10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(Mark One)

 [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 26, 2015

OR

 [  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to_________

Commission File Number 1-5039

WEIS MARKETS, INC.

(Exact name of registrant as specified in its charter)

PENNSYLVANIA (State or other jurisdiction of incorporation or organization) 1000 S. Second Street P. O. Box 471	24-0755415 (I.R.S. Employer Identification No.)
Sunbury, Pennsylvania (Address of principal executive offices) Registrant's telephone number, including area code: (570) 286-4571	17801-0471 (Zip Code) Registrant's web address:  www.weismarkets.com

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common stock, no par value Securities registered pursuant to Section 12(g) of the Act:  None Name of each exchange on which registered New York Stock Exchange  

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [  ]No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [  ]No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X]No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [  ]		Accelerated filer  [X]
Non-accelerated filer   [  ]	(Do not check if a smaller reporting company)	Smaller reporting company  [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes [  ]  No [X]

The aggregate market value of Common Stock held by non-affiliates of the Registrant is approximately $519,000,000 as of June 27, 2015 the last business day of the most recently completed second quarter.

Shares of common stock outstanding as of March 18, 2016 - 26,898,443.

DOCUMENTS INCORPORATED BY REFERENCE:  Selected portions of the Weis Markets, Inc. definitive proxy statement dated  March 10, 2016 are incorporated by reference in Part III of this Form 10-K.

WEIS MARKETS, INC.

TABLE OF CONTENTS

FORM 10-K	Page
Part I
Item 1. Business	1
Item 1a. Risk Factors	3
Item 1b. Unresolved Staff Comments	6
Item 2. Properties	6
Item 3. Legal Proceedings	6
Executive Officers of the Registrant	7
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6. Selected Financial Data	9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7a. Quantitative and Qualitative Disclosures about Market Risk	21
Item 8. Financial Statements and Supplementary Data	22
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	44
Item 9a. Controls and Procedures	44
Item 9b. Other Information	45
Part III
Item 10. Directors, Executive Officers and Corporate Governance	45
Item 11. Executive Compensation	45
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
Item 13. Certain Relationships and Related Transactions, and Director Independence	45
Item 14. Principal Accountant Fees and Services	45
Part IV
Item 15. Exhibits, Financial Statement Schedules	46
Item 15(c)(3). Schedule II - Valuation and Qualifying Accounts	48
Signatures	49
Exhibit 21 Subsidiaries of the Registrant
Exhibit 31.1 Rule 13a-14(a) Certification – CEO
Exhibit 31.2 Rule 13a-14(a) Certification - CFO
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350

PART I

Item 1.Business:

Weis Markets, Inc. is a Pennsylvania business founded by Harry and Sigmund Weis in 1912 and incorporated in 1924.  The Company is engaged principally in the retail sale of food in Pennsylvania and surrounding states.  There was no material change in the nature of the Company's business during fiscal 2015.  The Company’s stock has been traded on the New York Stock Exchange since 1965 under the symbol “WMK.”  The Weis family currently owns approximately 65% of the outstanding shares.  Jonathan H. Weis serves as Chairman of the Board of Directors, President and Chief Executive Officer. 

The Company's retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel and general merchandise items, such as health and beauty care and household products.  The Company advertises its products and promotes its brand through weekly newspaper circulars; radio ads; e-mail blasts; and on-line via its website, social media and mobile applications.  Printed circulars are used extensively on a weekly basis to advertise featured items.  The Company utilizes a loyalty marketing program, “Weis Club Preferred Shopper,” which enables customers to receive discounts, promotions and fuel rewards.  The Company currently owns and operates 163 retail food stores.  The Company’s operations are reported as a single reportable segment.

The following table provides additional detail on the percentage of consolidated net sales contributed by product category for fiscal years 2015, 2014 and 2013, respectively:

	2015		2014		2013
Center Store (1)	57.5	%	57.9	%	59.0	%
Fresh (2)	29.7		29.0		28.7
Pharmacy Services	9.4		9.0		8.6
Fuel	3.2		3.9		3.5
Other	0.2		0.2		0.2
Consolidated net sales	100.0	%	100.0	%	100.0	%

__________

(1) Consists primarily of groceries, dairy products, frozen foods, beer and wine, and general merchandise items, such as health and beauty care and household products.

(2) Consists primarily of meats, seafood, fresh produce, floral, deli products, prepared foods and bakery products.

At the end of 2015, Weis Markets, Inc. operated 25 stores in Maryland, 5 stores in New Jersey, 9 stores in New York, 122 stores in Pennsylvania and 2 stores in West Virginia, for a total of 163 retail food stores operating under the Weis Markets trade name. 

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WEIS MARKETS, INC.

Item 1.Business: (continued)

All retail food store locationsoperate as conventional supermarkets.  The retail food stores range in size from 8,000 to 70,000 square feet, with an average size of approximately 50,000 square feet.  The following summarizes the number of stores by size categories as of year-end:

	2015	2015	2014	2014
Square feet	Number of stores	% of Total	Number of stores	% of Total
55,000 to 70,000	57	35%	56	34%
45,000 to 54,999	69	42%	70	43%
35,000 to 44,999	22	13%	22	13%
25,000 to 34,999	9	6%	9	6%
Under 25,000	6	4%	6	4%
Total	163	100%	163	100%

The following schedule shows the changes in the number of retail food stores, total square footage and store additions/remodels as of year-end:

	2015	2014	2013	2012	2011
Beginning store count	163	165	163	161	164
New stores (1)	---	1	4	4	1
Opened relocated stores	1	1	---	1	1
Closed stores	---	(3)	(2)	(2)	(4)
Closed relocated stores	(1)	(1)	---	(1)	(1)
Ending store count	163	163	165	163	161
Total square feet (000’s), at year-end	8,215	8,202	8,211	8,054	7,877
Additions/major remodels	16	8	12	13	9

____________________

(1)  On June 11, 2012, Weis Markets, Inc. acquired three former Genuardi’s stores located in Conshohocken, Doylestown and Norristown, Pennsylvania from Safeway Inc. 

The Company supports its retail operations through a centrally located distribution facility, its own transportation fleet, three manufacturing facilities and its store support center.  The Company is required to use a significant amount of working capital to provide for the necessary amount of inventory to meet demand for its products through efficient use of buying power and effective utilization of space in its distribution facilities.  The manufacturing facilities consist of a meat processing plant, an ice cream plant and a milk processing plant.

The Company operates in a highly competitive market place.  The number and the variety of competitors vary by market.  The Company’s principal competition consists of international, national, regional and local food chains, as well as independent food stores.  The Company also faces substantial competition from convenience stores, membership warehouse clubs, specialty retailers, supercenters and large-scale drug and pharmaceutical chains.  The Company continues to effectively compete by offering a strong combination of value, quality and service.

The Company currently employs approximately 19,000 full-time and part-time associates.

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WEIS MARKETS, INC.

Item 1.Business: (continued)

Trade Names and Trademarks.    The Company has invested significantly in the development and protection of “Weis Markets” both as a trade name and a trademark and considers it to be an important asset.  The Company is the exclusive licensee of more than 50 other trademarks registered and/or pending in the United States Patent and Trademark Office from WMK Holdings, Inc., including trademarks for its product lines and promotions such as Weis, Weis 2 Go, Weis Wonder Chicken, Price Freeze, Weis Gas-n-Go and Weis Nutri-Facts.  Each trademark registration is for an initial period of 10 years and may be renewed so long as it is in continued use in commerce.

The Company considers its trademarks to be of material importance to its business and actively defends and enforces its rights.

The Company maintains a corporate web site at www.weismarkets.com.   The Company makes available, free of charge, on the “Financial” page of the “Corporate Information” section of its web site, its Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after the Company electronically files such material or furnishes it to the U.S. Securities and Exchange Commission (SEC) by clicking on the “SEC Information” link.

The Company’s Corporate Governance materials can be found on the”Governance” page of the “Corporate Information” section ofits web site.   These materials include the Corporate Governance Guidelines; the Charters of the Audit, Compensation and Disclosure Committees; and both the Code of Business Conduct and Ethics and the Code of Ethics for the CEO and CFO.  A copy of the foregoing corporate governance materials is available upon written request to the Company’s principal executive offices.

Item 1a.Risk Factors:

In addition to risks and uncertainties in the ordinary course of business common to all businesses, important factors are listed below specific to the Company and its industry, which could materially impact its future performance.

The Company’s industry is highly competitive.  If the Company is unable to compete effectively, the Company’s financial condition and results of operations could be materially affected.

The retail food industryis intensely price competitive, and the competition the Company encounters may have a negative impact on product retail prices.  The financial results may be adversely impacted by a competitive environment that could cause the Company to reduce retail prices without a reduction in its product cost to maintain market share; thus reducing sales and gross profit margins.

The trade area of the Company is located within a region and is subject to the economic, social and climate variables of that region.

The majority of the Company’s stores are concentrated in central and northeast Pennsylvania, central Maryland, suburban Baltimore regions and New York’s Southern Tier.  Changes in economic and social conditions in the Company’s operating regions, including fluctuations in the inflation rate along with changes in population and employment and job growth rates, affect customer shopping habits.  These changes may negatively impact sales and earnings.  Business disruptions due to weather and catastrophic events historically have been few.  The Company’s geographic regions could receive an extreme variance in the amount of annual snowfall that may materially affect sales and expense results.

The Company may be unable to retain key management personnel.

The Company's success depends to a significant degree upon the continued contributions of senior management. The loss of any key member of management may prevent the Company from implementing its business plans in a timely manner.  In addition, employment conditions specifically may affect the Company’s ability to hire and train qualified associates.

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Item 1a.   Risk Factors: (continued)

Food safety issues could result in the loss of consumer confidence in the Company. 

Customers count on the Company to provide them with safe and wholesome food products.  Concerns regarding the safety of food products sold in its stores could cause shoppers to avoid purchasing certain products from the Company, or to seek alternative sources of supply for all of their food needs, even if the basis for the concern is outside of the Company’s control.  A loss in confidence on the part of its customers would be difficult and costly to reestablish.  As such, any issue regarding the safety of any food items sold by the Company, regardless of the cause, could have a substantial and adverse effect on operations.

The failure to execute expansion plans could have a material adverse effect on the Company's business and results of its operations.

Circumstances outside the Company’s control could negatively impact anticipated capital investments in store, distribution and manufacturing projects, information technology and equipment.  The Company cannot determine with certainty whether its new stores will be successful.  The failure to expand by successfully opening new stores as planned, or the failure of a significant number of these stores to perform as planned, could have a material adverse effect on the Company’s business and results of its operations.

Disruptions or security breaches in the Company’s information technology systems could adversely affect results.

The Company’s business is highly dependent on complex information technology systems that are vital to its continuing operations.  If the Company was to experience difficulties maintaining existing systems or implementing new systems, significant losses could be incurred due to disruptions in its operations.  Additionally, these systems contain valuable proprietary data as well as receipt and storage of personal information about its associates and customers, in particular electronic payment data and personal health information that, if breached, would have an adverse effect on the Company.  Such an occurrence could adversely affect the Company’s reputation with its customers, associates, and vendors, as well as the Company’s operations, results of operations, financial condition and liquidity, and could result in litigation against the Company or the imposition of penalties.

The Company is affected by certain operating costs which could increase or fluctuate considerably.

Associate expenses contribute to the majority of the Company’s operating costs.  The Company's financial performance is potentially affected by increasing wage and benefit costs, a competitive labor market, regulatory wage increases and the risk of unionized labor disruptions of its non-union workforce.  The Company's profit is particularly sensitive to the cost of oil.  Oil prices directly affect the Company's product transportation costs, as well as its utility and petroleum-based supply costs.  It also affects the costs of its suppliers, which impacts its cost of goods. 

Various aspects of the Company’s business are subject to federal, state and local laws and regulations.

The Company is subject to various federal, state and local laws, regulations and administrative practices that affect the Company’s business.  The Company must comply with numerous provisions regulating health and sanitation standards, food labeling, equal employment opportunity, minimum wages and licensing for the sale of food, drugs and alcoholic beverages.  The Company’s compliance with these regulations may require additional capital expenditures and could adversely affect the Company’s ability to conduct the Company’s business as planned.  Management cannot predict either the nature of future laws, regulations, interpretations or applications, or the effect either additional government regulations or administrative orders, when and if promulgated, or disparate federal, state, and local regulatory schemes would have on the Company’s future business.  They could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling and/or scientific substantiation.  Any or all of such requirements could have an adverse effect on the Company’s results of operations and financial condition.

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WEIS MARKETS, INC.

Item 1a.   Risk Factors: (continued)

Unexpected factors affecting self-insurance claims and reserve estimates could adversely affect the Company.

The Company uses a combination of insurance and self-insurance to provide for potential liabilities for workers' compensation, general liability, vehicle accident, property and associate medical benefit claims.  Management estimates the liabilities associated with the risks retained by the Company, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions which, by their nature, are subject to a high degree of variability. Any projection of losses concerning workers’ compensation and general liability is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

The Company was liable for associate health claims up to an annual maximum of  $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member as of March 1, 2014.  As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible.  The Company is liable for workers' compensation claims up to $2,000,000 per claim.  Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $1,000,000.  The Company, for the benefit of cost savings, has accepted the risk of an unusual amount of independent multiple material claims arising, which could have a significant impact on earnings.

Changes in tax laws may result in higher income tax.

The Company's future effective tax rate may increase from current rates due to changes in laws and the status of pending items with various taxing authorities.  Currently, the Company benefits from a combination of its corporate structure and certain state tax laws.

The Company’s investment portfolio may suffer losses from changes in market interest rates and changes in market conditions which could adversely affect results of operations or liquidity.

As of December 26, 2015, the Company had $17.6 million in cash and cash equivalents, $91.6 million in marketable securities and $9.1 million in SERP (Supplemental Executive Retirement Plan) investments  (level 1 mutual funds).  The Company’s marketable securities consist of municipal bonds and equity securities.  The municipal bond investments are subject to general credit, liquidity, market and interest rate risks.  Substantially all of these securities are subject to interest rate and credit risk and will decline in value if interest rates increase or one of the issuers’ credit ratings is reduced.  As a result, the Company may experience a reduction in value or loss of liquidity from investments, which may have a negative impact on the Company’s results of operations, liquidity and financial condition.  The Federal Deposit Insurance Corporation (FDIC) insures amounts up to $250,000 per depositor, per insured bank, for each account ownership category.  The Company has balances in bank accounts that may exceed the insured amount leaving the Company exposed for any amounts over the $250,000 limit.

The Company is a controlled Company due to the common stock holdings of the Weis family.

The Weis family’s share ownership represents approximately 65% of the combined voting power of the Company’s common stock as of December 26, 2015.  As a result, the Weis family has the power to elect a majority of the Company’s directors and approve any action requiring the approval of the shareholders of the Company, including adopting certain amendments to the Company’s charter and approving mergers or sales of substantially all of the Company’s assets.  Currently, one of the Company’s five directors is a member of the Weis family.

Changes in vendor promotions or allowances, including the way vendors target their promotional spending, and the Company's ability to effectively manage these programs could significantly impact margins and profitability.

The Company cooperatively engages in a variety of promotional programs with its vendors.  As the parties assess the results of specific promotions and plan for future promotions, the nature of these programs and the allocation of dollars among them changes over time.  The Company manages these programs to maintain or improve margins while at the same time increasing sales.  A reduction in overall promotional spending or a shift by vendors in promotional spending away from certain types of promotions that the Company and its customers have historically utilized could have a significant impact on profitability.

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Item 1b.Unresolved Staff Comments:

There are no unresolved staff comments.

Item 2.Properties:

As of December 26, 2015, the Company owned and operated  83 of its retail food storesand leased and operated  80 stores under operating leases that expire at various dates through 2029.  The Company owns all trade fixtures and equipment in its stores and several parcels of vacant land, which are available as locations for possible future stores or other expansion.

The Company owns and operates one distribution center in Milton, Pennsylvania of approximately 1.1 million square feet, and one in Northumberland, Pennsylvania totaling approximately 76,000 square feet.  The Company also owns one warehouse complex in Sunbury, Pennsylvania totaling approximately 550,000 square feet.  The Company utilizes 259,000 square feet of its Sunbury location to operate its ice cream plant, meat processing plant and milk processing plant.

Item 3.Legal Proceedings:

Neither the Company nor any subsidiary is presently a party to, nor is any of their property subject to, any pending legal proceedings, other than routine litigation incidental to the business that would not have a material adverse effect on the financial results.  The Company estimates any exposure to these legal proceedings and establishes accruals for the estimated liabilities, where it is reasonably possible to estimate and where an adverse outcome is probable. 

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Executive Officers of the Registrant

The following sets forth the names and ages of the Company’s executive officers as of March 18, 2016, indicating all positions held during the past five years:

Name	Age	Title
Jonathan H. Weis (a)	48	Chairman of the Board, President and Chief Executive Officer
Kurt A. Schertle (b)	44	Chief Operating Officer
Scott F. Frost (c)	53	Senior Vice President, Chief Financial Officer and Treasurer
David W. Gose II (d)	49	Senior Vice President of Operations
Harold G. Graber (e)	60	Senior Vice President of Real Estate and Development, Secretary
Richard A. Gunn (f)	51	Senior Vice President of Merchandising and Marketing
James E. Marcil (g)	57	Senior Vice President of Human Resources

(a) Jonathan H. Weis.The Company has employed Mr. Weis since 1989.  Mr. Weis served the Company as Vice President of Property Management and Development from 1996 until April 2002, at which time he was appointed as Vice President and Secretary.  In January of 2004, the Board appointed Mr. Weis as Vice Chairman and Secretary.  Mr. Weis became the Company's interim President and Chief Executive Officer in September 2013 and was appointed as President and Chief Executive Officer in February 2014.  The Board elected Mr. Weis as Chairman of the Board in April 2015.

(b) Kurt A. Schertle.The Company hired Mr. Schertle on March 1, 2009 as its Vice President of Sales and Merchandising, which included the responsibility of overseeing the Marketing Department.  In February 2010, Mr. Schertle was promoted to Senior Vice President of Sales and Merchandising.  In July 2012, Mr. Schertle was promoted to Executive Vice President of Sales and Merchandising at which time, he assumed the additional responsibility of overseeing the Company’s Supply Chain.  In September 2013, Mr. Schertle assumed the additional responsibility of overseeing Store Operations and Mr. Schertle was promoted to Chief Operating Officer in March 2014. 

(c) Scott F.Frost.Mr. Frost joined the Company full-time in 1984 and he has held various positions since then, including but not limited to, Controller, Assistant Secretary, Assistant Treasurer and Acting Chief Financial Officer.  The Company appointed Mr. Frost as Vice President, Chief Financial Officer and Treasurer in October 2009.  In January 2011, Mr. Frost was promoted to Senior Vice President, Chief Financial Officer and Treasurer.   

(d) David W. Gose II. Mr. Gose joined the Company in May 2014 as Senior Vice President of Operations.  Prior to joining the Company, Mr. Gose was Senior Director and Regional General Manager of Walmart Ohio, a retail store SuperCenter, from February 2010 until May 2014.  Walmart Ohio consisted of 92 stores that geographically included all stores South of Toledo, Cleveland, Akron and Youngstown.

(e) Harold G. Graber.Mr. Graber joined the Company in October 1989 as the Director of Real Estate.  Mr. Graber, who served the Company as Vice President for Real Estate since 1996, was promoted to Senior Vice President of Real Estate and Development in February 2010.  Mr. Graber was appointed as Secretary of the Company in February 2014.

(f) Richard A. Gunn. Mr. Gunn joined the Company in May 2015 as the Senior Vice President of Merchandising and Marketing.  Prior to joining the Company, Mr. Gunn was employed by K-VA-T Food Stores, Inc. from May 1999 through April 2015 and most recently served as Executive Vice President of Merchandising and Marketing.  K-VA-T Food Stores, Inc. is a regional supermarket chain and distribution center operating in Virginia, Kentucky and Tennessee. 

(g) James E. Marcil. Mr. Marcil joined the Company in September 2002 as Vice President of Human Resources.  In February 2010, Mr. Marcil was promoted to Senior Vice President of Human Resources.  

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PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities:

The Company's stock is traded on the New York Stock Exchange (ticker symbol WMK).  The approximate number of shareholders, including individual participants in security position listings on December 26, 2015 as provided by the Company's transfer agent was 6,002.  High and low stock prices and dividends paid per share for the last two fiscal years were:

	2015						2014
	Stock Price				Dividend		Stock Price				Dividend
Quarter		High		Low	Per Share			High		Low	Per Share
First	$	51.91	$	45.38	$	0.30	$	52.82	$	46.12	$	0.30
Second		50.59		41.64		0.30		50.56		42.54		0.30
Third		43.99		39.26		0.30		46.97		39.09		0.30
Fourth		46.39		38.56		0.30		48.00		38.23		0.30

The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the S&P Composite-500 Stock Index and the cumulative total return of a published group index for the Retail Grocery Stores Industry (“Peer Group”), provided by Value Line, Inc., for the period of five years.  The graph depicts $100 invested at the close of trading on the last trading day preceding the first day of the fifth preceding year in Weis Markets, Inc. common stock, S&P 500, and the Peer Group.  The cumulative total return assumes reinvestment of dividends.

Comparative Five-Year Total Returns

	2010	2011	2012	2013	2014	2015
Weis Markets, Inc.	100.00	104.58	105.44	144.40	134.91	128.43
S&P 500	100.00	102.11	118.45	156.82	178.28	180.78
Peer Group	100.00	114.14	132.14	178.78	238.08	249.93

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Item 6.Selected Financial Data:

The following selected historical financial information has been derived from the Company's audited Consolidated Financial Statements.  This information should be read in connection with the Company's Consolidated Financial Statements and the Notes thereto, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in Item 7.

Five Year Review of Operations

	52 Weeks		52 Weeks		52 Weeks		52 Weeks		53 Weeks
(dollars in thousands, except shares,	Ended		Ended		Ended		Ended		Ended
per share amounts and store information)	Dec. 26, 2015		Dec. 27, 2014		Dec. 28, 2013		Dec. 29, 2012		Dec. 31, 2011
Net sales	$	2,876,748	$	2,776,683	$	2,692,588	$	2,701,405	$	2,752,504
Costs and expenses		2,785,969		2,695,308		2,578,916		2,573,712		2,638,224
Income from operations		90,779		81,375		113,672		127,693		114,280
Investment and other income		1,552		2,287		4,684		3,882		3,326
Income before provision for income taxes		92,331		83,662		118,356		131,575		117,606
Provision for income taxes		33,001		29,281		45,170		48,675		42,022
Net income		59,330		54,381		73,186		82,900		75,584
Retained earnings, beginning of year		980,842		958,739		917,831		867,209		849,995
		1,040,172		1,013,120		991,017		950,109		925,579
Cash dividends		32,278		32,278		32,278		32,278		58,370
Retained earnings, end of year	$	1,007,894	$	980,842	$	958,739	$	917,831	$	867,209
Weighted-average shares outstanding, diluted		26,898,443		26,898,443		26,898,443		26,898,443		26,898,443
Cash dividends per share	$	1.20	$	1.20	$	1.20	$	1.20	$	2.17
Basic and diluted earnings per share	$	2.21	$	2.02	$	2.72	$	3.08	$	2.81
Working capital	$	232,722	$	229,595	$	215,802	$	235,856	$	227,873
Total assets	$	1,235,959	$	1,191,119	$	1,148,242	$	1,090,440	$	1,029,004
Shareholders’ equity	$	871,747	$	844,763	$	821,770	$	781,942	$	731,749
Number of grocery stores		163		163		165		163		161

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations:

Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand Weis Markets, Inc., its operations and its present business environment.  The MD&A is provided as a supplement to and should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto contained in “Item 8. Financial Statements and Supplementary Data” of this report.  The following analysis should also be read in conjunction with the Financial Statements included in the Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned “Forward-Looking Statements” immediately following this analysis.  This overview summarizes the MD&A, which includes the following sections:

 •   Company Overview - a general description of the Company’s business and strategic imperatives.

 •   Results of Operations - an analysis of the Company’s consolidated results of operations for the three years presented in the Company’s Consolidated Financial Statements.

•   Liquidity and Capital Resources - an analysis of cash flows, aggregate contractual obligations, and off-balance sheet arrangements.

 •   Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates.

Company Overview

General

Weis Markets, Inc. was founded in 1912 by Harry and Sigmund Weis in Sunbury, Pennsylvania.  Today, the Company ranks among the top 50 food and drug retailers in the United States in revenues generated.  As of December 26, 2015, the Company operated 163 retail food stores in Pennsylvania and four surrounding states: Maryland, New Jersey, New York and West Virginia.

Company revenues are generated in its retail food stores from the sale of a wide variety of consumer products including groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel, and general merchandise items, such as health and beauty care and household products.  The Company supports its retail operations through a centrally located distribution facility, its own transportation fleet, three manufacturing facilities and its administrative offices.  The Company's operations are reported as a single reportable segment.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Company Overview, (continued)

Strategic Imperatives

The following strategic imperatives will be focused upon by the Company to attempt to ensure the success of the Company in the coming years:

· Establish a Sales Driven Culture – The Company continues to focus on sales and profits growth, improved operating practices, increased productivity and positive cash flow.  The Company believes disciplined growth will increase its market share and operating profits, resulting in enhanced shareholder value.  The Company’s method of driving sales includes focused preparation and execution of sales programs, investing in new stores and remodels, and strategic acquisitions.  Communicating clear executable standards and aligning performance measures across the organization will help to instill a sales-driven operating environment.

· Continuously Upgrade Organizational Talent Pool  –In support of the Company’s growth and sales building strategies, the Company is committed to growing leaders at every level throughout the organization through enhanced leadership development programs, succession planning, and establishing rewarding career paths.  The Company believes that continuing to build associate engagement and develop associate talent directly impacts its ability to compete and execute strategic plans.  The Company views this as a strategic imperative for future growth.

· Become More Relevant to Consumers – Understanding the consumer is crucial to the Company’s strategic plan.  Research can be done by studying the wants and needs of core consumers and casual consumers.  Measuring customer satisfaction and sharing insights across the organization will help communication between management and its consumers.  The Company strives to build customer loyalty by purchasing produce from local growers and supporting organizations within the communities it serves.  It will continue to invest in new stores, remodels and additions and strategic acquisitions, to help retain and attract new consumers.

· Create Meaningful Differentiation – The Company has identified product pricing, locally focused store assortments, shopping experience, overall convenience and customer service as critical components of future success.  The strategy includes developing improved customer service training and setting customer service measurements and goals.  As part of this strategy, management is committed to offering its customers a strong combination of quality, service and value.  It will continue to offer competitive prices on name brand and private brand products to exceed customers’ expectations.

· Significantly Improve Decision Support and Measurement – The Company will continue to make investments in its information technology systems and distribution network. This will help improve associate productivity, store conditions and the overall customer experience with user-friendly, support driven systems.  These systems will also continue to play a key role in the measurement of the Company’s strategic decisions and provide valuable insight into customer behavior, shopping trends, and financial returns.  Management will continue to streamline its supply chain by focusing on improving inventory turns, cost per case, in-stock position and overall service levels, which will help to improve in-store conditions and result in increased sales and profits.

· Focus on Sustainability Strategies– The Company strives to be good stewards of the environment and makes this an important part of its overall mission.Its sustainability strategy operates under four key pillars: green design, natural resource conservation, food and agricultural impact and social responsibility.  The goal of the sustainability strategy is to reduce the Company’s overall carbon footprint by reducing greenhouse gas emissions and reducing the impact on climate change.  The Company is seeking to reduce its carbon footprint by 20% by the year 2020.  To accomplish this, the Company will institute new sustainability programs and improve existing sustainability programs, like reducing energy usage by 2% each year, educating school children through its Mystery Tours Program, replacing 50% of the truck fleet within three years and increasing recycling 5% each year.  In 2015 alone, the Company recycled 31,000 tons of materials, representing a 2.5% increase in the corporate recycling rate over the previous year and a corporate wide recycling rate of 49%.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations

Analysis of Consolidated Statements of Income

(dollars in thousands except per share amounts)										Percentage Changes
For the Fiscal Years Ended December 26, 2015,	2015			2014			2013			2015 vs.			2014 vs.
December 27, 2014 and December 28, 2013	(52 weeks)			(52 weeks)			(52 weeks)			2014			2013
Net sales	$	2,876,748		$	2,776,683		$	2,692,588			3.6	%		3.1	%
Cost of sales, including warehousing and distribution expenses		2,090,016			2,023,721			1,947,120			3.3			3.9
Gross profit on sales		786,732			752,962			745,468			4.5			1.0
Gross profit margin		27.3	%		27.1	%		27.7	%
Operating, general and administrative expenses		695,953			671,587			631,796			3.6			6.3
O, G & A, percent of net sales		24.2	%		24.2	%		23.5	%
Income from operations		90,779			81,375			113,672			11.6			(28.4)
Operating margin		3.2	%		2.9	%		4.2	%
Investment income (loss)		1,552			2,287			4,684			(32.1)			(51.2)
Investment income (loss), percent of net sales		0.1	%		0.1	%		0.2	%
Income before provision for income taxes		92,331			83,662			118,356			10.4			(29.3)
Income before provision for income taxes, percent of net sales		3.2	%		3.0	%		4.4	%
Provision for income taxes		33,001			29,281			45,170			12.7			(35.2)
Effective tax rate		35.7	%		35.0	%		38.2	%
Net income	$	59,330		$	54,381		$	73,186			9.1	%		(25.7)	%
Net income, percent of net sales		2.1	%		2.0	%		2.7	%
Basic and diluted earnings per share	$	2.21		$	2.02		$	2.72			9.4	%		(25.7)	%

Income is earned by selling merchandise at price levels that produce revenues in excess of cost of merchandise sold and operating and administrative expenses.  Although the Company may experience short term fluctuations in its earnings due to unforeseen short-term operating cost increases, it historically has been able to increase revenues and maintain stable earnings from year to year.

Net Sales

The Company's revenues are earned and cash is generated as merchandise is sold to customers at the point of sale.  Discounts provided to customers by the Company at the point of sale are recognized as a reduction in sales as products are sold or over the life of a promotional program if redeemable in the future.  Discounts provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons.

Total store sales increased 3.6% in 2015 compared to 2014. Excluding fuel sales, total store sales increased 4.3% in 2015 compared to 2014.  Total store sales increased 3.1% in 2014 compared to 2013.  Excluding fuel sales, total store sales increased 2.8% in 2014 compared to 2013. 

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable when it has been in operation for five full quarters.  Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction.  Planned store dispositions are excluded from the calculation.  The Company only includes retail food stores in the calculation.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations (continued)

Net Sales (continued)

Comparable store sales increased 3.7% in 2015compared to 2014.  Excluding fuel sales, comparable store sales increased 4.4% in 2015 compared to 2014.  Comparable store sales increased 2.0% in 2014 compared to 2013.  Excluding fuel sales, comparable store sales increased 1.7% in 2014 compared to 2013. 

The Company attributes the increased sales to its continued investments in lower pricing and disciplined sales building programs.  This includes targeted promotional activity in key regional markets and its Everyday Lower Prices (EDLP) and Lowest Price Guarantee promotional programs.  The EDLP program lowered prices on more than 1,000 regularly purchased items.  The Lowest Price Guarantee program offers discounts on four items every week that the Company guarantees to be the lowest compared to local competitors.  Compared to 2014, the Company experienced a 0.2%  decrease in the average sales per customer transaction in 2015, while identical customer store visits increased by  4.1%.  Compared to 2013, the Company generated a 1.5% increase in the average sales per customer transaction in 2014, while identical customer store visits increased by 0.6%.

The Company’s results also benefited from increased store level and supply chain efficiencies and an improved customerexperience.  In addition, the Weis Preferred Club Shopper program continues to target customer members with personalized offers and digital coupons to help them save money.  As part of this loyalty marketing program, the Company continues to offer its "Gas Rewards" program in most markets.  The "Gas Rewards" program allows Weis Preferred Shoppers club card members to earn gas discounts resulting from their in-store purchases.  Customers can redeem these gas discounts at any of the thirty-one Weis Gas-n-Go locations, as well as participating third-party gas retail locations such as Sheetz convenience stores, which are located in most of the Company’s markets.

Comparable center store sales increased by 2.4% in 2015 compared to 2014.  Comparable center store sales decreased 0.2% in 2014 compared to 2013.  Comparable fresh sales increased 6.0% in 2015 compared to 2014 and increased 3.0% in 2014 compared to 2013.  Both comparable center store and fresh sales increased for the reasons described above.

Comparable health and beauty care sales increased 5.0% in 2015 compared to 2014.  The increase for these items was primarily driven by improved in-stock positions at store level due to the introduction of a computer generated ordering system.  New products coupled with electronic marketing programs and the successful execution of category business plans also aided sales.

Comparable meat sales increased 4.3% in 2015compared to 2014, and increased 3.8% in 2014 compared to 2013.  In addition to increased costs of commodities for the first half of the year which led to retail inflation in 2015, the Company continued to build the meat department’s base business through aggressive ads, the introduction of new programs, expanded variety and display space for All Natural and Organic products.  The Company also maintained a continued focus on superior customer service and fresh cut meat at store level through its “Great Meals Start Here” program, which was introduced in January 2014. Comparable meat sales increased 3.8% in 2014 compared to 2013.  The “Great Meals Start Here” program coupled with price inflation; more aggressive advertising; and a focus on improving store condition and resetting the stores to better serve our customers’ needs contributed to the meat sales increase in 2014.

Comparable produce sales increased 5.9% in 2015 compared to 2014.  The 2015 sales increase has been driven by an aggressive advertising and merchandising campaign; larger crops being harvested as compared to estimates, resulting in lower average retail prices but increased unit sales; and an increased variety in key categories of produce. In addition, sales growth in the produce department can be attributed to store remodeling projects, associate training classes and improved execution at the store level.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations (continued)

Net Sales (continued)

Comparable pharmacy sales increased 7.4% in 2015 compared to 2014.  The pharmacy sales increase was driven by an increased number of filled prescriptions, partially due to an increased acceptance of preferred third-party insurance plans as well as expanded pharmacy hours.  Comparable pharmacy sales increased 8.5% in 2014 compared to 2013.  Pharmacy sales experienced significant price inflation in 2014 but were negatively affected in 2013 due to the conversion of brand to generic drugs.  In additon to the price inflation, the sales increase was also attributed to an increased number of prescriptions being filled, partially due to the Company’s in-store pet medication and medication synchronization programs.  Also contributing to the increase, were expanded pharmacy hours at some stores and more individuals being eligible for healthcare benefits under the Affordable Care Act.

Comparable fuel sales decreased 25.4% in 2015 compared to 2014.  Fuel sales decreased as a result of the decline in retail fuel prices from 2014 to 2015.  According to the U.S. Department of Energy, the 52-week average price of gasoline in the Central Atlantic States decreased 27.1%, or $0.98 per gallon, in 2015 compared to 2014.  Comparable fuel sales increased 0.4% in 2014 compared to 2013. 

Management remains confident in its ability to generate sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company's competitive position.

Cost of Sales and Gross Profit

Cost of sales consists of direct product costs (net of discounts and allowances), distribution center and transportation costs, as well as manufacturing facility operations.Almost all of the increase in cost of sales in 2015 as compares to 2014 is due to the increased sales volume in 2015.  Both direct product cost and distribution cost increase when sales volume increases.

According to the latest U.S. Bureau of Labor Statistics’ report, the annual Seasonally Adjusted Food-at-Home Consumer Price Index increased 1.1% in 2015,  2.4% in 2014 and 0.9% in 2013.  Even though the U.S. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results.  Despite the fluctuation of retail and wholesale prices, the Company has achieved a gross profit rate of 27.3% in 2015, 27.1% in 2014 and 27.7% in 2013.  The increase in gross profit rate was driven by a shift in sales mix from fuel to grocery sales which carry a higher profit margin. The gross profit rate declined in 2014 as a result of the implementation of the Company’s Three Ways to Save sales initiative, which consisted of the EDLP and Lowest Price Guarantee programs throughout the year, the “Price Freeze” program in the first quarter and the “Get Grillin” program in the second quarter.

The Company experienced a LIFO charge of $1.4 million for 2015, compared to a charge of $911,000 for 2014 and a charge of $692,000 for 2013.  With the exception of pharmacy, the Company expects wholesale price inflation to increase slightly in 2016.

The Company's profitability is impacted by the cost of oil.  Fluctuating fuel prices affect the delivered cost of product and the cost of other petroleum-based supplies.  As a percentage of sales, the cost of diesel fuel used by the Company to deliver goods from its distribution center to its stores decreased by 0.07% in 2015 compared to 2014 anddecreased by 0.02% in 2014 compared to 2013.  Although the Company experienced a decrease in these costs, the decline in expense was minimized due to higher fuel usage resulting from more store deliveries to meet the higher sales demand.  According to the U.S. Department of Energy, the 52-week average diesel fuel price for the Central Atlantic States decreased $1.06 per gallon to $2.94 per gallon as of December 21, 2015, compared to $4.00 per gallon as of December 22, 2014.  Diesel fuel prices for the Central Atlantic States peaked in February 2014 at $4.36 and steadily fell to $2.44 as of December 21, 2015.  Based upon the U.S. Energy Information Administration’s current projections, the Company is expecting diesel fuel prices to remain below $2.50 during 2016.

Although the Company experienced product cost inflation and deflation in various commodities in 2015, 2014 and 2013, management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations (continued)

Operating, General and Administrative Expenses

Business operating costs including expenses generated from administration and purchasing functions, are recorded in "Operating, general and administrative expenses."  Business operating costs include items such as wages, benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, depreciation, leasehold amortization and costs for outside provided services.  The majority of the expenses were driven by increased sales.

The Company may not be able to recover rising expenses through increased prices charged to its customers.  A majority of our associates are paid hourly rates related to federal and state minimum wage laws. The Company increased the base hourly rate for associates to $9 per hour as of August 2, 2015, in order to attract and retain talented associates with a goal of delivering best-in-class customer service.  The Company has decided not to increase prices to offset this hourly wage rate increase. 

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 60% of the total “Operating, general and administrative expenses.”  As a percent of sales, direct store labor decreased 0.1% in 2015 compared to 2014 and decreased 0.2% in 2014 compared to 2013.  The increase in the base hourly rate for associates to $9 per hour and related wage compression had an estimated cost of $3.2 million in the second half of 2015.  Increases in employee related expenses were offset by savings realized from a store labor efficiency project.  In addition, employee related expenses increased $7.3 million in 2015 compared to 2014 due to anticipated and actual achievement of incentives for various levels of management, which increased 0.2% as a percent of sales. 

While the Company’s self-insured health care benefit expenses only increased by 0.4% in 2015 compared to 2014 anddecreased by0.5% in 2014 compared to 2013,the Company remains concerned about the impact that The Patient Protection and Affordable Care Act (ACA) will have on its future operating expenses. Based on the ACA definition of full time employment, there will be approximately an 18% increase in full time employees, which is currently estimated to be a $928,000 increase in costs.

On September 21, 2013, the Company entered into a separation agreement with the former President and Chief Executive Officer.  The Company's "Operating, general and administrative expenses" were negatively impacted by the charge of $6.1 million worth of estimated expenses related to the separation agreement.  See Exhibit 10, filed with the quarterly report on Form 10-Q filed on November 7, 2013, for more information pertaining to the separation agreement.

Depreciation and amortization expense was $70.1 million, or 2.4% of net sales, for 2015 compared to $66.9 million, or 2.4% of net sales, for 2014 and $58.3 million, or 2.2% of net sales, for 2013.  The increase in depreciation and amortization expense in 2015 compared to 2014 and in 2014 compared to 2013 was the result of additional capital expenditures as the Company implements its capital expansion program.  See the Liquidity and Capital Resources section for further information regarding the Company’s capital expansion program.

The Company recognized pre-tax gains of $751,000, $2.6 million and $2.9 million in 2015, 2014 and 2013, respectively, from the sale of two properties in each year.  In 2013, the Company determined that the asset value of four properties was impaired. As a result, the Company recognized a pre-tax impairment loss of $2.1 million.  See Note 1(l) to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company's impairment charges.  Earnings were further impacted in 2013 by a $680,000 adjustment to liabilities for future expenses on closed stores. 

Retail store profitability is sensitive to volatility in utility costs due to the amount of electricity and gas required to operate the Company's stores and facilities.  The Company is responding to this volatility in operating costs by employing conservation technologies, procurement strategies and associate energy awareness programs to manage and reduce consumption.  The Company continues to be a member of the EPA GreenChill program for advancing environmentally beneficial refrigerant management systems and has ten stores registered under this program.  In addition, all Company stores have an assigned Green Leader to promote in-store energy conservation. 

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations (continued)

Operating, General and Administrative Expense (continued)

A breakdown of the material increases (decreases) as a percent of sales in "Operating, general and administrative expenses" is as follows:
		2015 vs. 2014				2014 vs. 2013
(dollars in thousands)		Increase (Decrease)	Increase (Decrease) as a % of sales			Increase (Decrease)	Increase (Decrease) as a % of sales
Employee related expenses	$	19,421	0.2	%	$	10,517	(0.1)	%
Store advertising expense	$	(1,277)	(0.1)	%	$	3,082	0.1	%
Depreciation and amortization	$	4,473	0.1	%	$	6,195	0.2	%
Utility expense	$	(1,222)	(0.1)	%	$	1,790	0.0	%
Rent expense	$	(1,220)	(0.1)	%	$	(71)	(0.0)	%
Repairs/maintenance contracts	$	312	0.0	%	$	4,502	0.2	%
Landlord common area maintenance	$	(196)	(0.0)	%	$	2,876	0.1	%

Employee-related expenses increased in 2015 and 2014 for the reasons noted above, primarily related to increases in the basic hourly rate, management incentives and increases in sales volume. Hourly employees, particularly part time employees, are required to work increased hours when there is growth in sales volume. Increases in employee related expenses were offset by savings realized from a store labor efficiency project in both 2015 and 2014.  

Store advertising expense decreased in 2015 due to reduced spending on direct mail and weekly ads. In 2014, store advertising expenses increased due to the promotion of the Company’s new pricing strategy.

Depreciation and amortization increased in 2015 and 2014 as a result of the Company’s store capital expenditure program and technology investments.

Utility expense decreased in 2015 for the reasons noted above related to energy conservation efforts and procurement strategies, along with reduced electricity costs and usage and a reduction in the use of natural gas.  The Company’s utility expense increased in 2014 despite the aforementioned initiatives primarily due to higher generation charges and below average temperatures in the Mid-Atlantic States, the Company’s operating region, in the first quarter of 2014.

Rent expense decreased in 2015 primarily due to adjustments to accrued closed store liability estimates and purchasing a previously leased location.

Repairs/maintenance contracts increased in 2014 primarily due to new maintenance contracts for software and hardware including store front end systems.

Landlord common area maintenance expense increased in 2014 due to higher than average snowfall in the Company’s operating region.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Results of Operations (continued)

Investment Income

The Company’s investment portfolio consists of marketable securities, which currently includes municipal bonds and equity securities, as well as the Company’s SERP investment, which is comprised of mutual funds that are maintained within the Company’s non-qualified supplemental executive retirement plan and the non-qualified pharmacist deferred compensation plan.  The Company classifies all of its municipal bonds and equity securities as available-for-sale.  The SERP investments are classified as trading securities. 

Analysis of Investment Income	2015		2014		2013		Dollar Changes		Dollar Changes
(dollars in thousands)	(52 weeks)		(52 weeks)		(52 weeks)		2015 vs. 2014		2014 vs. 2013
Bond income	$	1,420	$	1,187	$	1,598	$	233	$	(411)
Equity income		412		706		1,895		(294)		(1,189)
SERP investment		(280)		394		1,191		(674)		(797)
Investment income	$	1,552	$	2,287	$	4,684	$	(735)	$	(2,397)

Equity income decreased in 2015 as a result of the Company receiving a stock dividend in 2014 which was not repeated in 2015. Equity income decreased in 2014 compared to 2013 due to recognizing gains on the sale of equity securities in 2013.

SERP investment was impacted by market adjustments in both 2015 and 2014 and experienced a loss in 2015.

Provision for Income Taxes

The effective income tax rate was 35.7%, 35.0% and 38.2% in 2015, 2014 and 2013, respectively.  The effective income tax rate rose in 2015 due to an increase in state tax expense.  The effect of this increase was partially offset by an increase in tax benefits related to tax exempt interest, food donations, and the Work Opportunity Tax Credit, resulting in a net increase of 0.7%.In 2014, pre-tax book income decreased significantly. Tax exempt interest and dividends eligible for a dividends received deduction increased, causing an increase to the net favorable permanent differences. The combination of the decrease to net income before taxes and increase to the net favorable permanent differences resulted in a drop in the effective rate for 2014. The effective income tax rate differs from the federal statutory rate of 35% primarily due to the effect of state taxes, net of permanent differences.

Liquidity and Capital Resources

Net cash provided by operating activities was $136.7 million in 2015, compared to $123.1 million in 2014 and $142.6 million in 2013.  Working capital increased 1.4% in 2015, increased 6.4% in 2014 and decreased 8.5% in 2013, in each case compared to the prior year.  The 2014 working capital increase is primarily attributed to the lower investment in the Company’s capital expansion program during 2014 compared to the previous years.Whereas, the 2013 decrease in working capital is primarily due to the utilization of marketable securities to fund the Company’s capital expansion program.

Net cash used in investing activities was $109.8 million in 2015 compared to $85.8 million in 2014 and $106.8 million in 2013.  These funds were used primarily to purchase property and equipment in the three fiscal years presented.  Property and equipment purchases totaled $90.2 million in 2015, compared to $79.2 million in 2014 and $128.1 million in 2013.  The Company paid $7.9 million for the property and equipment related to the purchase of a store in Hanover, Pennsylvania in the third quarter of 2015.  As a percentage of sales, capital expenditures were 3.1%, 2.9% and 4.8% in 2015, 2014 and 2013, respectively. 

The Company’s capital expansion program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet.  Management currently plans to invest approximately $100 million in its capital expansion program in 2016.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Liquidity and Capital Resources (continued)

Net cash used in financing activities was $32.3 million in 2015, 2014 and 2013, which solely consisted of dividend payments to shareholders.  At December 26, 2015, the Company had a $30 million line of credit, of which $16.9 million was committed to outstanding letters of credit.  The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.  The Company does not anticipate drawing on any of them.  The Company has a $50 million short-term credit facility agreement to fund future financing activities.

Total cash dividend payments on common stock, on a per share basis, amounted to $1.20 in 2015, 2014 and 2013.  No treasury stock was purchased in 2015, 2014 or 2013.  The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares.

The Company has no other commitment of capital resources as of December 26, 2015, other than the lease commitments on its store facilities and transportation equipment under operating leases that expire at various dates through 2029.  The Company anticipates funding its working capital requirements and its $100 million 2016 capital expansion program through cash and investment reserves and future internally generated cash flows from operations.

The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates as they relate to available-for-sale securities and any future long-term debt borrowings.  The Company’s marketable securities portfolio currently consists of municipal bonds and equity securities.  Other short-term investments are classified as cash equivalents on the Consolidated Balance Sheets.

Under its current policies, the Company invests in high-grade marketable debt securities and does not use interest rate derivative instruments to manage exposure to interest rate fluctuations.  Currently, the Company’s investment strategy of obtaining marketable debt securities with maturity dates between one and ten years helps to minimize market risk and to maintain a balance between risk and return.  The equity securities owned by the Company consist primarily of stock held in large capitalized companies trading on public security exchange markets.  The Company’s management continually monitors the risk associated with its marketable securities.  A quantitative tabular presentation of risk exposure is located in “Item 7a. Quantitative and Qualitative Disclosures about Market Risk” of this report.

By their nature, these financial instruments inherently expose the holders to market risk.  The extent of the Company’s interest rate and other market risk is not quantifiable or predictable with precision due to the variability of future interest rates and other changes in market conditions.  However, the Company believes that its exposure in this area is not material.

The Company experienced an unrealized holding loss net of deferred taxes of $52,000 in 2015,an unrealized holding gain net of deferred taxes of $927,000 in 2014 and an unrealized holding loss net of deferred taxes of $36,000 in 2013 (see Consolidated Statements of Comprehensive Income).  As of December 26, 2015, the Company had $8.2 million in gross unrealized holding gains and $66,000 in gross unrealized holding losses related to marketable securities.  See Note 2 Investments, of Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company’s marketable securities.

Contractual Obligations

The following table represents scheduled maturities of the Company’s long-term contractual obligations as of December 26, 2015.

	Payments due by period
				Less than						More than
(dollars in thousands)		Total		1 year		1-3 years		3-5 years		5 years
Operating leases	$	193,862	$	32,237	$	58,905	$	40,310	$	62,410
Total	$	193,862	$	32,237	$	58,905	$	40,310	$	62,410

Off-Balance Sheet Arrangements

The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations or cash flows, except for the Company's lease commitments to be recognized on the balance sheet related to operating leases for its store facilities and transportation equipment, which will be required for annual periods beginning after December 15, 2018 per the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).See Note 1(x) Summary of Significant Accounting Policies, to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on ASU 2016-02.

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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Critical Accounting Policies and Estimates

The Company has chosen accounting policies that it believes are appropriate to accurately and fairly report its operating results and financial position, and the Company applies those accounting policies in a consistent manner.  The Significant Accounting Policies are summarized in Note 1 to the Consolidated Financial Statements.  As a result of implementing Accounting Standards Update ("ASU") 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, the Company reclassified its current deferred income tax liabilities as noncurrent deferred income tax liabilities retrospectively for all periods presented as of the year ended December 26, 2015.  See Note 1(x) to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company’s accounting policy changes.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that the Company makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.  These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances.  The Company evaluates these estimates and assumptions on an ongoing basis and may retain outside consultants, lawyers and actuaries to assist in its evaluation.  The Company believes the following accounting policies are the most critical because they involve the most significant judgments and estimates used in preparation of its Consolidated Financial Statements.

Inventories

Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods.  The Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using average cost.  The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.  Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the last physical count to the financial statement date.

Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided on the cost of buildings and improvements and equipment using the straight-line method. 

Leasehold improvements are amortized using the straight-line method over the terms of the leases or the useful lives of the assets, whichever is shorter.

Maintenance and repairs are expensed and renewals and betterments are capitalized.  When assets are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited or charged to “Operating, general and administrative expenses.”

Goodwill and Intangible Assets

Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests in certain circumstances.

To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its stock value.  Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company.  Estimated future cash flows are based on the Company’s internal projection model.  The stock value evaluation consists of measuring the average market capitalization of the Company against its total asset value of its sole reporting unit.  The Company completes an impairment test annually.  See Note 1(l) to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information on the Company’s impairment of long-lived assets.

19

WEIS MARKETS, INC.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Critical Accounting Policies and Estimates (continued)

Revenue Recognition

Revenue from the sale of products to the Company’s customers is recognized at the point of sale.  Discounts provided to customers at the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.  Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts.  The Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer data tracking software.  Sales are reduced by these estimates over the life of the program.  Discounts to customers at the point of sale provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are redeemable at any retailer that accepts those discounts.  The Company records “Deferred revenue” for the sale of gift cards and revenue is recognized in “Net sales” at the time of customer redemption for products.  Gift card breakage income is recognized in “Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote.  Sales tax is excluded from “Net sales.”  The Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.  Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.

Vendor Allowances

Vendor allowances related to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as they are earned, in accordance with the underlying agreement.  Off-invoice and bill-back allowances are used to reduce direct product costs upon the receipt of goods.  Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized when the related inventory is sold.  Volume incentive discounts are realized as a reduction of cost of sales at the time it is deemed probable and reasonably estimable that the incentive target will be reached.  Long-term contract incentives, which require an exclusive vendor relationship, are allocated over the life of the contract.  Promotional allowance funds for specific vendor-sponsored programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement.  Cash discounts for prompt payment of invoices are realized in cost of sales as invoices are paid.  Warehouse and back-haul allowances provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.  Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially set up in the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is complete.  Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses also recorded in cost of sales.

Store Closing Costs

The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs associated with the store closing commitments.  Currently, closed stores have remaining lease terms ranging from one to three years, and the liabilities associated with these closed store leases are paid over the terms of the leases.  Closed store lease liabilities totaled $212,000 and $955,000 as of December 26, 2015 and December 27, 2014, respectively.  The Company estimates the lease liabilities, net of estimated sublease income, using the undiscounted rent payments of closed stores.  Other exit costs include estimated real estate taxes, common area maintenance, insurance and utility costs to be incurred after the store closes over the remaining lease term.  Store closings are generally completed within one year after the decision to close.  Adjustments to closed store liabilities and other exit costs primarily relate to changes in sublease income and actual exit costs differing from original estimates.  Adjustments are made for changes in estimates in the period in which the changes become known.  Any excess store closing liability remaining upon settlement of the obligation is reversed to income in the period that such settlement is determined.  Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs, or that is no longer needed for its originally intended purpose, is adjusted to income in the proper period.  Inventory write-downs, if any, in connection with store closings, are classified in cost of sales.  Costs to transfer inventory and equipment from closed stores are expensed as incurred. 

Self-Insurance

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims.  The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported.  The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.  The Company was liable for associate health claims up to an annual maximum of $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member as of March 1, 2014.  As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible.  The Company is liable for workers' compensation claims up to $2,000,000 per claim.  Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $1,000,000.  Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

20

WEIS MARKETS, INC.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)

Forward-Looking Statements

In addition to historical information, this Annual Report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.  For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; business conditions in the retail industry; the regulatory environment; rapidly changing technology and competitive factors, including increased competition with regional and national retailers; and price pressures.  Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof.  The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.  Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.

Item 7a.Quantitative and Qualitative Disclosures about Market Risk:

(dollars in thousands)	Expected Maturity Dates																					Fair Value
December 26, 2015		2016			2017			2018			2019			2020		Thereafter				Total		Dec. 26, 2015
Rate sensitive assets:
Fixed interest rate securities	$	10,875		$	13,355		$	18,440		$	13,090		$	4,905		$	15,310		$	75,975		$	83,749
Average interest rate		1.47	%		1.55	%		1.90	%		1.50	%		2.28	%		2.54	%		1.92	%

Other Relevant Market Risks

The Company’s equity securities at December 26, 2015 had a cost basis of $1,198,000 and a fair value of $7,880,000.  The dividend yield realized on these equity investments was 5.23% in 2015.  Market risk, as it relates to equities owned by the Company, is discussed within the “Liquidity and Capital Resources” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained within this report.

21

Item 8.Financial Statements and Supplementary Data:

WEIS MARKETS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)
December 26, 2015 and December 27, 2014		2015		2014
Assets
Current:
Cash and cash equivalents	$	17,596	$	22,986
Marketable securities		91,629		73,959
SERP investment		9,079		9,121
Accounts receivable, net		88,083		70,642
Inventories		229,399		239,641
Prepaid expenses and other current assets		17,198		17,432
Income taxes recoverable		1,666		612
Total current assets		454,650		434,393
Property and equipment, net		738,985		716,860
Goodwill		35,162		35,162
Intangible and other assets, net		7,162		4,704
Total assets	$	1,235,959	$	1,191,119
Liabilities
Current:
Accounts payable	$	160,441	$	144,812
Accrued expenses		37,819		34,590
Accrued self-insurance		16,770		18,676
Deferred revenue, net		6,898		6,720
Total current liabilities		221,928		204,798
Postretirement benefit obligations		14,368		18,672
Accrued self-insurance		22,761		22,364
Deferred income taxes		97,020		97,280
Other		8,135		3,242
Total liabilities		364,212		346,356
Shareholders’ Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued,
26,898,443 shares outstanding		9,949		9,949
Retained earnings		1,007,894		980,842
Accumulated other comprehensive income, net		4,761		4,829
		1,022,604		995,620
Treasury stock at cost, 6,149,364 shares		(150,857)		(150,857)
Total shareholders’ equity		871,747		844,763
Total liabilities and shareholders’ equity	$	1,235,959	$	1,191,119

See accompanying notes to Consolidated Financial Statements.

22

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except shares and per share amounts)
For the Fiscal Years Ended December 26, 2015,	2015		2014		2013
December 27, 2014 and December 28, 2013	(52 weeks)		(52 weeks)		(52 weeks)
Net sales	$	2,876,748	$	2,776,683	$	2,692,588
Cost of sales, including warehousing and distribution expenses		2,090,016		2,023,721		1,947,120
Gross profit on sales		786,732		752,962		745,468
Operating, general and administrative expenses		695,953		671,587		631,796
Income from operations		90,779		81,375		113,672
Investment income		1,552		2,287		4,684
Income before provision for income taxes		92,331		83,662		118,356
Provision for income taxes		33,001		29,281		45,170
Net income	$	59,330	$	54,381	$	73,186
Weighted-average shares outstanding, basic and diluted		26,898,443		26,898,443		26,898,443
Cash dividends per share	$	1.20	$	1.20	$	1.20
Basic and diluted earnings per share	$	2.21	$	2.02	$	2.72

See accompanying notes to Consolidated Financial Statements.

23

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)
For the Fiscal Years Ended December 26, 2015,	2015		2014		2013
December 27, 2014 and December 28, 2013	(52 weeks)		(52 weeks)		(52 weeks)
Net income	$	59,330	$	54,381	$	73,186
Other comprehensive (loss) income by component, net of tax:
Available-for-sale marketable securities
Unrealized holding (losses) gains arising during period
(Net of deferred taxes of $37, $644 and $23, respectively)		(52)		927		(36)
Reclassification adjustment for gains included in net income
(Net of deferred taxes of $11, $26 and $730, respectively)		(16)		(37)		(1,044)
Other comprehensive (loss) income, net of tax		(68)		890		(1,080)
Comprehensive income, net of tax	$	59,262	$	55,271	$	72,106

See accompanying notes to Consolidated Financial Statements.

24

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

						Accumulated
(dollars in thousands, except shares)						Other						Total
For the Fiscal Years Ended December 26, 2015,	Common Stock			Retained		Comprehensive		Treasury Stock				Shareholders’
December 27, 2014 and December 28, 2013	Shares	Amount		Earnings		Income (Loss)		Shares		Amount		Equity
Balance at December 29, 2012	33,047,807	$	9,949	$	917,831	$	5,019		6,149,364	$	(150,857)	$	781,942
Net income	—		—		73,186		—		—		—		73,186
Other comprehensive loss, net of
reclassification adjustments and tax	—		—		—		(1,080)		—		—		(1,080)
Dividends paid	—		—		(32,278)		—		—		—		(32,278)
Balance at December 28, 2013	33,047,807		9,949		958,739		3,939		6,149,364		(150,857)		821,770
Net income	—		—		54,381		—		—		—		54,381
Other comprehensive income, net of
reclassification adjustments and tax	—		—		—		890		—		—		890
Dividends paid	—		—		(32,278)		—		—		—		(32,278)
Balance at December 27, 2014	33,047,807		9,949		980,842		4,829		6,149,364		(150,857)		844,763
Net income	—		—		59,330		—		—		—		59,330
Other comprehensive loss, net of
reclassification adjustments and tax	—		—		—		(68)		—		—		(68)
Dividends paid	—		—		(32,278)		—		—		—		(32,278)
Balance at December 26, 2015	33,047,807	$	9,949	$	1,007,894	$	4,761		6,149,364	$	(150,857)	$	871,747

See accompanying notes to Consolidated Financial Statements.

25

WEIS MARKETS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)
For the Fiscal Years Ended December 26, 2015,		2015		2014		2013
December 27, 2014 and December 28, 2013		(52 weeks)		(52 weeks)		(52 weeks)
Cash flows from operating activities:
Net income	$	59,330	$	54,381	$	73,186
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation		61,834		59,004		51,068
Amortization		8,280		7,865		7,207
Gain on disposition of fixed assets		(54)		(2,630)		(2,033)
Impairment of fixed assets		-		-		2,088
Gain on sale of marketable securities		(27)		(63)		(1,775)
Gain on sale of intangible assets		-		-		(780)
Deferred income taxes		(212)		3,235		11,402
Changes in operating assets and liabilities:
Inventories		10,242		811		4,791
Accounts receivable and prepaid expenses		(17,127)		(13,588)		(10,512)
Income taxes recoverable		(1,054)		(612)		-
Accounts payable and other liabilities		14,403		17,230		7,056
Income taxes payable		-		(1,628)		269
Other		1,118		(895)		665
Net cash provided by operating activities		136,733		123,110		142,632
Cash flows from investing activities:
Purchase of property and equipment		(90,210)		(79,177)		(128,055)
Proceeds from the sale of property and equipment		1,929		3,614		4,451
Purchase of marketable securities		(31,329)		(20,118)		(12,635)
Proceeds from maturities of marketable securities		3,201		4,050		1,150
Proceeds from the sale of marketable securities		9,171		7,668		30,170
Purchase of intangible assets		(2,649)		(1,479)		(937)
Proceeds from sale of intangible assets		-		-		780
Change in SERP investment		42		(369)		(1,694)
Net cash used in investing activities		(109,845)		(85,811)		(106,770)
Cash flows from financing activities:
Dividends paid		(32,278)		(32,278)		(32,278)
Net cash used in financing activities		(32,278)		(32,278)		(32,278)
Net (decrease) increase in cash and cash equivalents		(5,390)		5,021		3,584
Cash and cash equivalents at beginning of year		22,986		17,965		14,381
Cash and cash equivalents at end of year	$	17,596	$	22,986	$	17,965

See accompanying notes to Consolidated Financial Statements.

26

WEIS MARKETS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1   Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies utilized in preparing the Company’s Consolidated Financial Statements:

(a)  Description of Business

Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924.  The Company is engaged principally in the retail sale of food in Pennsylvania and surrounding states.  The Company’s operations are reported as a single reportable segment.  There was no material change in the nature of the Company's business during fiscal 2015.

(b)  Definition of Fiscal Year

The Company’s fiscal year ends on the last Saturday in December.  Fiscal 2015 was comprised of 52 weeks, ending on December 26, 2015.  Fiscal 2014 was comprised of 52 weeks, ending on December 27, 2014.  Fiscal 2013 was comprised of 52 weeks, ending on December 28, 2013.  References to years in this Annual Report relate to fiscal years.

(c)  Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.

(d)  Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America.  Actual results could differ from those estimates.

(e)  Correction for Immaterial Prior Period Misstatements

The Company corrected the “Loss (gain) on disposition/impairment of fixed assets” originally reported as a net loss of $55,000 in the 2013 Consolidated Statement of Cash Flows into the “Gain on disposition of fixed assets” of $2.0 million and the “Impairment of fixed assets” of $2.1 million. There is no cash impact on the 2013 Consolidated Statement of Cash Flows related to this change, since both line items still net to the originally reported $55,000.

(f)  Cash and Cash Equivalents

The Company maintains its cash balances in the form of core checking accounts and money market accounts.  The Company maintains cash deposits with banks that at times exceed applicable insurance limits.  The Company reduces its exposure to credit risk by maintaining such deposits with high quality financial institutions that management believes are creditworthy.

The Company considers investments with an original maturity of three months or less to be cash equivalents.  Investment amounts classified as cash equivalents as of December 26, 2015 and December 27, 2014 totaled $7.7 million and $14.4 million, respectively.

(g)  Investments

Marketable securities consist of municipal bonds and equity securities.  The Company invests primarily in high-grade marketable debt securities.  The Company classifies all of its marketable securities as available-for-sale.

Available-for-sale securities are recorded at fair value as determined by quoted market price based on national markets.  Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized.  A decline in the fair value below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.  Dividend and interest income is recognized when earned.  Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities.

(h)  Accounts Receivable

Accounts receivable are stated net of an allowance for uncollectible accounts of $1,967,000 and $1,578,000 as of December 26, 2015 and December 27, 2014, respectively.  The reserve balance relates to amounts due from pharmacy third party providers, retail customer returned checks, manufacturing customers, vendors and tenants.  The Company maintains an allowance for the amount of receivables deemed to be uncollectible and calculates this amount based upon historical collection activity adjusted for current conditions.  Customer electronic payments accepted at the point of sale are classified as accounts receivable until collected.

27

WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(i)  Inventories

Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods.  The Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using average cost.  The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.  Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the last physical count to the financial statement date. 

(j)  Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided on the cost of buildings and improvements and equipment using the straight-line method.

Leasehold improvements are amortized using the straight-line method over the terms of the leases or the useful lives of the assets, whichever is shorter.

Maintenance and repairs are expensed and renewals and betterments are capitalized.  When assets are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited or charged to “Operating, general and administrative expenses.”

(k)  Goodwill and Intangible Assets

Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests when indicators of impairment are identified.

To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its stock value.  Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company.  Estimated future cash flows are based on the Company’s internal projection model.  The stock value evaluation consists of measuring the average market capitalization of the Company against its total asset value of its sole reporting unit. 

The Company’s intangible assets and related accumulated amortization at December 26, 2015 and December 27, 2014 consisted of the following:

			December 26, 2015						December 27, 2014
			Accumulated						Accumulated
(dollars in thousands)		Gross	Amortization			Net		Gross	Amortization			Net
Lease Acquisitions		3,654		2,604		1,050		3,654		2,418		1,236
Liquor Licenses		5,965		-		5,965		3,358		-		3,358
Customer Lists		162		15		147		120		10		110
Total	$	9,781	$	2,619	$	7,162	$	7,132	$	2,428	$	4,704

Intangible assets with a definite useful life are generally amortized on a straight-line basis over periods up to 30 years.  Estimated amortization expense for the next five fiscal years is approximately $191,000 in 2016,  $191,000 in 2017,  $191,000 in 2018,  $191,000 in 2019 and $188,000 in 2020.  As of December 26, 2015, the Company’s intangible assets with indefinite lives consisted of goodwill and Pennsylvanialiquor licenses.

28

WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(l)  Impairment of Long-Lived Assets

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives.  The Company completes an impairment test annually.  The Company also reviews its property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.  Recoverability is measured by a comparison of the carrying amount to the net undiscounted cash flows expected to be generated by the asset.  An impairment loss would be recorded for the excess of net book value over the fair value of the asset impaired.  The fair value is estimated based on expected discounted future cash flows.

With respect to owned property and equipment associated with closed stores, the value of the property and equipment is adjusted to reflect recoverable values based on the Company’s prior history of disposing of similar assets and current economic conditions.

In accordance with Accounting Standards Codification No. 360, Property, Plant and Equipment, the Company recorded a pre-tax charge of $2.1 million in the third quarter of 2013 for the impairment of long-lived assets, including equipment and leasehold improvements. The charge was a result of management determining that the net book value of four properties was impaired. This charge was included as a component of "Operating, general and administrative expenses."

The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results.  The Company believes that, based on current conditions, materially different reported results are not likely to result from long-lived asset impairments.  However, a change in assumptions or market conditions could result in a change in estimated future cash flows and the likelihood of materially different reported results.

(m)  Store Closing Costs

The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs associated with the store closing commitments.  Currently, closed stores have remaining lease terms ranging from one to three years, and the liabilities associated with these closed store leases are paid over the terms of the lease.  Closed store lease liabilities totaled $212,000 and $955,000 as of December 26, 2015 and December 27, 2014, respectively.  The Company estimates the lease liabilities, net of estimated sublease income, using the undiscounted rent payments of closed stores.  Other exit costs include estimated real estate taxes, common area maintenance, insurance and utility costs to be incurred after the store closes over the remaining lease term.  Store closings are generally completed within one year after the decision to close.  Adjustments to closed store liabilities and other exit costs primarily relate to changes in sublease income and actual exit costs differing from original estimates.  Adjustments are made for changes in estimates in the period in which the changes become known.  Any excess store closing liability remaining upon settlement of the obligation is reversed to income in the period that such settlement is determined.  Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs, or that no longer is needed for its originally intended purpose, is adjusted to income in the proper period.Inventory write-downs, if any, in connection with store closings are classified in cost of sales.  Costs to transfer inventory and equipment from closed stores are expensed as incurred.

The following table summarizes accrual activity for future lease obligations of stores that were closed in the normal course of business:

		Future Lease
(dollars in thousands)		Obligations
Balance at December 28, 2013	$	1,193
Additions		119
Payments		(375)
Adjustments		18
Balance at December 27, 2014		955
Additions		0
Payments		(578)
Adjustments		(165)
Balance at December 26, 2015	$	212

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WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(n)  Self-Insurance

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims.  The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported.  The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.  The Company was liable for associate health claims up to an annual maximum of $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member as of and after March 1, 2014.  As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible.  The Company is liable for workers' compensation claims up to $2,000,000 per claim.  Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $1,000,000.  Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

(o)  Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in our Consolidated Financial Statements.  Refer to Note 8 to the Consolidated Financial Statementsfor the amount of unrecognized tax benefits and other disclosures related to uncertain tax positions.  To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such amounts are accrued and classified as a component of income tax expense. 

(p)  Earnings Per Share

Earnings per share are based on the weighted-average number of common shares outstanding. 

(q)  Revenue Recognition

Revenue from the sale of products to the Company’s customers is recognized at the point of sale.  Discounts provided to customers at the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.  Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts.  The Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer data tracking software.  Sales are reduced by these estimates over the life of the program.  Discounts to customers at the point of sale provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are redeemable at any retailer that accepts those discounts.  The Company records “Deferred revenue” for the sale of gift cards and revenue is recognized in “Net sales” at the time of customer redemption for products.  Gift card breakage income is recognized in “Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote.  Sales tax is excluded from “Net sales.”  The Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.  Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.

(r)  Cost of Sales, Including Warehousing and Distribution Expenses

“Cost of sales, including warehousing and distribution expenses” consists of direct product costs (net of discounts and allowances), distribution center and transportation costs, as well as manufacturing facility operations.

(s)  Vendor Allowances

Vendor allowances related to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as they are earned, in accordance with the underlying agreement.  Off-invoice and bill-back allowances are used to reduce direct product costs upon the receipt of goods.  Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized when the related inventory is sold.  Volume incentive discounts are realized as a reduction of cost of sales at the time it is deemed probable and reasonably estimable that the incentive target will be reached.  Long-term contract incentives, which require an exclusive vendor relationship, are allocated over the life of the contract.  Promotional allowance funds for specific vendor-sponsored programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement.  Cash discounts for prompt payment of invoices are realized in cost of sales as invoices are paid.  Warehouse and back-haul allowances provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.  Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially set up in the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is complete.  Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses also recorded in cost of sales. 

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WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(s)  Vendor Allowances (continued)

Vendor allowances recorded as credits in cost of sales totaled $97.0 million in 2015,  $89.5 million in 2014 and$76.4 million in 2013.  Vendor paid cooperative advertising credits totaled $17.1 million in 2015,  $16.0 million in 2014 and$16.0 million in 2013.  These credits were netted against advertising costs within “Operating, general and administrative expenses.”  The Company had accounts receivable due from vendors of $842,000 and $395,000for earned advertising credits and $8.1 million and $5.7 million for earned promotional discounts as of December 26, 2015 and December 27, 2014, respectively.  The Company had $823,000 and $734,000 in unearned income included in accrued liabilities for unearned vendor programs under long-term contracts for display and shelf space allocation as of December 26, 2015 and December 27, 2014, respectively.

(t)  Operating, General and Administrative Expenses

Business operating costs including expenses generated from administration and purchasing functions, are recorded in “Operating, general and administrative expenses” in the Consolidated Statements of Income.  Business operating costs include items such as wages, benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, depreciation, leasehold amortization and costs for outside provided services.

(u)  Advertising Costs

The Company expenses advertising costs as incurred.  The Company recorded advertising expense, before vendor paid cooperative advertising credits, of $23.1 million in 2015,  $24.6 million in 2014 and$23.5 million in 2013in “Operating, general and administrative expenses.”

(v)  Rental Income

The Company leases or subleases space to tenants in owned, vacated and open store facilities.  Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”  All leases are operating leases, as disclosed in Note 5.

(w) Basis of Presentation

In conjunction with the September 26, 2015 quarterly financial statement close process, and while researching alternative methods to calculate retained claim liability for the Company’s self-insured workers compensation and general liability insurance programs, the Company discovered errors in the application of the actuarial methods used to estimate the obligation of future payments resulting from claims due to past events.  These errors primarily related to the Company’s selection of loss development factors and the application of such factors to the population of claims.  The impact of these prior period misstatements to the Company’s Consolidated Financial Statements resulted in the understatement of workers compensation and general liability expense with a corresponding understatement of self-insurance liabilities over multiple fiscal periods through June 27, 2015. Consequently, the Company has restated certain prior period amounts to correct these errors.

Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99 and 108, the Company concluded that these errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s quarterly and annual financial statements that have been previously filed in the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. As a result, amendment of such reports was not required.   In preparing the Company’s Consolidated Financial Statements for the thirteen and thirty-nine weeks ended September 26, 2015 and for each of the three years in the period ended December 26, 2015, the Company made appropriate revisions to its financial statements for historical periods. Such changes were reflected in the financial results for the thirteen and thirty-nine weeks ended September 26, 2015 and are also reflected in the historical financial results included in these Consolidated Financial Statements.  

The effect of these errors decreased net income by $786,000, or $0.03 per share, for the year ended December 27, 2014 and increased net income by $1.5 million, or $0.05 per share, for the year ended December 28, 2013.  These errors also increased total liabilities by $13.1 million at December 27, 2014 and reduced retained earnings by $13.7 million at December 29, 2012.  Additional information about these corrections, including a reconciliation of each financial statement line item affected, has been included in Note 7 to the Company’s Consolidated Financial Statements contained in its Quarterly Report on Form 10-Q for the period ended September 26, 2015.

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WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(x)  Current Relevant Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”)  issued Accounting Standards Update ("ASU") 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  ASU 2014-08 amends guidance on reporting discontinued operations only if the disposal of a component of an entity or group of components of an entity represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. It also allows companies to have significant continuing involvement and continuing cash flows with the discontinued operations. Additional disclosures are also required for discontinued operations and individually material disposal transactions that do not meet the definition of a discontinued operation.  The standard should be applied prospectively for all disposals of components of an entity and for all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014, including interim periods within that reporting period.  Adoption of the ASU did not have an impact on the Company’s 2015 Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606),which amended the existing accounting standards for revenue recognition.  ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.  The standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  In August 2015, the FASB issued a one-year deferral of the effective date of this new guidance resulting in it now being effective for the Company beginning in fiscal year 2018.  Early adoption is not permitted.  The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application.  The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic 718): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures.  The new requirements are effective for the annual periods ending after December 15, 2016, and for interim periods and annual periods thereafter.  Early adoption is permitted.  Adoption of the new ASU will not have an impact on the Company’s Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330):  Simplifying the Measurement of Inventory.  ASU 2015-11 amends guidance on the measurement of inventory from lower of cost or market to net realizable value.  The amendment applies to all inventory other than those measured by Last-In-First-Out (LIFO) and the Retail Inventory Method (RIM).  The amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period.  Early adoption is permitted.  Adoption of the new ASU will not have a material impact on the Company’s Consolidated Financial Statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.  ASU 2015-16 requires that any effect on earnings due to depreciation, amortization or other income effects, due to a change to the provisional amounts be recorded in the current period’s financial statements as if the accounting had been completed at the acquisition date.  The portion of the amount recorded in the current-period earnings, which would have been recorded in the previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date, must be presented separately on the face of the income statement or disclosed in the notes to the financial statements by line item.  The amendment is effective for the fiscal year beginning after December 15, 2015. The amendments are to be applied prospectively to any adjustments occurring after the effective date. Adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.  ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The Company adopted ASU 2015-17 for the fiscal year ended December 26, 2015 and applied it retrospectively.The Company reclassified $5.8 million out of “Total current liabilities” related to “Deferred income taxes” in the December 27, 2014 Consolidated Balance Sheet and into noncurrent “Deferred income taxes.”

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WEIS MARKETS, INC.

Note 1   Summary of Significant Accounting Policies (continued)

(x)  Current Relevant Accounting Standards (continued)

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842).  ASU 2016-02 requires lessees to recognize assets and liabilities for the rights and obligations created by their leases with lease terms more than 12 months.  Current guidance only requires capital leases to be recognized on the balance sheet.  However, the ASU 2016-02 now requires that both capital and operating leases be recognized on the balance sheet.  The effect on cash flows will strictly depend on whether the lease is classified as an operating lease or capital lease.  The ASU 2016-02 will require disclosures to aid investors and other financial statement users to better understand the amount, timing and uncertainty of the cash flows arising from leases.  These disclosures are to include qualitative and quantitative information about the amounts recorded in the financial statements.  This update remains unchanged for lessors. However, new guidance contains targeted improvements to align, where necessary, the lessor’s accounting with the lessee’s accounting standards.  ASU 2016-02 will become effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.  

Note 2  Investments

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets.  FASB has established three levels of inputs that may be used to measure fair value:

Level 1  Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2  Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3  Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available.  The Company’s bond portfolio is valued using Level 2 inputs.  The Company’s bonds are valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm(s), which include various third party pricing services.  These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.  In addition, the Company engages an independent firm to value a sample of the Company’s municipal bond holdings annually in order to validate the investment’s assigned fair value.

The Company accrues interest on its bond portfolio throughout the life of each bond held.  Dividends from the equity securities are recognized as received.  Both interest and dividends are recognized in “Investment income” on the Company’s Consolidated Statements of Income.

Marketable securities, as of December 26, 2015 and December 27, 2014, consisted of:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 26, 2015	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,682	$	-	$	7,880
Level 2
Municipal bonds		82,347		1,468		(66)		83,749
	$	83,545	$	8,150	$	(66)	$	91,629

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 27, 2014	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,683	$	-	$	7,881
Level 2
Municipal bonds		64,561		1,613		(96)		66,078
	$	65,759	$	8,296	$	(96)	$	73,959

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WEIS MARKETS, INC.

Note 2  Investments (continued)

Maturities of marketable securities classified as available-for-sale at December 26, 2015, were as follows:

		Amortized		Fair
(dollars in thousands)		Cost		Value
Available-for-sale:
Due within one year	$	9,775	$	9,839
Due after one year through five years		52,426		53,285
Due after five years through ten years		20,146		20,625
Equity securities		1,198		7,880
	$	83,545	$	91,629

The Company also maintains a non-qualified supplemental executive retirement plan and a non-qualified pharmacist deferred compensation plan for certain of its associates which allows them to defer income to future periods.  Participants in the plans earn a return on their deferrals based on mutual fund investments.  The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans.  Such investments are reported on the balance sheet as SERP investments, are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in investment income.  The changes in the underlying liability to the employee are recorded in operating expenses.

Note 3  Inventories

Merchandise inventories, as of December 26, 2015 and December 27, 2014, were valued as follows:

(dollars in thousands)		2015		2014
LIFO	$	181,321	$	193,621
Average cost		48,078		46,020
	$	229,399	$	239,641

Management believes the use of the LIFO method for valuing certain inventories represents the most appropriate matching of costs and revenues in the Company’s circumstances.  If all inventories were valued on the average cost method, which approximates current cost, total inventories would have been $81,347,000 and $79,933,000 higher than as reported on the above methods as of December 26, 2015 and December 27, 2014, respectively. During 2015, the Company had certain decrements in its LIFO pools, which had an insignificant impact on the cost of sales.

Note 4  Property and Equipment

Property and equipment, as of December 26, 2015 and December 27, 2014, consisted of:

	Useful Life
(dollars in thousands)	(in years)		2015		2014
Land		$	106,125	$	103,240
Buildings and improvements	10-60		586,903		544,309
Equipment	3-12		949,975		911,169
Leasehold improvements	5-20		190,249		193,842
Total, at cost			1,833,252		1,752,560
Less accumulated depreciation and amortization			1,094,267		1,035,700
		$	738,985	$	716,860

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WEIS MARKETS, INC.

Note 5  Lease Commitments 

At December 26, 2015, the Company leased approximately 50% of its open store facilities under operating leases that expire at various dates through 2029.  These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus contingent rentals as a percentage of annual sales and a number of leases require the Company to pay for all or a portion of insurance, real estate taxes, water and sewer rentals, and repairs, the cost of which is charged to the related expense category rather than being accounted for as rent expense.  Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years.  Rents on operating leases, including agreements with step rents, are charged to expense on a straight-line basis over the minimum lease term.  Additionally, the Company has operating leases for certain transportation and other equipment.

Rent expense and income on all leases consisted of:

(dollars in thousands)		2015		2014		2013
Minimum annual rentals	$	34,794	$	35,183	$	32,817
Contingent rentals		452		409		386
Lease or sublease income		(7,069)		(6,881)		(6,452)
	$	28,177	$	28,711	$	26,751

The following is a schedule by years of future minimum rental payments required under operating leases and total minimum sublease and lease rental income to be received that have initial or remaining non-cancelable lease terms in excess of one year as of December 26, 2015.

(dollars in thousands)		Leases		Subleases
2016	$	32,237	$	(3,151)
2017		30,492		(3,148)
2018		28,413		(2,486)
2019		23,214		(1,604)
2020		17,096		(1,355)
Thereafter		62,410		(6,500)
	$	193,862	$	(18,244)

The Company has $32,000 accrued as of December 26, 2015 and had $455,000 accrued as of December 27, 2014, for future minimum rental payments due on previously closed stores, reduced by the estimated sublease income to be received.  The future minimum rental payments required under operating leases and estimated sublease income for these locations are included in the above schedule.

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WEIS MARKETS, INC.

Note 6  Retirement Plans

The Company has a retirement savings plan, the Weis Markets, Inc. Retirement Savings Plan, covering substantially all full-time associates.  The plan has a contributory component as well as a noncontributory profit-sharing component for certain associates. The noncontributory component covers eligible associates which included certain salaried associates, store management and administrative support personnel.  The Company also has three non-qualified supplemental retirement plans covering highly compensated employees of the Company.  The Company’s policy is to fund retirement plan costs as accrued, with the exception of the deferred compensation plan.  Employer contributions to the qualified retirement plans are made at the sole discretion of the Company.

Retirement plan costs:

(dollars in thousands)		2015		2014		2013
Retirement savings plan		3,161		3,010		3,465
Deferred compensation plan		(318)		1,328		126
Supplemental executive retirement plan		484		1,061		2,025
Deferred compensation plan for pharmacists		(165)		(228)		178
	$	3,162	$	5,171	$	5,794

The Company maintains a non-qualified deferred compensation plan for the payment of specific amounts of annual retirement benefits to certain officers or their beneficiaries over an actuarially computed normal life expectancy.  Currently, there are no active officers in the plan.  The expected payments under the plan provisions were determined through actuarial calculations dependent on the age of the recipient, using an assumed discount rate.  The plan is unfunded and accounted for on an accrual basis.  The recorded liability at December 26, 2015 is $7,264,000, which is based on expected payments to be made over the remaining lives of the beneficiaries.  This amount is included in “Accrued expenses” and “Postretirement benefit obligations” in the Consolidated Balance Sheets.  The expected payment amounts are approximately $1,975,000 for each of 2016 and 2017, and approximately $1,013,000 for the years thereafter dependent on the lives of the beneficiaries.

The Company also maintains a non-qualified supplemental executive retirement plan and a non-qualified pharmacist deferred compensation plan for certain of its associates.  These plans are designed to provide retirement benefits and salary deferral opportunities because of limitations imposed by the Internal Revenue Code and the Regulations implemented by the Internal Revenue Service.  These plans are unfunded and accounted for on an accrual basis.  Participants in these plans are excluded from participation in the profit sharing portion of the Weis Markets, Inc. Retirement Savings Plan once their yearly earnings exceed the IRS highly compensated threshold.  The Board of Directors annually determines the amount of the allocation to the plans at its sole discretion.  The allocation among the various plan participants is made in both flat dollar amounts and in relationship to their compensation.  Plan participants are 100% vested in their accounts after six years of service with the Company.  Benefits are distributed among participants upon reaching the applicable retirement age.  Substantial risk of benefit forfeiture does exist for participants in these plans.  The present value of accumulated benefits amounted to $9,079,000 and $9,646,000 at December 26, 2015 and December 27, 2014, respectively, and is included in “Postretirement benefit obligations” in the Consolidated Balance Sheets. 

The Company has no other postretirement benefit plans.

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WEIS MARKETS, INC.

Note 7  Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable securities.  The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.

		Unrealized Gains
		on Available-for-Sale
(dollars in thousands)		Marketable Securities
Accumulated other comprehensive income balance as of December 28, 2013	$	3,939
Other comprehensive income before reclassifications		927
Amounts reclassified from accumulated other comprehensive income		(37)
Net current period other comprehensive income		890
Accumulated other comprehensive income balance as of December 27, 2014	$	4,829
Other comprehensive loss before reclassifications		(52)
Amounts reclassified from accumulated other comprehensive income		(16)
Net current period other comprehensive loss		(68)
Accumulated other comprehensive income balance as of December 26, 2015	$	4,761

The following table sets forth the effects on net income of the amounts reclassified out of accumulated other comprehensive income for the periods ended December 26, 2015, December 27, 2014 and December 28, 2013.

		Gains Reclassified from
		Accumulated Other Comprehensive Income to the
		Consolidated Statements of Income
(dollars in thousands)	Location		2015		2014		2013
Unrealized gains on available-for-sale marketable securities
	Investment income	$	27	$	63	$	1,774
	Provision for income taxes		(11)		(26)		(730)
Total amount reclassified, net of tax		$	16	$	37	$	1,044

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WEIS MARKETS, INC.

Note 8  Income Taxes

The provision (benefit) for income taxes consists of:

(dollars in thousands)		2015		2014		2013
Current:
Federal	$	29,888	$	24,809	$	26,994
State		3,325		1,237		6,774
Deferred:
Federal		(188)		2,559		8,973
State		(24)		676		2,429
	$	33,001	$	29,281	$	45,170

The reconciliation of income taxes computed at the federal statutory rate (35% in 2015, 2014 and 2013) to the provision for income taxes is:

(dollars in thousands)		2015		2014		2013
Income taxes at federal statutory rate	$	32,316	$	29,282	$	41,425
State income taxes, net of federal income tax benefit		1,112		1,436		5,981
Other		(427)		(1,437)		(2,236)
Provision for income taxes (effective tax rate 35.7%, 35.0% and 38.2%, respectively)	$	33,001	$	29,281	$	45,170

Cash paid for federal income taxes was $28.0 million,  $25.0 million and  $26.4 million in 2015, 2014 and 2013 respectively.Cash paid for state income taxes was $2.2 million, $1.8 million and $3.5 million in 2015, 2014 and 2013 respectively.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 26, 2015 and December 27, 2014, are:

(dollars in thousands)		2015		2014
Deferred tax assets:
Accounts receivable	$	813	$	615
Compensated absences		983		362
Long term employment incentives		3,143		1,161
Employee benefit plans		10,485		10,734
General liability insurance		4,048		3,655
Postretirement benefit obligations		5,906		7,676
Net operating loss carryforwards		5,926		6,218
Other		2,173		1,359
Total deferred tax assets		33,477		31,780
Deferred tax liabilities:
Inventories		(6,808)		(7,459)
Unrealized gains on marketable securities		(3,323)		(3,371)
Nondeductible accruals and other		(9,240)		(6,522)
Depreciation		(111,126)		(111,708)
Total deferred tax liabilities		(130,497)		(129,060)
Net deferred tax liability	$	(97,020)	$	(97,280)

The Company adopted ASU 2015-17 for the fiscal year ended December 26, 2015 and applied it retrospectively. The Company reclassified $5.8 million out of “Total current liabilities” related to “Deferred income taxes” in the December 27, 2014 Consolidated Balance Sheet and into noncurrent “Deferred income taxes.”

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WEIS MARKETS, INC.

Note 8  Income Taxes (continued)

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

(dollars in thousands)		2015		2014
Unrecognized tax benefits at beginning of year	$	-	$	-
Increases based on tax positions related to the current year		1,264		-
Additions for tax positions of prior year		-		-
Reductions for tax positions of prior years		-		-
Settlements		-		-
Expiration of the statute of limitations for assessment of taxes		-		-
Unrecognized tax benefits at end of year	$	1,264	$	-

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1,264,000 in 2015 and $0 in 2014.

The Company’s U.S. Federal income tax filings have been examined by the Internal Revenue Service through 2008.  The Company or one of its subsidiaries files tax returns in various states.  The tax years subject to examination in Pennsylvania, where the majority of the Company's revenues are generated, are 2011 to 2015. 

The Company has net operating loss carryforwards of $88.5 million available for state income tax purposes.  The net operating losses will begin to expire starting in 2027.  The Company expects to fully utilize these net operating loss carryforwards.

Note 9  Acquisition of Business

Fiscal 2015 Acquisitions

The Company paid $7.9 million for the property and equipment related to the purchase of a store in Hanover, Pennsylvania on August 31, 2015 from C&S Wholesale Grocers to expand current market share.  The purchase price was allocated between land, building and equipment of $1.9 million, $5.9 million and $112,000, respectively, in accordance with our accounting policies for business combinations.  No Goodwill was recognized.

Fiscal 2014 Acquisitions

There were no acquisitions for fiscal 2014.

Fiscal 2013 Acquisitions

There were no acquisitions for fiscal 2013.

39

WEIS MARKETS, INC.

Note 10  Summary of Quarterly Results (Unaudited)

Quarterly financial data for 2015 and 2014 are as follows:

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 28, 2015		June 27, 2015		September 26, 2015		December 26, 2015
Net sales	$	712,426	$	718,380	$	711,879	$	734,063
Gross profit on sales		195,115		198,919		194,147		198,551
Net income		13,323		16,644		12,788		16,575
Basic and diluted earnings per share		.50		.62		.48		.61

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 29, 2014		June 28, 2014		September 27, 2014		December 27, 2014
Net sales	$	687,127	$	691,875	$	683,893	$	713,788
Gross profit on sales		186,768		187,724		185,677		192,793
Net income		14,570		12,602		13,511		13,698
Basic and diluted earnings per share		.54		.47		.50		.51

Note 11  Fair Value Information

The carrying amounts for cash, accounts receivable and accounts payable approximate fair value because of the short maturities of these instruments.  The fair values of the Company’s marketable securities, as disclosed in Note 2, are based on quoted market prices and institutional pricing guidelines for those securities not classified as Level 1 securities. The Company’s SERP investments are classified as trading securities and are carried at fair value using Level 1 inputs.

Note 12  Commitments and Contingencies

The Company is involved in various legal actions arising out of the normal course of business.  The Company also accrues for tax contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated, based on experience.  In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

At December 26, 2015, the Company had a $30 million line of credit, of which $16.9 million was committed to outstanding letters of credit.  The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.  The Company does not anticipate drawing on any of them.  The Company has a $50 million short-term credit facility agreement to fund future financing activities.

40

WEIS MARKETS, INC.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Weis Markets, Inc.

We have audited the accompanying consolidated balance sheets of Weis Markets, Inc. as of December 26, 2015 and December 27, 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the 52 week periods ended December 26, 2015 and December 27, 2014. Our audits also included the financial statement schedule for each of the 52 week periods ended December 26, 2015 and December 27, 2014 at Item 15(c)(3). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Weis Markets, Inc. at December 26, 2015 and December 27, 2014, and the consolidated results of its operations and its cash flows for each of the 52 week periods ended December 26, 2015 and December 27, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule for each of the 52 week periods ended December 26, 2015 and December 27, 2014, when considered in relation to the basic Consolidated Financial Statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Weis Markets, Inc.’s internal control over financial reporting as of December 26, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework), and our report dated March 18, 2016, expressed an unqualified opinion thereon.

/S/Ernst & Young LLP

Philadelphia, Pennsylvania
March 18, 2016

41

WEIS MARKETS, INC.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders of

Weis Markets, Inc.

We have audited Weis Markets Inc.’s internal control over financial reporting as of December 26, 2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework)  (the COSO criteria). Weis Markets, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.  

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Weis Markets, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 26, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Weis Markets, Inc. as of December 26, 2015 and December 27, 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the 52 week periods ended December 26, 2015 and December 27, 2014 of Weis Markets, Inc. and our report dated March 18, 2016 expressed an unqualified opinion thereon.

/S/Ernst & Young LLP

Philadelphia, Pennsylvania
March 18, 2016

42

WEIS MARKETS, INC.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Weis Markets, Inc.

We have audited the accompanying consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the year ended December  28, 2013. Our audit of the basic Consolidated Financial Statements included the financial statement schedule listed in the index appearing under Item 15(c)(3).  These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the results of operations and cash flows of Weis Markets, Inc. for the period ended December 28, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the related financial statement schedule, when considered in relation to the basic Consolidated Financial Statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/S/Grant Thornton LLP

Philadelphia, Pennsylvania
March 18, 2016

43

WEIS MARKETS, INC.

Item 9.Changes in and Disagreementswith Accountants on Accounting and Financial Disclosure:

None.

Item 9a.Controls and Procedures:

Management’s Report on Disclosure Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of the close of the period covered by this Report, that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act).  Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (1992 framework). The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Based on the Company’s evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 26, 2015.

A s previously disclosed in Item 4 of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2015, management concluded that there was a material weakness in internal controls over the preparation and review of our self-insurance reserve calculations and that our internal controls over financial reporting were not designed to prevent or detect a material error as of September 26, 2015.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.  The material weakness resulted in an understatement of those reserves in our previously issued financial statements. The impact of those errors was corrected and presented in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2015.   Subsequent to the quarter ended September 26, 2015, the Company engaged a casualty actuarial services company to perform an actuarial analysis to assist in the determination of the appropriate reserve balances.  The Company also implemented management review controls over the completeness, accuracy and reasonableness of the actuary’s estimate of the reserve balance.  Based upon the remedial actions taken and our testing and evaluation of the design and operating effectiveness of these internal controls, we have concluded the material weakness in internal control over financial reporting related to the preparation and review of our self-insurance reserves calculations was remediated as of December 26, 2015. 

44

WEIS MARKETS, INC.

Item 9a.  Controls and Procedures: (continued)

Management's Report on Internal Control Over Financial Reporting (continued)

Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their attestation report on the Company’s internal control over financial reporting as of December 26, 2015. The report can be found in Item 8 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

Except as noted in the preceding paragraphs, there were no changes in the Company’s internal control over financial reporting during the fiscal year ended December 26, 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  

Item 9b.Other Information:

There was no information required on Form 8-K during this quarter that was not reported.

PART III

Item 10.Directors, Executive Officers and Corporate Governance:

In addition to the information reported in Part I of this Form 10-K under the caption “Executive Officers of the Registrant,” “Election of Directors,” “Board Committees and Meeting Attendance, Audit Committee,” “Corporate Governance Matters,” “Compensation Tables” and “Stock Ownership, Section 16(a) Beneficial Ownership Reporting Compliance” of the Weis Markets, Inc. definitive proxy statement dated March 10, 2016 are incorporated herein by reference.

Item 11.Executive Compensation:

“Board Committees and Meeting Attendance, Compensation Committee,” “Executive Compensation, Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Tables” and “Other Information Concerning the Board of Directors, Compensation Committee Interlocks and Insider Participation” of the Weis Markets, Inc. definitive proxy statement dated March 10, 2016 are incorporated herein by reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters:

“Stock Ownership” of the Weis Markets, Inc. definitive proxy statement dated March 10, 2016 is incorporated herein by reference. 

Item 13.Certain Relationships and Related Transactions, and Director Independence:

“Other Information Concerning the Board of Directors, Review and Approval of Related Party Transactions” and “Independence of Directors” of the Weis Markets, Inc. definitive proxy statement dated March 10, 2016 are incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services:

“Ratification Of Appointment Of Independent Registered Public Accounting Firm” of the Weis Markets, Inc. definitive proxy statement dated March 10, 2016 is incorporated herein by reference.

45

WEIS MARKETS, INC.

PART IV

Item 15.Exhibits, Financial Statement Schedules:

(a)(1)The Company’s 2015Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are included in Item 8 of Part II.

Financial Statements	Page
Consolidated Balance Sheets	22
Consolidated Statements of Income	23
Consolidated Statements of Comprehensive Income	24
Consolidated Statements of Shareholders’ Equity	25
Consolidated Statements of Cash Flows	26
Notes to Consolidated Financial Statements	27
Report of Independent Registered Public Accounting Firm	41

(a)(2)  Financial statement schedules required to be filed by Item 8 of this form, and by Item 15(c)(3) below:

Schedule II - Valuation and Qualifying Accounts, page 48 of this Annual Report on Form 10-K

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

46

WEIS MARKETS, INC.

Item 15.Exhibits, Financial Statement Schedules: (continued)

(a)(3)  A listing of exhibits filed or incorporated by reference is as follows:

Exhibit No.	Exhibits
3-A	Articles of Incorporation, filed as exhibit 4.1 in Form S-8 on September 13, 2002 and incorporated herein by reference.
3-B	By-Laws, filed as exhibit under Part IV, Item 14(c) in the Annual Report on Form 10-K for the fiscal year ended December 29, 2001 and incorporated herein by reference.
10-A	Retirement Savings Plan, amended January1, 2015 and filed with this Annual Report on Form 10-K.
10-B	Supplemental Executive Retirement Plan, filed as exhibit under Part IV, Item 15(a)(3) in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and incorporated herein by reference.  *
10-C	Deferred Compensation Plan for Pharmacists, filed as exhibit under Part IV, Item 15(a)(3) in the Annual Report on Form 10-K for the fiscal year ended December 26, 2009 and incorporated herein by reference.
10-D	Executive Benefits Agreement between the Company and Robert F. Weis, Chairman of the Board, signed on March 24, 2006, commencing immediately and continuing thereafter through December 31, 2023, filed on Form 8-K March 24, 2006 and incorporated herein by reference.  *
10-E	Deferred Compensation Agreement between the Company and Mr. Robert F. Weis, filed as exhibit under Part IV, Item 15(a)(3) in the Annual Report on Form 10-K for the fiscal year ended December 26, 2009 and incorporated herein by reference.  *
10-F	Executive Employment Agreement between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive Officer, signed on July 14, 2014, with retroactive effect to January 1, 2014 and continuing thereafter through December 31, 2016, filed as Exhibit 10.1 to Form 8-K July18, 2014 and incorporated herein by reference.  *
10-G	Executive Employment Agreement between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive Officer, signed on November 3, 2011, with retroactive effect to July 1, 2011 and continuing thereafter through December 31, 2016, filed as Exhibit 10.1 to Form 8-K November 8, 2011 and incorporated herein by reference.  *
10-H	Chief Executive Office Incentive Award Plan between the Company and Jonathan H. Weis, Chairman, President and Chief Executive Officer, effective July 1, 2011, amended and restated effective as of January 1, 2014 and continuing thereafter through December 31, 2016, filed as Exhibit 10.2 to Form 8-K July 18, 2014 and incorporated herein by reference. *
10-I	Vice Chairman Incentive Award Plan between the Company and Jonathan H. Weis, Vice Chairman, President and Chief Executive Officer, signed on November 3, 2011, with retroactive effect to July 1, 2011 and continuing thereafter through December 31, 2016, filed as Exhibit 10.2 to Form 8-K November 8, 2011 and incorporated herein by reference.  *
10-J	Confidential Separation Agreement and General Release between the Company and David J. Hepfinger, Former President and Chief Executive Officer, signed on September 21, 2013, filed as Exhibit 10.1 to Form 10-Q November 7, 2013 and incorporated herein by reference.  *
10-K	Executive Employment Agreement between the Company and David J. Hepfinger, Former President and Chief Executive Officer, signed on March 8, 2013, with retroactive effect to March 1, 2013 and continuing thereafter through February 28, 2018, filed as Exhibit 10.1 to Form 8-K March 13, 2013 and incorporated herein by reference.  *
10-L	Executive Employment Agreement between the Company and David J. Hepfinger, Former President and Chief Executive Officer, signed on October 26, 2010, with retroactive effect to March 1, 2010 and continuing thereafter through February 28, 2013, filed as Exhibit 10.1 to Form 8-K November 1, 2010 and incorporated herein by reference.  *
10-M	CEO Incentive Award Plan between the Company and David J. Hepfinger, Former President and Chief Executive Officer, signed on October 26, 2010, with retroactive effect to January 1, 2010 and continuing thereafter through December 31, 2014, filed as Exhibit 10.2 to Form 8-K November 1, 2010 and incorporated herein by reference.  *
21	Subsidiaries of the Registrant, filed with this Annual Report on Form 10-K
31.1	Rule 13a-14(a) Certification - CEO, filed with this Annual Report on Form 10-K
31.2	Rule 13a-14(a) Certification - CFO, filed with this Annual Report on Form 10-K
32	Certification Pursuant to 18 U.S.C. Section 1350, filed with this Annual Report on Form 10-K

*  Management contract or compensatory plan arrangement.

The Company will provide a copy of any exhibit upon receipt of a written request for the particular exhibit or exhibits desired.  All requests should be addressed to the Company’s principal executive offices.

(b)  The Company files as exhibits to this Annual Report on Form 10-K, those exhibits listed in Item 15(a)(3) above.

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WEIS MARKETS, INC.

Item 15(c)(3).Financial Statement Schedules:

Schedule II - Valuation and Qualifying Accounts:

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

WEIS MARKETS, INC.

(dollars in thousands)

Col. A	Col. B		Col. C				Col. D		Col. E
			Additions
	Balance at		Charged to		Charged to				Balance at
	Beginning		Costs and		Accounts		Deductions		End of
Description	of Period		Expenses		Describe		Describe (1)		Period
Fiscal Year ended December 26, 2015:
Deducted from asset accounts:
Allowance for uncollectible accounts	$	1,578	$	1,438	$	---	$	1,049	$	1,967
Fiscal Year ended December 27, 2014:
Deducted from asset accounts:
Allowance for uncollectible accounts	$	1,882	$	577	$	---	$	881	$	1,578
Fiscal Year ended December 28, 2013:
Deducted from asset accounts:
Allowance for uncollectible accounts	$	1,526	$	1,320	$	---	$	964	$	1,882

(1) Deductions are uncollectible accounts written off, net of recoveries.

48

WEIS MARKETS, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WEIS MARKETS, INC.
	(Registrant)
Date  03/18/2016	/S/Jonathan H. Weis
	Jonathan H. Weis
	Chairman,
	President and Chief Executive Officer
	and Director
	(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date  03/18/2016	S/Jonathan H. Weis
	Jonathan H. Weis
	Chairman,
	President and Chief Executive Officer
	and Director (principal executive officer)
Date  03/18/2016	/S/Scott F. Frost
	Scott F. Frost
	Senior Vice President, Chief Financial Officer
	and Treasurer
	(principal financial officer)
Date  03/18/2016	/S/Harold G. Graber
	Harold G. Graber
	Senior Vice President of Real Estate and Development and Secretary
	and Director
Date  03/18/2016	/S/Dennis G. Hatchell
	Dennis G. Hatchell
	Director
Date  03/18/2016	/S/Edward J. Lauth III
	Edward J. Lauth III
	Director
Date  03/18/2016	/S/Gerrald B. Silverman
	Gerrald B. Silverman
	Director
Date  03/18/2016	/S/Jeanette R. Rogers
	Jeanette R. Rogers
	Corporate Controller
	(principal accounting officer)

49

EX-10.A 2 wmk10k2015ex10-a.htm WEIS MARKETS, INC. 2015 ANNUAL REPORT ON FORM 10-K EXHIBIT 10-A

Weis Markets, Inc. Retirement Savings Plan

Originally Effective
July 1, 1994

As Amended And Restated Effective
January 1, 2015

821ec53f-24ed-48b4-a673-1058649831fc.DOCX

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Weis Markets, Inc. Retirement Savings Plan

TABLE OF CONTENTS

PREAMBLE.................................................................................................................................................................................................1

ARTICLE I – DEFINITIONS....................................................................................................................................................................2

Section 1.1 – References2

Section 1.2 – Compensation2

Section 1.3 – Dates3

Section 1.4 – Employee4

Section 1.5 – Employer5

Section 1.6 – Fiduciaries5

Section 1.7 – Participant/Beneficiary/Spouse/Dependent5

Section 1.8 – Participant Accounts6

Section 1.9 – Plan6

Section 1.10 – Service6

Section 1.11 – Trust8

ARTICLE II – PARTICIPATION............................................................................................................................................................8

Section 2.1 – Eligibility Service8

Section 2.2 – Plan Participation9

Section 2.3 – Termination of Participation10

Section 2.4 – Re-Participation or Re-Employment (Break in Service Rules)10

ARTICLE III – ALLOCATIONS TO PARTICIPANT ACCOUNTS................................................................................................11

Section 3.1 – General Provisions11

Section 3.2 – Profit Sharing Contributions12

Section 3.3 – Qualified Nonelective Contributions12

Section 3.4 – Employee 401(k) Elective Deferral Contributions13

Section 3.4A – Roth Elective Deferral Contributions14

Section 3.5 – Employee Nondeductible Contributions15

Section 3.6 – Employer Matching Contributions15

Section 3.7 – Rollover/Transfer Contributions16

Section 3.8 – Allocation of Investment Results17

ARTICLE IV – PAYMENT OF PARTICIPANT ACCOUNTS..........................................................................................................18

Section 4.1 – Vesting Service Rules18

Section 4.2 – Vesting of Participant Accounts19

Section 4.3 – Payment of Participant Accounts22

Section 4.4 – In-Service Payments25

Section 4.5 – Distributions Under Domestic Relations Orders26

ARTICLE V – ADDITIONAL QUALIFICATION RULES................................................................................................................27

Section 5.1 – Limitations on Allocations Under Code Section 41527

Section 5.2 – Joint and Survivor Annuity Requirements30

Section 5.3 – Distribution Requirements31

Section 5.4 – Top-Heavy Provisions35

Section 5.5 – Limitations and Conditions Regarding Contributions Under Code Sections 402(g), 401(k), and 401(m)38

ARTICLE VI – ADMINISTRATION OF THE PLAN........................................................................................................................50

Section 6.1 – Fiduciary Responsibility50

Section 6.2 – Plan Administrator50

Section 6.3 – Claims Procedure52

316_W969:

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Weis Markets, Inc. Retirement Savings Plan

Section 6.4 – Trust Fund53

ARTICLE VII – AMENDMENT AND TERMINATION OF PLAN.................................................................................................54

Section 7.1 – Right to Discontinue and Amend54

Section 7.2 – Amendments54

Section 7.3 – Protection of Benefits in Case of Plan Merger55

Section 7.4 – Termination of Plan55

ARTICLE VIII – MISCELLANEOUS PROVISIONS........................................................................................................................55

Section 8.1 – Exclusive Benefit – Non-Reversion55

Section 8.2 – Inalienability of Benefits56

Section 8.3 – Employer-Employee Relationship56

Section 8.4 – Binding Agreement56

Section 8.5 – Separability56

Section 8.6 – Construction56

Section 8.7 – Copies of Plan56

Section 8.8 – Interpretation56

This plan document has been created from the volume submitter plan document developed and sponsored by Conrad Siegel Actuaries and is the subject of an approval letter issued by the Internal Revenue Service.  For further information regarding the drafter's intended meaning of plan provisions or the effect of the approval letter contact Conrad Siegel Actuaries by letter (P.O. Box 5900, Harrisburg, Pennsylvania 17110-0900) or telephone (717-652-5633).  You may also contact us through our website at conradsiegel.com.

316_W969:

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Weis Markets, Inc. Retirement Savings Plan

PREAMBLE

This amended and restated plan, executed on the date indicated at the end hereof, is made effective as of January 1, 2015, except as provided otherwise in Section 1.3(c), by Weis Markets, Inc., a corporation, with its principal office located in Sunbury,  Pennsylvania.

W I T N E S S E T H :

WHEREAS, effective July 1, 1994, the employer established the plan for its employees and desires to continue to maintain a permanent qualified plan in order to provide its employees and their beneficiaries with financial security in the event of retirement, disability, or death; and

WHEREAS, it is desired to amend said plan;

NOW THEREFORE, the premises considered, the original plan is hereby replaced by this amended and restated plan, and the following are the provisions of the qualified plan of the employer as restated herein; provided, however, that each employee who was previously a participant shall remain a participant, and no employee who was a participant in the plan before the date of amendment shall receive a benefit under this amended plan that is less than the benefit he was then entitled to receive under the plan as of the day prior to the amendment.

316_W969:Copyright © 2012 byConrad Siegel Actuaries1

Weis Markets, Inc. Retirement Savings Plan

ARTICLE I – DEFINITIONS

Section 1.1 – References

(a)Code means the Internal Revenue Code of 1986, as it may be amended from time to time.

(b)ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Section 1.2 – Compensation

(a)Compensation means, except as provided in Section 1.2(b) hereof, any earnings reportable as W‑2 wages for federal income tax withholding purposes and earned income, plus elective contributions, for the determination period.  For this purpose, the determination period is the plan year.  Such earnings shall include any amount contributed to a Roth elective deferral account under this or any other qualified plan.  However, compensation shall not include any earnings reportable as W‑2 wages that are payable following the termination of employment pursuant to a severance agreement.

Elective contributions are amounts excludable from the employee’s gross income and contributed by the employer, at the employee’s election to:

· A cafeteria plan (excludable under Code section 125 and as provided in Section 5.1(c)(2));

· A Code section 401(k) arrangement (excludable under Code section 402(e)(3));

· A simplified employee pension (excludable under Code section 402(h));

· A simple retirement account (excludable under Code section 402(k));

· A tax sheltered annuity (excludable under Code section 403(b));

· A deferred compensation plan excludable under Code section 457(b); or

· A Code section 132(f)(4) qualified transportation fringe benefit plan.

"Earned Income" means net earnings from self-employment in the trade or business with respect to which the employer has established the plan, provided that personal services of the individual are a material income producing factor.  Net earnings shall be determined without regard to items excluded from gross income and the deductions allocable to those items.  Net earnings shall be determined after the deduction allowed to the self-employed individual for all contributions made by the employer to a qualified plan and, for plan years beginning after December 31, 1989, the deduction allowed to the self-employed under Code section 164(f) for self-employment taxes.

Any reference in this plan to compensation shall be a reference to the definition in this Section 1.2, unless the plan reference specifies a modification to this definition.  The plan administrator shall take into account only compensation actually paid by the employer for the relevant period.  A compensation payment includes compensation by the employer through another person under the common paymaster provisions in Code sections 3121 and 3306.  Compensation from an employer that is not a participating employer under this plan shall be excluded.

(b)Exclusions From Compensation – Notwithstanding the provisions of Section 1.2(a), the following types of remuneration shall be excluded from the participant’s compensation:

· Bonuses

· Meal allowances

· Auto Personal Use

· Sick Pay

(c)Limitations on Compensation – The plan administrator shall take into account only $200,000 (as adjusted for cost-of-living increases in accordance with Code section 401(a)(17)(B) for plan years beginning on or after January 1, 2003) of any participant's annual compensation for determining all benefits provided under the plan.  Contributions and allocations made before January 1, 2002 were made subject to the limitations of Code section 401(a)(17) as then in effect and described in prior statements of the plan document.  The compensation dollar limitation for a plan year shall be the limitation amount in effect on January 1 of the calendar year in which the plan year begins.  Annual compensation means

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compensation during the plan year or such other 12-consecutive-month period over which compensation is otherwise determined under the plan (the determination period for purposes of Section 1.2).  If the plan should determine compensation on a period of time that contains less than 12 calendar months (such as for a short plan year), the annual compensation dollar limitation shall be an amount equal to the compensation dollar limitation for the plan year multiplied by the ratio obtained by dividing the number of full months in the period by 12.

(d)Compensation for Nondiscrimination Testing – For purposes of determining whether the plan discriminates in favor of highly compensated employees, compensation means compensation as defined in this Section 1.2, except that the employer will not give effect to any exclusion from compensation specified in Section 1.2(b).

For this purpose, compensation shall include compensation paid by the employer as defined under Section 1.5(b). 

Notwithstanding the above, the employer may amend this plan to exclude from this nondiscrimination definition of compensation any items of compensation excludable under Code section 414(s) and the applicable Treasury regulations, provided such adjusted definition conforms to the nondiscrimination requirements of those regulations.

(e)Compensation for Compliance with Section 5.5 – For purposes of conducting the actual deferral percentage test or the actual contribution percentage test, compensation means compensation as defined in Section 1.2(a) for the entire determination period.

Section 1.3 – Dates

(a)Accounting Date means the date(s) on which investment results are allocated to participants’ accounts as set forth below:

· With respect to investment funds for which there is a daily market value, the investment results shall be allocated on a daily basis.  For this purpose, daily means as of each business day on which the New York Stock Exchange is open.  The accounting date for dividends that accrue on a daily basis but are paid monthly shall be the dividend distribution date.  The last day of each quarter shall be an investment allocation date for all other investments.

(b)Allocation Date means the date(s) as of which any contribution is allocated to participants' accounts.

The profit sharing contribution and forfeitures shall be allocated as of December 31.  The allocation period for the profit sharing contribution shall be the plan year.

Employer matching contributions shall be allocated as of the last day of each payroll period.  The allocation period applicable to a particular employer matching contribution allocation date shall be the period commencing as of the day following the immediately previous allocation date and ending on the particular allocation date.

Qualified nonelective contributions shall be allocated as of December 31.  The allocation period for the qualified nonelective contribution shall be the plan year.

Employee contributions (whether elective deferrals or nondeductible) shall be allocated as of the last day of each payroll period.

(c)The Effective Date of the plan is July 1, 1994.

The effective date of this amendment and restatement is January 1, 2015; provided, however, that the plan provisions required to comply with the Pension Protection Act of 2006 shall generally be effective as of the first day of the first plan year beginning after December 31, 2006, except as otherwise specified in said Act or in this plan (with respect to provisions not required for qualification compliance); the plan provisions required to comply with the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) shall generally be effective as of the first day of the first plan year beginning on or after January 1, 2007; the plan provisions required to comply with the final regulations issued under Code section 415 shall generally be effective as of the first day of the first limitation years beginning on or after July 1, 2007; the plan provisions required to comply with the Workers Retirees and Employers Relief Act of 2008 shall be effective as of January 1, 2009; and the plan provisions required to comply with the Cumulative Lists as published by the Internal Revenue Service with respect to the years 2004 through 2010 shall generally be

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effective as of the first day of the plan year with respect to which the List was published, except as specified otherwise in this plan or in said Acts.

Notwithstanding anything herein to the contrary, the provisions noted below shall become effective on the date indicated.  The prior provisions of the plan shall continue in effect until such indicated effective date.

ProvisionEffective Date

Section 3.4(A) - Roth Elective Deferral ContributionsApril 1, 2016

Section 4.4 - In-Service PaymentsJanuary 1, 2016

(d)Plan Entry Date means the participation date(s) specified in Article II.

(e)Plan Year means the 12-consecutive-month period beginning on January 1 and ending on December 31.

(f)Limitation Year means the 12-consecutive-month period beginning on January 1 and ending on December 31.

Section 1.4 – Employee

(a) (1)Employee means any person employed by the employer, including an owner-employee or other self-employed individual (as defined in Section 1.4(a)(3)).  The term employee shall include any employee of the employer as defined in Section 1.5(b).  The term employee shall also include any leased employee deemed to be an employee of any such employer as provided in Code section 414(n) or (o) and as defined in Section 1.4(a)(2).

(2)Leased Employee means an individual (who otherwise is not an employee of the employer) who, pursuant to a leasing agreement between the employer and any other person, has performed services for the employer (or for the employer and any persons related to the employer within the meaning of Code section 414(n)(6)) on a substantially full time basis for at least one year and such services are performed under the primary direction or control of the employer.  If a leased employee is treated as an employee by reason of this Section 1.4(a)(2), compensation from the leasing organization that is attributable to services performed for the employer shall be considered as compensation under the plan.  Contributions or benefits provided a leased employee by the leasing organization that are attributable to services performed for the employer shall be treated as provided by the employer.

Safe harbor plan exception – The plan shall not treat a leased employee as an employee if the leasing organization covers the employee in a safe harbor plan and, prior to application of this safe harbor plan exception, 20% or less of the employer's nonhighly compensated employees are leased employees.  A safe harbor plan is a money purchase pension plan providing immediate participation, full and immediate vesting, and a nonintegrated contribution formula equal to at least 10% of the employee's compensation without regard to employment by the leasing organization on a specified date.  The safe harbor plan must determine the 10% contribution on the basis of compensation as defined in Section 5.1(c)(2).

(3)Owner-Employee/Self-Employed Individual – Owner-employee means a self-employed individual who is a sole proprietor (if the employer is a sole proprietorship) or who is a partner (if the employer is a partnership) owning more than 10% of either the capital or profits interest of the partnership.  Self-employed individual means an individual who has earned income for the taxable year from the trade or business for which the plan is established, or who would have had earned income but for the fact that the trade or business had no net profits for the taxable year.

(b)Highly Compensated Employee means any employee who:

(1)was a more than 5% owner of the employer (applying the constructive ownership rules of Code section 318, and applying the principles of Code section 318, for an unincorporated entity) at any time during the current plan year or the look-back year; or

(2)for the look-back year –

(A)had compensation from the employer (as defined under Section 1.5(b)) in excess of $80,000 (as adjusted at the same time and in the same manner as under Code section 415(d), except that the base period shall be the calendar quarter ending September 30, 1996), and

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(B)if the employer elects the application of this Subparagraph for such look-back year, was in the top-paid group of employees for such look-back year.  For this purpose, an employee is in the top-paid group of employees for any look-back year if such employee is in the group consisting of the top 20% of the employees when ranked on the basis of compensation paid during such look-back year.

The look-back year is the twelve-month period immediately preceding the current plan year.  The term highly compensated employee also includes any former employee who separated from service (or has a deemed separation from service, as determined under Treasury regulations) prior to the plan year, performs no service for the employer during the plan year, and was a highly compensated employee either for the separation plan year or any plan year ending on or after his 55th birthday, based on the applicable rules in effect for such plan year.

For purposes of determining who is a highly compensated employee under this Section 1.4(b), compensation means compensation as defined in Section 1.2(a) without regard to Section 1.2(b).  The plan administrator shall make the determination of who is a highly compensated employee.

This Section 1.4(b) is effective for plan years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, this provision shall be treated as having been in effect for the last plan year beginning before January 1, 1997.

(c)Nonhighly Compensated Employee means any employee who is not a highly compensated employee.

Section 1.5 – Employer

(a)Employer means Weis Markets, Inc.or any successor entity by merger, purchase, consolidation, or otherwise; or an organization affiliated with the employer that may assume the obligations of this plan with respect to its employees by becoming a party to this plan.  Another employer, whether or not it is affiliated with the sponsor employer, may adopt this plan to cover its employees by filing with the sponsor employer a written resolution adopting the plan, upon which the sponsor employer shall indicate its acceptance of such employer as an employer under the plan, if such participation is acceptable.  Each such employer shall be deemed to be the employer only as to persons who are on its payroll.

(b)Employer for Compliance Testing – For purposes of determining whether the plan satisfies the participation coverage requirements of Code section 410(b) and the limitations on benefits and allocations under Code section 415, employer shall mean the employer that adopts this plan as set forth in Section 1.5(a), and all members of a controlled group of corporations (as defined in Code section 414(b)), all commonly controlled trades or businesses (as defined in Code section 414(c)) or affiliated service groups (as defined in Code section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to regulations under Code section 414(o).

(c)Exclusive Benefit – In compliance with the exclusive benefit requirements of Code section 401(a), the sponsorship of this plan may not be transferred to an unrelated entity if the transfer is not in connection with a transfer of business assets or operations from the employer to such entity.

Section 1.6 – Fiduciaries

(a)Named Fiduciary means the person or persons having fiduciary responsibility for the management and control of plan assets.

(b)Plan administrator means the person or persons appointed by the named fiduciary to administer the plan.

(c)Trustee means the trustee named in the trust agreement executed pursuant to this plan, or any duly appointed successor trustee.

(d)Investment Manager means a person or corporation other than the trustee appointed for the investment of plan assets.

Section 1.7 – Participant/Beneficiary/Spouse/Dependent

(a)Participant means an eligible employee of the employer who becomes a member of the plan pursuant to the provisions of Article II, or a former employee who has an accrued benefit under the plan.  A participant shall be treated as benefiting under the plan for any plan year during which the participant received or is deemed to receive an allocation in accordance with Regulation section 1.410(b)-3(a).

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(b)Beneficiary means a person designated by a participant who is or may become entitled to a benefit under the plan.  A beneficiary who becomes entitled to a benefit under the plan remains a beneficiary under the plan until the trustee has fully distributed his benefit to him.  A beneficiary's right to (and the plan administrator's, or a trustee's duty to provide to the beneficiary) information or data concerning the plan shall not arise until he first becomes entitled to receive a benefit under the plan.

(c)Spouse means the person of the opposite sex married to the participant at the time of the determination and as further defined by section 3 of the Defense of Marriage Act, 1 U.S.C. § 7 (1996).

(d)Dependent means a dependent as defined by Code section 152 without regard to section 152(d)(1)(B).

Section 1.8 – Participant Accounts

(a)Profit Sharing Account means the balance of the separate account derived from the employer’s profit sharing contributions, including forfeitures (if any) (if so provided under Section 3.2).

(b)Qualified Nonelective Contribution Account means the balance of the separate account derived from the employer's qualified nonelective contributions (if so provided under Section 3.3).

(c)Employee 401(k) Elective Deferral Account means the balance of the separate account derived from the participant's 401(k) elective deferrals (if so provided under Section 3.4).

(d)Roth Elective Deferral Account means the balance of the separate account derived from the participant's Roth elective deferrals (if so provided under Section 3.4A).

(e)Employee Nondeductible Contribution Account means the balance of the separate account derived from the participant’s nondeductible employee contributions (if so provided under Section 3.5).

(f)Employer Matching Contribution Account means the balance of the separate account derived from the employer's matching contributions (if so provided under Section 3.6).

(g)Qualified Employer Matching Contribution Account means the balance of the separate account derived from the employer's qualified matching contributions (if so provided under Section 3.6).

(h)Rollover/Transfer Account means the balance of the separate account derived from rollover contributions and/or transfer contributions (if so provided under Section 3.7).

(i)Accrued Benefit means the total of the participant’s account balances as of the accounting date falling on or before the day on which the accrued benefit is being determined.

Section 1.9 – Plan

Plan means Weis Markets, Inc. Retirement Savings Plan as set forth herein and as it may be amended from time to time.

Section 1.10 – Service

(a)Service means any period of time the employee is in the employ of the employer, including any period the employee is on an unpaid leave of absence authorized by the employer under a uniform, nondiscriminatory policy applicable to all employees.  Separation from service means that the employee no longer has an employment relationship with the employer.

(b)(1)Hour of Service means:

(A)Each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer.  These hours shall be credited to the employee for the computation period in which the duties are performed; and

(B)Each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.  No more than 501 hours of service shall be credited under this Subparagraph (B) for any single continuous period (whether or not such period occurs in a single computation period).  An hour of service shall not be credited to an employee under this Subparagraph (B) if the employee is paid, or entitled to payment, under a plan maintained solely for the purpose of complying with applicable worker's compensation or unemployment compensation or disability insurance laws.  Hours under this Subparagraph (B)

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shall be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations that is incorporated herein by this reference; and

(C)Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the employer.  The same hours of service shall not be credited both under Subparagraph (A) or Subparagraph (B), as the case may be, and under this Subparagraph (C).  These hours shall be credited to the employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made.

Hours of service shall be determined on the basis of actual hours for which an employee is paid or entitled to payment.  The above provisions shall be construed so as to resolve any ambiguities in favor of crediting employees with hours of service.

If, for the purposes of the plan, an employee's records are maintained on other than an hourly basis, the plan administrator, according to uniform rules applicable to a class of employees, may apply the following equivalencies for the purpose of crediting hours of service:

Basis Upon Which Records Are Maintained	Credit Granted to Individual if Individual Earns One or More Hours of Service During Period
Shift	Actual hours of full shift
Day	10 hours of service
Week	45 hours of service
Semi-Monthly Payroll Period	95 hours of service
Months of Employment	190 hours of service

(2)Solely for purposes of determining whether a break in service for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the hours of service that would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence.  For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (A) by reason of the pregnancy of the individual, (B) by reason of a birth of a child of the individual, (C) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (D) for purposes of caring for such child for a period beginning immediately following such birth or placement.  The hours of service credited under this paragraph shall be credited:  (A) in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period, or (B) in all other cases, in the following computation period.  No more than 501 hours of service shall be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period).

(3)Solely for purposes of determining whether a break in service for participation and vesting purposes has occurred in a computation period, an individual who is absent from work on unpaid leave under the Family and Medical Leave Act shall receive credit for the hours of service that would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence.  Such an individual shall be treated as actively employed for the purposes of participation and eligibility for an allocation of any employer contribution that may be provided under this plan.  Notwithstanding the preceding, this paragraph shall not apply if the employer or the particular employee is not subject to the requirements of the Family and Medical Leave Act at the time of the absence.

(4)Hours of service shall be credited for employment with the employer as defined in Section 1.5(b).  Hours of service shall also be credited for any leased employee who is considered an employee for purposes of this plan under Code section 414(n) or Code section 414(o).

(c)(1)Year of Service means a 12-consecutive-month computation period during which the employee completes the required number of hours of service with the employer as specified in Sections 2.1 or 4.1.  No more than one year of service will be credited for any 12-consecutive-month period unless otherwise required by Sections 2.1(c) and 4.1(c).

(2)Service With Related Employers – For purposes of crediting years of service, hours of service credited in accordance with Section 1.10(b)(4) shall be taken into account.

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(3)Predecessor Service – If the employer maintains the plan of a predecessor employer, service with such predecessor employer shall be treated as service for the employer.  If the employer does not maintain the plan of a predecessor employer, then service as an employee of a predecessor employer shall not be considered as service under the plan, except as noted below:

· Effective November 18, 1994, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Kings Markets, Strasburg store (Store No. 159) shall be considered as service under the plan solely for the purpose of determining eligibility years of service (under Section 2.1).

· Effective August 24, 2009, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Binghamton Giant Markets, Inc. shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective January 11, 2010, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Vestal, New York Medicine Shoppe shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective June 11, 2012, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Genuardi's Safeway shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective August 31, 2015, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Hanover, PA Nell's Shur-Fine Market shall be considered as service under the plan solely for the purpose of determining eligibility years of service (under Section 2.1).

(d)Break in Service (or One Year Break in Service) means a 12-consecutive-month computation period during which a participant or former participant does not complete the specified number of hours of service with the employer as set forth in Sections 2.1(b) and 4.1(b).

(e)Qualified Military Service – Notwithstanding any provision of this plan to the contrary, effective December 12, 1994, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code section 414(u).  An employee reemployed after qualified military service shall not be treated as having incurred a break in service, for purposes of vesting and benefit accruals, solely because of an absence due to qualified military service.

Effective with respect to deaths occurring on or after January 1, 2007, in the case of a participant who dies while performing qualified military service, the beneficiary(ies) of the participant shall be entitled to any additional benefits payable under Section 4.2(a)(5) (other than contributions relating to the period of qualified military service) that would have been payable had the participant resumed and then immediately terminated employment on account of death.

Section 1.11 – Trust

(a)Trust means the qualified trust created under the employer’s plan.

(b)Trust Fund means all property held or acquired by the plan.

ARTICLE II – PARTICIPATION

Section 2.1 – Eligibility Service

(a)Eligibility Year of Service means an eligibility computation period during which the employee completes at least 1,000 hours of service with the employer.

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(b)One Year Break in Service means for the purposes of this Article II an eligibility computation period during which the participant or former participant does not complete more than 500 hours of service with the employer.

(c)Eligibility Computation Period – The initial eligibility computation period shall be the 12-consecutive-month period beginning with the day on which the employee first performs an hour of service for the employer (employment commencement date).

Succeeding eligibility computation periods shall coincide with the plan year, beginning with the first plan year that commences prior to the first anniversary of the employee's employment commencement date regardless of whether the employee is credited with the required number of hours of service during the initial eligibility computation period.  An employee who is credited with the required number of hours of service in both the initial eligibility computation period and the first plan year that commences prior to the first anniversary of the employee's employment commencement date shall be credited with two years of service for purposes of eligibility to participate.

Section 2.2 – Plan Participation

(a)Eligibility

(1)Eligibility for Employer Profit Sharing Contributions

(A)Age/Service Requirements – An employee who is a member of the eligible class of employees shall be eligible for participation for the purpose of the employer profit sharing provision after he has satisfied the following participation requirement(s):

· Completion of 1 year of service.

· Attainment of age 21.

(B)Eligible Class of Employees – All employees of the employer except those described below shall be eligible for purposes of receiving a profit sharing allocation if employed in the following categories:  Salaried Employee, Level I Department Manager, Foreman, Corporate Lead Person, Corporate Department Assistant, Corporate Administrative Assistant, Corporate Reorder Buyer, or Corporate Architectural Draftsperson.

· Individuals not directly employed by the employer as defined in Section 1.5(a) shall not be eligible to receive a profit sharing contribution.  An employee of the employer as that term is defined in Section 1.5(b) with respect to the sponsoring employer shall not be eligible to receive a profit sharing allocation unless such employee's direct employer affirmatively elects to become a participating employer hereunder.

· Employees who became employees as the result of a “Code section 410(b)(6)(C) transaction.”  These employees shall be excluded during the period beginning on the date of the transaction and ending on the last day of the first plan year beginning after the date of the transaction.  A “Code section 410(b)(6)(C) transaction” is an asset or stock acquisition, merger, or similar transaction involving a change in the employer of the employees of a trade or business.

· Employees included in a unit of employees covered by a collective bargaining agreement between the employer and employee representatives shall not be eligible to receive a profit sharing allocation if retirement benefits were the subject of good faith bargaining and if less than 2% of the employees of the employer who are covered pursuant to that agreement are professionals as defined in Regulation section 1.410(b)-9(g).  For this purpose, the term "employee representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the employer.

· Leased employees who are considered employees under the plan shall not be eligible to receive a profit sharing allocation.

· Employees who are non-resident aliens (as defined in Code section 7701(b)(1)(B)) and who receive no earned income (as defined in Code section 911(d)(2)) from the employer that constitutes income from sources within the United States (as defined in Code section 861(a)(3)) shall not be eligible to receive a profit sharing allocation.

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· Highly compensated employees as defined in Section 1.4(b) shall not be eligible to receive a profit sharing allocation.

· Former employees of Hanover, PA Nell's Shur-Fine Market shall not be eligible to receive a profit sharing allocation prior to January 1, 2016.

Notwithstanding the above eligible class of employees, the eligible class provisions of the plan
before January 1, 2009 shall continue to apply to participants who received profit sharing
allocations before January 1, 2009, and to employees who otherwise would have become participants in the Plan by December 31, 2009.

(2)Eligibility for All Other Purposes

(A)Age/Service Requirements – An employee who is a member of the eligible class of employees shall be eligible for participation for all purposes under the plan after he has satisfied the following participation requirement(s):

(i)Completion of 1 year of service.

(ii)Attainment of age 21.

(B)Eligible class of employees – All employees of the employer shall be eligible for the purposes of this Section 2.2(a)(2) except for employees in the following categories:

· Individuals not directly employed by the employer as defined in Section 1.5(a).  An employee of the employer as that term is defined in Section 1.5(b) with respect to the sponsoring employer shall not participate in this plan unless such employee's direct employer affirmatively elects to become a participating employer hereunder.

· Employees who became employees as the result of a "Code section 410(b)(6)(C) transaction."  These employees shall be excluded during the period beginning on the date of the transaction and ending on the last day of the first plan year beginning after the date of the transaction.  A "Code section 410(b)(6)(C) transaction" is an asset or stock acquisition, merger, or similar transaction involving a change in the employer of the employees of a trade or business.

· Employees included in a unit of employees covered by a collective bargaining agreement between the employer and employee representatives if retirement benefits were the subject of good faith bargaining and if 2% or less of the employees of the employer who are covered pursuant to that agreement are professionals as defined in Regulation section 1.410(b)‑9.  For this purpose, the term "employee representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the employer.

· Leased employees who are considered employees under the plan.

· Employees who are non-resident aliens (as defined in Code section 7701(b)(1)(B)) and who receive no earned income (as defined in Code section 911(d)(2)) from the employer that constitutes income from sources within the United States (as defined in Code section 861(a)(3)).

(b)Entry Date

(1)Entry Date for Purposes of Employer Profit Sharing Contributions – An eligible employee shall participate in the plan for the purpose of the employer profit sharing contribution provisions on the earlier of the March 31, June 30, September 30, or December 31 coinciding with or immediately following the date on which he has met the age and service requirements, provided he is employed on that date.

(2)Entry Date for All Other Purposes – An eligible employee shall participate in the plan for all purposes on the earlier of the March 31,  June 30,  September 30, or December 31 coinciding with or immediately following the date on which he has met the age and service requirements, provided he is employed on that date.

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(3)If an employee who is not a member of the eligible class of employees becomes a member of the eligible class, such employee shall participate immediately, if he has satisfied the age and service requirements and would have otherwise previously become a participant.

Section 2.3 – Termination of Participation

A participant shall continue to be an active participant of the plan so long as he is a member of the eligible class of employees and he does not terminate employment.  He shall become an inactive participant when he terminates employment or ceases to be a member of the eligible class of employees.  He shall cease participation completely upon the later of his receipt of a total distribution of his nonforfeitable account balance(s) under the plan or the forfeiture of the nonvested portion of the account balance(s).

Section 2.4 – Re-Participation or Re-Employment (Break in Service Rules)

(a)Vested Participant – A former participant who had a nonforfeitable right to all or a portion of his account balance derived from employer contributions at the time of his termination from service shall become a participant immediately upon returning to the employ of the employer, if he is a member of the eligible class of employees.

(b)Nonvested Participant or Employee – In the case of an employee who does not have any nonforfeitable right to his account balance derived from employer contributions at the time of his termination from service, years of service before a period of consecutive one-year breaks in service shall not be taken into account in computing eligibility service if the number of consecutive one-year breaks in service in such period equals or exceeds the greater of 5 or the aggregate number of years of service before such breaks in service.  Such aggregate number of years of service shall not include any years of service disregarded under the preceding sentence by reason of prior breaks in service.

If an employee's years of service before termination from service are disregarded pursuant to the preceding paragraph, he shall be considered a new employee for eligibility purposes.  If such employee's years of service before termination from service may not be disregarded pursuant to the preceding paragraph, he shall participate immediately upon returning to the employ of the employer, if he is a member of the eligible class of employees and has otherwise satisfied the age and service requirements of Section 2.2.

(c)Return to Eligible Class – If a participant becomes an inactive participant, because he is no longer a member of the eligible class of employees, but does not incur a break in service, such inactive participant shall become an active participant immediately upon returning to the eligible class of employees.  If such participant incurs a break in service, eligibility shall be determined under the re-participation rules in Section 2.4(a) and (b) above.

ARTICLE III – ALLOCATIONS TO PARTICIPANT ACCOUNTS

Section 3.1 – General Provisions

(a)Maintenance of Participant Accounts – The plan administrator shall maintain separate accounts covering each participant under the plan as herein described.  Such accounts shall be increased by contributions, reallocation of forfeitures (if any), investment income, and market value appreciation of the fund.  They shall be decreased by market value depreciation of the fund, forfeiture of nonvested amounts, benefit payments, withdrawals, and expenses.

(b)Amount and Payment of Employer Contribution

(1)Amount of Contribution – For each plan year, the employer contribution to the plan shall be the amount that is determined under the provisions of this Article; provided, however, that the employer may not make a contribution to the plan for any plan year to the extent the contribution would exceed the participants' maximum permissible amounts under Code section 415.  Further, the employer contribution shall not exceed the maximum amount deductible under Code section 404, subject to the provisions for a nondeductible contribution without penalty as permitted under Code section 4972(c)(6).  For this purpose, participant elective deferrals shall not be taken into account as provided under Code section 404(n).

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The employer contributes to this plan on the conditions that its contribution is not due to a mistake of fact and that the Internal Revenue Service will not disallow the deduction for its contribution.  The trustee, upon written request from the employer, shall return to the employer the amount of the employer's contribution made due to a mistake of fact or the amount of the employer's contribution disallowed as a deduction under Code section 404.  The trustee shall not return any portion of the employer's contribution under the provisions of this paragraph more than one year after the earlier of:  (A) The date on which the employer made the contribution due to a mistake of fact; or (B) The time of disallowance of the contribution as a deduction, and then, only to the extent of the disallowance.  The trustee will not increase the amount of the employer contribution returnable under this Section for any earnings attributable to the contribution, but the trustee will decrease the employer contribution returnable for any losses attributable to it. The trustee may require the employer to furnish whatever evidence it deems necessary to confirm that the amount the employer has requested be returned is properly returnable under ERISA.

(2)Payment of Contribution – The employer shall make its contribution to the plan in cash within the time prescribed by the Code or applicable Treasury regulations.  Subject to the consent of the trustee, the employer may make its contribution in property rather than in cash, provided the contribution is discretionary and the property contributed is unencumbered.

(3)Allocation if More Than One Employer – If the employer consists of a sponsoring employer and one or more participating employers, the contribution made by each such entity shall be allocated to the accounts of the participants directly employed by the contributing employer.  If a participant is employed by more than one entity during the applicable period, each entity shall contribute with respect to the compensation earned by the participant while employed by that entity.

(c)Limitations and Conditions – Notwithstanding the allocation procedures set forth in this Article, the allocations otherwise contributable to participants' accounts under this plan shall be limited or reduced as provided in Section 5.1.

Section 3.2 – Profit SharingContributions

(a)Amount of Contribution – The employer shall determine, in its sole discretion, the amount of employer profit sharing contribution to be made under this Section 3.2(a) each year; provided, however, that the employer shall contribute such amount as may be required for restoration of a forfeited amount under Section 4.2. 

(b)Conditions for Allocations – A participant shall be eligible for an allocation of the employer profit sharing contribution and forfeitures as of an allocation date, provided that he satisfies the following conditions:

(1)He completed at least 1,000 hours of service during the current plan year, except that the hours of service requirement shall not apply with respect to any minimum top-heavy allocation as provided in Section 5.4.

AND

(2)He is employed by the employer on the last day of the plan year.

AND

(3)He is not a Highly Compensated Employee.

AND

(4)He is employed in one of the eligible job categories listed in Section 2.2(a)(1)(B) on the last day of the plan year.

In the event a minimum top-heavy allocation is required to be made as a profit sharing contribution under the provisions of Section 3.2(c)(2), solely for this limited purpose active participant shall include any person participating under the provision of Section 2.2(b)(1) and not yet eligible to participate in the plan for all purposes under Section 2.2(b)(2).

(c)(1)Allocation Formula

The employer shall make a separate profit sharing contribution for the plan year with respect to each allocation formula as described below.  The trustee shall be notified by the employer in writing as to

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the amount being contributed with respect to each formula.  Forfeitures for the plan year shall be allocated under allocation formula (B) below.  For this purpose, the following allocation formulas shall be used:

(A) The employer profit sharing contribution shall be allocated to the profit sharing account of each eligible participant in equal amounts, but not in excess of the maximum permissible amount as defined in Section 5.1(c).

(B) The employer profit sharing contribution and forfeitures for the plan year shall be allocated to the profit sharing account of each eligible participant in the ratio that such participant's compensation bears to the compensation of all participants. 

(2)Top-Heavy Plan Years

In any plan year in which this plan is top-heavy (as defined in Section 5.4(d)(2)), the top-heavy minimum benefit requirement with respect to a participant shall first be met by any allocation to the qualified nonelective contribution account for the plan year.  Then, the contributions and forfeitures allocable to the profit sharing account shall be adjusted as necessary for compliance.  The total of the contributions and forfeitures allocated to such account(s) of each participant shall not be less than an amount equal to 3% of his compensation or the largest percentage of elective deferral contribution, employer contribution, and forfeiture allocated on behalf of any key employee for that year, whichever is less.

(3)Compensation – For purposes of the allocation of the employer profit sharing contribution, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)) for the entire plan year.

Compensation includable under Section 1.2(a) and (b) but not paid through payroll shall be treated as being paid as of the last day of the plan year or the last day of employment, if earlier.

However, for purposes of the top-heavy contribution, compensation means compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

Section 3.3 – Qualified Nonelective Contributions

To the extent the current year testing method is being used to satisfy the requirements described in Section 5.5(b) and (c), the employer may make qualified nonelective contributions on behalf of either the nonhighly compensated active participants or all active participants that are sufficient to satisfy either the actual deferral percentage test or the actual contribution percentage test, or both, pursuant to regulations under the Code in lieu of distributing excess contributions as provided in Section 5.5(b)(2) of the plan, or excess aggregate contributions as provided in Section 5.5(c)(2) of the plan.  The employer may elect to comply with the ADP test requirements by making safe harbor nonelective contributions on behalf of all active participants as described in Section 5.5(f).

Qualified nonelective contributions are contributions (other than profit sharing contributions or employer matching contributions) that are made by the employer and allocated to participants' qualified nonelective contribution accounts that the participants may not elect to receive in cash until distributed from the plan; that are nonforfeitable when made; and that are distributable only in accordance with the distribution provisions that are applicable to elective deferrals and qualified matching contributions.  Safe harbor nonelective contributions shall be allocated to a safe harbor sub-account of the qualified nonelective contribution account and shall be held subject to the same rights and restrictions.

(a)Amount of Contribution

The amount of such contributions for each plan year shall be an amount determined by the employer, in its sole discretion, after the plan administrator has determined the amount needed to satisfy the actual deferral percentage test or the actual contribution percentage test, or both.

(b)Allocation of Contribution

(1)Allocation of the qualified nonelective contribution shall be made to the group of eligible nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees for the plan year determined by identifying the nonhighly compensated employee with the smallest amount of compensation and continuing in ascending order until half of all eligible nonhighly compensated

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employees have been identified, subject to the further requirements of Section 5.5(b)(1)(A)(viii) and Section 5.5(c)(1)(A)(viii).

(2)Top-Heavy Plan Years

The top-heavy minimum benefit requirements shall be met as provided under Section 3.2(c)(2) concerning profit sharing and qualified nonelective contribution allocations.

(3)Compensation – For purposes of the allocation of the qualified nonelective contribution, compensation means compensation as defined in Section 1.2(d) (subject to the limitations of Section 1.2(c)) for the entire plan year, but limited to the employee's compensation for the portion of the plan year in which the employee actually is a member of the eligible class of employees as defined in Section 2.2.  However, for purposes of the top-heavy contribution, compensation means compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

Section 3.4 – Employee 401(k) Elective Deferral Contributions

(a)Amount of Contribution – The employer shall contribute each plan year on behalf of each active participant who elects salary deferral a sum equal to the amount that the participant has elected to defer under a salary reduction arrangement or under a cash or deferred arrangement.  The contribution shall be credited to the participant's employee 401(k) elective deferral account.

A highly compensated employee may not elect a salary reduction in excess of any limitation established by board resolution.  Such limitation shall be communicated to the highly compensated employees a reasonable time in advance of the date as of which it is effective.  The plan administrator may limit the amount of salary reduction or deferred compensation at any time, if he determines that such limitation is necessary to meet the requirements for a "qualified cash or deferred arrangement" under Code section 401(k) and regulations issued pursuant thereto as set forth in Section 5.5.

Effective for plan years beginning prior to 2015, the plan administrator shall calculate the actual deferral percentage for the highly compensated employees using the testing method as provided under the prior statement of the plan document.

Effective for plan years beginning on or after January 1, 2015, the plan administrator shall calculate the actual deferral percentage for the highly compensated employees using the prior year testing method.

(b)Salary Reduction Election

(1)Availability of Election – An active participant may effect a salary reduction agreement with the employer under which an employer contribution will be made to the plan on behalf of such participant only if he elects to reduce his compensation or to forgo an increase in his compensation.  The amount of salary deferral may range from 0% to 50% of compensation.

(2)Election Procedures – A notice of a participant’s salary reduction election shall be given to the employer and to the plan administrator in the manner established by the plan administrator.  The plan administrator shall provide a written notice to all participants of the required procedures for making an election and the date as of which an election will be effective.  An election shall be permitted at least once each plan year and the participants shall be permitted a reasonable time in which to make the election.  However, in no event shall such election be made or be effective before the adoption of the employee 401(k) elective deferral contribution provision under the plan.  A participant electing salary reduction will be deemed to desire to continue at the same rate, unless he notifies the plan administrator of his desire to change the amount of salary reduction.  The revised election shall be effective in accordance with the plan administrator’s published procedures.  A salary reduction may be discontinued at any time upon proper notice in the manner established by the plan administrator.  The plan administrator and employer shall treat a salary reduction election as having been revoked by the participant upon his termination of employment or his ceasing to be a member of the eligible class of participants.

A participant who receives a distribution of elective deferrals on account of hardship shall be prohibited from making elective deferrals and employee nondeductible contributions under this and all other plans of the employer for 6 months after receipt of the distribution.

(3)Compensation – For this purpose, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)), but excluding short term disability benefits not paid through the employer's payroll system, expense reimbursements, and any form of non-cash

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compensation.  The participant’s salary reduction election shall apply only to compensation that becomes currently available to the employee after the effective date of the election.  The employer shall apply the salary reduction election to all of the participant’s compensation (and to increases in compensation), unless the participant’s salary reduction election specifies that the election is to be limited to certain compensation.

(4)Catch-Up Contributions – All employees who are eligible to make elective deferrals under this plan before the close of the plan year and who have attained age 50 or over by the end of their applicable taxable years shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Section 5.5(a)(2).  The employer-imposed limitations on the maximum amount of permissible salary deferral shall not apply.

(c)Cash or Deferred Election

No contribution shall be made under this plan pursuant to a cash or deferred election.  All elective deferrals shall be made under a salary deferral election.

Section 3.4A – Roth Elective Deferral Contributions

(a)Amount of Contribution – Effective April 1, 2016, the employer shall contribute each plan year on behalf of each active participant who elects a Roth elective deferral under Code section 402A a sum equal to the amount that the participant has elected to contribute as a Roth elective deferral pursuant to a salary reduction agreement.  The contribution shall be credited to the participant's Roth elective deferral account.

Any limitations imposed under Section 3.4(a) on the amount of salary reduction that a participant may elect shall be applied to the sum of the elections made under Section 3.4 and this Section 3.4A.

The plan administrator shall calculate the actual deferral percentage for the highly compensated employees as described in Section 3.4(a), taking into account any participant contributions made to the Roth elective deferral account.  Further, the Roth elective deferral account shall be included with the 401(k) elective deferral account for purposes of the actual deferral percentage and actual contribution percentage tests.  Unless specifically stated otherwise, Roth elective deferrals shall be treated as elective deferrals for all purposes under the plan.

(b)Salary Reduction Election

(1)Availability of Election – An active participant who is eligible to make 401(k) elective deferral contributions shall be eligible to designate all or a portion of his elective deferral contributions to be credited to his Roth elective deferral account.  Such designation shall be irrevocable.  The amount of Roth elective deferral together with any salary deferral made under Section 3.4 may range as provided under Section 3.4(b)(1).

(2)Election Procedures – A notice of a participant's Roth deferral election shall be given to the employer and to the plan administrator in the manner as provided for 401(k) salary reduction elections under Section 3.4(b)(2).  The election may be made on the same form as the 401(k) salary reduction election but shall be a separate election.  The plan administrator shall provide a written notice to all participants of the required procedures for making an election and the date as of which an election will be effective.  An election shall be permitted at least once each plan year and the participants shall be permitted a reasonable time in which to make the election.  However, in no event shall such election be made or be effective before the adoption of the Roth elective deferral contribution provision under the plan, except as provided in relief granted by the Commissioner of Internal Revenue.  A participant electing Roth elective deferral account crediting for his salary reduction will be deemed to desire to continue at the same rate, unless he notifies the plan administrator of his desire to change such election.  The revised election shall be effective in accordance with the plan administrator's published procedures.  Roth elective deferral account crediting may be discontinued at any time upon proper notice in the manner established by the plan administrator.  The plan administrator and employer shall treat a salary reduction election as having been revoked by the participant upon his termination of employment or his ceasing to be a member of the eligible class of participants.

As provided in Section 4.4, a participant who receives a hardship distribution shall be prohibited from making Roth elective deferrals under this and all other plans of the employer for 6 months after receipt of the distribution.

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(3)Conditions – The participant's election to have contributions credited to his Roth elective deferral account shall apply only to compensation that becomes currently available to the employee after the effective date of the election.  The employer shall apply such election to the designated portion of the participant's compensation (and to increases in compensation), unless the participant's Roth deferral election specifies that the election is to be limited to certain compensation.

(4)Accounting – Roth elective deferrals shall be credited only to the Roth elective deferral account.  Such contributions shall not be transferred to the 401(k) elective deferral account.  The plan administrator shall maintain an accounting of all participant contributions made thereto and withdrawals therefrom.  Investment results and other credits or charges shall be separately allocated on a reasonable and consistent basis to the Roth elective deferral account and the other accounts under the plan.  However, forfeitures may not be allocated to the Roth elective deferral account.

Section 3.5 – Employee Nondeductible Contributions

Employee nondeductible contributions are not permitted under this plan and no amount shall be credited to the employee nondeductible contribution account.

Section 3.6 – Employer Matching Contributions

Employer matching contributions shall be made under the provisions of this Section.  Such contributions shall be credited to the employer matching contribution account or the qualified employer matching contribution account, as applicable.  With respect to each interim allocation date, the employer shall contribute the amount necessary to fund the employer matching contribution allocation for the interim allocation period based on the eligible deferrals and participant compensation for such period. 

Effective for plan years beginning prior to 2015, the plan administrator shall calculate the actual contribution percentage for the highly compensated employees using the testing method as provided under the prior statement of the plan document.

Effective for plan years beginning on or after January 1, 2015, the plan administrator shall calculate the actual contribution percentage for the highly compensated employees using the prior year testing method.

(a)Qualified Matching Contributions – The employer matching contribution shall not be treated as a qualified matching contribution.  A qualified matching contribution means matching contributions that are subject to the distribution and nonforfeitability requirements under Code section 401(k) when made.  A matching contribution must be a qualified matching contribution under Regulation section 1.401(k)-2(a)(6) in order to be taken into account under the ADP test.

(b)Contributions Subject to Matching – Employer matching contributions shall be made for an eligible participant with respect to the following contributions:

· Any contributions made under a salary reduction agreement pursuant to Section 3.4

· Any Roth elective deferral contributions made pursuant to Section 3.4A

· Any catch-up contributions

(c)Conditions for Allocation – A participant shall be eligible for an allocation of an employer matching contribution as of an allocation date, provided that he satisfies the following conditions:

(1)He made a contribution that is subject to matching during the current plan year.

AND

(2)He completed at least one hour of service during the current allocation period.

AND

(3)Effective for allocations made after March 31, 2004, he is not a highly compensated employee who has held the title of chairman, vice chairman, president, or vice president with respect to the employer as of any day in the plan year on or before the allocation date.

Notwithstanding the preceding requirements, any hours of service or employment requirement shall not apply in any plan year for which the employer elects to comply with the ACP safe harbor in years beginning after December 31, 1998.

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(d)(1)Allocation Formula – The employer matching contribution and any applicable forfeitures shall be equal to the employer matching percentage applied to the participant’s contributions for each allocation period within the current plan year that are subject to matching.

The employer matching percentage shall be determined each year by the employer in its own discretion.

(2)Limitation on Total Matching Allocation – Notwithstanding the preceding allocation formula(s), an allocation shall not be made to an individual participant's account to the extent that when combined with any other employer matching contribution made to the participant's account for the plan year, it would exceed the greatest of:  (i) 5% of his compensation; (ii) his elective deferrals for the plan year; or (iii) the product of 2 times the sum of the plan’s representative matching rate (as defined in Section 5.5(c)(1)(A)(viii)) plus the participant’s elective deferrals for the plan year.  Such an excess allocation shall be reallocated among the remaining eligible participants.

(3)Compensation – For purposes of the allocation of the employer matching contribution, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)) for the allocation period.  Compensation includable under Section 1.2(a) and (b) but not paid through payroll shall be treated as being paid as of the last day of the plan year or the last day of employment, if earlier.

Compensation shall exclude any bonus payable to the participant.  Short term disability benefits not paid through the employer's payroll system, expense reimbursements, and any form of non-cash compensation shall not be taken into account for this purpose.

(e)Forfeitures of Excess Aggregate Contributions

Excess aggregate contributions that are determined under the actual contribution percentage test and that are attributed to employer matching contributions shall be distributed to the extent vested with a proportional amount of the nonvested employer matching contribution being forfeited as of the last day of the plan year in which the excess arose.  Also, any forfeitures required for compliance with Code section 401(a)(4) and Regulation section 1.401(m)-2(b)(3)(v)(B) (because the contribution to which it relates is treated as an excess deferral, excess contribution, or excess aggregate contribution) shall occur as of such date.  The forfeitures shall be treated in the manner described in Section 4.2(c)(2) for the following plan year.

Section 3.7 – Rollover/Transfer Contributions

(a)Rollover Contributions – An active participant may contribute to his rollover/transfer account any amounts that he previously received either as a lump sum distribution (as defined in Code section 402(e)(4)(D)) or within one taxable year as a distribution from another qualified plan on account of termination of that plan provided that:

(1)He transferred such distribution to an individual retirement account or annuity within sixty (60) days after receipt, or

(2)He transferred such distribution to this plan within sixty (60) days after receipt.

Before accepting a rollover contribution, the trustee may require an employee to furnish satisfactory evidence that the proposed transfer is in fact a "rollover contribution" that the Code permits an employee to make to a qualified plan.  Effective for requests received on or after January 1, 2002, the acceptable sources for a rollover contribution shall be as set forth in Section 3.7(b).  Notwithstanding the preceding or the provisions of Section 3.7(b), this plan will not accept a rollover from a Roth elective deferral account.

(b)Transfer Contributions – With the consent of the plan administrator, an active participant may have funds transferred directly to this plan from another qualified plan.  Consent shall not be given if the optional forms of payment to which the funds are subject under the prior plan are not properly disclosed by the prior plan or cannot be accommodated by this plan and trust.

Further, this plan shall not accept any direct or indirect transfers from a defined benefit plan, money purchase plan (including a target benefit plan), stock bonus or profit sharing plan that would otherwise have provided for a life annuity form of payment to the participant.

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Effective for requests received on or after January 1, 2002, with the consent of the plan administrator, the participant may have the following transfers made on his behalf directly to this plan (or may make the following rollover contributions as permitted below):

· A direct rollover of an eligible rollover distribution from a qualified plan described in Code section 401(a) or 403(a), excluding after-tax employee contributions.

· Effective for plan years beginning on or after April 1, 2016, a direct transfer from a Roth elective deferral account under a qualified Code section 401(a) plan shall be permitted, provided the plan administrator is provided with appropriate accounting information to maintain the accounting records required under Section 3.4A(b)(4).

· A direct rollover of an eligible rollover distribution from an annuity contract described in Code section 403(b), excluding after-tax employee contributions.

· Effective on or after April 1, 2016, a direct transfer from a Roth elective deferral account under a qualified Code section 403(b) account shall be permitted, provided the plan administrator is provided with appropriate accounting information to maintain the accounting records required under Section 3.4A(b)(4).

· A direct rollover or a participant contribution of an eligible rollover distribution from an eligible plan under Code section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.

· A participant rollover contribution of the portion of a distribution from an individual retirement account or annuity described in Code section 408(a) or 408(b) (including an account more specifically described under Code section 408(k) or (p)) that is eligible to be rolled over and would otherwise be includable in gross income.

(c)Contributions Before Plan Entry Date – An employee, (who is in the eligible class of employees) prior to satisfying the plan’s eligibility conditions, may make a rollover or transfer contribution to the plan to the same extent and in the same manner as a participant.  If an employee makes a rollover or transfer contribution to the plan before satisfying the plan's eligibility conditions, the plan administrator and trustee will treat the employee as a participant for all purposes of the plan, except the employee is not a participant for purposes of making or sharing in contributions or forfeitures under the plan until he actually becomes a participant in the plan.  If the employee has a separation from service prior to becoming a participant, the trustee will distribute his rollover/transfer account to him.

(d)Distribution – Withdrawals may be made from a rollover/transfer account under the terms and conditions set forth in Section 4.4.

Section 3.8 – Allocation of Investment Results

(a)General Allocation Procedures

Investment income and market value appreciation or depreciation shall be allocated to each account of each participant who has accrued benefits in proportion to the respective account balances on each accounting date.  For this purpose, each account balance shall be equal to the average balance for the period commencing on the day following the prior accounting date and ending on the current accounting date.

(b)Investment Elections

A participant may elect to have all of his accounts invested in such investment fund or combination of investment funds as may be established by the trustee and made available for the benefit of participants; provided, however, that in no event may the participant direct that any portion of his account(s) be invested in collectibles (as defined in Code section 408(m)).  A participant's investment election shall not apply to any portion of any account that may be invested in a participant loan sub-account established under Section 4.4.  The investment results shall be allocated to the participant's account(s) based upon earnings and losses on the participant's share in such investment fund or funds.

The terms and conditions for investment direction shall be established by the plan administrator.  An election may be revoked only by another election and will remain in effect until such revocation.  If a participant fails to make any investment election prior to an allocation to his account(s), the trustee shall invest his account(s) in a qualified default investment alternative selected for the purpose that complies

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with the regulations prescribed by the Secretary of Labor under ERISA section 404(c)(5) until such time as the participant makes an affirmative investment election.

ARTICLE IV – PAYMENT OF PARTICIPANT ACCOUNTS

Section 4.1 – Vesting Service Rules

(a)Vesting Year of Service means a vesting computation period during which the employee completes at least 1,000 hours of service with the employer.  All of an employee's years of service with the employer shall be counted to determine the nonforfeitable percentage in the employee's account balance(s) derived from employer contributions, except:

(1)Years of service disregarded under the break in service rules in Section 4.1(d) below.  (Post-ERISA break in service rules)

(2)Years of service before the effective date of ERISA if such service would have been disregarded under the break in service rules of the prior plan in effect from time to time before such date.  For this purpose, break in service rules are rules that result in the loss of prior vesting or benefit accruals, or that deny an employee eligibility to participate, by reason of separation or failure to complete a required period of service within a specified period of time.  (Pre-ERISA break in service rules)

(b)One Year Break in Service means for the purposes of this Article IV a vesting computation period during which the employee or former employee does not complete more than 500 hours of service with the employer.

(c)Vesting Computation Period means the 12-consecutive-month period coinciding with the plan year.

(d)Break in Service Rules

(1)Vested Participant – A former participant who had a nonforfeitable right to all or a portion of his account balance(s) derived from employer contributions or who (effective for plan years beginning on or after January 1, 2006) had made an employee elective deferral contribution at the time of his termination from service shall retain credit for all vesting years of service prior to a break in service as that term is defined in Section 4.1(b).

(2)Nonvested Participant or Employee – In the case of a former participant or employee who did not have any nonforfeitable right to his account balance(s) derived from employer contributions and who (effective for plan years beginning on or after January 1, 2006) had made no employee elective deferral contribution at the time of his termination from service, years of service before a period of consecutive one-year breaks in service shall not be taken into account in computing service if the number of consecutive one-year breaks in service in such period equals or exceeds the greater of 5 or the aggregate number of years of service before such breaks in service.  Such aggregate number of years of service shall not include any years of service disregarded under the preceding sentence by reason of prior breaks in service.

(3)Vesting for Pre-Break and Post-Break Accounts – In the case of a participant or employee who has five or more consecutive one-year breaks in service, all years of service after such breaks in service shall be disregarded for the purpose of vesting the employer-derived account balance(s) that accrued before such breaks in service.  Whether or not such pre-break service counts in vesting the post-break employer-derived account balance(s) shall be determined according to the rules set forth in Section 4.1(d)(1) and (2) above.  Separate accounts shall be maintained for each of the participant’s pre-break and post-break employer-derived account balance(s).  All accounts shall share in the investment earnings and losses of the fund.

Section 4.2 – Vesting of Participant Accounts

(a)Determination of Vesting

(1)Normal Retirement – An employee's right to his account balance(s) shall be 100% vested and nonforfeitable upon the attainment of age 65, the normal retirement age.  The vesting of an inactive participant who terminates employment prior to normal retirement age shall remain subject to the

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provisions of the vesting schedule following attainment of such specified age.  Distributions shall be administered in accordance with termination from employment provisions of Section 4.3(a)(3).

(2)Late Retirement – If a participant remains employed after his normal retirement age, his account balance(s) shall remain 100% vested and nonforfeitable.  Such participant shall continue to receive allocations to his account as he did before his normal retirement age.

(3)Early Retirement – In the case of a participant who has attained age 60 and completed 7 years of service before his normal retirement age, the participant's right to his account balance(s) shall be 100% vested and nonforfeitable.  Such participant may retire before his normal retirement age without the consent of the employer and receive payment of benefits from the plan.  If a participant separates from service before satisfying the age requirement for early retirement, but has satisfied the service requirement, the participant shall be entitled to elect an early retirement benefit upon satisfaction of such age requirement.

(4)Disability – If a participant separates from service due to disability, such participant’s right to his account balance(s) as of his date of disability shall be 100% vested and nonforfeitable.  Disability means the participant has been determined by the Social Security Administration to be eligible for either full or partial Social Security disability benefits.

(5)(A)Death – In the event of the death of a participant who has an accrued benefit under the plan (whether or not he is an active participant), 100% of the participant’s account balance(s) as of the date of death shall be paid to his surviving spouse; except that, if there is no surviving spouse, or if the surviving spouse has already consented in a manner that is (or conforms to) a qualified election under the joint and survivor annuity provisions of Code section 417(a) and regulations issued pursuant thereto and as set forth in Section 5.2, then such balance(s) shall be paid to the participant's designated beneficiary.  The payment options available to the beneficiary shall be those payment options available to the participant under Section 4.3(b).

(B)Beneficiary Designation – Subject to the spousal consent requirements of Section 5.2, the participant shall have the right to designate his beneficiaries, including a contingent death beneficiary, and shall have the right at any time prior to his death to change such beneficiaries. The designation shall be effective only if made in writing on a form signed by the participant and supplied by and filed with the plan administrator prior to his death.  If the participant fails to designate a beneficiary, or if the designated person or persons predecease the participant, "beneficiary" shall mean: (a) the spouse, (b) if no surviving spouse, then to the surviving children in equal shares, (c) if no surviving children, then to the surviving parents in equal shares, (d) if no surviving parents, then to the surviving brothers and sisters in equal shares, (e) if no surviving brothers and sisters, then (f) to the participant’s estate if an estate is opened within 2 years of the participant’s death; and otherwise to a charity selected in the sole discretion of the plan administrator.

If a designated beneficiary dies after the participant has died but before the plan has commenced or made distribution to the designated beneficiary, the plan shall be administered as set forth in this paragraph.  The death benefit will be paid to the beneficiary’s designated beneficiary, if any designated prior to such beneficiary’s death in connection with the beneficiary’s election of a form of payment of the participant’s death benefit to which he is entitled; and if no such designation is on file with the plan administrator, then to the beneficiary's estate in a single lump sum payment if an estate is opened within 2 years of the participant’s death; and otherwise to a charity selected in the sole discretion of the plan administrator.  If the deceased designated beneficiary was not the participant's surviving spouse, distribution under this paragraph will be completed by December 31 of the fifth year following the participant's date of death.  If the deceased designated beneficiary was the participant's surviving spouse, distribution under this paragraph will be completed by December 31 of the fifth year following the beneficiary's date of death.

For purposes of this Section 4.2(a)(5), if a spouse or beneficiary of the participant dies simultaneously with the participant, the participant shall be deemed to be the survivor and to have died subsequent to such spouse or beneficiary.  Likewise, if a beneficiary named by a designated beneficiary dies simultaneously with a designated beneficiary, the designated beneficiary shall be deemed to be the survivor and to have died subsequent to the beneficiary named by the designated beneficiary.

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If a participant completes or has completed a beneficiary designation form in which the participant designates his spouse as the beneficiary and the participant and such spouse are legally divorced subsequent to the date of such designation; then, the designation shall be administered as if such spouse had predeceased the participant unless the participant, subsequent to the legal divorce, reaffirms the designation by completing a new beneficiary designation form.

(6)Termination From Service – If a participant separates from the service of the employer other than by retirement, disability, or death, his vested interest in his accounts shall be equal to the account balance multiplied by the vesting percentage determined below:

(A)Profit Sharing Account – The vesting percentage applicable to the participant’s profit sharing account shall be determined based on his vesting years of service as follows:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

Transition Rule – Notwithstanding the above vesting schedule, the vesting provisions of the plan before January 1, 2007, shall continue to apply to participants who do not have an hour of service on or after such date.

(B)Employer Matching Contribution Account – The vesting percentage applicable to the participant's employer matching contribution account shall be determined as follows:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

Transition Rule – Notwithstanding the above vesting schedule, the vesting provisions of the plan before January 1, 2002, shall continue to apply to participants who do not have an hour of service on or after such date.

(C)Other Accounts – The participant shall always be 100% vested in his following accounts:  employee 401(k) elective deferral account; employee nondeductible contribution account; qualified employer matching contribution account; qualified nonelective contribution account; Roth elective deferral account; rollover/transfer account.  The accrued benefit in such accounts shall be nonforfeitable.

(b)Forfeitures

(1)Time of Forfeiture – If a participant terminates employment before his account balances derived from employer contributions are fully vested, the nonvested portion of his accounts shall be forfeited on the earlier of:

(A)The last day of the vesting computation period in which the participant first incurs five consecutive one-year breaks in service, or

(B)The date the participant receives his entire vested accrued benefit.

(2)Cashout Distributions and Restoration

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(A)Cashout Distribution – If an employee terminates service and the value of his vested account balances derived from employer and employee contributions are not greater than $5,000, the employee shall receive a distribution of the value of the entire vested portion of such account balances and the nonvested portion will be treated as a forfeiture.  If an employee would have received a distribution under the preceding sentence but for the fact that the employee's vested account balances exceeded $5,000 when the employee terminated service and if at a later time such account balances are reduced such that they are not greater than $5,000, the employee will receive a distribution of such account balance and the nonvested portion will be treated as a forfeiture.  For purposes of this section, if the value of an employee's vested account balances is zero, he shall be deemed to have received a distribution of such vested account balances.  For the purpose of determining the value of a participant's vested account balance, prior distributions shall be disregarded if distributions have not commenced under an optional form of payment described in Section 4.3.

If an employee terminates service and elects, in accordance with the requirements of Section 4.3, to receive the value of his vested account balances, the nonvested portion shall be treated as a forfeiture as of the date of distribution.  If the employee elects to have distributed less than the entire vested portion of the account balances derived from employer contributions, the part of the nonvested portion that will be treated as a forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to employer contributions and the denominator of which is the total value of the vested employer derived account balances.

(B)Restoration of Accounts – If an employee receives a cashout distribution pursuant to this section and resumes employment covered under this plan before he incurs five consecutive one-year breaks in service, his employer-derived account balances shall each be restored to the amount on the date of distribution, if he repays to the plan the full amount of the distribution attributable to employer contributions before the earlier of five years after the first date on which he is subsequently re-employed by the employer, or the date he incurs five consecutive one-year breaks in service following the date of the distribution.  If an employee is deemed to receive a distribution pursuant to this Section 4.2(b)(2), and he resumes employment covered under this plan before he incurs five consecutive one-year breaks in service, upon the re-employment of such employee his employer-derived account balances will be restored to the amount on the date of such deemed distribution.

Any amount required to restore such forfeitures shall be deducted from forfeitures (including forfeitures of excess aggregate contributions) occurring in the plan year of restoration.  If forfeitures are insufficient for the restoration, the employer may make a contribution to the plan for such plan year to satisfy the restoration.  However, by the end of the plan year following the plan year of restoration, sufficient forfeitures or employer contributions shall be credited to the account to satisfy the restoration.

(c)Disposition of Forfeitures

(1)Profit Sharing Account – Forfeitures from profit sharing accounts shall be reallocated among the eligible active participants at the end of the plan year in which such forfeitures occur in accordance with the allocation procedures set forth in Section 3.2.

(2)Employer Matching Contribution Account – Forfeitures of employer matching contribution accounts first shall be used to reduce administrative expenses; any remaining forfeitures shall be used to reduce the next employer matching contribution to which the employer has commited itself whether for the current plan year or the immediately following plan year. 

(d)Withdrawal of Employee Nondeductible Contributions – No forfeitures shall occur solely as a result of an employee's withdrawal of employee nondeductible contributions.

(e)Unclaimed Benefits

(1)Forfeiture – The plan does not require the trustee or the plan administrator to search for, or to ascertain the whereabouts of, any participant or beneficiary.  At the time the participant's or beneficiary's benefit becomes distributable under the plan, the plan administrator, by certified or registered mail addressed to his last known address of record, shall notify any participant or beneficiary that he is entitled to a distribution under this plan.  If the participant or beneficiary fails to

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claim his distributive share or make his whereabouts known in writing to the plan administrator within twelve months from the date of mailing of the notice, the plan administrator shall treat the participant's or beneficiary's unclaimed payable accrued benefit as forfeited and shall reallocate such forfeiture in accordance with Section 4.2(c).  A forfeiture under this paragraph shall occur at the end of the notice period or, if later, the earliest date applicable Treasury regulations would permit the forfeiture.  These forfeiture provisions apply solely to the participant’s or beneficiary’s accrued benefit derived from employer contributions.

(2)Restoration – If a participant or beneficiary who has incurred a forfeiture of his accrued benefit under the provisions of this Section 4.2(e) makes a claim, at any time, for his forfeited accrued benefit, the plan administrator shall restore the participant's or beneficiary's forfeited accrued benefit to the same dollar amount as the dollar amount of the accrued benefit forfeited, unadjusted for any gains or losses occurring after the date of the forfeiture.  During the plan year in which the participant or beneficiary makes the claim, the plan administrator shall make the restoration from forfeitures occurring in that plan year.  If forfeitures are insufficient for the restoration, the employer shall make a contribution to the plan to satisfy the restoration.  The plan administrator shall direct the trustee to distribute the participant's or beneficiary's restored accrued benefit to him not later than 60 days after the close of the plan year in which the plan administrator restores the forfeited accrued benefit.

Section 4.3 – Payment of Participant Accounts

(a)Time of Payment

(1)Commencement of Benefits – Unless the participant elects otherwise, distribution of benefits shall begin no later than the 60th day after the latest of the close of the plan year in which:

(A)The participant attains age 65 (or normal retirement age, if earlier);

(B)Occurs the 10th anniversary of the year in which the participant commenced participation in the plan; or

(C)The participant terminates service with the employer (i.e. late retirement).

(2)Payment Upon Retirement, Disability, or Death – Subject to the provisions set forth in Section 4.3(a)(1), in the Joint and Survivor Requirements of Section 5.2, and in the Distribution Requirements of Section 5.3, if the participant terminates employment due to retirement, disability, or death, his account(s) shall be paid as soon as administratively possible after the occurrence of the event creating the right to a distribution.

(3)Payment Upon Other Termination of Employment – Subject to the provisions set forth in Section 4.3(a)(1) and in the Distribution Requirements of Section 5.3, if the participant terminates employment other than by retirement, disability, or death, his account(s) shall be paid as soon as administratively possible after the date of severance of employment.

Notwithstanding the preceding, an alternate payee may elect to have paid the amount determined under the qualified domestic relations order as soon as administratively possible following the date permitted under Section 4.5.

(4)Notwithstanding the foregoing, the failure of a participant (and spouse where the spouse's consent is required) to consent to a distribution while a benefit is immediately distributable, within the meaning of Section 5.2(a), shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this section.

(b)Form of Payment – A participant or beneficiary may elect to receive distribution of his account(s) as a lump sum benefit payment.  The participant or beneficiary shall file a written request for benefits with the plan administrator before payment will be made.  The lump sum benefit payment shall be made in cash from the fund.  If the vested accrued benefit is no more than $5,000, benefits shall automatically be paid in a lump sum in accordance with Section 4.3(d)(5).

Effective solely for distributions made before October 1, 2009, a participant was permitted to elect installment payments over a period of years that meets the Distribution Requirements of Section 5.3.  Installment payments may be made in cash from the fund or by distribution of an annuity term certain contract.

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If a distribution is required under the Distribution Requirements of Section 5.3, the participant fails to elect payment, and the vested balance of the account(s) exceeds $5,000, the trustee shall pay the benefit in installment payments that meet the requirements of Section 5.3 over the joint life and last survivor expectancy of the participant and his designated beneficiary.  If the vested balance of the account(s) does not exceed $5,000, the trustee shall distribute the entire account balance in a lump sum.

(c)General Payment Provisions

(1)All distributions due to be made under this plan shall be made on the basis of the amount to the credit of the participant as of the accounting date coincident with or immediately preceding the occurrence of the event calling for a distribution.

If a distributable event occurs after an allocation date and before allocations have been made to the account of the participant, the distribution shall also include the amounts allocable to the account as of such allocation date.

(2)If any person entitled to receive benefits hereunder is physically or mentally incapable of receiving or acknowledging receipt thereof, and if a legal guardian or power of attorney has been appointed for him, the plan administrator may direct the benefit payment to be made to such legal representative.  The plan administrator may cause benefits to be paid to any other individual recognized by the state law under which the plan trust has been established.

In the event a distribution is to be made to a minor beneficiary, then the plan administrator may direct that such distribution be paid to the legal guardian, or if none, to a parent of such beneficiary or a responsible adult with whom the beneficiary maintains his residence, or to the custodian for such beneficiary under the Uniform Gift to Minors Act or the Gift to Minors Act, if such is permitted by the laws of the state in which said beneficiary resides.  Such a payment to the legal guardian, custodian or parent of a minor beneficiary shall fully discharge the trustee, employer, plan administrator, and plan from further liability on account thereof.

(3)Each optional form of benefit provided under the plan shall be made available to all participants on a nondiscriminatory basis.  The plan may not retroactively reduce or eliminate optional forms of benefits and any other Code section 411(d)(6) protected benefits, except as provided in Regulation section 1.411(d)‑4, Q&A‑2(b) and in other relief granted statutorily or by the Commissioner of Internal Revenue.

(4)The participant's election of a form of benefit payment shall be irrevocable as of the annuity starting date, subject to the notice requirements contained in Section 4.3(e).  For purposes of accounting, an installment distribution shall be debited from each of a participant's accounts on a pro rata basis.

(d)Eligible Rollover Distributions

A distributee may elect, at the time and in the manner prescribed by the plan administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(1)Eligible Rollover Distribution – An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include:  any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code section 401(a)(9) including any portion of such distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); any hardship withdrawal; any timely withdrawal of an automatic salary reduction contribution made on or after January 1, 2008 from a participant's elective deferral account(s); and any other distribution(s) that is reasonably expected to total less than $200 during a year.  For purposes of the $200 rule, a distribution from a designated Roth account and a distribution from other accounts under the plan are treated as made under separate plans.

A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includable in gross income.  However, such portion may be transferred only to:  (A) a traditional individual retirement account or annuity described in Code section 408(a) or (b) (traditional IRA) or, effective for distributions on or after

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January 1, 2008, a Roth individual retirement account or annuity described in Code section 408A (Roth IRA); or (B) a qualified plan or an annuity contract described in Code section 401(a) and 403(b), respectively, that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution that is includible in gross income and the portion of such distribution that is not so includible.

(2)Eligible Retirement Plan – An eligible retirement plan is a traditional IRA, a Roth IRA (effective January 1, 2008), an annuity plan described in Code section 403(a), an annuity contract described in Code section 403(b), a qualified plan described in Code section 401(a), that accepts the distributee's eligible rollover distribution, or an eligible plan under Code section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into such plan from this plan.  The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p).

If any portion of an eligible rollover distribution is attributable to payments or distributions from a designated Roth account, an eligible retirement plan with respect to such portion shall include only a designated Roth account or a Roth IRA.

(3)Distributee – A distributee includes an employee or former employee.  The employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p), are distributees with regard to the interest of the spouse or former spouse.  For distributions after December 31, 2006, a distributee shall include a nonspouse beneficiary but only with respect to a direct transfer to an inherited traditional or Roth IRA established on his behalf for the purpose of receiving the distribution.

(4)Direct Rollover – A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.

(5)Automatic Rollovers – In the event of a mandatory distribution greater than $1,000 in accordance with the provisions of Section 4.2(b)(2)(A), if the participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly in accordance with Section 4.3(e), then the plan administrator shall pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator.  For purposes of determining whether a mandatory distribution is greater than $1,000, the portion of the participant’s distribution attributable to any rollover contribution shall be included.

(e)Payment Election Procedures

As described in Section 5.2(a), an account balance in excess of $5,000 shall not be immediately distributed without the consent of the participant.  The participant shall receive the notice required under Regulation section 1.411(a)-11(c) no less than 30 days and no more than 180 days before the annuity starting date with respect to the distribution.  The written explanation shall include a description of the consequences of failing to defer receipt of the distribution.  For any distribution in excess of $200, the plan administrator shall give the participant notice of his eligible rollover distribution rights.  The participant shall receive such notice in the same time period as the 411 notice is required to be provided.  If a distribution is one to which Code sections 401(a)(11) and 417 do not apply, such distribution may commence less than 30 days after the 411 notice is given, provided that:

(1)The plan administrator clearly informs the participant that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

(2)The participant, after receiving the notice, affirmatively elects a distribution.

In the event of a mandatory distribution greater than $1,000 in accordance with the provisions of Section 4.2(b)(2)(A), if the participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly in accordance with Section 4.3(d), then the plan administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator.

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For purposes of determining whether there will be a mandatory distribution from the plan, if either the Roth elective deferral account or the total of the participant's other accounts exceeds $1,000, no mandatory distribution will be made.  If the Roth elective deferral account alone is $1,000 or less and the participant's other accounts on their own total $1,000 or less, then a mandatory distribution will be made of all of the participant's accounts.

Section 4.4 – In-Service Payments

(a)Withdrawals – An employee may withdraw amounts from his account(s) before his separation from service only under the circumstances and only to the extent provided below.

The plan administrator shall approve requests on a nondiscriminatory basis.  No forfeitures shall occur solely as a result of a participant's withdrawal of employee contributions.  The in-service receipt of benefits by an employee shall not affect his participation in the plan, and such participant shall continue to receive allocations to his account(s).

Distribution After Attainment of Age 59½ – An employee may elect to receive payment of benefits from his account(s) at any time after he attains age 59½ by filing a written request with the plan administrator, but only to the extent that he is fully vested in the particular account.  For purposes of accounting, a partial distribution shall be debited from each of a participant's accounts on a pro rata basis.

Withdrawals from Employer Accounts

(A)Availability of Withdrawal Privilege – Subject to the limitations and conditions set forth herein, an employee who has completed at least 5 years of participation in the plan and has attained age 55 may request a transfer in one lump sum from his profit sharing account to an individual retirement account, but only to the extent that he is fully vested in his profit sharing account.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from an account shall not exceed the vested portion of such account.

(C)Request for Withdrawal – The participant's request to withdraw shall be made in writing to the plan administrator.  The plan administrator shall approve requests on a nondiscriminatory basis.

Hardship Withdrawals from Employee 401(k) Elective Deferral Account

(A)Availability of Withdrawal Privilege – An employee who has a financial hardship may request a lump sum withdrawal from his employee 401(k) elective deferral account, subject to the limitations and conditions set forth herein.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from his account shall not exceed the cumulative amount of his 401(k) salary deferral contributions.  Earnings thereon may not be withdrawn.

(C)Request for Withdrawal – The participant's request to withdraw must be made in writing to the plan administrator and shall be subject to his consent.  The basis for the plan administrator's consenting to or refusing to consent to the participant’s request shall be demonstrated financial hardship of the participant as described in Hardship Withdrawals.

Hardship Withdrawals from Roth Elective Deferral Account

(A)Availability of Withdrawal Privilege – An employee who has a financial hardship may request a lump sum withdrawal from his Roth elective deferral account, subject to the limitations and conditions set forth herein.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from his account shall not exceed the cumulative amount of his Roth elective deferral contributions.  Earnings thereon may not be withdrawn.

(C)Request for Withdrawal – The participant's request to withdraw must be made in writing to the plan administrator and shall be subject to his consent.  The basis for the plan administrator's consenting to or refusing to consent to the participant's request shall be demonstrated financial hardship of the participant as described in Hardship Withdrawals.

Hardship Withdrawals

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For the purpose of this Section 4.4, a distribution will be made on account of hardship if the distribution is necessary in light of the immediate and heavy financial need of the employee.  A distribution based upon financial hardship cannot exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the participant.  The determination of the existence of financial hardship and the amount required to be distributed to meet the need created by the hardship must be made in accordance with uniform and nondiscriminatory standards established by the plan administrator under these plan provisions.

An immediate and heavy financial need shall be deemed to exist if the distribution is requested for one of the following reasons:  (1) expenses incurred or necessary for medical care as described in Code section 213(d) of the employee, the employee's spouse, children, dependents, or beneficiary(ies); (2) the purchase (excluding mortgage payments) of a principal residence for the employee; (3) payment of tuition and related educational fees for up to the next twelve months of post-secondary education for the employee, the employee's spouse, children, dependents, or beneficiary(ies); (4) payments necessary to prevent the eviction of the employee from, or a foreclosure on the mortgage of, the employee's principal residence; (5) payments for funeral or burial expenses for the employee's deceased parent, spouse, child, dependent, or beneficiary; or (6) expenses incurred to repair damage to the employee's principal residence that would qualify for a casualty loss deduction under Code section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).  For this purpose beneficiary shall mean the individual(s) designated by the participant as his primary beneficiary on his most recent beneficiary designation.

A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the employee only if:

1.The employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the employer;

2.All plans maintained by the employer provide that the employee's elective deferrals (and employee nondeductible contributions) will be suspended for 6 months after the receipt of the hardship distribution; and

3.The distribution is not in excess of the amount of the immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

Determination of Vested Account Balance

If a withdrawal is made at a time when a participant has a nonforfeitable right to less than the entire account balance derived from employer contributions and the participant may increase his nonforfeitable percentage in his account:

(A)A separate account will be established with respect to each of the participant's accounts that is subject to a vesting schedule that shall be credited with the participant's interest in such account as of the time of the distribution, and

(B)At any relevant time the participant's nonforfeitable portion of each such separate account will be equal to an amount ("X") determined by the formula:

X = P(AB + (R x D)) – (R x D)

For purposes of applying the formula:  P is the nonforfeitable percentage at the relevant time, AB is the account balance at the relevant time, D is the amount of the distribution from the relevant account, and R is the ratio of the account balance at the relevant time to the account balance after distribution.

(b)Participant Loans

No participant loans shall be permitted under this plan.

Section 4.5 – Distributions Under Domestic Relations Orders

Nothing contained in this plan prevents the trustee, in accordance with the direction of the plan administrator, from complying with the provisions of a qualified domestic relations order (as defined in Code section 414(p)).

A distribution will not be made to an alternate payee until the participant attains (or would have attained) his earliest retirement age.  For this purpose, earliest retirement age means the earlier of:  (1) the date on which

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the participant is entitled to a distribution under this plan; or (2) the later of the date the participant attains age 50 or the earliest date on which the participant could begin receiving benefits under this plan if the participant separated from service.

Nothing in this Section gives a participant a right to receive distribution at a time otherwise not permitted under the plan nor does it permit the alternate payee to receive a form of payment not otherwise permitted under the plan.

The plan administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order.  Upon receiving a domestic relations order, the plan administrator promptly will notify the participant and any alternate payee named in the order, in writing, of the receipt of the order and the plan's procedures for determining the qualified status of the order.  Within a reasonable period of time after receiving the domestic relations order, the plan administrator shall determine the qualified status of the order and shall notify the participant and each alternate payee, in writing, of his determination.  The plan administrator shall provide notice under this paragraph by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations.

If any portion of the participant's nonforfeitable accrued benefit is payable during the period the plan administrator is making his determination of the qualified status of the domestic relations order, the plan administrator shall make a separate accounting of the amounts payable.  If the plan administrator determines the order is a qualified domestic relations order within 18 months of the date amounts first are payable following receipt of the order, it shall direct the trustee to distribute the payable amounts in accordance with the order.  If the plan administrator does not make his determination of the qualified status of the order within the 18-month determination period, it shall direct the trustee to distribute the payable amounts in the manner the plan would distribute if the order did not exist and shall apply the order prospectively if it later determines the order is a qualified domestic relations order.

ARTICLE V – ADDITIONAL QUALIFICATION RULES

Section 5.1 – Limitations on Allocations Under Code Section 415

(a)Single Plan Limitations

(1)If the participant does not participate in, and has never participated in another qualified plan maintained by the employer, or a welfare benefit fund (as defined in Code section 419(e)) maintained by the employer, or an individual medical account (as defined in Code section 415(l)(2)) maintained by the employer, or a simplified employee pension (as defined in Code section 408(k)) maintained by the employer, that provides an annual addition as defined in Section 5.1(c)(1), the amount of annual additions that may be credited to the participant's account for any limitation year will not exceed the lesser of the maximum permissible amount or any other limitation contained in this plan.  If the employer contribution that would otherwise be contributed or allocated to the participant's account would cause the annual additions for the limitation year to exceed the maximum permissible amount, the amount contributed or allocated will be reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

(2)Prior to determining the participant's actual compensation for the limitation year, the employer may determine the maximum permissible amount for a participant on the basis of a reasonable estimation of the participant's compensation for the limitation year, uniformly determined for all participants similarly situated.

(3)As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year will be determined on the basis of the participant's actual compensation for the limitation year.

(4)If a participant elects to make employee nondeductible contributions or elective deferrals that together with any contribution the employer is obligated to make under the terms of this plan (including pursuant to any published discretionary contribution) would otherwise cause the annual additions for the limitation year to exceed the maximum permissible amount, the contribution election of the participant shall be limited before any employer contribution is reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

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(b)Combined Limitations – Other Defined Contribution Plan

(1)This Section 5.1(b) applies if, in addition to this plan, the participant is covered under another qualified defined contribution plan maintained by the employer, a welfare benefit fund maintained by the employer, an individual medical account maintained by the employer, or a simplified employee pension maintained by the employer, that provides an annual addition as defined in Section 5.1(c)(1), during any limitation year.  The annual additions that may be credited to a participant's account under this plan for any such limitation year will not exceed the maximum permissible amount reduced by the annual additions credited to a participant's account under the other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions for the same limitation year.  If the annual additions with respect to the participant under other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions maintained by the employer are less than the maximum permissible amount and the employer contribution that would otherwise be contributed or allocated to the participant's account under this plan would cause the annual additions for the limitation year to exceed this limitation, the amount contributed or allocated will be reduced so that the annual additions under all such plans and funds for the limitation year will equal the maximum permissible amount.  If the annual additions with respect to the participant under such other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions in the aggregate are equal to or greater than the maximum permissible amount, no amount will be contributed or allocated to the participant's account under this plan for the limitation year.

(2)Prior to determining the participant's actual compensation for the limitation year, the employer may determine the maximum permissible amount for a participant in the manner described in Section 5.1(a)(2).

(3)As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year will be determined on the basis of the participant's actual compensation for the limitation year.

(4)If, pursuant to Section 5.1(b)(3) or as a result of the allocation of forfeitures, a participant's annual additions under this plan and such other plans would result in an excess amount for a limitation year, the excess amount will be deemed to consist of the annual additions last allocated, except that annual additions attributable to a simplified employee pension will be deemed to have been allocated first, followed by annual additions to a welfare benefit fund or individual medical account, regardless of the actual allocation date.

(5)If an allocation date of this plan coincides with an allocation date of another plan and the employee or employer contribution that would otherwise be contributed or allocated to a participant's account under the plans would cause the annual additions for the limitation year to exceed the maximum permissible amount, Section 3.1(c) shall control which contribution or allocation will be reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

(c)Definitions (Code Section 415 Limitations)

(1)Annual Additions – The sum of the following amounts credited to a participant's account for the limitation year:  (A) employer contributions; (B) employee contributions (excluding catch-up contributions made in accordance with Code section 414(v)); (C) forfeitures; (D) amounts allocated to an individual medical account (as defined in Code section 415(l)(2)), that is part of a pension or annuity plan maintained by the employer are treated as annual additions to a defined contribution plan; and (E) allocations under a simplified employee pension.  Also, amounts derived from contributions paid or accrued that are attributable to postretirement medical benefits allocated to the separate account of a key employee (as defined in Code section 419A(d)(3)) under a welfare benefit fund (as defined in Code section 419(e)) maintained by the employer are treated as annual additions to a defined contribution plan.

For this purpose, any excess amount applied under Section 5.1(a)(4) or (b)(6) in the limitation year to increase the accounts of participants who did not have an excess amount or to reduce employer contributions will be considered annual additions for such limitation year.

Restorative payments allocated to a participant’s account including restorative payments made pursuant to Section 4.2(b)(2)(B) and payments made to restore losses to the plan resulting from actions (or a failure to act) by a fiduciary for which there is a reasonable risk of liability under ERISA

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or under other applicable federal or state law (where similarly situated participants are treated similarly) shall not give rise to an annual addition for any limitation year.

(2)Compensation – A participant's earned income and any earnings reportable as W-2 wages for federal income tax withholding purposes that are paid by the employer.  W-2 wages means wages as defined in Code section 3401(a) but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code section 3401(a)(2)).

For purposes of applying the limitations of this Section 5.1, compensation for a limitation year is the compensation actually paid or includable in gross income during such limitation year.  Compensation for a limitation year shall include amounts earned but not paid during the limitation year solely because of the timing of pay periods and pay dates, provided the amounts are paid during the first few weeks of the next limitation year, the amounts are included on a uniform and consistent basis with respect to all similarly situated employees, and no compensation is included in more than one limitation year.

Back pay, within the meaning of Regulation section 1.415(c)-2(g)(8), shall be treated as compensation for the limitation year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.

Compensation in excess of the limitations of Section 1.2(c) shall not be taken into account.  In order to be taken into account for a limitation year, compensation must be paid or treated as paid prior to severance from employment with the employer.  Effective for limitation years beginning on or after July 1, 2007, an includable payment shall be treated as paid prior to severance from employment if it is paid by the later of 2½ months after severance or the last day of the limitation year that includes the severance date.  For this purpose, includable payments are those that absent the severance would have been paid and are regular compensation for services during regular working hours or outside working hours (such as overtime or shift differentials), commissions, bonuses, or other similar compensation.  Includable payments shall also include accrued sick, vacation, or other leave if such payments would have been included in compensation as defined in Section 1.2 if they were paid prior to the employee's severance from employment.

For limitation years beginning after December 31, 2008, compensation for a limitation year shall include amounts paid as differential wages to a participant on qualified military service leave of more than 30 days and otherwise meeting the requirements of Code section 3401(h)(2).

Compensation shall include elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 501(c)(18) plan.  Elective contribution amounts under a cafeteria plan excludable under Code section 125 shall include any amounts not available to a participant in cash in lieu of group health coverage solely because the participant is unable to certify that he has other health coverage (deemed section 125 compensation).  Amounts are deemed section 125 compensation only if the employer does not request or collect information regarding the participant's other health coverage as part of the enrollment process for the health plan.

Notwithstanding the preceding, compensation for a participant who is permanently and totally disabled (as defined in Code section 22(e)(3)) is the compensation such participant would have received for the limitation year if the participant had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled; such imputed compensation for the disabled participant may be taken into account only if contributions made on behalf of such participant are nonforfeitable when made.

(3)Defined Contribution Dollar Limitation – $40,000, as adjusted under Code section 415(d).

(4)Employer – For purposes of this Section 5.1, employer shall mean the employer as defined in Section 1.5(b) but including all members of a controlled group of corporations as defined in Code section 414(b) as modified by Code section 415(h) and all commonly controlled trades or businesses as defined in Code section 414(c) as modified by Code section 415(h).

(5)Excess Amount – The excess of the participant's annual additions for the limitation year over the maximum permissible amount.

(6)Limitation Year – The 12-consecutive-month period defined in Section 1.3(f).  All qualified defined contribution plans maintained by the employer must use the same limitation year.  If the limitation

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year is amended to a different 12-consecutive-month period, the new limitation year must begin on a date within the limitation year in which the amendment is made.

(7)Maximum Permissible Amount – Except to the extent permitted under Section 3.4(b) and Code section 414(v), if applicable, the maximum annual addition that may be contributed or allocated to a participant's account under the plan for any limitation year shall not exceed the lesser of:

(A)the defined contribution dollar limitation as defined in Section 5.1(c)(3); or

(B)100% of the participant's compensation for the limitation year.

The compensation limitation referred to in (B) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code section 401(h) or Code section 419A(f)(2)) that is otherwise treated as an annual addition under Code section 415(l)(1) or 419A(d)(2).

If a short limitation year is created because of an amendment changing the limitation year to a different 12-consecutive-month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction:

Number of months in the short limitation year

12

If the plan is terminated as of a date other than the last day of the limitation year, the plan shall be deemed to have been amended to change its limitation year and the maximum permissible amount shall be determined by prorating it for the resulting short limitation year.

Section 5.2 – Joint and Survivor Annuity Requirements

No annuity form of payment is provided under Section 4.3(b) and no direct or indirect transfer is accepted under Section 3.7 from a defined benefit plan, money purchase pension plan (including a target benefit plan), stock bonus or profit sharing plan that would otherwise have provided for a life annuity form of payment to any participant; therefore, the joint and survivor annuity requirements of Code section 401(a)(11) and 417 shall not apply to this plan, except as provided in this Section 5.2.

(a)Restrictions on Immediate Distributions – If the value of a participant's vested account balance derived from employer and employee contributions exceeds $5,000 and the account balance is immediately distributable, the participant (or where the participant has died, the participant's spouse) must consent to any distribution of such account balance.  For the purpose of determining the value of a participant's vested account balance, prior distributions shall be disregarded if distributions have not commenced under an optional form of payment described in Section 4.3.  The consent of the participant (or the participant's surviving spouse) shall be obtained in writing within the 180‑day period ending on the annuity starting date.  The annuity starting date is the first day of the first period for which an amount is paid in any form.  The plan administrator shall notify the participant (or the participant's surviving spouse) of the right to defer any distribution until the participant's account balance is no longer immediately distributable and the consequences of failing to defer any distribution, as required by Regulation section 1.417(a)(3)-1.  Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the plan in a manner that would satisfy the notice requirements of Code section 417(a)(3), and a description of the consequences of failing to defer any distribution, and shall be provided no less than 30 days and no more than 180 days prior to the annuity starting date.  However, distribution may commence less than 30 days after the notice described in the preceding sentence is given, provided the distribution is one to which Code sections 401(a)(11) and 417 do not apply, the plan administrator clearly informs the participant that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and the participant, after receiving the notice, affirmatively elects a distribution.

Neither the consent of the participant nor the participant's spouse shall be required to the extent that a distribution is required to satisfy Code section 401(a)(9) or section 415.  In addition, upon termination of this plan if the plan does not offer an annuity option (purchased from a commercial provider) and if the employer or any entity within the same controlled group as the employer does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code section 4975(e)(7)), the participant's account balance will, without the participant's consent, be distributed to the participant.  However, if any entity within the same controlled group as the employer maintains another defined contribution plan (other than an employee stock ownership plan), the participant's

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account balance will be transferred, without the participant's consent, to the other plan if the participant does not consent to an immediate distribution.

An account balance is immediately distributable if any part of the account balance could be distributed to the participant (or surviving spouse) before the participant attains (or would have attained if not deceased) the later of normal retirement age or age 62.

(b)Safe Harbor Rules – This Section 5.2(b) shall apply to a participant in this profit sharing plan, and to any distribution, made on or after the first day of the first plan year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions, as defined in Code section 72(o)(5)(B), and maintained on behalf of a participant in a money purchase pension plan (including a target benefit plan).  This plan satisfies and shall continue to satisfy the following conditions:  (1) the participant cannot elect payments in the form of a life annuity; and (2) on the death of a participant, the participant's vested account balance will be paid to the participant's surviving spouse, but if there is no surviving spouse, or if the surviving spouse has consented in a manner conforming to a qualified election, then to the participant's designated beneficiary.  The surviving spouse may elect to have distribution of the vested account balance commence within the 90-day period following the date of the participant's death.  The account balance shall be adjusted for gains or losses occurring after the participant's death in accordance with the provisions of the plan governing the adjustment of account balances for other types of distributions.

(1)The participant may waive the spousal death benefit described in this Section 5.2(b) at any time provided that no such waiver shall be effective unless it satisfies the conditions of Section 5.2(c)(1) that would apply to the participant's waiver of the qualified preretirement survivor annuity.

(2)For purposes of this Section 5.2(b), vested account balance shall have the same meaning as provided in Section 5.2(c)(3).

(c)Definitions (Code Section 417 Requirements)

(1)Qualified Election – A waiver of a qualified preretirement survivor annuity.  Any waiver of a qualified preretirement survivor annuity shall not be effective unless:  (a) the participant's spouse consents in writing to the election; (b) the election designates a specific beneficiary, including any class of beneficiaries or any contingent beneficiaries, that may not be changed without spousal consent (or the spouse expressly permits designations by the participant without any further spousal consent); (c) the spouse's consent acknowledges the effect of the election; and (d) the spouse's consent is witnessed by a plan representative or notary public.  If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a qualified election.

Any consent by a spouse obtained under this provision (or establishment that the consent of a spouse may not be obtained) shall be effective only with respect to such spouse.  A consent that permits designations by the participant without any requirement of further consent by such spouse must acknowledge that the spouse has the right to limit consent to a specific beneficiary, and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of such rights.  A revocation of a prior waiver may be made by a participant without the consent of the spouse at any time before the commencement of benefits.  The number of revocations shall not be limited.

(2)Spouse (Surviving Spouse) – The spouse or surviving spouse of the participant, provided that a former spouse will be treated as the spouse or surviving spouse and a current spouse will not be treated as the spouse or surviving spouse to the extent provided under a qualified domestic relations order as described in Code section 414(p).

(3)Vested Account Balance – The aggregate value of the participant's vested account balances derived from employer and employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the participant's life.  The provisions of this Section 5.2 shall apply to a participant who is vested in amounts attributable to employer contributions, employee contributions, or both at the time of death or distribution.

(4)Annuity Starting Date – The first day of the first period for which an amount is paid as an annuity or any other form.

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Section 5.3 – Distribution Requirements

Subject to Section 5.2 Joint and Survivor Annuity Requirements, the requirements of this Section 5.3 shall apply to any distribution of a participant's interest and will take precedence over any inconsistent provisions of this plan.  All distributions required under this Section 5.3 shall be determined and made in accordance with the regulations under Code section 401(a)(9) and the minimum distribution incidental benefit requirement of Code section 401(a)(9)(G).

With respect to calendar year 2009, the provisions of Section 5.3 shall be applied subject to Code section 401(a)(9)(H).  Although the plan administrator shall calculate any required minimum distribution under Section 5.3 and pay it separately to any participant or beneficiary commencing distribution during 2009, such recipient shall be eligible to deposit such amount in a qualified employer plan or individual retirement account.  Any participant receiving or due to commence such distributions (including as a 5% owner) shall not receive a required minimum distribution with respect to 2009 in the absence of an affirmative election.  To the extent that a participant's entire interest is otherwise required to be distributed to a beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death, such 5-year period shall be determined without regard to calendar year 2009.

(a)Required Beginning Date – The entire interest of a participant must be distributed, or begin to be distributed, no later than the participant's required beginning date.

(b)Limits on Distribution Periods – As of the first distribution calendar year, distributions to a participant, if not made in a single sum, may only be made over one of the following periods (or a combination thereof):

(1)the life of the participant;

(2)the joint lives of the participant and a designated beneficiary;

(3)a period certain not extending beyond the life expectancy of the participant; or

(4)a period certain not extending beyond the joint life and last survivor expectancy of the participant and a designated beneficiary.

(c)Death of Participant Before Distributions Begin – If the participant dies before distributions begin, the participant's entire interest will be distributed, or begin to be distributed, no later than as follows:

(1)If the participant's surviving spouse is the participant's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70½, if later.  If the surviving spouse so elects, the participant's entire interest will be distributed to such surviving spouse by December 31 of the calendar year containing the fifth anniversary of the participant's death.  If no election is received, distributions to the surviving spouse will begin by December 31 of the calendar year in which the participant would have attained age 70½, or the participant's entire interest will be distributed to such surviving spouse by December 31 of the calendar year containing the fifth anniversary of the participant's death, if later.

(2)If the participant's surviving spouse is not the participant's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died.  If the designated beneficiary so elects or if no election is received, the participant's entire interest will be distributed to such designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(3)If there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(4)If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse are required to begin, this Section 5.3(c), other than Section 5.3(c)(1), will apply as if the surviving spouse were the participant.

For purposes of this Section 5.3(c) and Section 5.3(f), unless Section 5.3(c)(4) applies, distributions are considered to begin on the participant's required beginning date.  If Section 5.3(c)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under

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Section 5.3(c)(1).  If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant's required beginning date (or to the participant's surviving spouse before the date distributions are required to begin to the surviving spouse under Section 5.3(c)(1)), the date distributions are considered to begin is the date distributions actually commence.

(d)Forms of Distribution – Unless the participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with Section 5.3(e) and (f).  If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code section 401(a)(9) and the Treasury regulations.

To the extent the participant has a Roth elective deferral account, an employee nondeductible contribution account, or after-tax contributions of either type for which there is separate accounting under his rollover/transfer account, such funds shall be distributed in the order listed before any fully taxable distribution is made to satisfy the minimum distribution requirement.  After the exhaustion of such accounts, distributions shall be debited from a participant's accounts to the extent funded in accordance with the following order of preference:  rollover/transfer account, qualified nonelective contribution account, profit sharing account, employer matching contribution account, employee 401(k) elective deferral account.

(e)Required Minimum Distributions During Participant's Lifetime – If a participant's benefit is to be distributed over (1) a period not extending beyond the life expectancy of the participant or the joint life and last survivor expectancy of the participant and the participant's designated beneficiary or (2) a period not extending beyond the life expectancy of the designated beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the participant's benefit by the applicable life expectancy.

(1)Amount of Required Minimum Distribution For Each Distribution Calendar Year – During the participant's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(A)The quotient obtained by dividing the participant's account balance by the distribution period in the Uniform Lifetime Table set forth in Regulation section 1.401(a)(9)‑9, using the participant's age as of the participant's birthday in the distribution calendar year; or

(B)If the participant's sole designated beneficiary for the distribution calendar year is the participant's spouse, the quotient obtained by dividing the participant's account balance by the number in the Joint and Last Survivor Table set forth in Regulation section 1.401(a)(9)‑9, using the participant's and spouse's attained ages as of the participant's and spouse's birthdays in the distribution calendar year.

(2)Lifetime Required Minimum Distributions Continue Through Year of Participant's Death – Required minimum distributions will be determined under this Section 5.3(e) beginning with the first distribution calendar year and continuing up to and including the distribution calendar year that includes the participant's date of death.

(f)Required Minimum Distributions After Participant's Death

(1)Death On or After Date Distributions Begin – If the participant dies after distribution of his interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the participant's death.

(A)Participant Survived by Designated Beneficiary – If the participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the longer of the remaining life expectancy of the participant or the remaining life expectancy of the participant's designated beneficiary, determined as follows:

(i)The participant's remaining life expectancy is calculated using the age of the participant in the year of death, reduced by one for each subsequent year.

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(ii)If the participant's surviving spouse is the participant's sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the participant's death using the surviving spouse's age as of the spouse's birthday in that year.  For distribution calendar years after the year of the surviving spouse's death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one for each subsequent calendar year.

(iii)If the participant's surviving spouse is not the participant's sole designated beneficiary, the designated beneficiary's remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the participant's death, reduced by one for each subsequent year.

(B)No Designated Beneficiary – If the participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the participant's death, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the participant's remaining life expectancy calculated using the age of the participant in the year of death, reduced by one for each subsequent year.

(2)Death Before Date Distributions Begin

(A)Participant Survived by Designated Beneficiary – If the participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the remaining life expectancy of the participant's designated beneficiary, determined as provided in Section 5.3(f)(1).

(B)No Designated Beneficiary – If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant's death, distribution of the participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(C)Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin – If the participant dies before the date distributions begin, the participant's surviving spouse is the participant's sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 5.3(c), this Section 5.3(f)(2) will apply as if the surviving spouse were the participant.

(g)Definitions (Code Section 401(a)(9) Requirements)

(1)Designated Beneficiary – The individual who is designated as the beneficiary of the participant’s interest under the plan and who is the designated beneficiary under Code section 401(a)(9) and Regulation section 1.401(a)(9)‑4.

(2)Distribution Calendar Year – A calendar year for which a minimum distribution is required.  For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the participant's required beginning date.  For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 5.3(c).  The required minimum distribution for the participant's first distribution calendar year will be made on or before the participant's required beginning date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the participant's required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

(3)Life Expectancy – Life expectancy as computed by use of the Single Life Table in Regulation section 1.401(a)(9)‑9.

(4)Participant's Account Balance – The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The account balance for the valuation calendar

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year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

If any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it had been made in the immediately preceding distribution calendar year.

(5)Required Beginning Date

(A)Non-5% Owner – The required beginning date is April 1 of the calendar year following the later of:  (i) the calendar year in which the participant attains age 70½, or (ii) the calendar year in which the participant retires.

(B)5% Owner – The required beginning date for a participant who is a 5% owner is April 1 of the calendar year following the calendar year in which the participant attains age 70½.  A participant is treated as a 5% owner for purposes of this Section 5.3(g)(5) if such participant is a 5% owner as defined in Code section 416(i) (determined in accordance with section 416 but without regard to whether the plan is top-heavy) at any time during the plan year ending with or within the calendar year in which such participant attains age 70½.

(C)Once distributions have begun to a 5% owner under this Section 5.3(g)(5), they must continue to be distributed, even if the participant ceases to be a 5% owner in a subsequent year.

Section 5.4 – Top-Heavy Provisions

(a)Application of Provisions – If the plan is or becomes top-heavy in any plan year, the provisions of Section 5.4 will supersede any conflicting provisions in the plan.

(b)Minimum Allocation

(1)Except as otherwise provided in Section 5.4(b)(3) and (4) below, the employer contributions and forfeitures allocated on behalf of any participant who is not a key employee shall not be less than the lesser of 3% of such participant's compensation or in the case where the employer has no defined benefit plan that designates this plan to satisfy Code section 401, the largest percentage of employer contributions and forfeitures, as a percentage of key employee's compensation that may be taken into account under Section 1.2(c), allocated on behalf of any key employee for that year.  For this purpose, amounts contributed to the key employee's elective deferral account(s) shall be included as allocations on his behalf for that year.  However, amounts contributed to a non-key employee's elective deferral account(s) shall not be taken into account in determining whether he has received his minimum allocation.  The minimum allocation is determined without regard to any Social Security contribution.  This minimum allocation shall be made even though, under other plan provisions, the participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year because of (i) the participant's failure to complete 1,000 hours of service (or any equivalent provided in the plan), or (ii) the participant's failure to make mandatory employee contributions to the plan, or (iii) the participant's failure to make elective contributions to the plan, or (iv) compensation less than a stated amount.

(2)For purposes of computing the minimum allocation, compensation shall mean compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

(3)The provision in Section 5.4(b)(1) shall not apply to any participant who was not employed by the employer on the last day of the plan year.

(4)The provision in Section 5.4(b)(1) shall not apply to any participant to the extent the participant is covered under any other plan or plans of the employer and the employer has provided in Section 3.2 or 3.3 that the minimum allocation or benefit requirement applicable to top-heavy plans will be met in the other plan or plans (including another plan that consists solely of a cash or deferred arrangement that meets the ADP safe harbor requirements and matching contributions with respect to which the ACP safe harbor requirements are met).  If this plan is intended to meet the minimum allocation or benefit requirement applicable to another plan or plans, the employer shall so provide in Section 3.2(c) or 3.3(b), as appropriate.

Notwithstanding anything to the contrary herein and in Section 3.2(c) or 3.3(b), the top-heavy requirements of Code section 416 and this Section 5.4 shall not apply in any year beginning after

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December 31, 2001, in which the plan consists solely of a cash or deferred arrangement that meets the ADP safe harbor requirements as set forth in Sections 3.4(a) and 5.5(f) and matching contributions with respect to which the ACP safe harbor requirements are met as set forth in Sections 3.6 and 5.5(f).

(5)The minimum allocation required (to the extent required to be nonforfeitable under Code section 416(b)) may not be forfeited under Code section 411(a)(3)(B) or 411(a)(3)(D).

(6)Matching Contributions – Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code section 416(c)(2) and the plan if so provided in Section 3.2(c) or 3.3(b).  The preceding sentence shall apply with respect to matching contributions under the plan or, if the plan provides that the minimum contribution requirement shall be met in another plan, such other plan.  Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code section 401(m).

(c)Minimum Vesting Schedule – For any plan year in which this plan is top-heavy, the following minimum vesting schedule shall automatically apply to the plan:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

The minimum vesting schedule shall apply to all benefits within the meaning of Code section 411(a)(7) except those attributable to employee contributions, including benefits accrued before the effective date of Code section 416 and benefits accrued before the plan became top-heavy.  Further, no decrease in a participant's nonforfeitable percentage may occur in the event the plan's status as top-heavy changes for any plan year.  However, this Section does not apply to the account balances of any employee who does not have an hour of service after the plan has initially become top-heavy and such employee's account balance attributable to employer contributions and forfeitures will be determined without regard to this Section.

If the vesting schedule under the plans shifts in or out of the above schedule for any plan year because of the plan's top-heavy status, such shift shall constitute an amendment to the vesting schedule and the provisions of Section 7.2(d) and (e) shall apply.

(d)Definitions (Code Section 416 Requirements)

(1)Key Employee – Key employee means any employee or former employee (and the beneficiaries of such employee) who at any time during the determination period is an officer of the employer if such individual's annual compensation exceeds $130,000 (as adjusted under Code section 416(i)(1) for plan years beginning after December 31, 2002), a 5% owner of the employer, or a 1% owner of the employer who has an annual compensation of more than $150,000.  Annual compensation means compensation as defined in Section 5.1(c)(2), but including elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 457 plan or a Code section 501(c)(18) plan for any plan year and subject to the limitations of Section 1.2(c).  The determination period is the plan year containing the determination date.  In determining whether an employee is a key employee in 2002, this paragraph shall be treated as having been in effect for the last plan year beginning before January 1, 2002.

In determining whether a plan is top-heavy for plan years beginning before January 1, 2002, key employee means any employee or former employee (and the beneficiaries of such employee) who at any time during the determination period was an officer of the employer if such individual's annual compensation exceeded 50% of the dollar limitation under Code section 415(b)(1)(A), an owner (or considered an owner under Code section 318) of one of the ten largest interests in the employer if such individual's compensation exceeded 100% of the dollar limitation under Code

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section 415(c)(1)(A), a 5% owner of the employer, or a 1% owner of the employer who had an annual compensation of more than $150,000.  Annual compensation means compensation as defined in Section 5.1(c)(2), but including elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 457 plan or a Code section 501(c)(18) plan for any plan year and subject to the limitations of Section 1.2(c).  The determination period is the plan year containing the determination date and the four preceding plan years.

The determination of who is a key employee will be made in accordance with Code section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

(2)Top-Heavy Plan – This plan is top-heavy if any of the following conditions exists:

(A)If the top-heavy ratio for this plan exceeds 60% and this plan is not part of any required aggregation group or permissive aggregation group of plans.

(B)If this plan is a part of a required aggregation group of plans but not part of a permissive aggregation group and the top-heavy ratio for the group of plans exceeds 60%.

(C)If this plan is a part of a required aggregation group and part of a permissive aggregation group of plans and the top-heavy ratio for the permissive aggregation group exceeds 60%.

(3)Top-Heavy Ratio

(A)If the employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the employer has not maintained any defined benefit plan that during the five-year period ending on the determination date(s) has or has had accrued benefits, the top-heavy ratio for this plan alone or for the required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances of all key employees as of the determination date(s) including any part of any account balance distributed in the one-year period ending on the determination date(s) (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002), and the denominator of which is the sum of all account balances including any part of any account balance distributed in the one-year period ending on the determination date(s) (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002), both computed in accordance with Code section 416 and the regulations thereunder.  Both the numerator and denominator of the top-heavy ratio are increased to reflect any contribution not actually made as of the determination date, but which is required to be taken into account on that date under Code section 416 and the regulations thereunder.

(B)If the employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the employer maintains or has maintained one or more defined benefit plans that during the five-year period ending on the determination date(s) has or has had any accrued benefits, the top-heavy ratio for any required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated defined contribution plan or plans for all key employees, determined in accordance with (A) above, and the present value of accrued benefits under the aggregated defined benefit plan or plans for all key employees as of the determination date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all participants, determined in accordance with (A) above, and the present value of accrued benefits under the defined benefit plan or plans for all participants as of the determination date(s), all determined in accordance with Code section 416 and the regulations thereunder.  The accrued benefits under a defined benefit plan in both the numerator and denominator of the top-heavy ratio are increased for any distribution of an accrued benefit made in the one-year period ending on the determination date (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002).

The accrued benefit of a participant other than a key employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (2) if there is no such method, as if such benefit accrued not more

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rapidly than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).

(C)For purposes of Section 5.4(d)(3)(A) and (B) above the value of account balances and the present value of accrued benefits will be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the determination date, except as provided in Code section 416 and the regulations thereunder for the first and second plan years of a defined benefit plan.  The account balances and accrued benefits of a participant (1) who is not a key employee but who was a key employee in a prior year, or (2) who has not been credited with at least one hour of service with any employer maintaining the plan at any time during the one-year period (five-year period in determining whether the plan is top-heavy for plan years beginning before January 1, 2002) ending on the determination date will be disregarded.  The calculation of the top-heavy ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Code section 416 and the regulations thereunder.  Deductible employee contributions will not be taken into account for purposes of computing the top-heavy ratio.  When aggregating plans the value of account balances and accrued benefits will be calculated with reference to the determination dates that fall within the same calendar year.

The accrued benefit of a participant other than a key employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (2) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).

Catch-up contributions with respect to the current plan year shall not be taken into account; however, catch-up contributions for prior years shall be taken into account.

(4)Permissive Aggregation Group – The required aggregation group of plans plus any other plan or plans of the employer that, when considered as a group with the required aggregation group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410.

(5)Required Aggregation Group – (A) Each qualified plan of the employer in which at least one key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated), and (B) any other qualified plan of the employer that enables a plan described in (A) to meet the requirements of Code sections 401(a)(4) or 410.

(6)Determination Date – For any plan year subsequent to the first plan year, the last day of the preceding plan year.  For the first plan year of the plan, the last day of that year.

(7)Valuation Date – The last day of the plan year shall be the date as of which account balances or accrued benefits are valued for purposes of calculating the top-heavy ratio.

(8)Present Value – Present value shall be based only on the interest and mortality rates specified in the employer’s defined benefit plan.

(9)Non-Key Employee – Any employee who is not a key employee.  Non-key employees include employees who are former key employees.

Section 5.5 – Limitations and Conditions Regarding Contributions Under Code Sections 402(g), 401(k), and 401(m)

(a)(1)Limit Maximum Amount of Elective Deferrals Under Code Section 402(g)

No participant shall be permitted to have elective deferrals made under this plan, or any other qualified plan, contract or arrangement maintained by the employer, during any calendar year, in excess of the dollar limitation contained in Code section 402(g) in effect for the participant's taxable year at the beginning of such calendar year.  If Section 3.4 so provides, in the case of a participant age 50 or over by the end of the taxable year, the dollar limitation described in the preceding sentence shall include the amount of elective deferrals that are permitted to be catch-up contributions.  The dollar limitation contained in Code section 402(g) was $15,000 for taxable years beginning in 2006.  After 2006, the Secretary of the Treasury will adjust the $15,000 dollar limitation for cost-of-living increases under Code section 402(g)(4).  Any such adjustments will be in multiples of $500.

(2)Catch-up Contributions

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Catch-up contributions means elective deferrals made to the plan that are in excess of an otherwise applicable plan limit and that are made by participants who are age 50 or over by the end of their taxable years.  An otherwise applicable plan limit is a limit in the plan that applies to elective deferrals without regard to catch-up contributions, such as any limitation set forth in Section 3.4, the limits on annual additions described in Section 5.1, the dollar limitation on elective deferrals under Code section 402(g) (not taking into account catch-up contributions) and the limit imposed by the actual deferral percentage (ADP) test under Section 5.5(b).  Catch-up contributions for a participant for a taxable year may not exceed:

(A)the dollar limit on catch-up contributions under Code section 414(v)(2)(B)(i) for the taxable year; or

(B)when added to other elective deferrals, 100% of the participant’s compensation for the taxable year (subject to the reservation of sufficient compensation to satisfy federal, state, and local income and other wage-related tax requirements).

The dollar limit on catch-up contributions was $5,000 for taxable years beginning in 2006.  After 2006, the $5,000 limitation is adjusted by the Secretary of the Treasury for cost-of-living increases under Code section 414(v)(2)(C).  Any such adjustments will be in multiples of $500.

Catch-up contributions shall not be:

(A)subject to the limits on annual additions;

(B)taken into account under the ADP test; and

(C)taken into account in determining the minimum allocation under Section 5.4(b); however, catch-up contributions made in prior years shall be taken into account in determining whether the plan is top-heavy.

Provisions in the plan relating to catch-up contributions apply to elective deferrals made after December 31, 2001.

(3)Distribution of Excess Elective Deferrals

A participant may assign to this plan any excess elective deferrals made during a taxable year of the participant by following the claim procedure set forth in Section 5.5(a)(4).  Also, the employer may notify this plan on behalf of a participant who has excess deferrals for the taxable year calculated by taking into account only elective deferrals under the plans, contracts or arrangements maintained by the employer.

Notwithstanding any other provision of the plan, excess elective deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any participant to whose account excess elective deferrals were assigned for the preceding year and for whom excess elective deferrals have been claimed for such taxable year or calendar year.  For participant taxable years beginning after December 31, 2005, distribution of excess elective deferrals for a year shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(4)Claims

The participant's claim shall be submitted in writing to the plan administrator no later than March 1.  The participant shall specify the excess deferral amount for the preceding calendar year and shall provide a written statement that if such amounts are not distributed, such excess deferral amount, when added to amounts deferred under other plans or arrangements described in Code sections 401(k), 408(k), 457, or 403(b), exceeds the limit imposed on the participant by Code section 402(g) for the year in which the deferral occurred.

(5)Definitions (Code Section 402(g) Limitations)

(A)Elective Deferrals shall mean any employer contributions made to the plan at the election of the participant, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism.  With respect to any taxable year, a participant's elective deferral is the sum of all employer contributions made on behalf of such participant pursuant to an election to defer under any qualified cash or deferred arrangement as

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described in Code section 401(k), any salary reduction simplified employee pension described in section 408(k)(6), any SIMPLE IRA plan described in section 408(p), any plan described under section 501(c)(18), and any employer contributions made on the behalf of a participant for the purchase of an annuity contract under section 403(b) pursuant to a salary reduction agreement.  For years beginning after December 31, 2005, the term "elective deferrals" shall include pre-tax elective deferrals and Roth elective deferrals.  Pre-tax elective deferrals means a participant's elective deferrals that are not includable in the participant's gross income at the time deferred.  Elective deferrals shall not include any deferrals properly distributed as excess annual additions.

(B)Roth Elective Deferrals shall mean a participant's elective deferrals that are includable in the participant's gross income at the time deferred and have been irrevocably designated as Roth elective deferrals by the participant in the deferral election in lieu of all or a portion of the pre-tax elective deferrals the participant is otherwise eligible to make under the plan.  A participant's Roth elective deferrals shall be maintained in a separate account containing only the participant's Roth elective deferrals and gains and losses attributable to those Roth elective deferrals.

(C)Excess Elective Deferrals shall mean those elective deferrals that either:  (i) are made during the participant's taxable year and exceed the dollar limitation under Section 5.5(a) (including, if applicable, the dollar limitation on catch-up contributions described in Section 5.5(a)(2)) for such year; or (ii) are made during a calendar year and exceed such dollar limitations for the participant's taxable year beginning in such calendar year, counting only elective deferrals made under this plan and any other plan, contract or arrangement maintained by the employer.  Excess elective deferrals shall be treated as annual additions under the plan, unless such amounts are distributed no later than the first April 15 following the close of the participant's taxable year.

(6)Determination of Income or Loss

Excess elective deferrals shall be adjusted for any income or loss.  For taxable years beginning on or after January 1, 2008, the income or loss allocable to excess elective deferrals allocated to each participant is the income or loss allocable to the participant's elective deferral account for the taxable year multiplied by a fraction, the numerator of which is such participant's excess elective deferrals for the year and the denominator is the participant's account balance attributable to elective deferrals without regard to any income or loss occurring during such taxable year.  Effective solely for the taxable year beginning on or after January 1, 2007, and to the extent the excess elective deferrals were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the taxable year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the participant’s taxable year and the date of distribution, counting the month of distribution if distribution occurred after the 15th of such month.

(b)(1)Actual Deferral Percentage Test

The actual deferral percentage (hereinafter "ADP") for a plan year for participants who are highly compensated employees for the plan year and the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year must satisfy one of the following tests:  (i) The ADP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year multiplied by 1.25; or (ii) The ADP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year multiplied by 2.0, provided that the ADP for participants who are highly compensated employees does not exceed the ADP for participants who were nonhighly compensated employees in the prior plan year by more than two percentage points.

In place of the prior year testing method described above, if so elected by the employer and adopted in Section 3.4(a), the ADP tests in (i) and (ii) will be applied by comparing the current plan year's ADP for participants who are highly compensated employees with the current plan year's ADP for participants who are nonhighly compensated employees.  In the alternative, the plan may satisfy the ADP test requirements by meeting the ADP test safe harbor requirements as described in Section 5.5(f).  Election of this method shall be treated as an election to use the current year testing method.  Once the current year testing method election has been made, the employer can elect prior year testing for a plan year only if the plan has used current year testing for each of the preceding

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5 plan years (or if lesser, the number of plan years the plan has been in existence) or if, as a result of a merger or acquisition described in Code section 410(b)(6)(c)(i), the employer maintains both a plan using prior year testing and a plan using current year testing and the change is made within the transition period described in section 410(b)(6)(c)(ii).  Such elections shall be reflected in Section 3.4(a).

(A)Special Rules Applying to ADP Test

(i)A participant is a highly compensated employee for a particular plan year if he meets the definition of a highly compensated employee in effect for that plan year.  A participant is a nonhighly compensated employee for a particular plan year if he does not meet the definition of a highly compensated employee in effect for that plan year.

(ii)The ADP for any participant who is a highly compensated employee for the plan year and who is eligible to have elective deferrals (and qualified nonelective contributions or qualified matching contributions, or both, to the extent treated as elective deferrals for purposes of the ADP test) allocated to his accounts under two or more arrangements described in Code section 401(k), that are maintained by the employer, shall be determined as if such elective deferrals (and, to the extent taken into account, such qualified nonelective contributions or qualified matching contributions, or both) were made under a single arrangement.  If a highly compensated employee participates in two or more cash or deferred arrangements of the employer that have different plan years, all elective deferrals made during this plan's plan year under all such arrangements shall be aggregated.  For plan years beginning before January 1, 2006, all elective deferrals made under all such cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.  Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code section 401(k).

(iii)In the event that this plan satisfies the requirements of Code sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this plan, then this Section 5.5(b)(1) shall be applied by determining the ADP of employees as if all such plans were a single plan.  If more than 10% of the employer's nonhighly compensated employees are involved in a plan coverage change as defined in Regulation section 1.401(k)-2(c)(4), then any adjustments to the nonhighly compensated employees' ADP for the prior year shall be made in accordance with such regulation, unless the employer has elected in Section 3.4(a) to use the current year testing method.  Plans may be aggregated in order to satisfy Code section 401(k) only if they have the same plan year and use the same ADP testing method.

(iv)If:  (A) this plan is not a successor plan (as defined in Regulation section 1.401(k)-2(c)(2)(iii)), and (B) this plan is not aggregated under Regulation section 1.401(k)-1(b)(4) for such plan year with any other plan that was or that included a Code section 401(k) plan in the prior year; then, in the case of the first plan year the plan permits any participant to make elective deferrals the amount treated as the ADP for participants who are nonhighly compensated employees for the prior plan year shall be 3% or, if the employer so elects, the ADP for participants who are nonhighly compensated employees as calculated for such first plan year.  Such election shall be set forth in Section 3.4(a).

(v)For purposes of determining the ADP test, elective deferrals, qualified nonelective contributions and qualified matching contributions must be made before the last day of the twelve-month period immediately following the plan year to which the contributions relate.  An elective deferral shall be taken into account only if it relates to compensation that either (a) would have been received by the participant in the plan year but for the deferral election, or (b) is attributable to services performed by the participant in the plan year and would have been received by the participant within 2½ months after the last day of the plan year but for the deferral election.

When the prior year testing method is used, qualified nonelective contributions and qualified matching contributions shall not be taken into account.

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(vi)The plan administrator shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of qualified nonelective contributions or qualified matching contributions, or both, used in such test.

(vii)When the current year testing method is used, qualified nonelective contributions may be taken into account as elective deferrals only to the extent needed to meet the ADP test.  Further, qualified matching contributions may be taken into account only to the extent such contributions are not needed to meet the average deferral percentage test unless it is the intention of the plan administrator to test all qualified nonelective and matching contributions under the ADP test.

(viii)Effective for plan years beginning on or after January 1, 2006, qualified nonelective contributions cannot be taken into account for a plan year for a nonhighly compensated employee to the extent such contributions exceed the product of that nonhighly compensated employee's compensation and the greater of 5% or two times the plan's representative contribution rate.  For this purpose, the plan's representative contribution rate is the lowest applicable contribution rate of any eligible nonhighly compensated employee among a group of eligible nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees for the plan year (or, if greater, the lowest applicable contribution rate of any eligible nonhighly compensated employee in the group of all eligible nonhighly compensated employees for the plan year and who is employed by the employer on the last day of the plan year).

The applicable contribution rate for an eligible nonhighly compensated employee is the sum of his qualified matching contributions taken into account under the ADP test and his qualified nonelective contributions for the plan year, divided by his compensation for the same period.  Notwithstanding the preceding, qualified nonelective contributions that are made in connection with an employer's obligation to pay prevailing wages under the Davis-Bacon Act can be taken into account for a plan year for a nonhighly compensated employee to the extent such contributions do not exceed 10% of his compensation.

(ix)Applicable limitations when testing changes from current year testing to prior year testing:  The ADP for the prior plan year shall be determined taking into account only:  (A) elective contributions for nonhighly compensated employees that were taken into account for purposes of the ADP test in the prior plan year under the current plan year testing method and (B) qualified nonelective contributions not previously taken into account under either the ADP or ACP test.

(x)The determination and treatment of the ADP amounts of any participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(B)Actual Deferral Percentage (ADP) shall mean, for a specified group of participants (either highly compensated employees or nonhighly compensated employees) for a plan year, the average of the ratios (calculated separately for each participant in such group) of (1) the amount of employer contributions actually paid over to the trust on behalf of such participant for the plan year to (2) the participant's compensation as defined in Section 1.2(e).  The actual deferral ratio of each participant and the actual deferral percentage of each group shall be calculated to the nearest hundredth of a percentage point.  Employer contributions on behalf of any participant shall include: (1) any elective deferrals (other than catch-up contributions) made pursuant to the participant's deferral election, including excess elective deferrals of highly compensated employees, but excluding (a) excess elective deferrals of nonhighly compensated employees that arise solely from elective deferrals to the extent the excess deferrals are prohibited under Code section 401(a)(30) due to the contributions made under this plan and without taking into account deferrals made under an unrelated employer's plan and (b) elective deferrals that are taken into account in the actual contribution percentage test (provided the ADP test is satisfied both with and without exclusion of these elective deferrals); and (2) at the election of the employer, qualified nonelective contributions and qualified matching contributions.  For purposes of computing actual deferral percentages, an employee who would be a participant but for the failure to make elective deferrals shall be treated as a participant on whose behalf no elective deferrals are made.

(2)Distribution of Excess Contributions

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Notwithstanding any other provision of this plan, excess contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each plan year to participants to whose accounts such excess contributions were allocated for the preceding plan year, except to the extent such excess contributions are classified as catch-up contributions.  If such excess amounts (other than catch-up contributions) are distributed more than 2½ months after the last day of the plan year in which such excess amounts arose, a 10% excise tax will be imposed on the employer maintaining the plan with respect to such amounts.  Notwithstanding the preceding, the excise tax will not be imposed if the distribution is made within 6 months after the last day of such plan year if the plan is an eligible automatic contribution arrangement within the meaning of Code section 414(w) that covers all eligible nonhighly compensated employees and highly compensated employees for the entire portion of the plan year for which they are eligible and provides the notice described in Section 5.5(f)(4) even after an affirmative deferral election has been made.  Excess contributions shall be allocated to the highly compensated employees with the largest amounts of contributions taken into account in calculating the ADP test for the plan year in which the excess arose, beginning with the highly compensated employee with the largest amount of such contributions and continuing in descending order until all of the excess contributions have been allocated.  To the extent a highly compensated employee has not reached his catch-up contribution limit under the plan, excess contributions allocated to such highly compensated employee shall be recognized as catch-up contributions and will not be treated as excess contributions.

Excess contributions shall be treated as annual additions under the plan even if distributed.

(A)Determination of Income or Loss – Excess contributions shall be adjusted for any income or loss.  For plan years beginning on or after January 1, 2008, the income or loss allocable to excess contributions allocated to each participant is the income or loss allocable to the participant's elective deferral account(s) (and, if applicable, the qualified nonelective contribution account or the qualified employer matching contribution account or both) for the plan year multiplied by a fraction, the numerator of which is such participant's excess contributions for the year and the denominator is the participant's account balance(s) attributable to elective deferrals (and qualified nonelective contributions or qualified matching contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such plan year.  Effective solely for the plan year beginning on or after January 1, 2006 and the plan year beginning on or after January 1, 2007 and to the extent the excess contributions were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the plan year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the plan year and the date of distribution, counting the month of distribution if distribution occured after the 15th of such month.

(B)Accounting for Excess Contributions – Excess contributions allocated to a participant shall be distributed from the participant's elective deferral account(s) and qualified employer matching contribution account (if applicable) in proportion to the participant's elective deferrals and qualified matching contributions (to the extent used in the ADP test) for the plan year.  Excess contributions shall be distributed from the participant's qualified nonelective contribution account only to the extent that such excess contributions exceed the amount of excess contributions in the participant's elective deferral account(s) and qualified matching contribution account.

For plan years beginning after December 31, 2005, distribution of excess contributions for a year shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(C)Excess Contributions shall mean, with respect to any plan year, the excess of:  (i) The aggregate amount of employer contributions actually taken into account in computing the ADP of highly compensated employees for such plan year, over (ii) The maximum amount of such contributions permitted by the ADP test (determined by hypothetically reducing contributions made on behalf of highly compensated employees in order of the ADPs, beginning with the highest of such percentages).

Such determination shall be made after first determining excess elective deferrals pursuant to Section 5.5(a).

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(c)(1)Limitations on Employee and Matching Contributions Under Code Section 401(m)

The actual contribution percentage (hereinafter "ACP") for a plan year for participants who are highly compensated employees for the plan year and the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year must satisfy one of the following tests:  (i) The ACP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year multiplied by 1.25; or (ii) The ACP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year multiplied by 2.0, provided that the ACP for participants who are highly compensated employees does not exceed the ACP for participants who were nonhighly compensated employees in the prior plan year by more than two  percentage points.

In place of the prior year testing method described above, if so elected by the employer and adopted in Section 3.6, the ACP tests in (i) and (ii) will be applied by comparing the current plan year's ACP for participants who are highly compensated employees with the current plan year's ACP for participants who are nonhighly compensated employees.  In the alternative, the plan may satisfy the ACP test requirements by meeting the safe harbor requirements of Section 5.5(f)(3) and (4).  Election of this method shall be treated as an election to use the current year testing method.  In such a plan year, the current year testing method shall be used for the purpose of testing any employee nondeductible contributions.  Once the current year testing method election has been made, the employer can elect prior year testing for a plan year only if the plan has used current year testing for each of the preceding 5 plan years (or if lesser, the number of plan years the plan has been in existence) or if, as a result of a merger or acquisition described in Code section 410(b)(6)(c)(i), the employer maintains both a plan using prior year testing and a plan using current year testing and the change is made within the transition period described in section 410(b)(6)(c)(ii).  Such elections shall be reflected in Section 3.6.

(A)Special Rules for Limitations Under Code Section 401(m)

(i)A participant is a highly compensated employee for a particular plan year if he meets the definition of a highly compensated employee in effect for that plan year.  A participant is a nonhighly compensated employee for a particular plan year if he does not meet the definition of a highly compensated employee in effect for that plan year.

(ii)For purposes of this Section 5.5(c)(1), the contribution percentage for any participant who is a highly compensated employee and who is eligible to have contribution percentage amounts allocated to his account under two or more plans described in Code section 401(a), or arrangements described in Code section 401(k) that are maintained by the employer, shall be determined as if the total of such contribution percentage amounts were made under each plan and arrangement.  If a highly compensated employee participates in two or more such plans or cash or deferred arrangements that have different plan years, all contribution percentage amounts made during the plan year for this plan under all such plans and arrangements shall be aggregated.  For plan years beginning before January 1, 2006, all such plans and cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.  Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code section 401(m).

(iii)In the event that this plan satisfies the requirements of Code sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections only if aggregated with this plan, then this Section 5.5(c)(1) shall be applied by determining the ACP of employees as if all such plans were a single plan.  If more than 10% of the employer's nonhighly compensated employees are involved in a plan coverage change as defined in Regulation section 1.401(m)-2(c)(4), then any adjustments to the nonhighly compensated employees' ACP for the prior year shall be made in accordance with such regulation, unless the employer has elected in Section 3.6 to use the current year testing method.  Plans may be aggregated in order to satisfy Code section 401(m) only if they have the same plan year and use the same ACP testing method.

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(iv)If:  (A) this plan is not a successor plan (as defined in Regulation section 1.401(m)-2(c)(2)(iii)) and (B) this plan is not aggregated under Regulation section 1.401(m)-1(b)(4) for such plan year with any other plan that was or that included a Code section 401(m) plan in the prior year; then, in the case of the first plan year this plan permits any participant to make employee contributions, provides for matching contributions, or both, the amount treated as the ACP for participants who are nonhighly compensated employees for the prior plan year shall be 3% or, if the employer so elects, the ACP for participants who are nonhighly compensated employees as calculated for such first plan year.  Such election shall be set forth in Section 3.6.

(v)For purposes of determining the ACP test, employee contributions are considered to have been made in the plan year in which contributed to the trust.  Matching contributions and qualified nonelective contributions will be considered made for a plan year if made no later than the end of the twelve-month period beginning on the day after the close of the plan year.

When the prior year testing method is used, qualified nonelective contributions shall not be taken into account.

(vi)The plan administrator shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of qualified nonelective contributions or qualified matching contributions, or both, used in such test.

(vii)Elective deferral contributions may be taken into account; however, the ADP test shall be met before any elective deferrals are used in the ACP test and the elective deferrals needed to meet the ADP test shall not be used to meet the ACP test.  When the current year testing method is used, qualified nonelective contributions shall be taken into account to the extent such contributions are not used to meet the ADP test.

(viii)Effective for plan years beginning on or after January 1, 2006, a matching contribution with respect to an elective deferral for a nonhighly compensated employee shall not be taken into account under the ACP test to the extent it exceeds the greatest of:  (A) 5% of compensation; (B) the employee's elective deferrals for a year; and (C) the product of 2 times the plan's representative matching rate and the employee's elective deferrals for a year.  For this purpose, the plan's representative matching rate is the lowest matching rate for any eligible nonhighly compensated employee among a group of nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees in the plan for the plan year who make elective deferrals for the plan year (or, if greater, the lowest matching rate for all eligible nonhighly compensated employees in the plan who are employed by the employer on the last day of the plan year and who make elective deferrals for the plan year).

The matching rate for an employee generally is the matching contributions made for such employee divided by his elective deferrals (and employee nondeductible contributions) for the year.  If the matching rate is not the same for all levels of his elective deferrals (and employee nondeductible contributions), the employee's matching rate is determined assuming that his elective deferrals are equal to 6% of compensation.

(ix)Applicable limitations when testing changes from current year testing to prior year testing:  The ACP for the prior plan year shall be determined taking into account only:  (A) employee contributions for nonhighly compensated employees made for the prior plan year, (B) matching contributions for nonhighly compensated employees that were taken into account for purposes of the ACP test in the prior plan year under the current plan year testing method, and (C) qualified nonelective contributions not previously taken into account under either the ADP or ACP test.

(x)The determination and treatment of the ACP amounts of any participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(B)Definitions (Code Section 401(m) Limitations)

(i)Actual Contribution Percentage (ACP) shall mean, for a specified group of participants (either highly compensated employees or nonhighly compensated employees) for a plan year, the average of the contribution percentages of the eligible participants in the group.

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(ii)Contribution Percentage shall mean the ratio (expressed as a percentage calculated to the nearest hundredth of a percentage point) of the participant's contribution percentage amounts to the participant's compensation as defined in Section 1.2(e).

(iii)Contribution Percentage Amounts shall mean the sum of the employee nondeductible contributions, employer matching contributions and elective deferrals (to the extent not taken into account for purposes of the ADP test) made under the plan on behalf of the participant for the plan year.  Such contribution percentage amounts shall not include matching contributions that are forfeited either to correct excess aggregate contributions or because the contributions to which they relate are excess deferrals, excess contributions, or excess aggregate contributions.  Qualified nonelective contributions may be included in the contribution percentage amounts.  Elective deferrals may also be used in calculating the contribution percentage amounts so long as the ADP test is met before the elective deferrals are used in the ACP test and the ADP test continues to be met following the exclusion of those elective deferrals that are used to meet the ACP test.  The contribution percentage amounts shall be calculated to the nearest hundredth of a percentage point.

(iv)Eligible Participant shall mean any employee who is eligible to make an employee nondeductible contribution, or an elective deferral (if the employer takes such contributions into account in the calculation of the contribution percentage), or to receive an employer matching contribution (including forfeitures).  If an employee nondeductible contribution is required as a condition of participation in the plan, any employee who would be a participant in the plan if such employee made such a contribution shall be treated as an eligible participant on behalf of whom no employee contributions are made.

(v)Employee Nondeductible Contribution (or employee contribution) shall mean any contribution (other than Roth elective deferrals) made under Section 3.5 to the plan by or on behalf of a participant that is included in the participant's gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated.

(vi)Matching Contribution shall mean an employer contribution made to this or any other defined contribution plan on behalf of a participant on account of an employee nondeductible contribution made by such participant, or on account of a participant's elective deferral, under a plan maintained by the employer.

(2)Distribution of Excess Aggregate Contributions

Notwithstanding any other provision of this plan, excess aggregate contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later than the last day of each plan year to participants to whose accounts such excess aggregate contributions were allocated for the preceding plan year.  Excess aggregate contributions shall be allocated to the highly compensated employees with the largest contribution dollar amounts taken into account in calculating the ACP test for the plan year in which the excess arose, beginning with the highly compensated employee with the largest dollar amount of such contributions and continuing in descending order until all of the excess aggregate contributions have been allocated.  If such excess aggregate contributions are distributed more than 2½ months after the last day of the plan year in which such excess amounts arose, a 10% excise tax will be imposed on the employer maintaining the plan with respect to those amounts.  Notwithstanding the preceding, the excise tax will not be imposed if the distribution is made within 6 months after the last day of such plan year if the plan is an eligible automatic contribution arrangement within the meaning of Code section 414(w) that covers all eligible nonhighly compensated employees and highly compensated employees for the entire portion of the plan year for which they are eligible and provides the notice described in Section 5.5(f)(4) even after an affirmative deferral election has been made.  Excess aggregate contributions shall be treated as annual additions under the plan even if distributed.

(A)Determination of Income or Loss – Excess aggregate contributions shall be adjusted for any income or loss.  For plan years beginning on or after January 1, 2008, the income or loss allocable to excess aggregate contributions allocated to each participant is the income or loss allocable to the participant's employee nondeductible contribution account, employer matching contribution account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, qualified nonelective contribution account and elective deferral account(s) for the plan

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year multiplied by a fraction, the numerator of which is such participant's excess aggregate contributions for the year and the denominator is the participant's account balance(s) attributable to contribution percentage amounts without regard to any income or loss occurring during such plan year.  Effective solely for the plan year beginning on or after January 1, 2006 and the plan year beginning on or after January 1, 2007, and to the extent the excess contributions were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the plan year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the plan year and the date of distribution, counting the month of distribution if distribution occured after the 15th of such month.

(B)Forfeitures of Excess Aggregate Contributions – Forfeitures of excess aggregate matching contributions may either be reallocated to the accounts of nonhighly compensated employees or applied to reduce employer contributions, as provided in Section 3.6(e).

(C)Accounting for Excess Aggregate Contributions – Excess aggregate contributions allocated to a participant shall be forfeited, if forfeitable or distributed on a pro-rata basis from the participant's employee nondeductible contribution account and employer matching contribution account (and, if applicable, the participant's qualified nonelective contribution account or elective deferral account(s), or both).  For plan years beginning after December 31, 2005, distribution of elective deferrals that are excess aggregate contributions shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess aggregate elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(D)Excess Aggregate Contributions shall mean, with respect to any plan year, the excess of:  (i) The aggregate contribution percentage amounts taken into account in computing the numerator of the contribution percentage actually made on behalf of highly compensated employees for such plan year, over (ii) The maximum contribution percentage amounts permitted by the ACP test (determined by hypothetically reducing contributions made on behalf of highly compensated employees in order of their contribution percentages beginning with the highest of such percentages).

Such determination shall be made after first determining excess elective deferrals pursuant to Section 5.5(a) and then determining excess contributions pursuant to Section 5.5(b)(2).

(3)Required Forfeitures – Any employer matching contribution attributable to an excess elective deferral determined pursuant to Section 5.5(a) or an excess contribution determined pursuant to Section 5.5(b)(2) shall be forfeited.  Any nonvested excess aggregate contribution determined pursuant to Section 5.5(c)(2) shall also be forfeited.

(d)Top-Heavy Requirements

Elective deferrals (and for plan years beginning before January 1, 2002 employer matching contributions) will not be taken into account for the purpose of satisfying the minimum top-heavy contribution requirement.  However, qualified nonelective contributions and employer matching contributions (for plan years beginning on or after January 1, 2002) may be taken into account for this purpose as provided in Section 3.2(c) or 3.3(b), as appropriate.

(e)Restrictions on Payment of Certain Accounts

Elective deferrals, qualified nonelective contributions, and qualified matching contributions, and income allocable to each are not distributable to a participant or his beneficiary in accordance with such person's election, earlier than upon the participant's severance from employment, death, or disability.  All distributions that may be made pursuant to one or more of the distributable events described in this Section 5.5(e) are subject to the spousal and participant consent requirements as described in Section 5.2(a).

Such account balances may also be distributed upon:

(1)Termination of the plan without the employer maintaining or establishing another defined contribution plan (other than an employee stock ownership plan (as defined in Code section 4975(e)(7) or 409(a)), a simplified employee pension plan (as defined in Code section 408(k)), a SIMPLE IRA plan (as defined in Code section 408(p)), a plan or contract

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described in Code section 403(b) or a plan described in Code section 457(b) or (f)) at any time during the period beginning on the date of plan termination and ending 12 months after all assets have been distributed from the plan.  Such a distribution must be made in a lump sum or through the purchase of an annuity contract that shall be owned by the participant (if an annuity payment option is otherwise available under Section 4.3(b)).

(2)The attainment of age 59½ in the case of a profit sharing plan.

(3)The hardship of the participant as described in Section 4.4(a).

(f)Safe Harbor Alternative Compliance

(1)If the plan so provides in Section 3.4(a) or Section 3.6 that the safe harbor requirements will be met, the provisions of this Section 5.5(f) shall apply for the plan year as provided in such Sections and any provisions relating to the ADP test described in Section 5.5(b) or the ACP test described in Section 5.5(c) shall not apply.  To the extent that any other provision of the plan is inconsistent with the provisions of this Section 5.5(f), the provisions of this Section 5.5(f) shall govern when Section 3.4(a) or Section 3.6 so provide.  In accordance with Regulation sections 1.401(k)-1(e)(7) and 1.401(m)-1(c)(2), it is impermissible for the employer to use ADP and ACP testing for a plan year in which it is intended for the plan through its written terms to be a Code section 401(k) safe harbor plan and a Code section 401(m) safe harbor plan and the employer fails to satisfy the requirements of such safe harbors for the plan year.

(2)ADP Test Safe Harbor Contributions – The plan may provide in Section 3.4(a) that the ADP test safe harbor requirements shall be satisfied by the employer making a safe harbor employer matching contribution as provided under Section 3.6 (or as a separate safe harbor employer matching contribution as provided under Section 3.6A) or by the employer making a safe harbor nonelective contribution of at least 3% of the employee's compensation under Section 3.3 or another defined contribution plan sponsored by the employer.  In any case, the notice described in Section 5.5(f)(4) shall be given.  The participant's accrued benefit derived from ADP test safe harbor contributions shall be nonforfeitable and may not be distributed earlier than provided in Section 5.5(e), regardless of the form of the contribution.

If the plan provides in Section 3.4(a) that the safe harbor nonelective contribution will be made in satisfaction of the qualified automatic contribution arrangement requirements, the contribution shall be held under the safe harbor qualified automatic contribution arrangement sub-account.  Such account shall not become 100% vested until the participant has completed 2 years of vesting service.  Any forfeiture therefrom shall be used to reduce the employer’s safe harbor contribution.

(3)ACP Test Safe Harbor Requirements – The plan may provide in Section 3.6 that the ACP test safe harbor requirements shall be satisfied by the employer making a safe harbor nonelective contribution under Section 3.3 of at least 3% of the employee's compensation or by the employer making a matching contribution on behalf of each eligible employee that either:

(A)is equal to 100% of the elective contributions of the employee to the extent such elective contributions do not exceed 3% of the employee's compensation, plus 50% of the elective contributions of the employee to the extent that such elective contributions exceed 3% but do not exceed 5% of the employee's compensation; or

(B)does not increase as an employee's rate of elective contributions increase and the aggregate amount of which is at least equal to the aggregate amount of matching contributions which would be made if matching contributions were made on the basis of the percentages described in Section 5.5(f)(3)(A).

If the plan provides in Section 3.4(a) and Section 3.6(b)(2) that the safe harbor matching contribution will be made in satisfaction of the qualified automatic contribution arrangement requirements, in place of the matching contribution formula described in Section 5.5(f)(3)(A), the employer shall contribute an amount equal to 100% of the elective contributions of the employee to the extent such elective contributions do not exceed 1% of the employee's compensation, plus 50% of the elective contributions of the employee to the extent that such elective contributions exceed 1% but do not exceed 6% of the employee's compensation.

In any case, the notice described in Section 5.5(f)(4) shall be given and matching contributions on behalf of any employee shall not be made with respect to an employee's nondeductible contributions

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or elective deferrals in excess of 6% of the employee's compensation.  The rate of an employer's matching contribution shall not increase as the rate of an employee's nondeductible contributions or elective deferrals increase nor shall the matching contribution with respect to any highly compensated employee be greater than that with respect to a nonhighly compensated employee.

(4)Safe Harbor Notice – If the employer elects to satisfy the safe harbor requirements of this Section 5.5(f) or if the employer wishes to take advantage of the 3.5 month extension for the return of excess contributions and excess aggregate contributions, the plan administrator shall provide to each employee eligible to participate in the plan, no less than 30 days and no more than 90 days prior to any plan year (or his entry date in the case of a new participant), written notice of the employee's rights and obligations under the plan that is sufficiently accurate and comprehensive to apprise the employee of such rights and obligations.  If an employee becomes eligible to participate after the 90th day before the beginning of the plan year and does not receive the notice for that reason, the notice must be provided no more than 90 days before the employee becomes eligible but not later than the date the employee becomes eligible.  This timing requirement shall be deemed satisfied in the case of a plan that provides for participation upon date of employment if the notice is provided as soon as practicable after that date but prior to the pay date for the first payroll period.

Notwithstanding the preceding, where the plan is not intended to comply with either the ADP or ACP safe harbor requirements, but only the eligible automatic contribution arrangement requirements of Code section 414(w); the notice shall contain only the items listed in Section 5.5(f)(4)(A)(viii) through (xi).  If the employer wishes to take advantage of the 3.5 month extension for the return of excess contributions and excess aggregate contributions, then the notice shall be provided to all employees eligible to be covered by the plan.  Otherwise, after the initial notice is provided to all eligible employees who have not chosen to make 401(k) deferral contributions, no notice will be provided to employees who have made an affirmative election to defer or not to defer.

(A)Contents of the Notice – Such notice shall be written in a manner calculated to be understood by the average employee eligible to participate hereunder.  The notice shall accurately describe:  (i) the safe harbor matching or nonelective contribution formula used under the plan (including a description of the levels of matching contributions, if any, available under the plan); (ii) any other contributions under the plan (including the potential for discretionary matching contributions) and the conditions under which such contributions are made; (iii) the plan to which safe harbor contributions will be made if such contributions will be made to another plan; (iv) the type and amount of compensation that may be deferred under the plan; (v) how to make cash or deferred elections, including any administrative requirements that apply to such elections; (vi) the periods available under the plan for making cash or deferred elections; (vii) withdrawal and vesting provisions applicable to contributions under the plan; (viii) the level of elective contributions that will be made on an employee’s behalf if he does not make an affirmative election; (ix) the employee's right under any automatic salary reduction contribution arrangement to elect not to have elective contributions made on the employee's behalf (or to elect to have such contributions made at a different percentage); (x) if the employee is eligible to make investment elections under Section 3.8, how contributions made under the arrangement will be invested in the absence of any investment election by the employee; and (xi) the employee's right to make a permissible withdrawal, if applicable, and the procedures to elect such a withdrawal.  If eligible employees have been provided with the current summary plan description, the written notice may instead cross-reference the relevant portion with respect to items (ii), (iii), and (iv); however, such notice must also provide the telephone numbers, addresses and, if applicable, electronic addresses, of the individuals or offices from whom employees can obtain additional information about the plan.

(B)Alternative Timing of Amendment and Notice for Safe Harbor Nonelective Contribution – If an employer using the current year method to satisfy the ADP test determines that it may choose during a plan year to satisfy the ADP test safe harbor requirements by providing a safe harbor nonelective contribution, the plan administrator shall provide a written notice to eligible employees before the beginning of the plan year that (i) the plan may be amended during the plan year to provide that the employer will make a safe harbor nonelective contribution of at least 3% to the plan for the plan year and (ii) if the plan is so amended, a supplemental notice will be given to eligible employees 30 days prior to the last day of the plan year informing them of such an amendment.  If the employer elects during the plan year to satisfy the ADP test safe harbor requirements by providing a safe harbor nonelective contribution, the amendment shall be adopted not later than 30 days before the last day of the plan year.  The supplemental notice

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shall be distributed no later than 30 days prior to the last day of the plan year and shall state that a 3% safe harbor nonelective contribution will be made for the plan year.

ARTICLE VI – ADMINISTRATION OF THE PLAN

Section 6.1 – Fiduciary Responsibility

(a)Fiduciary Standards – A fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and –

For the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan;

With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

By diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of ERISA.

(b)Allocation of Fiduciary Responsibility

(1)It is intended to allocate to each fiduciary, either named or otherwise, the individual responsibility for the prudent execution of the functions assigned to him.  None of the allocated responsibilities or any other responsibilities shall be shared by two or more fiduciaries unless specifically provided for in the plan.

(2)When one fiduciary is required to follow the directions of another fiduciary, the two fiduciaries shall not be deemed to share such responsibility.  Instead, the responsibility of the fiduciary giving the directions shall be deemed to be his sole responsibility and the responsibility of the fiduciary receiving directions shall be to follow those directions insofar as such instructions on their face are proper under applicable law.

(3)Any person or group of persons may serve in more than one fiduciary capacity with respect to this plan.

(4)A fiduciary under this plan may employ one or more persons, including independent accountants, attorneys and actuaries to render advice with regard to any responsibility such fiduciary has under the plan.

(c)Indemnification by Employer – Unless resulting from the gross negligence, willful misconduct or lack of good faith on the part of a fiduciary who is an officer or employee of the employer, the employer shall indemnify and save harmless such fiduciary from, against, for and in respect of any and all damages, losses, obligations, liabilities, liens, deficiencies, costs and expenses, including without limitation, reasonable attorney's fees and other costs and expenses incident to any suit, action, investigation, claim or proceedings suffered in connection with his acting as a fiduciary under the plan.

(d)Named Fiduciary – The person or persons named by the employer as having fiduciary responsibility for the management and control of plan assets shall be known as the "named fiduciary" hereunder.  Such responsibility shall include the appointment of the plan administrator (Section 6.2(a)) and the investment manager (Section 6.4(b)) and the deciding of benefit appeals (Section 6.3).  The employer shall retain the authority to appoint the trustee (Section 6.4(a)).  The named fiduciary possesses exclusive authority to monitor the plan’s receipt of contributions and enforce the collection of delinquent contributions to the trust.

Section 6.2 – Plan Administrator

(a)Appointment of Plan Administrator

The named fiduciary shall appoint a plan administrator who may be a person or an administrative committee consisting of no more than five members.  Vacancies occurring upon resignation or removal of

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a plan administrator or a committee member shall be filled promptly by the named fiduciary.  Any plan administrator may resign at any time by giving notice of his resignation to the named fiduciary, and any plan administrator may be removed at any time by the named fiduciary.  The named fiduciary shall review at regular intervals the performance of the plan administrator(s) and shall re-evaluate the appointment of such administrator(s).  After the named fiduciary has appointed the plan administrator and has received a written notice of acceptance, the fiduciary responsibility for administration of the plan shall be the responsibility of the plan administrator or plan administrative committee.

(b)Duties and Powers of Plan Administrator

The plan administrator shall have the following duties and discretionary powers and such other duties and discretionary powers as relate to the administration of the plan:

(1)To determine in a nondiscriminatory manner all questions relating to the eligibility of employees to become participants.

(2)To determine in a nondiscriminatory manner eligibility for benefits and to determine and certify the amount and kind of benefits payable to participants.

(3)To authorize all disbursements from the fund.

(4)To appoint or employ any independent person to perform necessary plan functions and to assist in the fulfillment of administrative responsibilities as he deems advisable, including the retention of a third party administrator, custodian, auditor, accountant, actuary, or attorney.

(5)When appropriate, to select an insurance company and annuity contracts that, in his opinion, will best carry out the purposes of the plan.

(6)To construe and interpret any ambiguities in the plan and to make, publish, interpret, alter, amend or revoke rules for the regulation of the plan that are consistent with the terms of the plan and with ERISA.

(7)To prepare and distribute, in such manner as determined to be appropriate, information explaining the plan.

(c)Allocation of Fiduciary Responsibility Within Plan Administrative Committee

If the plan administrator is a plan administrative committee, the committee shall choose from its members a chairperson and a secretary.  The committee may allocate responsibility for those duties and powers listed in Section 6.2(b)(1) and (2) (except determination of qualification for disability retirement) and other purely ministerial duties to one or more members of the committee.  The committee shall review at regular intervals the performance of any committee member to whom fiduciary responsibility has been allocated and shall re-evaluate such allocation of responsibility.  After the plan administrative committee has made such allocations of responsibilities and has received written notice of acceptance, the fiduciary responsibilities for such administrative duties and powers shall then be considered as the responsibilities of such committee member(s).

(d)Miscellaneous Provisions

(1)Plan Administrative Committee Actions – The actions of such committee shall be determined by the vote or other affirmative expression of a majority of its members.  Either the chairperson or the secretary may execute any certificate or other written direction on behalf of the committee.  A member of the committee who is a participant shall not vote on any question relating specifically to himself.  If the remaining members of the committee, by majority vote thereof, are unable to come to a determination of any such question, the named fiduciary shall appoint a substitute member who shall act as a member of the committee for the special vote.

(2)Expenses – The plan administrator shall serve without compensation for service as such.  All reasonable expenses of the plan administrator shall be paid by the employer or from the fund.

(3)Examination of Records – The plan administrator shall make available to any participant for examination during business hours such of the plan records as pertain only to the participant involved.

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(4)Information to the Plan Administrator – To enable the plan administrator to perform the administrative functions, the employer shall supply full and timely information to the plan administrator on all participants as the plan administrator may require.

Section 6.3 – Claims Procedure

(a)Notification of Claim Determination – The plan administrator shall notify each participant in writing of his determination of benefits.  If the plan administrator denies any benefit, such written denial shall include:

· The specific reasons for denial;

· Reference to provisions on which the denial is based;

· A description of and reason for any additional information needed to process the claim; and

· A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

If a claim is wholly or partially denied, the plan administrator shall notify the claimant of the plan's adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the plan, unless the plan administrator determines that special circumstances require an extension of time for processing the claim.  If the plan administrator determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90‑day period.  In no event shall such extension exceed a period of 90 days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the plan expects to render the benefit determination.

(b)Appeal – The participant or his duly authorized representative may:

· Make a written request for a review of the participant's case by the named fiduciary;

· Review upon request and free of charge, have reasonable access to, and have copies of, all documents, records, and other information relevant to the claimant's claim for benefits;

· Submit written issues, comments, documents, records, and other information relating to the claim for benefits, without regard to whether such information was submitted or considered in the initial benefit determination.

The written request for review must be submitted no later than 60 days after receiving written notification of denial of benefits.  A document, record, or other information shall be considered relevant to a claimant's claim if such document, record, or other information:

· Was relied upon in making the benefit determination;

· Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or

· Demonstrates compliance with the administrative processes and safeguards required by law in making the benefit determination.

(c)Appeal Procedure

(1)Except as provided in Section 6.3(c)(2), the named fiduciary must render a decision no later than 60 days after receiving the written request for review, unless circumstances make it impossible to do so; but in no event shall the decision be rendered later than 120 days after the request for review is received.  If the named fiduciary determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant by the plan administrator prior to the termination of the initial 60-day period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the plan expects to render the determination on review.

(2)If the named fiduciary is a committee or board of trustees that holds regularly scheduled meetings at least quarterly, Section 6.3(c)(1) shall not apply.  The named fiduciary shall instead make a benefit determination no later than the date of the meeting of the committee or board that immediately follows

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the plan's receipt of a request for review, unless the request for review is filed within 30 days preceding the date of such meeting.  In such case, a benefit determination may be made by no later than the date of the second meeting following the plan's receipt of the request for review.  If special circumstances require a further extension of time for processing, a benefit determination shall be rendered not later than the third meeting of the committee or board following the plan's receipt of the request for review.  If such an extension of time for review is required because of special circumstances, the plan administrator shall provide the claimant with written notice of the extension, describing the special circumstances and the date as of which the benefit determination will be made, prior to the commencement of the extension.  The plan administrator shall notify the claimant of the benefit determination as soon as possible, but not later than 5 days after the benefit determination is made.

(3)The review shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  If the claim is denied upon review, the written notice of denial shall include the items listed in Section 6.3(a) and the statement required by Regulation section 2560.503‑1(j)(5)(iii) regarding the possible availability of alternative dispute resolution options.

(d)Limitation on Time Period for Litigation of a Benefit Claim – Following receipt of the written rendering of the named fiduciary's decision under Section 6.3(c), the participant shall have 365 days in which to file suit in the appropriate court.  Thereafter, the right to contest the decision shall be waived.

Section 6.4 – Trust Fund

(a)Appointment of Trustee

The employer shall appoint a trustee for the proper care and custody of all funds, securities and other properties in the trust, and for investment of plan assets (or for execution of such orders as it receives from an investment manager appointed for investment of plan assets).  The duties and powers of the trustee shall be set forth in a trust agreement executed by the employer, which is incorporated herein by reference.  The named fiduciary shall review at regular intervals the performance of the trustee and shall re-evaluate the appointment of such trustee.  After the employer has appointed the trustee and the named fiduciary has received a written notice of acceptance of its responsibility, the fiduciary responsibility with respect to the proper care and custody of plan assets shall be considered as the responsibility of the trustee.  Unless otherwise allocated to an investment manager, the fiduciary responsibility with respect to investment of plan assets shall likewise be considered as the responsibility of the trustee.

(b)Appointment of Investment Manager

The named fiduciary may appoint an investment manager who is other than the trustee, which investment manager may be a bank or an investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940.  Such investment manager, if appointed, shall have sole discretion in the investment of plan assets, subject to the funding policy.  The named fiduciary shall review at regular intervals no less frequently than annually, the performance of such investment manager and shall re-evaluate the appointment of such investment manager.  After the named fiduciary has appointed an investment manager and has received a written notice of acceptance of its responsibility, the fiduciary responsibility with respect to investment of plan assets shall be considered as the responsibility of the investment manager.

(c)Funding Policy

The named fiduciary shall determine and communicate in writing to the fiduciary responsible for investment of plan assets the funding policy for the plan.  The funding policy shall set forth the plan's short-range and long-range financial needs, so that said fiduciary may coordinate the investment of plan assets with the plan's financial needs.

(d)Valuation of the Fund

The fund shall be valued by the trustee on the last day of each plan year and as of any interim allocation date determined by the plan administrator.  The valuation shall be made on the basis of the current fair market value of all property in the fund.

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(e)Expenses

The trust fund may pay the expenses incurred in the administration of the plan and the investment of the fund, provided the cost is reasonable.  Such expenses shall include legal fees incurred by the plan administrator or the trustee, provided such fiduciaries are not proven to have committed a prohibited transaction.  If the trust fund pays the expenses, the expenses shall be allocated against the participant accounts on a pro rata basis, unless otherwise specifically provided in the summary plan description.  Certain expenses incurred with respect to a particular participant or beneficiary may be allocated against the participant's account on a direct basis.  The plan administrator shall communicate such expense charges to the participant through a written notice.

ARTICLE VII – AMENDMENT AND TERMINATION OF PLAN

Section 7.1 – Right to Discontinue and Amend

It is the expectation of the employer that it will continue this plan indefinitely and make the payments of its contributions hereunder, but the continuance of the plan is not assumed as a contractual obligation of the employer and the right is reserved by the employer, at any time, to reduce, suspend or discontinue its contributions hereunder.

Section 7.2 – Amendments

Except as herein limited, the employer shall have the right to amend this plan at any time to any extent that it may deem advisable.  Such amendment shall be stated in writing.  It shall be authorized by action of the board of directors under the corporate by-laws if the employer is a corporation, by action of the agreement of the partners as required under the partnership agreement if the employer is a partnership, or by action of the sole proprietor if the employer is a sole proprietorship.  The authorization of an employer's board of directors shall designate the person to execute the amendment.

The employer's right to amend the plan shall be limited as follows:

(a)No amendment shall increase the duties or liabilities of the plan administrator, the trustee, or other fiduciary without their respective written consent.

(b)No amendments shall have the effect of vesting in the employer any interest in or control over any contracts issued pursuant hereto or any other property in the fund.

(c)No amendment to the plan shall be effective to the extent that it has the effect of decreasing a participant's accrued benefit.  This includes a plan amendment that decreases a participant’s accrued benefit, or otherwise places greater restrictions or conditions on a participant’s rights to Code section 411(d)(6) protected benefits, even if the amendment merely adds a restriction or condition that is permitted under the vesting rules in Code section 411(a)(3) through (11).  Notwithstanding the preceding sentence, a participant's account balance may be reduced to the extent permitted under Code section 412(d)(2) or to the extent permitted under Regulation sections 1.411(d)-3 and 1.411(d)-4.  For purposes of this paragraph, a plan amendment that has the effect of decreasing a participant's account balance, with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit.  Furthermore, if the vesting schedule of a plan is amended, in the case of an employee who is a participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such employee's right to his employer-derived accrued benefit will not be less than his percentage computed under the plan without regard to such amendment.

(d)No amendment to the plan shall be effective to eliminate or restrict an optional form of benefit.  The preceding sentence shall not apply to a plan amendment that eliminates or restricts the ability of a participant to receive payment of his or her account balance under a particular optional form of benefit if the amendment provides a single-sum distribution form that is otherwise identical to the optional form of benefit being eliminated or restricted.  For this purpose, a single-sum distribution form is otherwise identical only if the single-sum distribution form is identical in all respects to the eliminated or restricted optional form of benefit (or would be identical except that it provides greater rights to the participant) except with respect to the timing of payments after commencement.

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(e)No amendment to the vesting schedule adopted by the employer hereunder shall deprive a participant of his vested portion of his employer contribution accounts to the date of such amendment.  If the plan's vesting schedule is amended, or the plan is amended in any way that directly or indirectly affects the computation of the participant's nonforfeitable percentage or if the plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each participant with at least 3 years of service with the employer may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the plan without regard to such amendment or change.  For participants who do not have at least one hour of service in any plan year beginning after December 31, 1988, "5 years of service" shall be substituted for "3 years of service" in the preceding sentence.  The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of:

(1)60 days after the amendment is adopted;

(2)60 days after the amendment becomes effective; or

(3)60 days after the participant is issued written notice of the amendment by the employer or plan administrator.

Section 7.3 – Protection of Benefits in Case of Plan Merger

In the event of a merger or consolidation with, or transfer of assets or liabilities to any other plan, each participant will receive a benefit immediately after such merger, consolidation or transfer (if the plan then terminated) that is at least equal to the benefit the participant was entitled to immediately before such merger, consolidation or transfer (if the plan had terminated).

Effective October1,2008, the transfer of amounts from this trust to a nonqualified foreign trust shall be treated as a distribution from this plan.  Further, the transfer of assets and liabilities from this plan to a plan that satisfies Puerto Rico Code section 1165 shall also be treated as a distribution from this plan.

Section 7.4 – Termination of Plan

(a)When Plan Terminates – This plan shall terminate upon the happening of any of the following events:  legal adjudication of the employer as bankrupt; a general assignment by the employer to or for the benefit of its creditors; the legal dissolution of the employer; or termination of the plan by the employer.

(b)Allocation of Assets – Upon termination, partial termination, or complete discontinuance of employer contributions, the account balance(s) of each affected participant who is an active participant or who is not an active participant but has neither received a complete distribution of his vested accrued benefit nor incurred five one-year breaks in service (as defined in Section 4.1) shall be 100% vested and nonforfeitable.  The amount of the fund assets shall be allocated to each participant, subject to provisions for expenses of administration of the liquidation, in the ratio that such participant's account(s) bears to all accounts.  If a participant under this plan has terminated his employment at any time after the first day of the plan year in which the employer made his final contribution to the plan, and if any portion of any account of such terminated participant was forfeited and reallocated to the remaining participants, such forfeiture shall be reversed and the forfeited amount shall be credited to the account of such terminated participant.

ARTICLE VIII – MISCELLANEOUS PROVISIONS

Section 8.1 – Exclusive Benefit – Non-Reversion

The plan is created for the exclusive benefit of the employees of the employer and shall be interpreted in a manner consistent with its being a qualified plan as defined in section 401(a) of the Internal Revenue Code and with ERISA.  The corpus or income of the trust may not be diverted to or used for other than the exclusive benefit of the participants or their beneficiaries (except for defraying reasonable expenses of administering the plan).

Notwithstanding the above, a contribution paid by the employer to the trust may be repaid to the employer under the following circumstances:

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(a)Any contribution made by the employer because of a mistake of fact must be returned to the employer within one year of the contribution.

(b)In the event the deduction of a contribution made by the employer is disallowed under Code section 404, such contribution (to the extent disallowed) must be returned to the employer within one year of the disallowance of the deduction.

(c)If the Commissioner of Internal Revenue determines that the plan is not initially qualified under the Internal Revenue Code, any contribution made incident to that initial qualification by the employer must be returned to the employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the employer's return for the taxable year in which the plan is adopted, or such later date as the Secretary of the Treasury may prescribe.

Section 8.2 – Inalienability of Benefits

No benefit or interest available hereunder including any annuity contract distributed herefrom shall be subject to assignment or alienation, either voluntarily or involuntarily.  The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order as defined in Code section 414(p), or any domestic relations order entered before January 1, 1985.  A loan made to a participant and secured by his nonforfeitable account balance(s) under Section 4.4(b) will not be treated as an assignment or alienation and such securing account balance(s) shall be subject to attachment by the plan in the event of default.

Notwithstanding the preceding paragraph, effective with respect to judgments, orders, and decrees issued, and settlement agreements entered into, on or after August 5, 1997, a participant’s benefit (and that of his spouse) shall be reduced to satisfy liabilities of the participant to the plan due to (1) the participant being convicted of committing a crime involving the plan, (2) a civil judgment (or consent order or decree) entered by a court in an action brought in connection with a violation of the fiduciary provisions of part 4 of subtitle B of Title I of ERISA, or (3) a settlement agreement between the Secretary of Labor or the Pension Benefit Guaranty Corporation and the participant in connection with a violation of such fiduciary provisions of ERISA.  No reduction shall be made pursuant to this paragraph, unless the judgment, order, decree, or settlement agreement shall expressly provide for the offset of all or part of the amount ordered or required to be paid to the Plan against the participant’s benefits provided under the Plan.

Section 8.3 – Employer-Employee Relationship

This plan is not to be construed as creating or changing any contract of employment between the employer and its employees, and the employer retains the right to deal with its employees in the same manner as though this plan had not been created.

Section 8.4 – Binding Agreement

This plan shall be binding on the heirs, executors, administrators, successors and assigns as such terms may be applicable to any or all parties hereto, and on any participants, present or future.

Section 8.5 – Separability

If any provision of this plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof and this plan shall be construed and enforced as if such provision had not been included.

Section 8.6 – Construction

The plan shall be construed in accordance with the laws of the state in which the employer was incorporated (or is domiciled in the case of an unincorporated employer) and with ERISA.

Section 8.7 – Copies of Plan

This plan may be executed in any number of counterparts, each of which shall be deemed as an original, and said counterparts shall constitute but one and the same instrument that may be sufficiently evidenced by any one counterpart.

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Section 8.8 – Interpretation

Wherever appropriate, words used in this plan in the singular may include the plural or the plural may be read as singular, and the masculine may include the feminine.

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The Internal Revenue Service has issued an advisory letter with respect to the volume submitter specimen plan (VS) sponsored by Conrad Siegel Actuaries from which this plan was created.  This letter constitutes a determination as to the qualification of the plan as adopted by a particular employer only under the circumstances, and to the extent, described herein.  An employer adopting a VS plan may rely on that plan's advisory letter if the employer's plan is identical to an approved specimen plan with a currently valid favorable advisory letter, the employer has not amended the plan other than to choose options provided under the approved plan or to adopt compliance amendments provided by the sponsor, and the employer has followed the terms of the plan.  Such an employer can forego filing Form 5307 and can rely on the plan's favorable advisory letter with respect to the qualification requirements, except with respect to the plan’s satisfaction of the nondiscrimination requirements where a safe harbor provision has not been adopted.  The advisory letter does not constitute a ruling or determination as to the exempt status of the related trust.

2015 COMPLIANCE AMENDMENT
TO THE
Weis Markets, Inc. Retirement Savings Plan

As authorized by Section 7.2 of the Weis Markets, Inc. Retirement Savings Plan ("Plan") as amended and restated effective January 1, 2015, the employer, Weis Markets, Inc.,  hereby amends the Plan to comply with certain law and regulatory changes effective as of the 2015 plan year not otherwise incorporated into the Plan.  This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.The employer hereby amends the Plan in the following manner:

First: Spouse

Effective as of June 26, 2013, in response to the overturning of the Defense of Marriage Act, 110 Stat. 2419, section 3 by the Supreme Court in United States v. Windsor, Section 1.7(c) is amended to redefine "spouse" for purposes of the Plan and to reference the marriage certificate as evidence of marriage.  As amended, Section 1.7(c) shall read as follows:

(c)Spouse means the person married to the participant at the time of the determination as evidenced by a marriage certificate valid under the marriage licensing laws of the place of issuance.  

Second: Rollover/Transfer Contributions

Section 3.7 is amended to eliminate references to conduit individual retirement accounts and simplify the evidence requirements for the source plan.  As amended, Section 3.7(a)shall read as follows:

(a)Rollover Contributions – A participant may contribute to his rollover/transfer account any amounts that he previously received as a lump sum distribution (as defined in Code section 402(e)(4)(D)) provided that he transfers such distribution to this plan within sixty (60) days after receipt.

Before accepting a rollover contribution, the trustee may require an employee to furnish satisfactory evidence that the proposed transfer is in fact a "rollover contribution" that the Code permits an employee to make to a qualified plan.  If and to the extent the transferring plan is represented to be a retirement plan qualified under 401(a) that is not sponsored by a church or governmental agency, the employee shall not be required to furnish such evidence, except with respect to Roth or other after-tax accounting.  Further, no evidence shall be required when the check is issued by a financial institution indicating that the distribution is from an individual retirement account, 403(b) account, or a governmental entity 457(b) account previously maintained for the benefit of the employee.  The acceptable sources for a rollover contribution shall be as set forth in Section 3.7(b).  Notwithstanding the preceding or the provisions of Section 3.7(b), this plan will not accept a rollover from a Roth elective deferral account or a Code section 408A Roth individual retirement account.

As amended, Section 3.7(b) shall contain an additional provision that shall read as follows:

If the plan administrator later determines that the contribution was an invalid transfer contribution, the plan administrator shall distribute the amount of the invalid contribution, plus any earnings attributable thereto, to the employee within a reasonable time after such determination.

Third: Payment Election Procedures

Section 4.3(e) is amended to permit a terminating participant to elect multiple destinations for his direct rollover distributions so that he may designate the allocation of the pretax amounts.  As amended, Section 4.3(e) shall contain an additional paragraph that shall read as follows:

If and to the extent the participant elects multiple destinations for his direct rollover distributions, he may designate the allocation of the pretax amounts.

Fourth: Effective Date

This amendment  is effective as ofJanuary 1, 2015, except as otherwise provided herein.

Fifth: Remaining Plan Provisions

All other provisions of the Plan remain in full force and effect.

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EX-21 3 wmk10k2015ex21.htm WEIS MARKETS, INC. 2015 ANNUAL REPORT ON FORM 10-K EXHIBIT 21

WEIS MARKETS, INC.

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

	State of	Percent Owned
	Incorporation	By Registrant
Dutch Valley Food Company, Inc.	Pennsylvania	100%
Weis Transportation, Inc.	Pennsylvania	100%
WMK Financing, Inc.	Delaware	100%

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries.

EX-31.1 4 wmk10k2015ex31-1.htm WEIS MARKETS, INC. 2015 ANNUAL REPORT ON FORM 10-K EXHIBIT 31.1

WEIS MARKETS, INC.

Exhibit 31.1

CERTIFICATION- CEO

I, Jonathan H. Weis, certify that:

1.  I have reviewed this Annual Report on Form 10-K of Weis Markets, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in

all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal controls over financial reporting, or caused such internal control over financial reporting to

be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control

over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: March 18, 2016	/S/ Jonathan H. Weis
	Jonathan H. Weis
	Chairman,
	President and Chief Executive Officer

EX-31.2 5 wmk10k2015ex31-2.htm WEIS MARKETS, INC. 2015 ANNUAL REPORT ON FORM 10-K EXHIBIT 31.2

WEIS MARKETS, INC.

Exhibit 31.2

CERTIFICATION- CFO

I, Scott F. Frost, certify that:

1.  I have reviewed this Annual Report on Form 10-K of Weis Markets, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present

in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal controls over financial reporting, or caused such internal control over financial reporting to

be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control

over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: March 18, 2016	/S/ Scott F. Frost
	Scott F. Frost
	Senior Vice President, Chief Financial Officer
	and Treasurer

EX-32 6 wmk10k2015ex32.htm WEIS MARKETS, INC. 2015 ANNUAL REPORT ON FORM 10-K EXHIBIT 32

WEIS MARKETS, INC.

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Weis Markets, Inc. (the "Company") on Form 10-K for the fiscal year ending December 26, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Jonathan H. Weis, Chairman, President and Chief Executive Officer, and Scott F. Frost, Senior Vice President, Chief Financial Officer and Treasurer, of the Company, certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) to my knowledge the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ Jonathan H. Weis

Jonathan H. Weis

Chairman, President and Chief Executive Officer

03/18/2016

/S/ Scott F. Frost

Scott F. Frost

Senior Vice President, Chief Financial Officer and Treasurer

03/18/2016

A signed original of this written statement required by Section 906 has been provided to Weis Markets, Inc. and will be retained by Weis Markets, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-10.A

Weis Markets, Inc. Retirement Savings Plan

Originally Effective
July 1, 1994

As Amended And Restated Effective
January 1, 2015

821ec53f-24ed-48b4-a673-1058649831fc.DOCX

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TABLE OF CONTENTS

PREAMBLE.................................................................................................................................................................................................1

ARTICLE I – DEFINITIONS....................................................................................................................................................................2

Section 1.1 – References2

Section 1.2 – Compensation2

Section 1.3 – Dates3

Section 1.4 – Employee4

Section 1.5 – Employer5

Section 1.6 – Fiduciaries5

Section 1.7 – Participant/Beneficiary/Spouse/Dependent5

Section 1.8 – Participant Accounts6

Section 1.9 – Plan6

Section 1.10 – Service6

Section 1.11 – Trust8

ARTICLE II – PARTICIPATION............................................................................................................................................................8

Section 2.1 – Eligibility Service8

Section 2.2 – Plan Participation9

Section 2.3 – Termination of Participation10

Section 2.4 – Re-Participation or Re-Employment (Break in Service Rules)10

ARTICLE III – ALLOCATIONS TO PARTICIPANT ACCOUNTS................................................................................................11

Section 3.1 – General Provisions11

Section 3.2 – Profit Sharing Contributions12

Section 3.3 – Qualified Nonelective Contributions12

Section 3.4 – Employee 401(k) Elective Deferral Contributions13

Section 3.4A – Roth Elective Deferral Contributions14

Section 3.5 – Employee Nondeductible Contributions15

Section 3.6 – Employer Matching Contributions15

Section 3.7 – Rollover/Transfer Contributions16

Section 3.8 – Allocation of Investment Results17

ARTICLE IV – PAYMENT OF PARTICIPANT ACCOUNTS..........................................................................................................18

Section 4.1 – Vesting Service Rules18

Section 4.2 – Vesting of Participant Accounts19

Section 4.3 – Payment of Participant Accounts22

Section 4.4 – In-Service Payments25

Section 4.5 – Distributions Under Domestic Relations Orders26

ARTICLE V – ADDITIONAL QUALIFICATION RULES................................................................................................................27

Section 5.1 – Limitations on Allocations Under Code Section 41527

Section 5.2 – Joint and Survivor Annuity Requirements30

Section 5.3 – Distribution Requirements31

Section 5.4 – Top-Heavy Provisions35

Section 5.5 – Limitations and Conditions Regarding Contributions Under Code Sections 402(g), 401(k), and 401(m)38

ARTICLE VI – ADMINISTRATION OF THE PLAN........................................................................................................................50

Section 6.1 – Fiduciary Responsibility50

Section 6.2 – Plan Administrator50

Section 6.3 – Claims Procedure52

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Section 6.4 – Trust Fund53

ARTICLE VII – AMENDMENT AND TERMINATION OF PLAN.................................................................................................54

Section 7.1 – Right to Discontinue and Amend54

Section 7.2 – Amendments54

Section 7.3 – Protection of Benefits in Case of Plan Merger55

Section 7.4 – Termination of Plan55

ARTICLE VIII – MISCELLANEOUS PROVISIONS........................................................................................................................55

Section 8.1 – Exclusive Benefit – Non-Reversion55

Section 8.2 – Inalienability of Benefits56

Section 8.3 – Employer-Employee Relationship56

Section 8.4 – Binding Agreement56

Section 8.5 – Separability56

Section 8.6 – Construction56

Section 8.7 – Copies of Plan56

Section 8.8 – Interpretation56

This plan document has been created from the volume submitter plan document developed and sponsored by Conrad Siegel Actuaries and is the subject of an approval letter issued by the Internal Revenue Service.  For further information regarding the drafter's intended meaning of plan provisions or the effect of the approval letter contact Conrad Siegel Actuaries by letter (P.O. Box 5900, Harrisburg, Pennsylvania 17110-0900) or telephone (717-652-5633).  You may also contact us through our website at conradsiegel.com.

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PREAMBLE

This amended and restated plan, executed on the date indicated at the end hereof, is made effective as of January 1, 2015, except as provided otherwise in Section 1.3(c), by Weis Markets, Inc., a corporation, with its principal office located in Sunbury,  Pennsylvania.

W I T N E S S E T H :

WHEREAS, effective July 1, 1994, the employer established the plan for its employees and desires to continue to maintain a permanent qualified plan in order to provide its employees and their beneficiaries with financial security in the event of retirement, disability, or death; and

WHEREAS, it is desired to amend said plan;

NOW THEREFORE, the premises considered, the original plan is hereby replaced by this amended and restated plan, and the following are the provisions of the qualified plan of the employer as restated herein; provided, however, that each employee who was previously a participant shall remain a participant, and no employee who was a participant in the plan before the date of amendment shall receive a benefit under this amended plan that is less than the benefit he was then entitled to receive under the plan as of the day prior to the amendment.

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ARTICLE I – DEFINITIONS

Section 1.1 – References

(a)Code means the Internal Revenue Code of 1986, as it may be amended from time to time.

(b)ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Section 1.2 – Compensation

(a)Compensation means, except as provided in Section 1.2(b) hereof, any earnings reportable as W‑2 wages for federal income tax withholding purposes and earned income, plus elective contributions, for the determination period.  For this purpose, the determination period is the plan year.  Such earnings shall include any amount contributed to a Roth elective deferral account under this or any other qualified plan.  However, compensation shall not include any earnings reportable as W‑2 wages that are payable following the termination of employment pursuant to a severance agreement.

Elective contributions are amounts excludable from the employee’s gross income and contributed by the employer, at the employee’s election to:

· A cafeteria plan (excludable under Code section 125 and as provided in Section 5.1(c)(2));

· A Code section 401(k) arrangement (excludable under Code section 402(e)(3));

· A simplified employee pension (excludable under Code section 402(h));

· A simple retirement account (excludable under Code section 402(k));

· A tax sheltered annuity (excludable under Code section 403(b));

· A deferred compensation plan excludable under Code section 457(b); or

· A Code section 132(f)(4) qualified transportation fringe benefit plan.

"Earned Income" means net earnings from self-employment in the trade or business with respect to which the employer has established the plan, provided that personal services of the individual are a material income producing factor.  Net earnings shall be determined without regard to items excluded from gross income and the deductions allocable to those items.  Net earnings shall be determined after the deduction allowed to the self-employed individual for all contributions made by the employer to a qualified plan and, for plan years beginning after December 31, 1989, the deduction allowed to the self-employed under Code section 164(f) for self-employment taxes.

Any reference in this plan to compensation shall be a reference to the definition in this Section 1.2, unless the plan reference specifies a modification to this definition.  The plan administrator shall take into account only compensation actually paid by the employer for the relevant period.  A compensation payment includes compensation by the employer through another person under the common paymaster provisions in Code sections 3121 and 3306.  Compensation from an employer that is not a participating employer under this plan shall be excluded.

(b)Exclusions From Compensation – Notwithstanding the provisions of Section 1.2(a), the following types of remuneration shall be excluded from the participant’s compensation:

· Bonuses

· Meal allowances

· Auto Personal Use

· Sick Pay

(c)Limitations on Compensation – The plan administrator shall take into account only $200,000 (as adjusted for cost-of-living increases in accordance with Code section 401(a)(17)(B) for plan years beginning on or after January 1, 2003) of any participant's annual compensation for determining all benefits provided under the plan.  Contributions and allocations made before January 1, 2002 were made subject to the limitations of Code section 401(a)(17) as then in effect and described in prior statements of the plan document.  The compensation dollar limitation for a plan year shall be the limitation amount in effect on January 1 of the calendar year in which the plan year begins.  Annual compensation means

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compensation during the plan year or such other 12-consecutive-month period over which compensation is otherwise determined under the plan (the determination period for purposes of Section 1.2).  If the plan should determine compensation on a period of time that contains less than 12 calendar months (such as for a short plan year), the annual compensation dollar limitation shall be an amount equal to the compensation dollar limitation for the plan year multiplied by the ratio obtained by dividing the number of full months in the period by 12.

(d)Compensation for Nondiscrimination Testing – For purposes of determining whether the plan discriminates in favor of highly compensated employees, compensation means compensation as defined in this Section 1.2, except that the employer will not give effect to any exclusion from compensation specified in Section 1.2(b).

For this purpose, compensation shall include compensation paid by the employer as defined under Section 1.5(b). 

Notwithstanding the above, the employer may amend this plan to exclude from this nondiscrimination definition of compensation any items of compensation excludable under Code section 414(s) and the applicable Treasury regulations, provided such adjusted definition conforms to the nondiscrimination requirements of those regulations.

(e)Compensation for Compliance with Section 5.5 – For purposes of conducting the actual deferral percentage test or the actual contribution percentage test, compensation means compensation as defined in Section 1.2(a) for the entire determination period.

Section 1.3 – Dates

(a)Accounting Date means the date(s) on which investment results are allocated to participants’ accounts as set forth below:

· With respect to investment funds for which there is a daily market value, the investment results shall be allocated on a daily basis.  For this purpose, daily means as of each business day on which the New York Stock Exchange is open.  The accounting date for dividends that accrue on a daily basis but are paid monthly shall be the dividend distribution date.  The last day of each quarter shall be an investment allocation date for all other investments.

(b)Allocation Date means the date(s) as of which any contribution is allocated to participants' accounts.

The profit sharing contribution and forfeitures shall be allocated as of December 31.  The allocation period for the profit sharing contribution shall be the plan year.

Employer matching contributions shall be allocated as of the last day of each payroll period.  The allocation period applicable to a particular employer matching contribution allocation date shall be the period commencing as of the day following the immediately previous allocation date and ending on the particular allocation date.

Qualified nonelective contributions shall be allocated as of December 31.  The allocation period for the qualified nonelective contribution shall be the plan year.

Employee contributions (whether elective deferrals or nondeductible) shall be allocated as of the last day of each payroll period.

(c)The Effective Date of the plan is July 1, 1994.

The effective date of this amendment and restatement is January 1, 2015; provided, however, that the plan provisions required to comply with the Pension Protection Act of 2006 shall generally be effective as of the first day of the first plan year beginning after December 31, 2006, except as otherwise specified in said Act or in this plan (with respect to provisions not required for qualification compliance); the plan provisions required to comply with the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) shall generally be effective as of the first day of the first plan year beginning on or after January 1, 2007; the plan provisions required to comply with the final regulations issued under Code section 415 shall generally be effective as of the first day of the first limitation years beginning on or after July 1, 2007; the plan provisions required to comply with the Workers Retirees and Employers Relief Act of 2008 shall be effective as of January 1, 2009; and the plan provisions required to comply with the Cumulative Lists as published by the Internal Revenue Service with respect to the years 2004 through 2010 shall generally be

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effective as of the first day of the plan year with respect to which the List was published, except as specified otherwise in this plan or in said Acts.

Notwithstanding anything herein to the contrary, the provisions noted below shall become effective on the date indicated.  The prior provisions of the plan shall continue in effect until such indicated effective date.

ProvisionEffective Date

Section 3.4(A) - Roth Elective Deferral ContributionsApril 1, 2016

Section 4.4 - In-Service PaymentsJanuary 1, 2016

(d)Plan Entry Date means the participation date(s) specified in Article II.

(e)Plan Year means the 12-consecutive-month period beginning on January 1 and ending on December 31.

(f)Limitation Year means the 12-consecutive-month period beginning on January 1 and ending on December 31.

Section 1.4 – Employee

(a) (1)Employee means any person employed by the employer, including an owner-employee or other self-employed individual (as defined in Section 1.4(a)(3)).  The term employee shall include any employee of the employer as defined in Section 1.5(b).  The term employee shall also include any leased employee deemed to be an employee of any such employer as provided in Code section 414(n) or (o) and as defined in Section 1.4(a)(2).

(2)Leased Employee means an individual (who otherwise is not an employee of the employer) who, pursuant to a leasing agreement between the employer and any other person, has performed services for the employer (or for the employer and any persons related to the employer within the meaning of Code section 414(n)(6)) on a substantially full time basis for at least one year and such services are performed under the primary direction or control of the employer.  If a leased employee is treated as an employee by reason of this Section 1.4(a)(2), compensation from the leasing organization that is attributable to services performed for the employer shall be considered as compensation under the plan.  Contributions or benefits provided a leased employee by the leasing organization that are attributable to services performed for the employer shall be treated as provided by the employer.

Safe harbor plan exception – The plan shall not treat a leased employee as an employee if the leasing organization covers the employee in a safe harbor plan and, prior to application of this safe harbor plan exception, 20% or less of the employer's nonhighly compensated employees are leased employees.  A safe harbor plan is a money purchase pension plan providing immediate participation, full and immediate vesting, and a nonintegrated contribution formula equal to at least 10% of the employee's compensation without regard to employment by the leasing organization on a specified date.  The safe harbor plan must determine the 10% contribution on the basis of compensation as defined in Section 5.1(c)(2).

(3)Owner-Employee/Self-Employed Individual – Owner-employee means a self-employed individual who is a sole proprietor (if the employer is a sole proprietorship) or who is a partner (if the employer is a partnership) owning more than 10% of either the capital or profits interest of the partnership.  Self-employed individual means an individual who has earned income for the taxable year from the trade or business for which the plan is established, or who would have had earned income but for the fact that the trade or business had no net profits for the taxable year.

(b)Highly Compensated Employee means any employee who:

(1)was a more than 5% owner of the employer (applying the constructive ownership rules of Code section 318, and applying the principles of Code section 318, for an unincorporated entity) at any time during the current plan year or the look-back year; or

(2)for the look-back year –

(A)had compensation from the employer (as defined under Section 1.5(b)) in excess of $80,000 (as adjusted at the same time and in the same manner as under Code section 415(d), except that the base period shall be the calendar quarter ending September 30, 1996), and

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(B)if the employer elects the application of this Subparagraph for such look-back year, was in the top-paid group of employees for such look-back year.  For this purpose, an employee is in the top-paid group of employees for any look-back year if such employee is in the group consisting of the top 20% of the employees when ranked on the basis of compensation paid during such look-back year.

The look-back year is the twelve-month period immediately preceding the current plan year.  The term highly compensated employee also includes any former employee who separated from service (or has a deemed separation from service, as determined under Treasury regulations) prior to the plan year, performs no service for the employer during the plan year, and was a highly compensated employee either for the separation plan year or any plan year ending on or after his 55th birthday, based on the applicable rules in effect for such plan year.

For purposes of determining who is a highly compensated employee under this Section 1.4(b), compensation means compensation as defined in Section 1.2(a) without regard to Section 1.2(b).  The plan administrator shall make the determination of who is a highly compensated employee.

This Section 1.4(b) is effective for plan years beginning after December 31, 1996, except that, in determining whether an employee is a highly compensated employee in 1997, this provision shall be treated as having been in effect for the last plan year beginning before January 1, 1997.

(c)Nonhighly Compensated Employee means any employee who is not a highly compensated employee.

Section 1.5 – Employer

(a)Employer means Weis Markets, Inc.or any successor entity by merger, purchase, consolidation, or otherwise; or an organization affiliated with the employer that may assume the obligations of this plan with respect to its employees by becoming a party to this plan.  Another employer, whether or not it is affiliated with the sponsor employer, may adopt this plan to cover its employees by filing with the sponsor employer a written resolution adopting the plan, upon which the sponsor employer shall indicate its acceptance of such employer as an employer under the plan, if such participation is acceptable.  Each such employer shall be deemed to be the employer only as to persons who are on its payroll.

(b)Employer for Compliance Testing – For purposes of determining whether the plan satisfies the participation coverage requirements of Code section 410(b) and the limitations on benefits and allocations under Code section 415, employer shall mean the employer that adopts this plan as set forth in Section 1.5(a), and all members of a controlled group of corporations (as defined in Code section 414(b)), all commonly controlled trades or businesses (as defined in Code section 414(c)) or affiliated service groups (as defined in Code section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to regulations under Code section 414(o).

(c)Exclusive Benefit – In compliance with the exclusive benefit requirements of Code section 401(a), the sponsorship of this plan may not be transferred to an unrelated entity if the transfer is not in connection with a transfer of business assets or operations from the employer to such entity.

Section 1.6 – Fiduciaries

(a)Named Fiduciary means the person or persons having fiduciary responsibility for the management and control of plan assets.

(b)Plan administrator means the person or persons appointed by the named fiduciary to administer the plan.

(c)Trustee means the trustee named in the trust agreement executed pursuant to this plan, or any duly appointed successor trustee.

(d)Investment Manager means a person or corporation other than the trustee appointed for the investment of plan assets.

Section 1.7 – Participant/Beneficiary/Spouse/Dependent

(a)Participant means an eligible employee of the employer who becomes a member of the plan pursuant to the provisions of Article II, or a former employee who has an accrued benefit under the plan.  A participant shall be treated as benefiting under the plan for any plan year during which the participant received or is deemed to receive an allocation in accordance with Regulation section 1.410(b)-3(a).

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(b)Beneficiary means a person designated by a participant who is or may become entitled to a benefit under the plan.  A beneficiary who becomes entitled to a benefit under the plan remains a beneficiary under the plan until the trustee has fully distributed his benefit to him.  A beneficiary's right to (and the plan administrator's, or a trustee's duty to provide to the beneficiary) information or data concerning the plan shall not arise until he first becomes entitled to receive a benefit under the plan.

(c)Spouse means the person of the opposite sex married to the participant at the time of the determination and as further defined by section 3 of the Defense of Marriage Act, 1 U.S.C. § 7 (1996).

(d)Dependent means a dependent as defined by Code section 152 without regard to section 152(d)(1)(B).

Section 1.8 – Participant Accounts

(a)Profit Sharing Account means the balance of the separate account derived from the employer’s profit sharing contributions, including forfeitures (if any) (if so provided under Section 3.2).

(b)Qualified Nonelective Contribution Account means the balance of the separate account derived from the employer's qualified nonelective contributions (if so provided under Section 3.3).

(c)Employee 401(k) Elective Deferral Account means the balance of the separate account derived from the participant's 401(k) elective deferrals (if so provided under Section 3.4).

(d)Roth Elective Deferral Account means the balance of the separate account derived from the participant's Roth elective deferrals (if so provided under Section 3.4A).

(e)Employee Nondeductible Contribution Account means the balance of the separate account derived from the participant’s nondeductible employee contributions (if so provided under Section 3.5).

(f)Employer Matching Contribution Account means the balance of the separate account derived from the employer's matching contributions (if so provided under Section 3.6).

(g)Qualified Employer Matching Contribution Account means the balance of the separate account derived from the employer's qualified matching contributions (if so provided under Section 3.6).

(h)Rollover/Transfer Account means the balance of the separate account derived from rollover contributions and/or transfer contributions (if so provided under Section 3.7).

(i)Accrued Benefit means the total of the participant’s account balances as of the accounting date falling on or before the day on which the accrued benefit is being determined.

Section 1.9 – Plan

Plan means Weis Markets, Inc. Retirement Savings Plan as set forth herein and as it may be amended from time to time.

Section 1.10 – Service

(a)Service means any period of time the employee is in the employ of the employer, including any period the employee is on an unpaid leave of absence authorized by the employer under a uniform, nondiscriminatory policy applicable to all employees.  Separation from service means that the employee no longer has an employment relationship with the employer.

(b)(1)Hour of Service means:

(A)Each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer.  These hours shall be credited to the employee for the computation period in which the duties are performed; and

(B)Each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.  No more than 501 hours of service shall be credited under this Subparagraph (B) for any single continuous period (whether or not such period occurs in a single computation period).  An hour of service shall not be credited to an employee under this Subparagraph (B) if the employee is paid, or entitled to payment, under a plan maintained solely for the purpose of complying with applicable worker's compensation or unemployment compensation or disability insurance laws.  Hours under this Subparagraph (B)

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shall be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations that is incorporated herein by this reference; and

(C)Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the employer.  The same hours of service shall not be credited both under Subparagraph (A) or Subparagraph (B), as the case may be, and under this Subparagraph (C).  These hours shall be credited to the employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made.

Hours of service shall be determined on the basis of actual hours for which an employee is paid or entitled to payment.  The above provisions shall be construed so as to resolve any ambiguities in favor of crediting employees with hours of service.

If, for the purposes of the plan, an employee's records are maintained on other than an hourly basis, the plan administrator, according to uniform rules applicable to a class of employees, may apply the following equivalencies for the purpose of crediting hours of service:

Basis Upon Which Records Are Maintained	Credit Granted to Individual if Individual Earns One or More Hours of Service During Period
Shift	Actual hours of full shift
Day	10 hours of service
Week	45 hours of service
Semi-Monthly Payroll Period	95 hours of service
Months of Employment	190 hours of service

(2)Solely for purposes of determining whether a break in service for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the hours of service that would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence.  For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (A) by reason of the pregnancy of the individual, (B) by reason of a birth of a child of the individual, (C) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (D) for purposes of caring for such child for a period beginning immediately following such birth or placement.  The hours of service credited under this paragraph shall be credited:  (A) in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period, or (B) in all other cases, in the following computation period.  No more than 501 hours of service shall be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period).

(3)Solely for purposes of determining whether a break in service for participation and vesting purposes has occurred in a computation period, an individual who is absent from work on unpaid leave under the Family and Medical Leave Act shall receive credit for the hours of service that would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence.  Such an individual shall be treated as actively employed for the purposes of participation and eligibility for an allocation of any employer contribution that may be provided under this plan.  Notwithstanding the preceding, this paragraph shall not apply if the employer or the particular employee is not subject to the requirements of the Family and Medical Leave Act at the time of the absence.

(4)Hours of service shall be credited for employment with the employer as defined in Section 1.5(b).  Hours of service shall also be credited for any leased employee who is considered an employee for purposes of this plan under Code section 414(n) or Code section 414(o).

(c)(1)Year of Service means a 12-consecutive-month computation period during which the employee completes the required number of hours of service with the employer as specified in Sections 2.1 or 4.1.  No more than one year of service will be credited for any 12-consecutive-month period unless otherwise required by Sections 2.1(c) and 4.1(c).

(2)Service With Related Employers – For purposes of crediting years of service, hours of service credited in accordance with Section 1.10(b)(4) shall be taken into account.

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(3)Predecessor Service – If the employer maintains the plan of a predecessor employer, service with such predecessor employer shall be treated as service for the employer.  If the employer does not maintain the plan of a predecessor employer, then service as an employee of a predecessor employer shall not be considered as service under the plan, except as noted below:

· Effective November 18, 1994, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Kings Markets, Strasburg store (Store No. 159) shall be considered as service under the plan solely for the purpose of determining eligibility years of service (under Section 2.1).

· Effective August 24, 2009, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Binghamton Giant Markets, Inc. shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective January 11, 2010, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Vestal, New York Medicine Shoppe shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective June 11, 2012, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Genuardi's Safeway shall be considered as service under the plan for the purposes of determining eligibility years of service (under Section 2.1) and vesting years of service (under Section 4.1).

· Effective August 31, 2015, with respect to an employee employed by the predecessor employer as of the day immediately prior, service as an employee of Hanover, PA Nell's Shur-Fine Market shall be considered as service under the plan solely for the purpose of determining eligibility years of service (under Section 2.1).

(d)Break in Service (or One Year Break in Service) means a 12-consecutive-month computation period during which a participant or former participant does not complete the specified number of hours of service with the employer as set forth in Sections 2.1(b) and 4.1(b).

(e)Qualified Military Service – Notwithstanding any provision of this plan to the contrary, effective December 12, 1994, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code section 414(u).  An employee reemployed after qualified military service shall not be treated as having incurred a break in service, for purposes of vesting and benefit accruals, solely because of an absence due to qualified military service.

Effective with respect to deaths occurring on or after January 1, 2007, in the case of a participant who dies while performing qualified military service, the beneficiary(ies) of the participant shall be entitled to any additional benefits payable under Section 4.2(a)(5) (other than contributions relating to the period of qualified military service) that would have been payable had the participant resumed and then immediately terminated employment on account of death.

Section 1.11 – Trust

(a)Trust means the qualified trust created under the employer’s plan.

(b)Trust Fund means all property held or acquired by the plan.

ARTICLE II – PARTICIPATION

Section 2.1 – Eligibility Service

(a)Eligibility Year of Service means an eligibility computation period during which the employee completes at least 1,000 hours of service with the employer.

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(b)One Year Break in Service means for the purposes of this Article II an eligibility computation period during which the participant or former participant does not complete more than 500 hours of service with the employer.

(c)Eligibility Computation Period – The initial eligibility computation period shall be the 12-consecutive-month period beginning with the day on which the employee first performs an hour of service for the employer (employment commencement date).

Succeeding eligibility computation periods shall coincide with the plan year, beginning with the first plan year that commences prior to the first anniversary of the employee's employment commencement date regardless of whether the employee is credited with the required number of hours of service during the initial eligibility computation period.  An employee who is credited with the required number of hours of service in both the initial eligibility computation period and the first plan year that commences prior to the first anniversary of the employee's employment commencement date shall be credited with two years of service for purposes of eligibility to participate.

Section 2.2 – Plan Participation

(a)Eligibility

(1)Eligibility for Employer Profit Sharing Contributions

(A)Age/Service Requirements – An employee who is a member of the eligible class of employees shall be eligible for participation for the purpose of the employer profit sharing provision after he has satisfied the following participation requirement(s):

· Completion of 1 year of service.

· Attainment of age 21.

(B)Eligible Class of Employees – All employees of the employer except those described below shall be eligible for purposes of receiving a profit sharing allocation if employed in the following categories:  Salaried Employee, Level I Department Manager, Foreman, Corporate Lead Person, Corporate Department Assistant, Corporate Administrative Assistant, Corporate Reorder Buyer, or Corporate Architectural Draftsperson.

· Individuals not directly employed by the employer as defined in Section 1.5(a) shall not be eligible to receive a profit sharing contribution.  An employee of the employer as that term is defined in Section 1.5(b) with respect to the sponsoring employer shall not be eligible to receive a profit sharing allocation unless such employee's direct employer affirmatively elects to become a participating employer hereunder.

· Employees who became employees as the result of a “Code section 410(b)(6)(C) transaction.”  These employees shall be excluded during the period beginning on the date of the transaction and ending on the last day of the first plan year beginning after the date of the transaction.  A “Code section 410(b)(6)(C) transaction” is an asset or stock acquisition, merger, or similar transaction involving a change in the employer of the employees of a trade or business.

· Employees included in a unit of employees covered by a collective bargaining agreement between the employer and employee representatives shall not be eligible to receive a profit sharing allocation if retirement benefits were the subject of good faith bargaining and if less than 2% of the employees of the employer who are covered pursuant to that agreement are professionals as defined in Regulation section 1.410(b)-9(g).  For this purpose, the term "employee representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the employer.

· Leased employees who are considered employees under the plan shall not be eligible to receive a profit sharing allocation.

· Employees who are non-resident aliens (as defined in Code section 7701(b)(1)(B)) and who receive no earned income (as defined in Code section 911(d)(2)) from the employer that constitutes income from sources within the United States (as defined in Code section 861(a)(3)) shall not be eligible to receive a profit sharing allocation.

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· Highly compensated employees as defined in Section 1.4(b) shall not be eligible to receive a profit sharing allocation.

· Former employees of Hanover, PA Nell's Shur-Fine Market shall not be eligible to receive a profit sharing allocation prior to January 1, 2016.

Notwithstanding the above eligible class of employees, the eligible class provisions of the plan
before January 1, 2009 shall continue to apply to participants who received profit sharing
allocations before January 1, 2009, and to employees who otherwise would have become participants in the Plan by December 31, 2009.

(2)Eligibility for All Other Purposes

(A)Age/Service Requirements – An employee who is a member of the eligible class of employees shall be eligible for participation for all purposes under the plan after he has satisfied the following participation requirement(s):

(i)Completion of 1 year of service.

(ii)Attainment of age 21.

(B)Eligible class of employees – All employees of the employer shall be eligible for the purposes of this Section 2.2(a)(2) except for employees in the following categories:

· Individuals not directly employed by the employer as defined in Section 1.5(a).  An employee of the employer as that term is defined in Section 1.5(b) with respect to the sponsoring employer shall not participate in this plan unless such employee's direct employer affirmatively elects to become a participating employer hereunder.

· Employees who became employees as the result of a "Code section 410(b)(6)(C) transaction."  These employees shall be excluded during the period beginning on the date of the transaction and ending on the last day of the first plan year beginning after the date of the transaction.  A "Code section 410(b)(6)(C) transaction" is an asset or stock acquisition, merger, or similar transaction involving a change in the employer of the employees of a trade or business.

· Employees included in a unit of employees covered by a collective bargaining agreement between the employer and employee representatives if retirement benefits were the subject of good faith bargaining and if 2% or less of the employees of the employer who are covered pursuant to that agreement are professionals as defined in Regulation section 1.410(b)‑9.  For this purpose, the term "employee representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the employer.

· Leased employees who are considered employees under the plan.

· Employees who are non-resident aliens (as defined in Code section 7701(b)(1)(B)) and who receive no earned income (as defined in Code section 911(d)(2)) from the employer that constitutes income from sources within the United States (as defined in Code section 861(a)(3)).

(b)Entry Date

(1)Entry Date for Purposes of Employer Profit Sharing Contributions – An eligible employee shall participate in the plan for the purpose of the employer profit sharing contribution provisions on the earlier of the March 31, June 30, September 30, or December 31 coinciding with or immediately following the date on which he has met the age and service requirements, provided he is employed on that date.

(2)Entry Date for All Other Purposes – An eligible employee shall participate in the plan for all purposes on the earlier of the March 31,  June 30,  September 30, or December 31 coinciding with or immediately following the date on which he has met the age and service requirements, provided he is employed on that date.

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(3)If an employee who is not a member of the eligible class of employees becomes a member of the eligible class, such employee shall participate immediately, if he has satisfied the age and service requirements and would have otherwise previously become a participant.

Section 2.3 – Termination of Participation

A participant shall continue to be an active participant of the plan so long as he is a member of the eligible class of employees and he does not terminate employment.  He shall become an inactive participant when he terminates employment or ceases to be a member of the eligible class of employees.  He shall cease participation completely upon the later of his receipt of a total distribution of his nonforfeitable account balance(s) under the plan or the forfeiture of the nonvested portion of the account balance(s).

Section 2.4 – Re-Participation or Re-Employment (Break in Service Rules)

(a)Vested Participant – A former participant who had a nonforfeitable right to all or a portion of his account balance derived from employer contributions at the time of his termination from service shall become a participant immediately upon returning to the employ of the employer, if he is a member of the eligible class of employees.

(b)Nonvested Participant or Employee – In the case of an employee who does not have any nonforfeitable right to his account balance derived from employer contributions at the time of his termination from service, years of service before a period of consecutive one-year breaks in service shall not be taken into account in computing eligibility service if the number of consecutive one-year breaks in service in such period equals or exceeds the greater of 5 or the aggregate number of years of service before such breaks in service.  Such aggregate number of years of service shall not include any years of service disregarded under the preceding sentence by reason of prior breaks in service.

If an employee's years of service before termination from service are disregarded pursuant to the preceding paragraph, he shall be considered a new employee for eligibility purposes.  If such employee's years of service before termination from service may not be disregarded pursuant to the preceding paragraph, he shall participate immediately upon returning to the employ of the employer, if he is a member of the eligible class of employees and has otherwise satisfied the age and service requirements of Section 2.2.

(c)Return to Eligible Class – If a participant becomes an inactive participant, because he is no longer a member of the eligible class of employees, but does not incur a break in service, such inactive participant shall become an active participant immediately upon returning to the eligible class of employees.  If such participant incurs a break in service, eligibility shall be determined under the re-participation rules in Section 2.4(a) and (b) above.

ARTICLE III – ALLOCATIONS TO PARTICIPANT ACCOUNTS

Section 3.1 – General Provisions

(a)Maintenance of Participant Accounts – The plan administrator shall maintain separate accounts covering each participant under the plan as herein described.  Such accounts shall be increased by contributions, reallocation of forfeitures (if any), investment income, and market value appreciation of the fund.  They shall be decreased by market value depreciation of the fund, forfeiture of nonvested amounts, benefit payments, withdrawals, and expenses.

(b)Amount and Payment of Employer Contribution

(1)Amount of Contribution – For each plan year, the employer contribution to the plan shall be the amount that is determined under the provisions of this Article; provided, however, that the employer may not make a contribution to the plan for any plan year to the extent the contribution would exceed the participants' maximum permissible amounts under Code section 415.  Further, the employer contribution shall not exceed the maximum amount deductible under Code section 404, subject to the provisions for a nondeductible contribution without penalty as permitted under Code section 4972(c)(6).  For this purpose, participant elective deferrals shall not be taken into account as provided under Code section 404(n).

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The employer contributes to this plan on the conditions that its contribution is not due to a mistake of fact and that the Internal Revenue Service will not disallow the deduction for its contribution.  The trustee, upon written request from the employer, shall return to the employer the amount of the employer's contribution made due to a mistake of fact or the amount of the employer's contribution disallowed as a deduction under Code section 404.  The trustee shall not return any portion of the employer's contribution under the provisions of this paragraph more than one year after the earlier of:  (A) The date on which the employer made the contribution due to a mistake of fact; or (B) The time of disallowance of the contribution as a deduction, and then, only to the extent of the disallowance.  The trustee will not increase the amount of the employer contribution returnable under this Section for any earnings attributable to the contribution, but the trustee will decrease the employer contribution returnable for any losses attributable to it. The trustee may require the employer to furnish whatever evidence it deems necessary to confirm that the amount the employer has requested be returned is properly returnable under ERISA.

(2)Payment of Contribution – The employer shall make its contribution to the plan in cash within the time prescribed by the Code or applicable Treasury regulations.  Subject to the consent of the trustee, the employer may make its contribution in property rather than in cash, provided the contribution is discretionary and the property contributed is unencumbered.

(3)Allocation if More Than One Employer – If the employer consists of a sponsoring employer and one or more participating employers, the contribution made by each such entity shall be allocated to the accounts of the participants directly employed by the contributing employer.  If a participant is employed by more than one entity during the applicable period, each entity shall contribute with respect to the compensation earned by the participant while employed by that entity.

(c)Limitations and Conditions – Notwithstanding the allocation procedures set forth in this Article, the allocations otherwise contributable to participants' accounts under this plan shall be limited or reduced as provided in Section 5.1.

Section 3.2 – Profit SharingContributions

(a)Amount of Contribution – The employer shall determine, in its sole discretion, the amount of employer profit sharing contribution to be made under this Section 3.2(a) each year; provided, however, that the employer shall contribute such amount as may be required for restoration of a forfeited amount under Section 4.2. 

(b)Conditions for Allocations – A participant shall be eligible for an allocation of the employer profit sharing contribution and forfeitures as of an allocation date, provided that he satisfies the following conditions:

(1)He completed at least 1,000 hours of service during the current plan year, except that the hours of service requirement shall not apply with respect to any minimum top-heavy allocation as provided in Section 5.4.

AND

(2)He is employed by the employer on the last day of the plan year.

AND

(3)He is not a Highly Compensated Employee.

AND

(4)He is employed in one of the eligible job categories listed in Section 2.2(a)(1)(B) on the last day of the plan year.

In the event a minimum top-heavy allocation is required to be made as a profit sharing contribution under the provisions of Section 3.2(c)(2), solely for this limited purpose active participant shall include any person participating under the provision of Section 2.2(b)(1) and not yet eligible to participate in the plan for all purposes under Section 2.2(b)(2).

(c)(1)Allocation Formula

The employer shall make a separate profit sharing contribution for the plan year with respect to each allocation formula as described below.  The trustee shall be notified by the employer in writing as to

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the amount being contributed with respect to each formula.  Forfeitures for the plan year shall be allocated under allocation formula (B) below.  For this purpose, the following allocation formulas shall be used:

(A) The employer profit sharing contribution shall be allocated to the profit sharing account of each eligible participant in equal amounts, but not in excess of the maximum permissible amount as defined in Section 5.1(c).

(B) The employer profit sharing contribution and forfeitures for the plan year shall be allocated to the profit sharing account of each eligible participant in the ratio that such participant's compensation bears to the compensation of all participants. 

(2)Top-Heavy Plan Years

In any plan year in which this plan is top-heavy (as defined in Section 5.4(d)(2)), the top-heavy minimum benefit requirement with respect to a participant shall first be met by any allocation to the qualified nonelective contribution account for the plan year.  Then, the contributions and forfeitures allocable to the profit sharing account shall be adjusted as necessary for compliance.  The total of the contributions and forfeitures allocated to such account(s) of each participant shall not be less than an amount equal to 3% of his compensation or the largest percentage of elective deferral contribution, employer contribution, and forfeiture allocated on behalf of any key employee for that year, whichever is less.

(3)Compensation – For purposes of the allocation of the employer profit sharing contribution, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)) for the entire plan year.

Compensation includable under Section 1.2(a) and (b) but not paid through payroll shall be treated as being paid as of the last day of the plan year or the last day of employment, if earlier.

However, for purposes of the top-heavy contribution, compensation means compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

Section 3.3 – Qualified Nonelective Contributions

To the extent the current year testing method is being used to satisfy the requirements described in Section 5.5(b) and (c), the employer may make qualified nonelective contributions on behalf of either the nonhighly compensated active participants or all active participants that are sufficient to satisfy either the actual deferral percentage test or the actual contribution percentage test, or both, pursuant to regulations under the Code in lieu of distributing excess contributions as provided in Section 5.5(b)(2) of the plan, or excess aggregate contributions as provided in Section 5.5(c)(2) of the plan.  The employer may elect to comply with the ADP test requirements by making safe harbor nonelective contributions on behalf of all active participants as described in Section 5.5(f).

Qualified nonelective contributions are contributions (other than profit sharing contributions or employer matching contributions) that are made by the employer and allocated to participants' qualified nonelective contribution accounts that the participants may not elect to receive in cash until distributed from the plan; that are nonforfeitable when made; and that are distributable only in accordance with the distribution provisions that are applicable to elective deferrals and qualified matching contributions.  Safe harbor nonelective contributions shall be allocated to a safe harbor sub-account of the qualified nonelective contribution account and shall be held subject to the same rights and restrictions.

(a)Amount of Contribution

The amount of such contributions for each plan year shall be an amount determined by the employer, in its sole discretion, after the plan administrator has determined the amount needed to satisfy the actual deferral percentage test or the actual contribution percentage test, or both.

(b)Allocation of Contribution

(1)Allocation of the qualified nonelective contribution shall be made to the group of eligible nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees for the plan year determined by identifying the nonhighly compensated employee with the smallest amount of compensation and continuing in ascending order until half of all eligible nonhighly compensated

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employees have been identified, subject to the further requirements of Section 5.5(b)(1)(A)(viii) and Section 5.5(c)(1)(A)(viii).

(2)Top-Heavy Plan Years

The top-heavy minimum benefit requirements shall be met as provided under Section 3.2(c)(2) concerning profit sharing and qualified nonelective contribution allocations.

(3)Compensation – For purposes of the allocation of the qualified nonelective contribution, compensation means compensation as defined in Section 1.2(d) (subject to the limitations of Section 1.2(c)) for the entire plan year, but limited to the employee's compensation for the portion of the plan year in which the employee actually is a member of the eligible class of employees as defined in Section 2.2.  However, for purposes of the top-heavy contribution, compensation means compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

Section 3.4 – Employee 401(k) Elective Deferral Contributions

(a)Amount of Contribution – The employer shall contribute each plan year on behalf of each active participant who elects salary deferral a sum equal to the amount that the participant has elected to defer under a salary reduction arrangement or under a cash or deferred arrangement.  The contribution shall be credited to the participant's employee 401(k) elective deferral account.

A highly compensated employee may not elect a salary reduction in excess of any limitation established by board resolution.  Such limitation shall be communicated to the highly compensated employees a reasonable time in advance of the date as of which it is effective.  The plan administrator may limit the amount of salary reduction or deferred compensation at any time, if he determines that such limitation is necessary to meet the requirements for a "qualified cash or deferred arrangement" under Code section 401(k) and regulations issued pursuant thereto as set forth in Section 5.5.

Effective for plan years beginning prior to 2015, the plan administrator shall calculate the actual deferral percentage for the highly compensated employees using the testing method as provided under the prior statement of the plan document.

Effective for plan years beginning on or after January 1, 2015, the plan administrator shall calculate the actual deferral percentage for the highly compensated employees using the prior year testing method.

(b)Salary Reduction Election

(1)Availability of Election – An active participant may effect a salary reduction agreement with the employer under which an employer contribution will be made to the plan on behalf of such participant only if he elects to reduce his compensation or to forgo an increase in his compensation.  The amount of salary deferral may range from 0% to 50% of compensation.

(2)Election Procedures – A notice of a participant’s salary reduction election shall be given to the employer and to the plan administrator in the manner established by the plan administrator.  The plan administrator shall provide a written notice to all participants of the required procedures for making an election and the date as of which an election will be effective.  An election shall be permitted at least once each plan year and the participants shall be permitted a reasonable time in which to make the election.  However, in no event shall such election be made or be effective before the adoption of the employee 401(k) elective deferral contribution provision under the plan.  A participant electing salary reduction will be deemed to desire to continue at the same rate, unless he notifies the plan administrator of his desire to change the amount of salary reduction.  The revised election shall be effective in accordance with the plan administrator’s published procedures.  A salary reduction may be discontinued at any time upon proper notice in the manner established by the plan administrator.  The plan administrator and employer shall treat a salary reduction election as having been revoked by the participant upon his termination of employment or his ceasing to be a member of the eligible class of participants.

A participant who receives a distribution of elective deferrals on account of hardship shall be prohibited from making elective deferrals and employee nondeductible contributions under this and all other plans of the employer for 6 months after receipt of the distribution.

(3)Compensation – For this purpose, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)), but excluding short term disability benefits not paid through the employer's payroll system, expense reimbursements, and any form of non-cash

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compensation.  The participant’s salary reduction election shall apply only to compensation that becomes currently available to the employee after the effective date of the election.  The employer shall apply the salary reduction election to all of the participant’s compensation (and to increases in compensation), unless the participant’s salary reduction election specifies that the election is to be limited to certain compensation.

(4)Catch-Up Contributions – All employees who are eligible to make elective deferrals under this plan before the close of the plan year and who have attained age 50 or over by the end of their applicable taxable years shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Section 5.5(a)(2).  The employer-imposed limitations on the maximum amount of permissible salary deferral shall not apply.

(c)Cash or Deferred Election

No contribution shall be made under this plan pursuant to a cash or deferred election.  All elective deferrals shall be made under a salary deferral election.

Section 3.4A – Roth Elective Deferral Contributions

(a)Amount of Contribution – Effective April 1, 2016, the employer shall contribute each plan year on behalf of each active participant who elects a Roth elective deferral under Code section 402A a sum equal to the amount that the participant has elected to contribute as a Roth elective deferral pursuant to a salary reduction agreement.  The contribution shall be credited to the participant's Roth elective deferral account.

Any limitations imposed under Section 3.4(a) on the amount of salary reduction that a participant may elect shall be applied to the sum of the elections made under Section 3.4 and this Section 3.4A.

The plan administrator shall calculate the actual deferral percentage for the highly compensated employees as described in Section 3.4(a), taking into account any participant contributions made to the Roth elective deferral account.  Further, the Roth elective deferral account shall be included with the 401(k) elective deferral account for purposes of the actual deferral percentage and actual contribution percentage tests.  Unless specifically stated otherwise, Roth elective deferrals shall be treated as elective deferrals for all purposes under the plan.

(b)Salary Reduction Election

(1)Availability of Election – An active participant who is eligible to make 401(k) elective deferral contributions shall be eligible to designate all or a portion of his elective deferral contributions to be credited to his Roth elective deferral account.  Such designation shall be irrevocable.  The amount of Roth elective deferral together with any salary deferral made under Section 3.4 may range as provided under Section 3.4(b)(1).

(2)Election Procedures – A notice of a participant's Roth deferral election shall be given to the employer and to the plan administrator in the manner as provided for 401(k) salary reduction elections under Section 3.4(b)(2).  The election may be made on the same form as the 401(k) salary reduction election but shall be a separate election.  The plan administrator shall provide a written notice to all participants of the required procedures for making an election and the date as of which an election will be effective.  An election shall be permitted at least once each plan year and the participants shall be permitted a reasonable time in which to make the election.  However, in no event shall such election be made or be effective before the adoption of the Roth elective deferral contribution provision under the plan, except as provided in relief granted by the Commissioner of Internal Revenue.  A participant electing Roth elective deferral account crediting for his salary reduction will be deemed to desire to continue at the same rate, unless he notifies the plan administrator of his desire to change such election.  The revised election shall be effective in accordance with the plan administrator's published procedures.  Roth elective deferral account crediting may be discontinued at any time upon proper notice in the manner established by the plan administrator.  The plan administrator and employer shall treat a salary reduction election as having been revoked by the participant upon his termination of employment or his ceasing to be a member of the eligible class of participants.

As provided in Section 4.4, a participant who receives a hardship distribution shall be prohibited from making Roth elective deferrals under this and all other plans of the employer for 6 months after receipt of the distribution.

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(3)Conditions – The participant's election to have contributions credited to his Roth elective deferral account shall apply only to compensation that becomes currently available to the employee after the effective date of the election.  The employer shall apply such election to the designated portion of the participant's compensation (and to increases in compensation), unless the participant's Roth deferral election specifies that the election is to be limited to certain compensation.

(4)Accounting – Roth elective deferrals shall be credited only to the Roth elective deferral account.  Such contributions shall not be transferred to the 401(k) elective deferral account.  The plan administrator shall maintain an accounting of all participant contributions made thereto and withdrawals therefrom.  Investment results and other credits or charges shall be separately allocated on a reasonable and consistent basis to the Roth elective deferral account and the other accounts under the plan.  However, forfeitures may not be allocated to the Roth elective deferral account.

Section 3.5 – Employee Nondeductible Contributions

Employee nondeductible contributions are not permitted under this plan and no amount shall be credited to the employee nondeductible contribution account.

Section 3.6 – Employer Matching Contributions

Employer matching contributions shall be made under the provisions of this Section.  Such contributions shall be credited to the employer matching contribution account or the qualified employer matching contribution account, as applicable.  With respect to each interim allocation date, the employer shall contribute the amount necessary to fund the employer matching contribution allocation for the interim allocation period based on the eligible deferrals and participant compensation for such period. 

Effective for plan years beginning prior to 2015, the plan administrator shall calculate the actual contribution percentage for the highly compensated employees using the testing method as provided under the prior statement of the plan document.

Effective for plan years beginning on or after January 1, 2015, the plan administrator shall calculate the actual contribution percentage for the highly compensated employees using the prior year testing method.

(a)Qualified Matching Contributions – The employer matching contribution shall not be treated as a qualified matching contribution.  A qualified matching contribution means matching contributions that are subject to the distribution and nonforfeitability requirements under Code section 401(k) when made.  A matching contribution must be a qualified matching contribution under Regulation section 1.401(k)-2(a)(6) in order to be taken into account under the ADP test.

(b)Contributions Subject to Matching – Employer matching contributions shall be made for an eligible participant with respect to the following contributions:

· Any contributions made under a salary reduction agreement pursuant to Section 3.4

· Any Roth elective deferral contributions made pursuant to Section 3.4A

· Any catch-up contributions

(c)Conditions for Allocation – A participant shall be eligible for an allocation of an employer matching contribution as of an allocation date, provided that he satisfies the following conditions:

(1)He made a contribution that is subject to matching during the current plan year.

AND

(2)He completed at least one hour of service during the current allocation period.

AND

(3)Effective for allocations made after March 31, 2004, he is not a highly compensated employee who has held the title of chairman, vice chairman, president, or vice president with respect to the employer as of any day in the plan year on or before the allocation date.

Notwithstanding the preceding requirements, any hours of service or employment requirement shall not apply in any plan year for which the employer elects to comply with the ACP safe harbor in years beginning after December 31, 1998.

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(d)(1)Allocation Formula – The employer matching contribution and any applicable forfeitures shall be equal to the employer matching percentage applied to the participant’s contributions for each allocation period within the current plan year that are subject to matching.

The employer matching percentage shall be determined each year by the employer in its own discretion.

(2)Limitation on Total Matching Allocation – Notwithstanding the preceding allocation formula(s), an allocation shall not be made to an individual participant's account to the extent that when combined with any other employer matching contribution made to the participant's account for the plan year, it would exceed the greatest of:  (i) 5% of his compensation; (ii) his elective deferrals for the plan year; or (iii) the product of 2 times the sum of the plan’s representative matching rate (as defined in Section 5.5(c)(1)(A)(viii)) plus the participant’s elective deferrals for the plan year.  Such an excess allocation shall be reallocated among the remaining eligible participants.

(3)Compensation – For purposes of the allocation of the employer matching contribution, compensation means compensation as defined in Section 1.2(a) and (b) (subject to the limitations of Section 1.2(c)) for the allocation period.  Compensation includable under Section 1.2(a) and (b) but not paid through payroll shall be treated as being paid as of the last day of the plan year or the last day of employment, if earlier.

Compensation shall exclude any bonus payable to the participant.  Short term disability benefits not paid through the employer's payroll system, expense reimbursements, and any form of non-cash compensation shall not be taken into account for this purpose.

(e)Forfeitures of Excess Aggregate Contributions

Excess aggregate contributions that are determined under the actual contribution percentage test and that are attributed to employer matching contributions shall be distributed to the extent vested with a proportional amount of the nonvested employer matching contribution being forfeited as of the last day of the plan year in which the excess arose.  Also, any forfeitures required for compliance with Code section 401(a)(4) and Regulation section 1.401(m)-2(b)(3)(v)(B) (because the contribution to which it relates is treated as an excess deferral, excess contribution, or excess aggregate contribution) shall occur as of such date.  The forfeitures shall be treated in the manner described in Section 4.2(c)(2) for the following plan year.

Section 3.7 – Rollover/Transfer Contributions

(a)Rollover Contributions – An active participant may contribute to his rollover/transfer account any amounts that he previously received either as a lump sum distribution (as defined in Code section 402(e)(4)(D)) or within one taxable year as a distribution from another qualified plan on account of termination of that plan provided that:

(1)He transferred such distribution to an individual retirement account or annuity within sixty (60) days after receipt, or

(2)He transferred such distribution to this plan within sixty (60) days after receipt.

Before accepting a rollover contribution, the trustee may require an employee to furnish satisfactory evidence that the proposed transfer is in fact a "rollover contribution" that the Code permits an employee to make to a qualified plan.  Effective for requests received on or after January 1, 2002, the acceptable sources for a rollover contribution shall be as set forth in Section 3.7(b).  Notwithstanding the preceding or the provisions of Section 3.7(b), this plan will not accept a rollover from a Roth elective deferral account.

(b)Transfer Contributions – With the consent of the plan administrator, an active participant may have funds transferred directly to this plan from another qualified plan.  Consent shall not be given if the optional forms of payment to which the funds are subject under the prior plan are not properly disclosed by the prior plan or cannot be accommodated by this plan and trust.

Further, this plan shall not accept any direct or indirect transfers from a defined benefit plan, money purchase plan (including a target benefit plan), stock bonus or profit sharing plan that would otherwise have provided for a life annuity form of payment to the participant.

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Effective for requests received on or after January 1, 2002, with the consent of the plan administrator, the participant may have the following transfers made on his behalf directly to this plan (or may make the following rollover contributions as permitted below):

· A direct rollover of an eligible rollover distribution from a qualified plan described in Code section 401(a) or 403(a), excluding after-tax employee contributions.

· Effective for plan years beginning on or after April 1, 2016, a direct transfer from a Roth elective deferral account under a qualified Code section 401(a) plan shall be permitted, provided the plan administrator is provided with appropriate accounting information to maintain the accounting records required under Section 3.4A(b)(4).

· A direct rollover of an eligible rollover distribution from an annuity contract described in Code section 403(b), excluding after-tax employee contributions.

· Effective on or after April 1, 2016, a direct transfer from a Roth elective deferral account under a qualified Code section 403(b) account shall be permitted, provided the plan administrator is provided with appropriate accounting information to maintain the accounting records required under Section 3.4A(b)(4).

· A direct rollover or a participant contribution of an eligible rollover distribution from an eligible plan under Code section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.

· A participant rollover contribution of the portion of a distribution from an individual retirement account or annuity described in Code section 408(a) or 408(b) (including an account more specifically described under Code section 408(k) or (p)) that is eligible to be rolled over and would otherwise be includable in gross income.

(c)Contributions Before Plan Entry Date – An employee, (who is in the eligible class of employees) prior to satisfying the plan’s eligibility conditions, may make a rollover or transfer contribution to the plan to the same extent and in the same manner as a participant.  If an employee makes a rollover or transfer contribution to the plan before satisfying the plan's eligibility conditions, the plan administrator and trustee will treat the employee as a participant for all purposes of the plan, except the employee is not a participant for purposes of making or sharing in contributions or forfeitures under the plan until he actually becomes a participant in the plan.  If the employee has a separation from service prior to becoming a participant, the trustee will distribute his rollover/transfer account to him.

(d)Distribution – Withdrawals may be made from a rollover/transfer account under the terms and conditions set forth in Section 4.4.

Section 3.8 – Allocation of Investment Results

(a)General Allocation Procedures

Investment income and market value appreciation or depreciation shall be allocated to each account of each participant who has accrued benefits in proportion to the respective account balances on each accounting date.  For this purpose, each account balance shall be equal to the average balance for the period commencing on the day following the prior accounting date and ending on the current accounting date.

(b)Investment Elections

A participant may elect to have all of his accounts invested in such investment fund or combination of investment funds as may be established by the trustee and made available for the benefit of participants; provided, however, that in no event may the participant direct that any portion of his account(s) be invested in collectibles (as defined in Code section 408(m)).  A participant's investment election shall not apply to any portion of any account that may be invested in a participant loan sub-account established under Section 4.4.  The investment results shall be allocated to the participant's account(s) based upon earnings and losses on the participant's share in such investment fund or funds.

The terms and conditions for investment direction shall be established by the plan administrator.  An election may be revoked only by another election and will remain in effect until such revocation.  If a participant fails to make any investment election prior to an allocation to his account(s), the trustee shall invest his account(s) in a qualified default investment alternative selected for the purpose that complies

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with the regulations prescribed by the Secretary of Labor under ERISA section 404(c)(5) until such time as the participant makes an affirmative investment election.

ARTICLE IV – PAYMENT OF PARTICIPANT ACCOUNTS

Section 4.1 – Vesting Service Rules

(a)Vesting Year of Service means a vesting computation period during which the employee completes at least 1,000 hours of service with the employer.  All of an employee's years of service with the employer shall be counted to determine the nonforfeitable percentage in the employee's account balance(s) derived from employer contributions, except:

(1)Years of service disregarded under the break in service rules in Section 4.1(d) below.  (Post-ERISA break in service rules)

(2)Years of service before the effective date of ERISA if such service would have been disregarded under the break in service rules of the prior plan in effect from time to time before such date.  For this purpose, break in service rules are rules that result in the loss of prior vesting or benefit accruals, or that deny an employee eligibility to participate, by reason of separation or failure to complete a required period of service within a specified period of time.  (Pre-ERISA break in service rules)

(b)One Year Break in Service means for the purposes of this Article IV a vesting computation period during which the employee or former employee does not complete more than 500 hours of service with the employer.

(c)Vesting Computation Period means the 12-consecutive-month period coinciding with the plan year.

(d)Break in Service Rules

(1)Vested Participant – A former participant who had a nonforfeitable right to all or a portion of his account balance(s) derived from employer contributions or who (effective for plan years beginning on or after January 1, 2006) had made an employee elective deferral contribution at the time of his termination from service shall retain credit for all vesting years of service prior to a break in service as that term is defined in Section 4.1(b).

(2)Nonvested Participant or Employee – In the case of a former participant or employee who did not have any nonforfeitable right to his account balance(s) derived from employer contributions and who (effective for plan years beginning on or after January 1, 2006) had made no employee elective deferral contribution at the time of his termination from service, years of service before a period of consecutive one-year breaks in service shall not be taken into account in computing service if the number of consecutive one-year breaks in service in such period equals or exceeds the greater of 5 or the aggregate number of years of service before such breaks in service.  Such aggregate number of years of service shall not include any years of service disregarded under the preceding sentence by reason of prior breaks in service.

(3)Vesting for Pre-Break and Post-Break Accounts – In the case of a participant or employee who has five or more consecutive one-year breaks in service, all years of service after such breaks in service shall be disregarded for the purpose of vesting the employer-derived account balance(s) that accrued before such breaks in service.  Whether or not such pre-break service counts in vesting the post-break employer-derived account balance(s) shall be determined according to the rules set forth in Section 4.1(d)(1) and (2) above.  Separate accounts shall be maintained for each of the participant’s pre-break and post-break employer-derived account balance(s).  All accounts shall share in the investment earnings and losses of the fund.

Section 4.2 – Vesting of Participant Accounts

(a)Determination of Vesting

(1)Normal Retirement – An employee's right to his account balance(s) shall be 100% vested and nonforfeitable upon the attainment of age 65, the normal retirement age.  The vesting of an inactive participant who terminates employment prior to normal retirement age shall remain subject to the

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provisions of the vesting schedule following attainment of such specified age.  Distributions shall be administered in accordance with termination from employment provisions of Section 4.3(a)(3).

(2)Late Retirement – If a participant remains employed after his normal retirement age, his account balance(s) shall remain 100% vested and nonforfeitable.  Such participant shall continue to receive allocations to his account as he did before his normal retirement age.

(3)Early Retirement – In the case of a participant who has attained age 60 and completed 7 years of service before his normal retirement age, the participant's right to his account balance(s) shall be 100% vested and nonforfeitable.  Such participant may retire before his normal retirement age without the consent of the employer and receive payment of benefits from the plan.  If a participant separates from service before satisfying the age requirement for early retirement, but has satisfied the service requirement, the participant shall be entitled to elect an early retirement benefit upon satisfaction of such age requirement.

(4)Disability – If a participant separates from service due to disability, such participant’s right to his account balance(s) as of his date of disability shall be 100% vested and nonforfeitable.  Disability means the participant has been determined by the Social Security Administration to be eligible for either full or partial Social Security disability benefits.

(5)(A)Death – In the event of the death of a participant who has an accrued benefit under the plan (whether or not he is an active participant), 100% of the participant’s account balance(s) as of the date of death shall be paid to his surviving spouse; except that, if there is no surviving spouse, or if the surviving spouse has already consented in a manner that is (or conforms to) a qualified election under the joint and survivor annuity provisions of Code section 417(a) and regulations issued pursuant thereto and as set forth in Section 5.2, then such balance(s) shall be paid to the participant's designated beneficiary.  The payment options available to the beneficiary shall be those payment options available to the participant under Section 4.3(b).

(B)Beneficiary Designation – Subject to the spousal consent requirements of Section 5.2, the participant shall have the right to designate his beneficiaries, including a contingent death beneficiary, and shall have the right at any time prior to his death to change such beneficiaries. The designation shall be effective only if made in writing on a form signed by the participant and supplied by and filed with the plan administrator prior to his death.  If the participant fails to designate a beneficiary, or if the designated person or persons predecease the participant, "beneficiary" shall mean: (a) the spouse, (b) if no surviving spouse, then to the surviving children in equal shares, (c) if no surviving children, then to the surviving parents in equal shares, (d) if no surviving parents, then to the surviving brothers and sisters in equal shares, (e) if no surviving brothers and sisters, then (f) to the participant’s estate if an estate is opened within 2 years of the participant’s death; and otherwise to a charity selected in the sole discretion of the plan administrator.

If a designated beneficiary dies after the participant has died but before the plan has commenced or made distribution to the designated beneficiary, the plan shall be administered as set forth in this paragraph.  The death benefit will be paid to the beneficiary’s designated beneficiary, if any designated prior to such beneficiary’s death in connection with the beneficiary’s election of a form of payment of the participant’s death benefit to which he is entitled; and if no such designation is on file with the plan administrator, then to the beneficiary's estate in a single lump sum payment if an estate is opened within 2 years of the participant’s death; and otherwise to a charity selected in the sole discretion of the plan administrator.  If the deceased designated beneficiary was not the participant's surviving spouse, distribution under this paragraph will be completed by December 31 of the fifth year following the participant's date of death.  If the deceased designated beneficiary was the participant's surviving spouse, distribution under this paragraph will be completed by December 31 of the fifth year following the beneficiary's date of death.

For purposes of this Section 4.2(a)(5), if a spouse or beneficiary of the participant dies simultaneously with the participant, the participant shall be deemed to be the survivor and to have died subsequent to such spouse or beneficiary.  Likewise, if a beneficiary named by a designated beneficiary dies simultaneously with a designated beneficiary, the designated beneficiary shall be deemed to be the survivor and to have died subsequent to the beneficiary named by the designated beneficiary.

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If a participant completes or has completed a beneficiary designation form in which the participant designates his spouse as the beneficiary and the participant and such spouse are legally divorced subsequent to the date of such designation; then, the designation shall be administered as if such spouse had predeceased the participant unless the participant, subsequent to the legal divorce, reaffirms the designation by completing a new beneficiary designation form.

(6)Termination From Service – If a participant separates from the service of the employer other than by retirement, disability, or death, his vested interest in his accounts shall be equal to the account balance multiplied by the vesting percentage determined below:

(A)Profit Sharing Account – The vesting percentage applicable to the participant’s profit sharing account shall be determined based on his vesting years of service as follows:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

Transition Rule – Notwithstanding the above vesting schedule, the vesting provisions of the plan before January 1, 2007, shall continue to apply to participants who do not have an hour of service on or after such date.

(B)Employer Matching Contribution Account – The vesting percentage applicable to the participant's employer matching contribution account shall be determined as follows:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

Transition Rule – Notwithstanding the above vesting schedule, the vesting provisions of the plan before January 1, 2002, shall continue to apply to participants who do not have an hour of service on or after such date.

(C)Other Accounts – The participant shall always be 100% vested in his following accounts:  employee 401(k) elective deferral account; employee nondeductible contribution account; qualified employer matching contribution account; qualified nonelective contribution account; Roth elective deferral account; rollover/transfer account.  The accrued benefit in such accounts shall be nonforfeitable.

(b)Forfeitures

(1)Time of Forfeiture – If a participant terminates employment before his account balances derived from employer contributions are fully vested, the nonvested portion of his accounts shall be forfeited on the earlier of:

(A)The last day of the vesting computation period in which the participant first incurs five consecutive one-year breaks in service, or

(B)The date the participant receives his entire vested accrued benefit.

(2)Cashout Distributions and Restoration

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(A)Cashout Distribution – If an employee terminates service and the value of his vested account balances derived from employer and employee contributions are not greater than $5,000, the employee shall receive a distribution of the value of the entire vested portion of such account balances and the nonvested portion will be treated as a forfeiture.  If an employee would have received a distribution under the preceding sentence but for the fact that the employee's vested account balances exceeded $5,000 when the employee terminated service and if at a later time such account balances are reduced such that they are not greater than $5,000, the employee will receive a distribution of such account balance and the nonvested portion will be treated as a forfeiture.  For purposes of this section, if the value of an employee's vested account balances is zero, he shall be deemed to have received a distribution of such vested account balances.  For the purpose of determining the value of a participant's vested account balance, prior distributions shall be disregarded if distributions have not commenced under an optional form of payment described in Section 4.3.

If an employee terminates service and elects, in accordance with the requirements of Section 4.3, to receive the value of his vested account balances, the nonvested portion shall be treated as a forfeiture as of the date of distribution.  If the employee elects to have distributed less than the entire vested portion of the account balances derived from employer contributions, the part of the nonvested portion that will be treated as a forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to employer contributions and the denominator of which is the total value of the vested employer derived account balances.

(B)Restoration of Accounts – If an employee receives a cashout distribution pursuant to this section and resumes employment covered under this plan before he incurs five consecutive one-year breaks in service, his employer-derived account balances shall each be restored to the amount on the date of distribution, if he repays to the plan the full amount of the distribution attributable to employer contributions before the earlier of five years after the first date on which he is subsequently re-employed by the employer, or the date he incurs five consecutive one-year breaks in service following the date of the distribution.  If an employee is deemed to receive a distribution pursuant to this Section 4.2(b)(2), and he resumes employment covered under this plan before he incurs five consecutive one-year breaks in service, upon the re-employment of such employee his employer-derived account balances will be restored to the amount on the date of such deemed distribution.

Any amount required to restore such forfeitures shall be deducted from forfeitures (including forfeitures of excess aggregate contributions) occurring in the plan year of restoration.  If forfeitures are insufficient for the restoration, the employer may make a contribution to the plan for such plan year to satisfy the restoration.  However, by the end of the plan year following the plan year of restoration, sufficient forfeitures or employer contributions shall be credited to the account to satisfy the restoration.

(c)Disposition of Forfeitures

(1)Profit Sharing Account – Forfeitures from profit sharing accounts shall be reallocated among the eligible active participants at the end of the plan year in which such forfeitures occur in accordance with the allocation procedures set forth in Section 3.2.

(2)Employer Matching Contribution Account – Forfeitures of employer matching contribution accounts first shall be used to reduce administrative expenses; any remaining forfeitures shall be used to reduce the next employer matching contribution to which the employer has commited itself whether for the current plan year or the immediately following plan year. 

(d)Withdrawal of Employee Nondeductible Contributions – No forfeitures shall occur solely as a result of an employee's withdrawal of employee nondeductible contributions.

(e)Unclaimed Benefits

(1)Forfeiture – The plan does not require the trustee or the plan administrator to search for, or to ascertain the whereabouts of, any participant or beneficiary.  At the time the participant's or beneficiary's benefit becomes distributable under the plan, the plan administrator, by certified or registered mail addressed to his last known address of record, shall notify any participant or beneficiary that he is entitled to a distribution under this plan.  If the participant or beneficiary fails to

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claim his distributive share or make his whereabouts known in writing to the plan administrator within twelve months from the date of mailing of the notice, the plan administrator shall treat the participant's or beneficiary's unclaimed payable accrued benefit as forfeited and shall reallocate such forfeiture in accordance with Section 4.2(c).  A forfeiture under this paragraph shall occur at the end of the notice period or, if later, the earliest date applicable Treasury regulations would permit the forfeiture.  These forfeiture provisions apply solely to the participant’s or beneficiary’s accrued benefit derived from employer contributions.

(2)Restoration – If a participant or beneficiary who has incurred a forfeiture of his accrued benefit under the provisions of this Section 4.2(e) makes a claim, at any time, for his forfeited accrued benefit, the plan administrator shall restore the participant's or beneficiary's forfeited accrued benefit to the same dollar amount as the dollar amount of the accrued benefit forfeited, unadjusted for any gains or losses occurring after the date of the forfeiture.  During the plan year in which the participant or beneficiary makes the claim, the plan administrator shall make the restoration from forfeitures occurring in that plan year.  If forfeitures are insufficient for the restoration, the employer shall make a contribution to the plan to satisfy the restoration.  The plan administrator shall direct the trustee to distribute the participant's or beneficiary's restored accrued benefit to him not later than 60 days after the close of the plan year in which the plan administrator restores the forfeited accrued benefit.

Section 4.3 – Payment of Participant Accounts

(a)Time of Payment

(1)Commencement of Benefits – Unless the participant elects otherwise, distribution of benefits shall begin no later than the 60th day after the latest of the close of the plan year in which:

(A)The participant attains age 65 (or normal retirement age, if earlier);

(B)Occurs the 10th anniversary of the year in which the participant commenced participation in the plan; or

(C)The participant terminates service with the employer (i.e. late retirement).

(2)Payment Upon Retirement, Disability, or Death – Subject to the provisions set forth in Section 4.3(a)(1), in the Joint and Survivor Requirements of Section 5.2, and in the Distribution Requirements of Section 5.3, if the participant terminates employment due to retirement, disability, or death, his account(s) shall be paid as soon as administratively possible after the occurrence of the event creating the right to a distribution.

(3)Payment Upon Other Termination of Employment – Subject to the provisions set forth in Section 4.3(a)(1) and in the Distribution Requirements of Section 5.3, if the participant terminates employment other than by retirement, disability, or death, his account(s) shall be paid as soon as administratively possible after the date of severance of employment.

Notwithstanding the preceding, an alternate payee may elect to have paid the amount determined under the qualified domestic relations order as soon as administratively possible following the date permitted under Section 4.5.

(4)Notwithstanding the foregoing, the failure of a participant (and spouse where the spouse's consent is required) to consent to a distribution while a benefit is immediately distributable, within the meaning of Section 5.2(a), shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this section.

(b)Form of Payment – A participant or beneficiary may elect to receive distribution of his account(s) as a lump sum benefit payment.  The participant or beneficiary shall file a written request for benefits with the plan administrator before payment will be made.  The lump sum benefit payment shall be made in cash from the fund.  If the vested accrued benefit is no more than $5,000, benefits shall automatically be paid in a lump sum in accordance with Section 4.3(d)(5).

Effective solely for distributions made before October 1, 2009, a participant was permitted to elect installment payments over a period of years that meets the Distribution Requirements of Section 5.3.  Installment payments may be made in cash from the fund or by distribution of an annuity term certain contract.

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If a distribution is required under the Distribution Requirements of Section 5.3, the participant fails to elect payment, and the vested balance of the account(s) exceeds $5,000, the trustee shall pay the benefit in installment payments that meet the requirements of Section 5.3 over the joint life and last survivor expectancy of the participant and his designated beneficiary.  If the vested balance of the account(s) does not exceed $5,000, the trustee shall distribute the entire account balance in a lump sum.

(c)General Payment Provisions

(1)All distributions due to be made under this plan shall be made on the basis of the amount to the credit of the participant as of the accounting date coincident with or immediately preceding the occurrence of the event calling for a distribution.

If a distributable event occurs after an allocation date and before allocations have been made to the account of the participant, the distribution shall also include the amounts allocable to the account as of such allocation date.

(2)If any person entitled to receive benefits hereunder is physically or mentally incapable of receiving or acknowledging receipt thereof, and if a legal guardian or power of attorney has been appointed for him, the plan administrator may direct the benefit payment to be made to such legal representative.  The plan administrator may cause benefits to be paid to any other individual recognized by the state law under which the plan trust has been established.

In the event a distribution is to be made to a minor beneficiary, then the plan administrator may direct that such distribution be paid to the legal guardian, or if none, to a parent of such beneficiary or a responsible adult with whom the beneficiary maintains his residence, or to the custodian for such beneficiary under the Uniform Gift to Minors Act or the Gift to Minors Act, if such is permitted by the laws of the state in which said beneficiary resides.  Such a payment to the legal guardian, custodian or parent of a minor beneficiary shall fully discharge the trustee, employer, plan administrator, and plan from further liability on account thereof.

(3)Each optional form of benefit provided under the plan shall be made available to all participants on a nondiscriminatory basis.  The plan may not retroactively reduce or eliminate optional forms of benefits and any other Code section 411(d)(6) protected benefits, except as provided in Regulation section 1.411(d)‑4, Q&A‑2(b) and in other relief granted statutorily or by the Commissioner of Internal Revenue.

(4)The participant's election of a form of benefit payment shall be irrevocable as of the annuity starting date, subject to the notice requirements contained in Section 4.3(e).  For purposes of accounting, an installment distribution shall be debited from each of a participant's accounts on a pro rata basis.

(d)Eligible Rollover Distributions

A distributee may elect, at the time and in the manner prescribed by the plan administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(1)Eligible Rollover Distribution – An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include:  any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code section 401(a)(9) including any portion of such distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); any hardship withdrawal; any timely withdrawal of an automatic salary reduction contribution made on or after January 1, 2008 from a participant's elective deferral account(s); and any other distribution(s) that is reasonably expected to total less than $200 during a year.  For purposes of the $200 rule, a distribution from a designated Roth account and a distribution from other accounts under the plan are treated as made under separate plans.

A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includable in gross income.  However, such portion may be transferred only to:  (A) a traditional individual retirement account or annuity described in Code section 408(a) or (b) (traditional IRA) or, effective for distributions on or after

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January 1, 2008, a Roth individual retirement account or annuity described in Code section 408A (Roth IRA); or (B) a qualified plan or an annuity contract described in Code section 401(a) and 403(b), respectively, that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution that is includible in gross income and the portion of such distribution that is not so includible.

(2)Eligible Retirement Plan – An eligible retirement plan is a traditional IRA, a Roth IRA (effective January 1, 2008), an annuity plan described in Code section 403(a), an annuity contract described in Code section 403(b), a qualified plan described in Code section 401(a), that accepts the distributee's eligible rollover distribution, or an eligible plan under Code section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into such plan from this plan.  The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p).

If any portion of an eligible rollover distribution is attributable to payments or distributions from a designated Roth account, an eligible retirement plan with respect to such portion shall include only a designated Roth account or a Roth IRA.

(3)Distributee – A distributee includes an employee or former employee.  The employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p), are distributees with regard to the interest of the spouse or former spouse.  For distributions after December 31, 2006, a distributee shall include a nonspouse beneficiary but only with respect to a direct transfer to an inherited traditional or Roth IRA established on his behalf for the purpose of receiving the distribution.

(4)Direct Rollover – A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.

(5)Automatic Rollovers – In the event of a mandatory distribution greater than $1,000 in accordance with the provisions of Section 4.2(b)(2)(A), if the participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly in accordance with Section 4.3(e), then the plan administrator shall pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator.  For purposes of determining whether a mandatory distribution is greater than $1,000, the portion of the participant’s distribution attributable to any rollover contribution shall be included.

(e)Payment Election Procedures

As described in Section 5.2(a), an account balance in excess of $5,000 shall not be immediately distributed without the consent of the participant.  The participant shall receive the notice required under Regulation section 1.411(a)-11(c) no less than 30 days and no more than 180 days before the annuity starting date with respect to the distribution.  The written explanation shall include a description of the consequences of failing to defer receipt of the distribution.  For any distribution in excess of $200, the plan administrator shall give the participant notice of his eligible rollover distribution rights.  The participant shall receive such notice in the same time period as the 411 notice is required to be provided.  If a distribution is one to which Code sections 401(a)(11) and 417 do not apply, such distribution may commence less than 30 days after the 411 notice is given, provided that:

(1)The plan administrator clearly informs the participant that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

(2)The participant, after receiving the notice, affirmatively elects a distribution.

In the event of a mandatory distribution greater than $1,000 in accordance with the provisions of Section 4.2(b)(2)(A), if the participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly in accordance with Section 4.3(d), then the plan administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator.

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For purposes of determining whether there will be a mandatory distribution from the plan, if either the Roth elective deferral account or the total of the participant's other accounts exceeds $1,000, no mandatory distribution will be made.  If the Roth elective deferral account alone is $1,000 or less and the participant's other accounts on their own total $1,000 or less, then a mandatory distribution will be made of all of the participant's accounts.

Section 4.4 – In-Service Payments

(a)Withdrawals – An employee may withdraw amounts from his account(s) before his separation from service only under the circumstances and only to the extent provided below.

The plan administrator shall approve requests on a nondiscriminatory basis.  No forfeitures shall occur solely as a result of a participant's withdrawal of employee contributions.  The in-service receipt of benefits by an employee shall not affect his participation in the plan, and such participant shall continue to receive allocations to his account(s).

Distribution After Attainment of Age 59½ – An employee may elect to receive payment of benefits from his account(s) at any time after he attains age 59½ by filing a written request with the plan administrator, but only to the extent that he is fully vested in the particular account.  For purposes of accounting, a partial distribution shall be debited from each of a participant's accounts on a pro rata basis.

Withdrawals from Employer Accounts

(A)Availability of Withdrawal Privilege – Subject to the limitations and conditions set forth herein, an employee who has completed at least 5 years of participation in the plan and has attained age 55 may request a transfer in one lump sum from his profit sharing account to an individual retirement account, but only to the extent that he is fully vested in his profit sharing account.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from an account shall not exceed the vested portion of such account.

(C)Request for Withdrawal – The participant's request to withdraw shall be made in writing to the plan administrator.  The plan administrator shall approve requests on a nondiscriminatory basis.

Hardship Withdrawals from Employee 401(k) Elective Deferral Account

(A)Availability of Withdrawal Privilege – An employee who has a financial hardship may request a lump sum withdrawal from his employee 401(k) elective deferral account, subject to the limitations and conditions set forth herein.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from his account shall not exceed the cumulative amount of his 401(k) salary deferral contributions.  Earnings thereon may not be withdrawn.

(C)Request for Withdrawal – The participant's request to withdraw must be made in writing to the plan administrator and shall be subject to his consent.  The basis for the plan administrator's consenting to or refusing to consent to the participant’s request shall be demonstrated financial hardship of the participant as described in Hardship Withdrawals.

Hardship Withdrawals from Roth Elective Deferral Account

(A)Availability of Withdrawal Privilege – An employee who has a financial hardship may request a lump sum withdrawal from his Roth elective deferral account, subject to the limitations and conditions set forth herein.

(B)Amount of Withdrawal – The amount that an eligible participant may withdraw from his account shall not exceed the cumulative amount of his Roth elective deferral contributions.  Earnings thereon may not be withdrawn.

(C)Request for Withdrawal – The participant's request to withdraw must be made in writing to the plan administrator and shall be subject to his consent.  The basis for the plan administrator's consenting to or refusing to consent to the participant's request shall be demonstrated financial hardship of the participant as described in Hardship Withdrawals.

Hardship Withdrawals

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For the purpose of this Section 4.4, a distribution will be made on account of hardship if the distribution is necessary in light of the immediate and heavy financial need of the employee.  A distribution based upon financial hardship cannot exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other resources of the participant.  The determination of the existence of financial hardship and the amount required to be distributed to meet the need created by the hardship must be made in accordance with uniform and nondiscriminatory standards established by the plan administrator under these plan provisions.

An immediate and heavy financial need shall be deemed to exist if the distribution is requested for one of the following reasons:  (1) expenses incurred or necessary for medical care as described in Code section 213(d) of the employee, the employee's spouse, children, dependents, or beneficiary(ies); (2) the purchase (excluding mortgage payments) of a principal residence for the employee; (3) payment of tuition and related educational fees for up to the next twelve months of post-secondary education for the employee, the employee's spouse, children, dependents, or beneficiary(ies); (4) payments necessary to prevent the eviction of the employee from, or a foreclosure on the mortgage of, the employee's principal residence; (5) payments for funeral or burial expenses for the employee's deceased parent, spouse, child, dependent, or beneficiary; or (6) expenses incurred to repair damage to the employee's principal residence that would qualify for a casualty loss deduction under Code section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).  For this purpose beneficiary shall mean the individual(s) designated by the participant as his primary beneficiary on his most recent beneficiary designation.

A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the employee only if:

1.The employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the employer;

2.All plans maintained by the employer provide that the employee's elective deferrals (and employee nondeductible contributions) will be suspended for 6 months after the receipt of the hardship distribution; and

3.The distribution is not in excess of the amount of the immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

Determination of Vested Account Balance

If a withdrawal is made at a time when a participant has a nonforfeitable right to less than the entire account balance derived from employer contributions and the participant may increase his nonforfeitable percentage in his account:

(A)A separate account will be established with respect to each of the participant's accounts that is subject to a vesting schedule that shall be credited with the participant's interest in such account as of the time of the distribution, and

(B)At any relevant time the participant's nonforfeitable portion of each such separate account will be equal to an amount ("X") determined by the formula:

X = P(AB + (R x D)) – (R x D)

For purposes of applying the formula:  P is the nonforfeitable percentage at the relevant time, AB is the account balance at the relevant time, D is the amount of the distribution from the relevant account, and R is the ratio of the account balance at the relevant time to the account balance after distribution.

(b)Participant Loans

No participant loans shall be permitted under this plan.

Section 4.5 – Distributions Under Domestic Relations Orders

Nothing contained in this plan prevents the trustee, in accordance with the direction of the plan administrator, from complying with the provisions of a qualified domestic relations order (as defined in Code section 414(p)).

A distribution will not be made to an alternate payee until the participant attains (or would have attained) his earliest retirement age.  For this purpose, earliest retirement age means the earlier of:  (1) the date on which

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the participant is entitled to a distribution under this plan; or (2) the later of the date the participant attains age 50 or the earliest date on which the participant could begin receiving benefits under this plan if the participant separated from service.

Nothing in this Section gives a participant a right to receive distribution at a time otherwise not permitted under the plan nor does it permit the alternate payee to receive a form of payment not otherwise permitted under the plan.

The plan administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order.  Upon receiving a domestic relations order, the plan administrator promptly will notify the participant and any alternate payee named in the order, in writing, of the receipt of the order and the plan's procedures for determining the qualified status of the order.  Within a reasonable period of time after receiving the domestic relations order, the plan administrator shall determine the qualified status of the order and shall notify the participant and each alternate payee, in writing, of his determination.  The plan administrator shall provide notice under this paragraph by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations.

If any portion of the participant's nonforfeitable accrued benefit is payable during the period the plan administrator is making his determination of the qualified status of the domestic relations order, the plan administrator shall make a separate accounting of the amounts payable.  If the plan administrator determines the order is a qualified domestic relations order within 18 months of the date amounts first are payable following receipt of the order, it shall direct the trustee to distribute the payable amounts in accordance with the order.  If the plan administrator does not make his determination of the qualified status of the order within the 18-month determination period, it shall direct the trustee to distribute the payable amounts in the manner the plan would distribute if the order did not exist and shall apply the order prospectively if it later determines the order is a qualified domestic relations order.

ARTICLE V – ADDITIONAL QUALIFICATION RULES

Section 5.1 – Limitations on Allocations Under Code Section 415

(a)Single Plan Limitations

(1)If the participant does not participate in, and has never participated in another qualified plan maintained by the employer, or a welfare benefit fund (as defined in Code section 419(e)) maintained by the employer, or an individual medical account (as defined in Code section 415(l)(2)) maintained by the employer, or a simplified employee pension (as defined in Code section 408(k)) maintained by the employer, that provides an annual addition as defined in Section 5.1(c)(1), the amount of annual additions that may be credited to the participant's account for any limitation year will not exceed the lesser of the maximum permissible amount or any other limitation contained in this plan.  If the employer contribution that would otherwise be contributed or allocated to the participant's account would cause the annual additions for the limitation year to exceed the maximum permissible amount, the amount contributed or allocated will be reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

(2)Prior to determining the participant's actual compensation for the limitation year, the employer may determine the maximum permissible amount for a participant on the basis of a reasonable estimation of the participant's compensation for the limitation year, uniformly determined for all participants similarly situated.

(3)As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year will be determined on the basis of the participant's actual compensation for the limitation year.

(4)If a participant elects to make employee nondeductible contributions or elective deferrals that together with any contribution the employer is obligated to make under the terms of this plan (including pursuant to any published discretionary contribution) would otherwise cause the annual additions for the limitation year to exceed the maximum permissible amount, the contribution election of the participant shall be limited before any employer contribution is reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

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(b)Combined Limitations – Other Defined Contribution Plan

(1)This Section 5.1(b) applies if, in addition to this plan, the participant is covered under another qualified defined contribution plan maintained by the employer, a welfare benefit fund maintained by the employer, an individual medical account maintained by the employer, or a simplified employee pension maintained by the employer, that provides an annual addition as defined in Section 5.1(c)(1), during any limitation year.  The annual additions that may be credited to a participant's account under this plan for any such limitation year will not exceed the maximum permissible amount reduced by the annual additions credited to a participant's account under the other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions for the same limitation year.  If the annual additions with respect to the participant under other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions maintained by the employer are less than the maximum permissible amount and the employer contribution that would otherwise be contributed or allocated to the participant's account under this plan would cause the annual additions for the limitation year to exceed this limitation, the amount contributed or allocated will be reduced so that the annual additions under all such plans and funds for the limitation year will equal the maximum permissible amount.  If the annual additions with respect to the participant under such other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions in the aggregate are equal to or greater than the maximum permissible amount, no amount will be contributed or allocated to the participant's account under this plan for the limitation year.

(2)Prior to determining the participant's actual compensation for the limitation year, the employer may determine the maximum permissible amount for a participant in the manner described in Section 5.1(a)(2).

(3)As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year will be determined on the basis of the participant's actual compensation for the limitation year.

(4)If, pursuant to Section 5.1(b)(3) or as a result of the allocation of forfeitures, a participant's annual additions under this plan and such other plans would result in an excess amount for a limitation year, the excess amount will be deemed to consist of the annual additions last allocated, except that annual additions attributable to a simplified employee pension will be deemed to have been allocated first, followed by annual additions to a welfare benefit fund or individual medical account, regardless of the actual allocation date.

(5)If an allocation date of this plan coincides with an allocation date of another plan and the employee or employer contribution that would otherwise be contributed or allocated to a participant's account under the plans would cause the annual additions for the limitation year to exceed the maximum permissible amount, Section 3.1(c) shall control which contribution or allocation will be reduced so that the annual additions for the limitation year will equal the maximum permissible amount.

(c)Definitions (Code Section 415 Limitations)

(1)Annual Additions – The sum of the following amounts credited to a participant's account for the limitation year:  (A) employer contributions; (B) employee contributions (excluding catch-up contributions made in accordance with Code section 414(v)); (C) forfeitures; (D) amounts allocated to an individual medical account (as defined in Code section 415(l)(2)), that is part of a pension or annuity plan maintained by the employer are treated as annual additions to a defined contribution plan; and (E) allocations under a simplified employee pension.  Also, amounts derived from contributions paid or accrued that are attributable to postretirement medical benefits allocated to the separate account of a key employee (as defined in Code section 419A(d)(3)) under a welfare benefit fund (as defined in Code section 419(e)) maintained by the employer are treated as annual additions to a defined contribution plan.

For this purpose, any excess amount applied under Section 5.1(a)(4) or (b)(6) in the limitation year to increase the accounts of participants who did not have an excess amount or to reduce employer contributions will be considered annual additions for such limitation year.

Restorative payments allocated to a participant’s account including restorative payments made pursuant to Section 4.2(b)(2)(B) and payments made to restore losses to the plan resulting from actions (or a failure to act) by a fiduciary for which there is a reasonable risk of liability under ERISA

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or under other applicable federal or state law (where similarly situated participants are treated similarly) shall not give rise to an annual addition for any limitation year.

(2)Compensation – A participant's earned income and any earnings reportable as W-2 wages for federal income tax withholding purposes that are paid by the employer.  W-2 wages means wages as defined in Code section 3401(a) but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code section 3401(a)(2)).

For purposes of applying the limitations of this Section 5.1, compensation for a limitation year is the compensation actually paid or includable in gross income during such limitation year.  Compensation for a limitation year shall include amounts earned but not paid during the limitation year solely because of the timing of pay periods and pay dates, provided the amounts are paid during the first few weeks of the next limitation year, the amounts are included on a uniform and consistent basis with respect to all similarly situated employees, and no compensation is included in more than one limitation year.

Back pay, within the meaning of Regulation section 1.415(c)-2(g)(8), shall be treated as compensation for the limitation year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.

Compensation in excess of the limitations of Section 1.2(c) shall not be taken into account.  In order to be taken into account for a limitation year, compensation must be paid or treated as paid prior to severance from employment with the employer.  Effective for limitation years beginning on or after July 1, 2007, an includable payment shall be treated as paid prior to severance from employment if it is paid by the later of 2½ months after severance or the last day of the limitation year that includes the severance date.  For this purpose, includable payments are those that absent the severance would have been paid and are regular compensation for services during regular working hours or outside working hours (such as overtime or shift differentials), commissions, bonuses, or other similar compensation.  Includable payments shall also include accrued sick, vacation, or other leave if such payments would have been included in compensation as defined in Section 1.2 if they were paid prior to the employee's severance from employment.

For limitation years beginning after December 31, 2008, compensation for a limitation year shall include amounts paid as differential wages to a participant on qualified military service leave of more than 30 days and otherwise meeting the requirements of Code section 3401(h)(2).

Compensation shall include elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 501(c)(18) plan.  Elective contribution amounts under a cafeteria plan excludable under Code section 125 shall include any amounts not available to a participant in cash in lieu of group health coverage solely because the participant is unable to certify that he has other health coverage (deemed section 125 compensation).  Amounts are deemed section 125 compensation only if the employer does not request or collect information regarding the participant's other health coverage as part of the enrollment process for the health plan.

Notwithstanding the preceding, compensation for a participant who is permanently and totally disabled (as defined in Code section 22(e)(3)) is the compensation such participant would have received for the limitation year if the participant had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled; such imputed compensation for the disabled participant may be taken into account only if contributions made on behalf of such participant are nonforfeitable when made.

(3)Defined Contribution Dollar Limitation – $40,000, as adjusted under Code section 415(d).

(4)Employer – For purposes of this Section 5.1, employer shall mean the employer as defined in Section 1.5(b) but including all members of a controlled group of corporations as defined in Code section 414(b) as modified by Code section 415(h) and all commonly controlled trades or businesses as defined in Code section 414(c) as modified by Code section 415(h).

(5)Excess Amount – The excess of the participant's annual additions for the limitation year over the maximum permissible amount.

(6)Limitation Year – The 12-consecutive-month period defined in Section 1.3(f).  All qualified defined contribution plans maintained by the employer must use the same limitation year.  If the limitation

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year is amended to a different 12-consecutive-month period, the new limitation year must begin on a date within the limitation year in which the amendment is made.

(7)Maximum Permissible Amount – Except to the extent permitted under Section 3.4(b) and Code section 414(v), if applicable, the maximum annual addition that may be contributed or allocated to a participant's account under the plan for any limitation year shall not exceed the lesser of:

(A)the defined contribution dollar limitation as defined in Section 5.1(c)(3); or

(B)100% of the participant's compensation for the limitation year.

The compensation limitation referred to in (B) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code section 401(h) or Code section 419A(f)(2)) that is otherwise treated as an annual addition under Code section 415(l)(1) or 419A(d)(2).

If a short limitation year is created because of an amendment changing the limitation year to a different 12-consecutive-month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction:

Number of months in the short limitation year

12

If the plan is terminated as of a date other than the last day of the limitation year, the plan shall be deemed to have been amended to change its limitation year and the maximum permissible amount shall be determined by prorating it for the resulting short limitation year.

Section 5.2 – Joint and Survivor Annuity Requirements

No annuity form of payment is provided under Section 4.3(b) and no direct or indirect transfer is accepted under Section 3.7 from a defined benefit plan, money purchase pension plan (including a target benefit plan), stock bonus or profit sharing plan that would otherwise have provided for a life annuity form of payment to any participant; therefore, the joint and survivor annuity requirements of Code section 401(a)(11) and 417 shall not apply to this plan, except as provided in this Section 5.2.

(a)Restrictions on Immediate Distributions – If the value of a participant's vested account balance derived from employer and employee contributions exceeds $5,000 and the account balance is immediately distributable, the participant (or where the participant has died, the participant's spouse) must consent to any distribution of such account balance.  For the purpose of determining the value of a participant's vested account balance, prior distributions shall be disregarded if distributions have not commenced under an optional form of payment described in Section 4.3.  The consent of the participant (or the participant's surviving spouse) shall be obtained in writing within the 180‑day period ending on the annuity starting date.  The annuity starting date is the first day of the first period for which an amount is paid in any form.  The plan administrator shall notify the participant (or the participant's surviving spouse) of the right to defer any distribution until the participant's account balance is no longer immediately distributable and the consequences of failing to defer any distribution, as required by Regulation section 1.417(a)(3)-1.  Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the plan in a manner that would satisfy the notice requirements of Code section 417(a)(3), and a description of the consequences of failing to defer any distribution, and shall be provided no less than 30 days and no more than 180 days prior to the annuity starting date.  However, distribution may commence less than 30 days after the notice described in the preceding sentence is given, provided the distribution is one to which Code sections 401(a)(11) and 417 do not apply, the plan administrator clearly informs the participant that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and the participant, after receiving the notice, affirmatively elects a distribution.

Neither the consent of the participant nor the participant's spouse shall be required to the extent that a distribution is required to satisfy Code section 401(a)(9) or section 415.  In addition, upon termination of this plan if the plan does not offer an annuity option (purchased from a commercial provider) and if the employer or any entity within the same controlled group as the employer does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code section 4975(e)(7)), the participant's account balance will, without the participant's consent, be distributed to the participant.  However, if any entity within the same controlled group as the employer maintains another defined contribution plan (other than an employee stock ownership plan), the participant's

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account balance will be transferred, without the participant's consent, to the other plan if the participant does not consent to an immediate distribution.

An account balance is immediately distributable if any part of the account balance could be distributed to the participant (or surviving spouse) before the participant attains (or would have attained if not deceased) the later of normal retirement age or age 62.

(b)Safe Harbor Rules – This Section 5.2(b) shall apply to a participant in this profit sharing plan, and to any distribution, made on or after the first day of the first plan year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions, as defined in Code section 72(o)(5)(B), and maintained on behalf of a participant in a money purchase pension plan (including a target benefit plan).  This plan satisfies and shall continue to satisfy the following conditions:  (1) the participant cannot elect payments in the form of a life annuity; and (2) on the death of a participant, the participant's vested account balance will be paid to the participant's surviving spouse, but if there is no surviving spouse, or if the surviving spouse has consented in a manner conforming to a qualified election, then to the participant's designated beneficiary.  The surviving spouse may elect to have distribution of the vested account balance commence within the 90-day period following the date of the participant's death.  The account balance shall be adjusted for gains or losses occurring after the participant's death in accordance with the provisions of the plan governing the adjustment of account balances for other types of distributions.

(1)The participant may waive the spousal death benefit described in this Section 5.2(b) at any time provided that no such waiver shall be effective unless it satisfies the conditions of Section 5.2(c)(1) that would apply to the participant's waiver of the qualified preretirement survivor annuity.

(2)For purposes of this Section 5.2(b), vested account balance shall have the same meaning as provided in Section 5.2(c)(3).

(c)Definitions (Code Section 417 Requirements)

(1)Qualified Election – A waiver of a qualified preretirement survivor annuity.  Any waiver of a qualified preretirement survivor annuity shall not be effective unless:  (a) the participant's spouse consents in writing to the election; (b) the election designates a specific beneficiary, including any class of beneficiaries or any contingent beneficiaries, that may not be changed without spousal consent (or the spouse expressly permits designations by the participant without any further spousal consent); (c) the spouse's consent acknowledges the effect of the election; and (d) the spouse's consent is witnessed by a plan representative or notary public.  If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a qualified election.

Any consent by a spouse obtained under this provision (or establishment that the consent of a spouse may not be obtained) shall be effective only with respect to such spouse.  A consent that permits designations by the participant without any requirement of further consent by such spouse must acknowledge that the spouse has the right to limit consent to a specific beneficiary, and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of such rights.  A revocation of a prior waiver may be made by a participant without the consent of the spouse at any time before the commencement of benefits.  The number of revocations shall not be limited.

(2)Spouse (Surviving Spouse) – The spouse or surviving spouse of the participant, provided that a former spouse will be treated as the spouse or surviving spouse and a current spouse will not be treated as the spouse or surviving spouse to the extent provided under a qualified domestic relations order as described in Code section 414(p).

(3)Vested Account Balance – The aggregate value of the participant's vested account balances derived from employer and employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the participant's life.  The provisions of this Section 5.2 shall apply to a participant who is vested in amounts attributable to employer contributions, employee contributions, or both at the time of death or distribution.

(4)Annuity Starting Date – The first day of the first period for which an amount is paid as an annuity or any other form.

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Section 5.3 – Distribution Requirements

Subject to Section 5.2 Joint and Survivor Annuity Requirements, the requirements of this Section 5.3 shall apply to any distribution of a participant's interest and will take precedence over any inconsistent provisions of this plan.  All distributions required under this Section 5.3 shall be determined and made in accordance with the regulations under Code section 401(a)(9) and the minimum distribution incidental benefit requirement of Code section 401(a)(9)(G).

With respect to calendar year 2009, the provisions of Section 5.3 shall be applied subject to Code section 401(a)(9)(H).  Although the plan administrator shall calculate any required minimum distribution under Section 5.3 and pay it separately to any participant or beneficiary commencing distribution during 2009, such recipient shall be eligible to deposit such amount in a qualified employer plan or individual retirement account.  Any participant receiving or due to commence such distributions (including as a 5% owner) shall not receive a required minimum distribution with respect to 2009 in the absence of an affirmative election.  To the extent that a participant's entire interest is otherwise required to be distributed to a beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death, such 5-year period shall be determined without regard to calendar year 2009.

(a)Required Beginning Date – The entire interest of a participant must be distributed, or begin to be distributed, no later than the participant's required beginning date.

(b)Limits on Distribution Periods – As of the first distribution calendar year, distributions to a participant, if not made in a single sum, may only be made over one of the following periods (or a combination thereof):

(1)the life of the participant;

(2)the joint lives of the participant and a designated beneficiary;

(3)a period certain not extending beyond the life expectancy of the participant; or

(4)a period certain not extending beyond the joint life and last survivor expectancy of the participant and a designated beneficiary.

(c)Death of Participant Before Distributions Begin – If the participant dies before distributions begin, the participant's entire interest will be distributed, or begin to be distributed, no later than as follows:

(1)If the participant's surviving spouse is the participant's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70½, if later.  If the surviving spouse so elects, the participant's entire interest will be distributed to such surviving spouse by December 31 of the calendar year containing the fifth anniversary of the participant's death.  If no election is received, distributions to the surviving spouse will begin by December 31 of the calendar year in which the participant would have attained age 70½, or the participant's entire interest will be distributed to such surviving spouse by December 31 of the calendar year containing the fifth anniversary of the participant's death, if later.

(2)If the participant's surviving spouse is not the participant's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died.  If the designated beneficiary so elects or if no election is received, the participant's entire interest will be distributed to such designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(3)If there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(4)If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse are required to begin, this Section 5.3(c), other than Section 5.3(c)(1), will apply as if the surviving spouse were the participant.

For purposes of this Section 5.3(c) and Section 5.3(f), unless Section 5.3(c)(4) applies, distributions are considered to begin on the participant's required beginning date.  If Section 5.3(c)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under

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Section 5.3(c)(1).  If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant's required beginning date (or to the participant's surviving spouse before the date distributions are required to begin to the surviving spouse under Section 5.3(c)(1)), the date distributions are considered to begin is the date distributions actually commence.

(d)Forms of Distribution – Unless the participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with Section 5.3(e) and (f).  If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code section 401(a)(9) and the Treasury regulations.

To the extent the participant has a Roth elective deferral account, an employee nondeductible contribution account, or after-tax contributions of either type for which there is separate accounting under his rollover/transfer account, such funds shall be distributed in the order listed before any fully taxable distribution is made to satisfy the minimum distribution requirement.  After the exhaustion of such accounts, distributions shall be debited from a participant's accounts to the extent funded in accordance with the following order of preference:  rollover/transfer account, qualified nonelective contribution account, profit sharing account, employer matching contribution account, employee 401(k) elective deferral account.

(e)Required Minimum Distributions During Participant's Lifetime – If a participant's benefit is to be distributed over (1) a period not extending beyond the life expectancy of the participant or the joint life and last survivor expectancy of the participant and the participant's designated beneficiary or (2) a period not extending beyond the life expectancy of the designated beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the participant's benefit by the applicable life expectancy.

(1)Amount of Required Minimum Distribution For Each Distribution Calendar Year – During the participant's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(A)The quotient obtained by dividing the participant's account balance by the distribution period in the Uniform Lifetime Table set forth in Regulation section 1.401(a)(9)‑9, using the participant's age as of the participant's birthday in the distribution calendar year; or

(B)If the participant's sole designated beneficiary for the distribution calendar year is the participant's spouse, the quotient obtained by dividing the participant's account balance by the number in the Joint and Last Survivor Table set forth in Regulation section 1.401(a)(9)‑9, using the participant's and spouse's attained ages as of the participant's and spouse's birthdays in the distribution calendar year.

(2)Lifetime Required Minimum Distributions Continue Through Year of Participant's Death – Required minimum distributions will be determined under this Section 5.3(e) beginning with the first distribution calendar year and continuing up to and including the distribution calendar year that includes the participant's date of death.

(f)Required Minimum Distributions After Participant's Death

(1)Death On or After Date Distributions Begin – If the participant dies after distribution of his interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the participant's death.

(A)Participant Survived by Designated Beneficiary – If the participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the longer of the remaining life expectancy of the participant or the remaining life expectancy of the participant's designated beneficiary, determined as follows:

(i)The participant's remaining life expectancy is calculated using the age of the participant in the year of death, reduced by one for each subsequent year.

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(ii)If the participant's surviving spouse is the participant's sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the participant's death using the surviving spouse's age as of the spouse's birthday in that year.  For distribution calendar years after the year of the surviving spouse's death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one for each subsequent calendar year.

(iii)If the participant's surviving spouse is not the participant's sole designated beneficiary, the designated beneficiary's remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the participant's death, reduced by one for each subsequent year.

(B)No Designated Beneficiary – If the participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the participant's death, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the participant's remaining life expectancy calculated using the age of the participant in the year of death, reduced by one for each subsequent year.

(2)Death Before Date Distributions Begin

(A)Participant Survived by Designated Beneficiary – If the participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant's death is the quotient obtained by dividing the participant's account balance by the remaining life expectancy of the participant's designated beneficiary, determined as provided in Section 5.3(f)(1).

(B)No Designated Beneficiary – If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant's death, distribution of the participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

(C)Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin – If the participant dies before the date distributions begin, the participant's surviving spouse is the participant's sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 5.3(c), this Section 5.3(f)(2) will apply as if the surviving spouse were the participant.

(g)Definitions (Code Section 401(a)(9) Requirements)

(1)Designated Beneficiary – The individual who is designated as the beneficiary of the participant’s interest under the plan and who is the designated beneficiary under Code section 401(a)(9) and Regulation section 1.401(a)(9)‑4.

(2)Distribution Calendar Year – A calendar year for which a minimum distribution is required.  For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the participant's required beginning date.  For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 5.3(c).  The required minimum distribution for the participant's first distribution calendar year will be made on or before the participant's required beginning date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the participant's required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

(3)Life Expectancy – Life expectancy as computed by use of the Single Life Table in Regulation section 1.401(a)(9)‑9.

(4)Participant's Account Balance – The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The account balance for the valuation calendar

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year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

If any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it had been made in the immediately preceding distribution calendar year.

(5)Required Beginning Date

(A)Non-5% Owner – The required beginning date is April 1 of the calendar year following the later of:  (i) the calendar year in which the participant attains age 70½, or (ii) the calendar year in which the participant retires.

(B)5% Owner – The required beginning date for a participant who is a 5% owner is April 1 of the calendar year following the calendar year in which the participant attains age 70½.  A participant is treated as a 5% owner for purposes of this Section 5.3(g)(5) if such participant is a 5% owner as defined in Code section 416(i) (determined in accordance with section 416 but without regard to whether the plan is top-heavy) at any time during the plan year ending with or within the calendar year in which such participant attains age 70½.

(C)Once distributions have begun to a 5% owner under this Section 5.3(g)(5), they must continue to be distributed, even if the participant ceases to be a 5% owner in a subsequent year.

Section 5.4 – Top-Heavy Provisions

(a)Application of Provisions – If the plan is or becomes top-heavy in any plan year, the provisions of Section 5.4 will supersede any conflicting provisions in the plan.

(b)Minimum Allocation

(1)Except as otherwise provided in Section 5.4(b)(3) and (4) below, the employer contributions and forfeitures allocated on behalf of any participant who is not a key employee shall not be less than the lesser of 3% of such participant's compensation or in the case where the employer has no defined benefit plan that designates this plan to satisfy Code section 401, the largest percentage of employer contributions and forfeitures, as a percentage of key employee's compensation that may be taken into account under Section 1.2(c), allocated on behalf of any key employee for that year.  For this purpose, amounts contributed to the key employee's elective deferral account(s) shall be included as allocations on his behalf for that year.  However, amounts contributed to a non-key employee's elective deferral account(s) shall not be taken into account in determining whether he has received his minimum allocation.  The minimum allocation is determined without regard to any Social Security contribution.  This minimum allocation shall be made even though, under other plan provisions, the participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year because of (i) the participant's failure to complete 1,000 hours of service (or any equivalent provided in the plan), or (ii) the participant's failure to make mandatory employee contributions to the plan, or (iii) the participant's failure to make elective contributions to the plan, or (iv) compensation less than a stated amount.

(2)For purposes of computing the minimum allocation, compensation shall mean compensation as defined in Section 5.1(c)(2), subject to the limitations of Section 1.2(c).

(3)The provision in Section 5.4(b)(1) shall not apply to any participant who was not employed by the employer on the last day of the plan year.

(4)The provision in Section 5.4(b)(1) shall not apply to any participant to the extent the participant is covered under any other plan or plans of the employer and the employer has provided in Section 3.2 or 3.3 that the minimum allocation or benefit requirement applicable to top-heavy plans will be met in the other plan or plans (including another plan that consists solely of a cash or deferred arrangement that meets the ADP safe harbor requirements and matching contributions with respect to which the ACP safe harbor requirements are met).  If this plan is intended to meet the minimum allocation or benefit requirement applicable to another plan or plans, the employer shall so provide in Section 3.2(c) or 3.3(b), as appropriate.

Notwithstanding anything to the contrary herein and in Section 3.2(c) or 3.3(b), the top-heavy requirements of Code section 416 and this Section 5.4 shall not apply in any year beginning after

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December 31, 2001, in which the plan consists solely of a cash or deferred arrangement that meets the ADP safe harbor requirements as set forth in Sections 3.4(a) and 5.5(f) and matching contributions with respect to which the ACP safe harbor requirements are met as set forth in Sections 3.6 and 5.5(f).

(5)The minimum allocation required (to the extent required to be nonforfeitable under Code section 416(b)) may not be forfeited under Code section 411(a)(3)(B) or 411(a)(3)(D).

(6)Matching Contributions – Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code section 416(c)(2) and the plan if so provided in Section 3.2(c) or 3.3(b).  The preceding sentence shall apply with respect to matching contributions under the plan or, if the plan provides that the minimum contribution requirement shall be met in another plan, such other plan.  Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code section 401(m).

(c)Minimum Vesting Schedule – For any plan year in which this plan is top-heavy, the following minimum vesting schedule shall automatically apply to the plan:

Years of Service	Vesting Percentage
0–1 Year		0%
2		20%
3		40%
4		60%
5		80%
6 or More Years		100%

The minimum vesting schedule shall apply to all benefits within the meaning of Code section 411(a)(7) except those attributable to employee contributions, including benefits accrued before the effective date of Code section 416 and benefits accrued before the plan became top-heavy.  Further, no decrease in a participant's nonforfeitable percentage may occur in the event the plan's status as top-heavy changes for any plan year.  However, this Section does not apply to the account balances of any employee who does not have an hour of service after the plan has initially become top-heavy and such employee's account balance attributable to employer contributions and forfeitures will be determined without regard to this Section.

If the vesting schedule under the plans shifts in or out of the above schedule for any plan year because of the plan's top-heavy status, such shift shall constitute an amendment to the vesting schedule and the provisions of Section 7.2(d) and (e) shall apply.

(d)Definitions (Code Section 416 Requirements)

(1)Key Employee – Key employee means any employee or former employee (and the beneficiaries of such employee) who at any time during the determination period is an officer of the employer if such individual's annual compensation exceeds $130,000 (as adjusted under Code section 416(i)(1) for plan years beginning after December 31, 2002), a 5% owner of the employer, or a 1% owner of the employer who has an annual compensation of more than $150,000.  Annual compensation means compensation as defined in Section 5.1(c)(2), but including elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 457 plan or a Code section 501(c)(18) plan for any plan year and subject to the limitations of Section 1.2(c).  The determination period is the plan year containing the determination date.  In determining whether an employee is a key employee in 2002, this paragraph shall be treated as having been in effect for the last plan year beginning before January 1, 2002.

In determining whether a plan is top-heavy for plan years beginning before January 1, 2002, key employee means any employee or former employee (and the beneficiaries of such employee) who at any time during the determination period was an officer of the employer if such individual's annual compensation exceeded 50% of the dollar limitation under Code section 415(b)(1)(A), an owner (or considered an owner under Code section 318) of one of the ten largest interests in the employer if such individual's compensation exceeded 100% of the dollar limitation under Code

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section 415(c)(1)(A), a 5% owner of the employer, or a 1% owner of the employer who had an annual compensation of more than $150,000.  Annual compensation means compensation as defined in Section 5.1(c)(2), but including elective contributions as defined in Section 1.2(a) and elective contributions under a Code section 457 plan or a Code section 501(c)(18) plan for any plan year and subject to the limitations of Section 1.2(c).  The determination period is the plan year containing the determination date and the four preceding plan years.

The determination of who is a key employee will be made in accordance with Code section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

(2)Top-Heavy Plan – This plan is top-heavy if any of the following conditions exists:

(A)If the top-heavy ratio for this plan exceeds 60% and this plan is not part of any required aggregation group or permissive aggregation group of plans.

(B)If this plan is a part of a required aggregation group of plans but not part of a permissive aggregation group and the top-heavy ratio for the group of plans exceeds 60%.

(C)If this plan is a part of a required aggregation group and part of a permissive aggregation group of plans and the top-heavy ratio for the permissive aggregation group exceeds 60%.

(3)Top-Heavy Ratio

(A)If the employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the employer has not maintained any defined benefit plan that during the five-year period ending on the determination date(s) has or has had accrued benefits, the top-heavy ratio for this plan alone or for the required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances of all key employees as of the determination date(s) including any part of any account balance distributed in the one-year period ending on the determination date(s) (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002), and the denominator of which is the sum of all account balances including any part of any account balance distributed in the one-year period ending on the determination date(s) (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002), both computed in accordance with Code section 416 and the regulations thereunder.  Both the numerator and denominator of the top-heavy ratio are increased to reflect any contribution not actually made as of the determination date, but which is required to be taken into account on that date under Code section 416 and the regulations thereunder.

(B)If the employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the employer maintains or has maintained one or more defined benefit plans that during the five-year period ending on the determination date(s) has or has had any accrued benefits, the top-heavy ratio for any required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated defined contribution plan or plans for all key employees, determined in accordance with (A) above, and the present value of accrued benefits under the aggregated defined benefit plan or plans for all key employees as of the determination date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all participants, determined in accordance with (A) above, and the present value of accrued benefits under the defined benefit plan or plans for all participants as of the determination date(s), all determined in accordance with Code section 416 and the regulations thereunder.  The accrued benefits under a defined benefit plan in both the numerator and denominator of the top-heavy ratio are increased for any distribution of an accrued benefit made in the one-year period ending on the determination date (five-year period ending on the determination date in the case of a distribution made for a reason other than severance from employment, death or disability and in determining whether the plan is top-heavy for plan years beginning before January 1, 2002).

The accrued benefit of a participant other than a key employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (2) if there is no such method, as if such benefit accrued not more

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rapidly than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).

(C)For purposes of Section 5.4(d)(3)(A) and (B) above the value of account balances and the present value of accrued benefits will be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the determination date, except as provided in Code section 416 and the regulations thereunder for the first and second plan years of a defined benefit plan.  The account balances and accrued benefits of a participant (1) who is not a key employee but who was a key employee in a prior year, or (2) who has not been credited with at least one hour of service with any employer maintaining the plan at any time during the one-year period (five-year period in determining whether the plan is top-heavy for plan years beginning before January 1, 2002) ending on the determination date will be disregarded.  The calculation of the top-heavy ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Code section 416 and the regulations thereunder.  Deductible employee contributions will not be taken into account for purposes of computing the top-heavy ratio.  When aggregating plans the value of account balances and accrued benefits will be calculated with reference to the determination dates that fall within the same calendar year.

The accrued benefit of a participant other than a key employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (2) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).

Catch-up contributions with respect to the current plan year shall not be taken into account; however, catch-up contributions for prior years shall be taken into account.

(4)Permissive Aggregation Group – The required aggregation group of plans plus any other plan or plans of the employer that, when considered as a group with the required aggregation group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410.

(5)Required Aggregation Group – (A) Each qualified plan of the employer in which at least one key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated), and (B) any other qualified plan of the employer that enables a plan described in (A) to meet the requirements of Code sections 401(a)(4) or 410.

(6)Determination Date – For any plan year subsequent to the first plan year, the last day of the preceding plan year.  For the first plan year of the plan, the last day of that year.

(7)Valuation Date – The last day of the plan year shall be the date as of which account balances or accrued benefits are valued for purposes of calculating the top-heavy ratio.

(8)Present Value – Present value shall be based only on the interest and mortality rates specified in the employer’s defined benefit plan.

(9)Non-Key Employee – Any employee who is not a key employee.  Non-key employees include employees who are former key employees.

Section 5.5 – Limitations and Conditions Regarding Contributions Under Code Sections 402(g), 401(k), and 401(m)

(a)(1)Limit Maximum Amount of Elective Deferrals Under Code Section 402(g)

No participant shall be permitted to have elective deferrals made under this plan, or any other qualified plan, contract or arrangement maintained by the employer, during any calendar year, in excess of the dollar limitation contained in Code section 402(g) in effect for the participant's taxable year at the beginning of such calendar year.  If Section 3.4 so provides, in the case of a participant age 50 or over by the end of the taxable year, the dollar limitation described in the preceding sentence shall include the amount of elective deferrals that are permitted to be catch-up contributions.  The dollar limitation contained in Code section 402(g) was $15,000 for taxable years beginning in 2006.  After 2006, the Secretary of the Treasury will adjust the $15,000 dollar limitation for cost-of-living increases under Code section 402(g)(4).  Any such adjustments will be in multiples of $500.

(2)Catch-up Contributions

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Catch-up contributions means elective deferrals made to the plan that are in excess of an otherwise applicable plan limit and that are made by participants who are age 50 or over by the end of their taxable years.  An otherwise applicable plan limit is a limit in the plan that applies to elective deferrals without regard to catch-up contributions, such as any limitation set forth in Section 3.4, the limits on annual additions described in Section 5.1, the dollar limitation on elective deferrals under Code section 402(g) (not taking into account catch-up contributions) and the limit imposed by the actual deferral percentage (ADP) test under Section 5.5(b).  Catch-up contributions for a participant for a taxable year may not exceed:

(A)the dollar limit on catch-up contributions under Code section 414(v)(2)(B)(i) for the taxable year; or

(B)when added to other elective deferrals, 100% of the participant’s compensation for the taxable year (subject to the reservation of sufficient compensation to satisfy federal, state, and local income and other wage-related tax requirements).

The dollar limit on catch-up contributions was $5,000 for taxable years beginning in 2006.  After 2006, the $5,000 limitation is adjusted by the Secretary of the Treasury for cost-of-living increases under Code section 414(v)(2)(C).  Any such adjustments will be in multiples of $500.

Catch-up contributions shall not be:

(A)subject to the limits on annual additions;

(B)taken into account under the ADP test; and

(C)taken into account in determining the minimum allocation under Section 5.4(b); however, catch-up contributions made in prior years shall be taken into account in determining whether the plan is top-heavy.

Provisions in the plan relating to catch-up contributions apply to elective deferrals made after December 31, 2001.

(3)Distribution of Excess Elective Deferrals

A participant may assign to this plan any excess elective deferrals made during a taxable year of the participant by following the claim procedure set forth in Section 5.5(a)(4).  Also, the employer may notify this plan on behalf of a participant who has excess deferrals for the taxable year calculated by taking into account only elective deferrals under the plans, contracts or arrangements maintained by the employer.

Notwithstanding any other provision of the plan, excess elective deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any participant to whose account excess elective deferrals were assigned for the preceding year and for whom excess elective deferrals have been claimed for such taxable year or calendar year.  For participant taxable years beginning after December 31, 2005, distribution of excess elective deferrals for a year shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(4)Claims

The participant's claim shall be submitted in writing to the plan administrator no later than March 1.  The participant shall specify the excess deferral amount for the preceding calendar year and shall provide a written statement that if such amounts are not distributed, such excess deferral amount, when added to amounts deferred under other plans or arrangements described in Code sections 401(k), 408(k), 457, or 403(b), exceeds the limit imposed on the participant by Code section 402(g) for the year in which the deferral occurred.

(5)Definitions (Code Section 402(g) Limitations)

(A)Elective Deferrals shall mean any employer contributions made to the plan at the election of the participant, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism.  With respect to any taxable year, a participant's elective deferral is the sum of all employer contributions made on behalf of such participant pursuant to an election to defer under any qualified cash or deferred arrangement as

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described in Code section 401(k), any salary reduction simplified employee pension described in section 408(k)(6), any SIMPLE IRA plan described in section 408(p), any plan described under section 501(c)(18), and any employer contributions made on the behalf of a participant for the purchase of an annuity contract under section 403(b) pursuant to a salary reduction agreement.  For years beginning after December 31, 2005, the term "elective deferrals" shall include pre-tax elective deferrals and Roth elective deferrals.  Pre-tax elective deferrals means a participant's elective deferrals that are not includable in the participant's gross income at the time deferred.  Elective deferrals shall not include any deferrals properly distributed as excess annual additions.

(B)Roth Elective Deferrals shall mean a participant's elective deferrals that are includable in the participant's gross income at the time deferred and have been irrevocably designated as Roth elective deferrals by the participant in the deferral election in lieu of all or a portion of the pre-tax elective deferrals the participant is otherwise eligible to make under the plan.  A participant's Roth elective deferrals shall be maintained in a separate account containing only the participant's Roth elective deferrals and gains and losses attributable to those Roth elective deferrals.

(C)Excess Elective Deferrals shall mean those elective deferrals that either:  (i) are made during the participant's taxable year and exceed the dollar limitation under Section 5.5(a) (including, if applicable, the dollar limitation on catch-up contributions described in Section 5.5(a)(2)) for such year; or (ii) are made during a calendar year and exceed such dollar limitations for the participant's taxable year beginning in such calendar year, counting only elective deferrals made under this plan and any other plan, contract or arrangement maintained by the employer.  Excess elective deferrals shall be treated as annual additions under the plan, unless such amounts are distributed no later than the first April 15 following the close of the participant's taxable year.

(6)Determination of Income or Loss

Excess elective deferrals shall be adjusted for any income or loss.  For taxable years beginning on or after January 1, 2008, the income or loss allocable to excess elective deferrals allocated to each participant is the income or loss allocable to the participant's elective deferral account for the taxable year multiplied by a fraction, the numerator of which is such participant's excess elective deferrals for the year and the denominator is the participant's account balance attributable to elective deferrals without regard to any income or loss occurring during such taxable year.  Effective solely for the taxable year beginning on or after January 1, 2007, and to the extent the excess elective deferrals were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the taxable year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the participant’s taxable year and the date of distribution, counting the month of distribution if distribution occurred after the 15th of such month.

(b)(1)Actual Deferral Percentage Test

The actual deferral percentage (hereinafter "ADP") for a plan year for participants who are highly compensated employees for the plan year and the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year must satisfy one of the following tests:  (i) The ADP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year multiplied by 1.25; or (ii) The ADP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ADP for participants who were nonhighly compensated employees for the prior plan year multiplied by 2.0, provided that the ADP for participants who are highly compensated employees does not exceed the ADP for participants who were nonhighly compensated employees in the prior plan year by more than two percentage points.

In place of the prior year testing method described above, if so elected by the employer and adopted in Section 3.4(a), the ADP tests in (i) and (ii) will be applied by comparing the current plan year's ADP for participants who are highly compensated employees with the current plan year's ADP for participants who are nonhighly compensated employees.  In the alternative, the plan may satisfy the ADP test requirements by meeting the ADP test safe harbor requirements as described in Section 5.5(f).  Election of this method shall be treated as an election to use the current year testing method.  Once the current year testing method election has been made, the employer can elect prior year testing for a plan year only if the plan has used current year testing for each of the preceding

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5 plan years (or if lesser, the number of plan years the plan has been in existence) or if, as a result of a merger or acquisition described in Code section 410(b)(6)(c)(i), the employer maintains both a plan using prior year testing and a plan using current year testing and the change is made within the transition period described in section 410(b)(6)(c)(ii).  Such elections shall be reflected in Section 3.4(a).

(A)Special Rules Applying to ADP Test

(i)A participant is a highly compensated employee for a particular plan year if he meets the definition of a highly compensated employee in effect for that plan year.  A participant is a nonhighly compensated employee for a particular plan year if he does not meet the definition of a highly compensated employee in effect for that plan year.

(ii)The ADP for any participant who is a highly compensated employee for the plan year and who is eligible to have elective deferrals (and qualified nonelective contributions or qualified matching contributions, or both, to the extent treated as elective deferrals for purposes of the ADP test) allocated to his accounts under two or more arrangements described in Code section 401(k), that are maintained by the employer, shall be determined as if such elective deferrals (and, to the extent taken into account, such qualified nonelective contributions or qualified matching contributions, or both) were made under a single arrangement.  If a highly compensated employee participates in two or more cash or deferred arrangements of the employer that have different plan years, all elective deferrals made during this plan's plan year under all such arrangements shall be aggregated.  For plan years beginning before January 1, 2006, all elective deferrals made under all such cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.  Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code section 401(k).

(iii)In the event that this plan satisfies the requirements of Code sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this plan, then this Section 5.5(b)(1) shall be applied by determining the ADP of employees as if all such plans were a single plan.  If more than 10% of the employer's nonhighly compensated employees are involved in a plan coverage change as defined in Regulation section 1.401(k)-2(c)(4), then any adjustments to the nonhighly compensated employees' ADP for the prior year shall be made in accordance with such regulation, unless the employer has elected in Section 3.4(a) to use the current year testing method.  Plans may be aggregated in order to satisfy Code section 401(k) only if they have the same plan year and use the same ADP testing method.

(iv)If:  (A) this plan is not a successor plan (as defined in Regulation section 1.401(k)-2(c)(2)(iii)), and (B) this plan is not aggregated under Regulation section 1.401(k)-1(b)(4) for such plan year with any other plan that was or that included a Code section 401(k) plan in the prior year; then, in the case of the first plan year the plan permits any participant to make elective deferrals the amount treated as the ADP for participants who are nonhighly compensated employees for the prior plan year shall be 3% or, if the employer so elects, the ADP for participants who are nonhighly compensated employees as calculated for such first plan year.  Such election shall be set forth in Section 3.4(a).

(v)For purposes of determining the ADP test, elective deferrals, qualified nonelective contributions and qualified matching contributions must be made before the last day of the twelve-month period immediately following the plan year to which the contributions relate.  An elective deferral shall be taken into account only if it relates to compensation that either (a) would have been received by the participant in the plan year but for the deferral election, or (b) is attributable to services performed by the participant in the plan year and would have been received by the participant within 2½ months after the last day of the plan year but for the deferral election.

When the prior year testing method is used, qualified nonelective contributions and qualified matching contributions shall not be taken into account.

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(vi)The plan administrator shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of qualified nonelective contributions or qualified matching contributions, or both, used in such test.

(vii)When the current year testing method is used, qualified nonelective contributions may be taken into account as elective deferrals only to the extent needed to meet the ADP test.  Further, qualified matching contributions may be taken into account only to the extent such contributions are not needed to meet the average deferral percentage test unless it is the intention of the plan administrator to test all qualified nonelective and matching contributions under the ADP test.

(viii)Effective for plan years beginning on or after January 1, 2006, qualified nonelective contributions cannot be taken into account for a plan year for a nonhighly compensated employee to the extent such contributions exceed the product of that nonhighly compensated employee's compensation and the greater of 5% or two times the plan's representative contribution rate.  For this purpose, the plan's representative contribution rate is the lowest applicable contribution rate of any eligible nonhighly compensated employee among a group of eligible nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees for the plan year (or, if greater, the lowest applicable contribution rate of any eligible nonhighly compensated employee in the group of all eligible nonhighly compensated employees for the plan year and who is employed by the employer on the last day of the plan year).

The applicable contribution rate for an eligible nonhighly compensated employee is the sum of his qualified matching contributions taken into account under the ADP test and his qualified nonelective contributions for the plan year, divided by his compensation for the same period.  Notwithstanding the preceding, qualified nonelective contributions that are made in connection with an employer's obligation to pay prevailing wages under the Davis-Bacon Act can be taken into account for a plan year for a nonhighly compensated employee to the extent such contributions do not exceed 10% of his compensation.

(ix)Applicable limitations when testing changes from current year testing to prior year testing:  The ADP for the prior plan year shall be determined taking into account only:  (A) elective contributions for nonhighly compensated employees that were taken into account for purposes of the ADP test in the prior plan year under the current plan year testing method and (B) qualified nonelective contributions not previously taken into account under either the ADP or ACP test.

(x)The determination and treatment of the ADP amounts of any participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(B)Actual Deferral Percentage (ADP) shall mean, for a specified group of participants (either highly compensated employees or nonhighly compensated employees) for a plan year, the average of the ratios (calculated separately for each participant in such group) of (1) the amount of employer contributions actually paid over to the trust on behalf of such participant for the plan year to (2) the participant's compensation as defined in Section 1.2(e).  The actual deferral ratio of each participant and the actual deferral percentage of each group shall be calculated to the nearest hundredth of a percentage point.  Employer contributions on behalf of any participant shall include: (1) any elective deferrals (other than catch-up contributions) made pursuant to the participant's deferral election, including excess elective deferrals of highly compensated employees, but excluding (a) excess elective deferrals of nonhighly compensated employees that arise solely from elective deferrals to the extent the excess deferrals are prohibited under Code section 401(a)(30) due to the contributions made under this plan and without taking into account deferrals made under an unrelated employer's plan and (b) elective deferrals that are taken into account in the actual contribution percentage test (provided the ADP test is satisfied both with and without exclusion of these elective deferrals); and (2) at the election of the employer, qualified nonelective contributions and qualified matching contributions.  For purposes of computing actual deferral percentages, an employee who would be a participant but for the failure to make elective deferrals shall be treated as a participant on whose behalf no elective deferrals are made.

(2)Distribution of Excess Contributions

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Notwithstanding any other provision of this plan, excess contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each plan year to participants to whose accounts such excess contributions were allocated for the preceding plan year, except to the extent such excess contributions are classified as catch-up contributions.  If such excess amounts (other than catch-up contributions) are distributed more than 2½ months after the last day of the plan year in which such excess amounts arose, a 10% excise tax will be imposed on the employer maintaining the plan with respect to such amounts.  Notwithstanding the preceding, the excise tax will not be imposed if the distribution is made within 6 months after the last day of such plan year if the plan is an eligible automatic contribution arrangement within the meaning of Code section 414(w) that covers all eligible nonhighly compensated employees and highly compensated employees for the entire portion of the plan year for which they are eligible and provides the notice described in Section 5.5(f)(4) even after an affirmative deferral election has been made.  Excess contributions shall be allocated to the highly compensated employees with the largest amounts of contributions taken into account in calculating the ADP test for the plan year in which the excess arose, beginning with the highly compensated employee with the largest amount of such contributions and continuing in descending order until all of the excess contributions have been allocated.  To the extent a highly compensated employee has not reached his catch-up contribution limit under the plan, excess contributions allocated to such highly compensated employee shall be recognized as catch-up contributions and will not be treated as excess contributions.

Excess contributions shall be treated as annual additions under the plan even if distributed.

(A)Determination of Income or Loss – Excess contributions shall be adjusted for any income or loss.  For plan years beginning on or after January 1, 2008, the income or loss allocable to excess contributions allocated to each participant is the income or loss allocable to the participant's elective deferral account(s) (and, if applicable, the qualified nonelective contribution account or the qualified employer matching contribution account or both) for the plan year multiplied by a fraction, the numerator of which is such participant's excess contributions for the year and the denominator is the participant's account balance(s) attributable to elective deferrals (and qualified nonelective contributions or qualified matching contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such plan year.  Effective solely for the plan year beginning on or after January 1, 2006 and the plan year beginning on or after January 1, 2007 and to the extent the excess contributions were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the plan year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the plan year and the date of distribution, counting the month of distribution if distribution occured after the 15th of such month.

(B)Accounting for Excess Contributions – Excess contributions allocated to a participant shall be distributed from the participant's elective deferral account(s) and qualified employer matching contribution account (if applicable) in proportion to the participant's elective deferrals and qualified matching contributions (to the extent used in the ADP test) for the plan year.  Excess contributions shall be distributed from the participant's qualified nonelective contribution account only to the extent that such excess contributions exceed the amount of excess contributions in the participant's elective deferral account(s) and qualified matching contribution account.

For plan years beginning after December 31, 2005, distribution of excess contributions for a year shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(C)Excess Contributions shall mean, with respect to any plan year, the excess of:  (i) The aggregate amount of employer contributions actually taken into account in computing the ADP of highly compensated employees for such plan year, over (ii) The maximum amount of such contributions permitted by the ADP test (determined by hypothetically reducing contributions made on behalf of highly compensated employees in order of the ADPs, beginning with the highest of such percentages).

Such determination shall be made after first determining excess elective deferrals pursuant to Section 5.5(a).

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(c)(1)Limitations on Employee and Matching Contributions Under Code Section 401(m)

The actual contribution percentage (hereinafter "ACP") for a plan year for participants who are highly compensated employees for the plan year and the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year must satisfy one of the following tests:  (i) The ACP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year multiplied by 1.25; or (ii) The ACP for a plan year for participants who are highly compensated employees for the plan year shall not exceed the prior year's ACP for participants who were nonhighly compensated employees for the prior plan year multiplied by 2.0, provided that the ACP for participants who are highly compensated employees does not exceed the ACP for participants who were nonhighly compensated employees in the prior plan year by more than two  percentage points.

In place of the prior year testing method described above, if so elected by the employer and adopted in Section 3.6, the ACP tests in (i) and (ii) will be applied by comparing the current plan year's ACP for participants who are highly compensated employees with the current plan year's ACP for participants who are nonhighly compensated employees.  In the alternative, the plan may satisfy the ACP test requirements by meeting the safe harbor requirements of Section 5.5(f)(3) and (4).  Election of this method shall be treated as an election to use the current year testing method.  In such a plan year, the current year testing method shall be used for the purpose of testing any employee nondeductible contributions.  Once the current year testing method election has been made, the employer can elect prior year testing for a plan year only if the plan has used current year testing for each of the preceding 5 plan years (or if lesser, the number of plan years the plan has been in existence) or if, as a result of a merger or acquisition described in Code section 410(b)(6)(c)(i), the employer maintains both a plan using prior year testing and a plan using current year testing and the change is made within the transition period described in section 410(b)(6)(c)(ii).  Such elections shall be reflected in Section 3.6.

(A)Special Rules for Limitations Under Code Section 401(m)

(i)A participant is a highly compensated employee for a particular plan year if he meets the definition of a highly compensated employee in effect for that plan year.  A participant is a nonhighly compensated employee for a particular plan year if he does not meet the definition of a highly compensated employee in effect for that plan year.

(ii)For purposes of this Section 5.5(c)(1), the contribution percentage for any participant who is a highly compensated employee and who is eligible to have contribution percentage amounts allocated to his account under two or more plans described in Code section 401(a), or arrangements described in Code section 401(k) that are maintained by the employer, shall be determined as if the total of such contribution percentage amounts were made under each plan and arrangement.  If a highly compensated employee participates in two or more such plans or cash or deferred arrangements that have different plan years, all contribution percentage amounts made during the plan year for this plan under all such plans and arrangements shall be aggregated.  For plan years beginning before January 1, 2006, all such plans and cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.  Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code section 401(m).

(iii)In the event that this plan satisfies the requirements of Code sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections only if aggregated with this plan, then this Section 5.5(c)(1) shall be applied by determining the ACP of employees as if all such plans were a single plan.  If more than 10% of the employer's nonhighly compensated employees are involved in a plan coverage change as defined in Regulation section 1.401(m)-2(c)(4), then any adjustments to the nonhighly compensated employees' ACP for the prior year shall be made in accordance with such regulation, unless the employer has elected in Section 3.6 to use the current year testing method.  Plans may be aggregated in order to satisfy Code section 401(m) only if they have the same plan year and use the same ACP testing method.

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(iv)If:  (A) this plan is not a successor plan (as defined in Regulation section 1.401(m)-2(c)(2)(iii)) and (B) this plan is not aggregated under Regulation section 1.401(m)-1(b)(4) for such plan year with any other plan that was or that included a Code section 401(m) plan in the prior year; then, in the case of the first plan year this plan permits any participant to make employee contributions, provides for matching contributions, or both, the amount treated as the ACP for participants who are nonhighly compensated employees for the prior plan year shall be 3% or, if the employer so elects, the ACP for participants who are nonhighly compensated employees as calculated for such first plan year.  Such election shall be set forth in Section 3.6.

(v)For purposes of determining the ACP test, employee contributions are considered to have been made in the plan year in which contributed to the trust.  Matching contributions and qualified nonelective contributions will be considered made for a plan year if made no later than the end of the twelve-month period beginning on the day after the close of the plan year.

When the prior year testing method is used, qualified nonelective contributions shall not be taken into account.

(vi)The plan administrator shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of qualified nonelective contributions or qualified matching contributions, or both, used in such test.

(vii)Elective deferral contributions may be taken into account; however, the ADP test shall be met before any elective deferrals are used in the ACP test and the elective deferrals needed to meet the ADP test shall not be used to meet the ACP test.  When the current year testing method is used, qualified nonelective contributions shall be taken into account to the extent such contributions are not used to meet the ADP test.

(viii)Effective for plan years beginning on or after January 1, 2006, a matching contribution with respect to an elective deferral for a nonhighly compensated employee shall not be taken into account under the ACP test to the extent it exceeds the greatest of:  (A) 5% of compensation; (B) the employee's elective deferrals for a year; and (C) the product of 2 times the plan's representative matching rate and the employee's elective deferrals for a year.  For this purpose, the plan's representative matching rate is the lowest matching rate for any eligible nonhighly compensated employee among a group of nonhighly compensated employees that consists of half of all eligible nonhighly compensated employees in the plan for the plan year who make elective deferrals for the plan year (or, if greater, the lowest matching rate for all eligible nonhighly compensated employees in the plan who are employed by the employer on the last day of the plan year and who make elective deferrals for the plan year).

The matching rate for an employee generally is the matching contributions made for such employee divided by his elective deferrals (and employee nondeductible contributions) for the year.  If the matching rate is not the same for all levels of his elective deferrals (and employee nondeductible contributions), the employee's matching rate is determined assuming that his elective deferrals are equal to 6% of compensation.

(ix)Applicable limitations when testing changes from current year testing to prior year testing:  The ACP for the prior plan year shall be determined taking into account only:  (A) employee contributions for nonhighly compensated employees made for the prior plan year, (B) matching contributions for nonhighly compensated employees that were taken into account for purposes of the ACP test in the prior plan year under the current plan year testing method, and (C) qualified nonelective contributions not previously taken into account under either the ADP or ACP test.

(x)The determination and treatment of the ACP amounts of any participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(B)Definitions (Code Section 401(m) Limitations)

(i)Actual Contribution Percentage (ACP) shall mean, for a specified group of participants (either highly compensated employees or nonhighly compensated employees) for a plan year, the average of the contribution percentages of the eligible participants in the group.

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(ii)Contribution Percentage shall mean the ratio (expressed as a percentage calculated to the nearest hundredth of a percentage point) of the participant's contribution percentage amounts to the participant's compensation as defined in Section 1.2(e).

(iii)Contribution Percentage Amounts shall mean the sum of the employee nondeductible contributions, employer matching contributions and elective deferrals (to the extent not taken into account for purposes of the ADP test) made under the plan on behalf of the participant for the plan year.  Such contribution percentage amounts shall not include matching contributions that are forfeited either to correct excess aggregate contributions or because the contributions to which they relate are excess deferrals, excess contributions, or excess aggregate contributions.  Qualified nonelective contributions may be included in the contribution percentage amounts.  Elective deferrals may also be used in calculating the contribution percentage amounts so long as the ADP test is met before the elective deferrals are used in the ACP test and the ADP test continues to be met following the exclusion of those elective deferrals that are used to meet the ACP test.  The contribution percentage amounts shall be calculated to the nearest hundredth of a percentage point.

(iv)Eligible Participant shall mean any employee who is eligible to make an employee nondeductible contribution, or an elective deferral (if the employer takes such contributions into account in the calculation of the contribution percentage), or to receive an employer matching contribution (including forfeitures).  If an employee nondeductible contribution is required as a condition of participation in the plan, any employee who would be a participant in the plan if such employee made such a contribution shall be treated as an eligible participant on behalf of whom no employee contributions are made.

(v)Employee Nondeductible Contribution (or employee contribution) shall mean any contribution (other than Roth elective deferrals) made under Section 3.5 to the plan by or on behalf of a participant that is included in the participant's gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated.

(vi)Matching Contribution shall mean an employer contribution made to this or any other defined contribution plan on behalf of a participant on account of an employee nondeductible contribution made by such participant, or on account of a participant's elective deferral, under a plan maintained by the employer.

(2)Distribution of Excess Aggregate Contributions

Notwithstanding any other provision of this plan, excess aggregate contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later than the last day of each plan year to participants to whose accounts such excess aggregate contributions were allocated for the preceding plan year.  Excess aggregate contributions shall be allocated to the highly compensated employees with the largest contribution dollar amounts taken into account in calculating the ACP test for the plan year in which the excess arose, beginning with the highly compensated employee with the largest dollar amount of such contributions and continuing in descending order until all of the excess aggregate contributions have been allocated.  If such excess aggregate contributions are distributed more than 2½ months after the last day of the plan year in which such excess amounts arose, a 10% excise tax will be imposed on the employer maintaining the plan with respect to those amounts.  Notwithstanding the preceding, the excise tax will not be imposed if the distribution is made within 6 months after the last day of such plan year if the plan is an eligible automatic contribution arrangement within the meaning of Code section 414(w) that covers all eligible nonhighly compensated employees and highly compensated employees for the entire portion of the plan year for which they are eligible and provides the notice described in Section 5.5(f)(4) even after an affirmative deferral election has been made.  Excess aggregate contributions shall be treated as annual additions under the plan even if distributed.

(A)Determination of Income or Loss – Excess aggregate contributions shall be adjusted for any income or loss.  For plan years beginning on or after January 1, 2008, the income or loss allocable to excess aggregate contributions allocated to each participant is the income or loss allocable to the participant's employee nondeductible contribution account, employer matching contribution account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, qualified nonelective contribution account and elective deferral account(s) for the plan

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year multiplied by a fraction, the numerator of which is such participant's excess aggregate contributions for the year and the denominator is the participant's account balance(s) attributable to contribution percentage amounts without regard to any income or loss occurring during such plan year.  Effective solely for the plan year beginning on or after January 1, 2006 and the plan year beginning on or after January 1, 2007, and to the extent the excess contributions were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the plan year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the plan year and the date of distribution, counting the month of distribution if distribution occured after the 15th of such month.

(B)Forfeitures of Excess Aggregate Contributions – Forfeitures of excess aggregate matching contributions may either be reallocated to the accounts of nonhighly compensated employees or applied to reduce employer contributions, as provided in Section 3.6(e).

(C)Accounting for Excess Aggregate Contributions – Excess aggregate contributions allocated to a participant shall be forfeited, if forfeitable or distributed on a pro-rata basis from the participant's employee nondeductible contribution account and employer matching contribution account (and, if applicable, the participant's qualified nonelective contribution account or elective deferral account(s), or both).  For plan years beginning after December 31, 2005, distribution of elective deferrals that are excess aggregate contributions shall be made first from the participant's Roth elective deferral account, to the extent Roth elective deferrals were made for the year.  Excess aggregate elective deferrals shall only be distributed from the 401(k) elective deferral account after the Roth elective deferrals made for the year have been fully distributed.

(D)Excess Aggregate Contributions shall mean, with respect to any plan year, the excess of:  (i) The aggregate contribution percentage amounts taken into account in computing the numerator of the contribution percentage actually made on behalf of highly compensated employees for such plan year, over (ii) The maximum contribution percentage amounts permitted by the ACP test (determined by hypothetically reducing contributions made on behalf of highly compensated employees in order of their contribution percentages beginning with the highest of such percentages).

Such determination shall be made after first determining excess elective deferrals pursuant to Section 5.5(a) and then determining excess contributions pursuant to Section 5.5(b)(2).

(3)Required Forfeitures – Any employer matching contribution attributable to an excess elective deferral determined pursuant to Section 5.5(a) or an excess contribution determined pursuant to Section 5.5(b)(2) shall be forfeited.  Any nonvested excess aggregate contribution determined pursuant to Section 5.5(c)(2) shall also be forfeited.

(d)Top-Heavy Requirements

Elective deferrals (and for plan years beginning before January 1, 2002 employer matching contributions) will not be taken into account for the purpose of satisfying the minimum top-heavy contribution requirement.  However, qualified nonelective contributions and employer matching contributions (for plan years beginning on or after January 1, 2002) may be taken into account for this purpose as provided in Section 3.2(c) or 3.3(b), as appropriate.

(e)Restrictions on Payment of Certain Accounts

Elective deferrals, qualified nonelective contributions, and qualified matching contributions, and income allocable to each are not distributable to a participant or his beneficiary in accordance with such person's election, earlier than upon the participant's severance from employment, death, or disability.  All distributions that may be made pursuant to one or more of the distributable events described in this Section 5.5(e) are subject to the spousal and participant consent requirements as described in Section 5.2(a).

Such account balances may also be distributed upon:

(1)Termination of the plan without the employer maintaining or establishing another defined contribution plan (other than an employee stock ownership plan (as defined in Code section 4975(e)(7) or 409(a)), a simplified employee pension plan (as defined in Code section 408(k)), a SIMPLE IRA plan (as defined in Code section 408(p)), a plan or contract

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described in Code section 403(b) or a plan described in Code section 457(b) or (f)) at any time during the period beginning on the date of plan termination and ending 12 months after all assets have been distributed from the plan.  Such a distribution must be made in a lump sum or through the purchase of an annuity contract that shall be owned by the participant (if an annuity payment option is otherwise available under Section 4.3(b)).

(2)The attainment of age 59½ in the case of a profit sharing plan.

(3)The hardship of the participant as described in Section 4.4(a).

(f)Safe Harbor Alternative Compliance

(1)If the plan so provides in Section 3.4(a) or Section 3.6 that the safe harbor requirements will be met, the provisions of this Section 5.5(f) shall apply for the plan year as provided in such Sections and any provisions relating to the ADP test described in Section 5.5(b) or the ACP test described in Section 5.5(c) shall not apply.  To the extent that any other provision of the plan is inconsistent with the provisions of this Section 5.5(f), the provisions of this Section 5.5(f) shall govern when Section 3.4(a) or Section 3.6 so provide.  In accordance with Regulation sections 1.401(k)-1(e)(7) and 1.401(m)-1(c)(2), it is impermissible for the employer to use ADP and ACP testing for a plan year in which it is intended for the plan through its written terms to be a Code section 401(k) safe harbor plan and a Code section 401(m) safe harbor plan and the employer fails to satisfy the requirements of such safe harbors for the plan year.

(2)ADP Test Safe Harbor Contributions – The plan may provide in Section 3.4(a) that the ADP test safe harbor requirements shall be satisfied by the employer making a safe harbor employer matching contribution as provided under Section 3.6 (or as a separate safe harbor employer matching contribution as provided under Section 3.6A) or by the employer making a safe harbor nonelective contribution of at least 3% of the employee's compensation under Section 3.3 or another defined contribution plan sponsored by the employer.  In any case, the notice described in Section 5.5(f)(4) shall be given.  The participant's accrued benefit derived from ADP test safe harbor contributions shall be nonforfeitable and may not be distributed earlier than provided in Section 5.5(e), regardless of the form of the contribution.

If the plan provides in Section 3.4(a) that the safe harbor nonelective contribution will be made in satisfaction of the qualified automatic contribution arrangement requirements, the contribution shall be held under the safe harbor qualified automatic contribution arrangement sub-account.  Such account shall not become 100% vested until the participant has completed 2 years of vesting service.  Any forfeiture therefrom shall be used to reduce the employer’s safe harbor contribution.

(3)ACP Test Safe Harbor Requirements – The plan may provide in Section 3.6 that the ACP test safe harbor requirements shall be satisfied by the employer making a safe harbor nonelective contribution under Section 3.3 of at least 3% of the employee's compensation or by the employer making a matching contribution on behalf of each eligible employee that either:

(A)is equal to 100% of the elective contributions of the employee to the extent such elective contributions do not exceed 3% of the employee's compensation, plus 50% of the elective contributions of the employee to the extent that such elective contributions exceed 3% but do not exceed 5% of the employee's compensation; or

(B)does not increase as an employee's rate of elective contributions increase and the aggregate amount of which is at least equal to the aggregate amount of matching contributions which would be made if matching contributions were made on the basis of the percentages described in Section 5.5(f)(3)(A).

If the plan provides in Section 3.4(a) and Section 3.6(b)(2) that the safe harbor matching contribution will be made in satisfaction of the qualified automatic contribution arrangement requirements, in place of the matching contribution formula described in Section 5.5(f)(3)(A), the employer shall contribute an amount equal to 100% of the elective contributions of the employee to the extent such elective contributions do not exceed 1% of the employee's compensation, plus 50% of the elective contributions of the employee to the extent that such elective contributions exceed 1% but do not exceed 6% of the employee's compensation.

In any case, the notice described in Section 5.5(f)(4) shall be given and matching contributions on behalf of any employee shall not be made with respect to an employee's nondeductible contributions

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or elective deferrals in excess of 6% of the employee's compensation.  The rate of an employer's matching contribution shall not increase as the rate of an employee's nondeductible contributions or elective deferrals increase nor shall the matching contribution with respect to any highly compensated employee be greater than that with respect to a nonhighly compensated employee.

(4)Safe Harbor Notice – If the employer elects to satisfy the safe harbor requirements of this Section 5.5(f) or if the employer wishes to take advantage of the 3.5 month extension for the return of excess contributions and excess aggregate contributions, the plan administrator shall provide to each employee eligible to participate in the plan, no less than 30 days and no more than 90 days prior to any plan year (or his entry date in the case of a new participant), written notice of the employee's rights and obligations under the plan that is sufficiently accurate and comprehensive to apprise the employee of such rights and obligations.  If an employee becomes eligible to participate after the 90th day before the beginning of the plan year and does not receive the notice for that reason, the notice must be provided no more than 90 days before the employee becomes eligible but not later than the date the employee becomes eligible.  This timing requirement shall be deemed satisfied in the case of a plan that provides for participation upon date of employment if the notice is provided as soon as practicable after that date but prior to the pay date for the first payroll period.

Notwithstanding the preceding, where the plan is not intended to comply with either the ADP or ACP safe harbor requirements, but only the eligible automatic contribution arrangement requirements of Code section 414(w); the notice shall contain only the items listed in Section 5.5(f)(4)(A)(viii) through (xi).  If the employer wishes to take advantage of the 3.5 month extension for the return of excess contributions and excess aggregate contributions, then the notice shall be provided to all employees eligible to be covered by the plan.  Otherwise, after the initial notice is provided to all eligible employees who have not chosen to make 401(k) deferral contributions, no notice will be provided to employees who have made an affirmative election to defer or not to defer.

(A)Contents of the Notice – Such notice shall be written in a manner calculated to be understood by the average employee eligible to participate hereunder.  The notice shall accurately describe:  (i) the safe harbor matching or nonelective contribution formula used under the plan (including a description of the levels of matching contributions, if any, available under the plan); (ii) any other contributions under the plan (including the potential for discretionary matching contributions) and the conditions under which such contributions are made; (iii) the plan to which safe harbor contributions will be made if such contributions will be made to another plan; (iv) the type and amount of compensation that may be deferred under the plan; (v) how to make cash or deferred elections, including any administrative requirements that apply to such elections; (vi) the periods available under the plan for making cash or deferred elections; (vii) withdrawal and vesting provisions applicable to contributions under the plan; (viii) the level of elective contributions that will be made on an employee’s behalf if he does not make an affirmative election; (ix) the employee's right under any automatic salary reduction contribution arrangement to elect not to have elective contributions made on the employee's behalf (or to elect to have such contributions made at a different percentage); (x) if the employee is eligible to make investment elections under Section 3.8, how contributions made under the arrangement will be invested in the absence of any investment election by the employee; and (xi) the employee's right to make a permissible withdrawal, if applicable, and the procedures to elect such a withdrawal.  If eligible employees have been provided with the current summary plan description, the written notice may instead cross-reference the relevant portion with respect to items (ii), (iii), and (iv); however, such notice must also provide the telephone numbers, addresses and, if applicable, electronic addresses, of the individuals or offices from whom employees can obtain additional information about the plan.

(B)Alternative Timing of Amendment and Notice for Safe Harbor Nonelective Contribution – If an employer using the current year method to satisfy the ADP test determines that it may choose during a plan year to satisfy the ADP test safe harbor requirements by providing a safe harbor nonelective contribution, the plan administrator shall provide a written notice to eligible employees before the beginning of the plan year that (i) the plan may be amended during the plan year to provide that the employer will make a safe harbor nonelective contribution of at least 3% to the plan for the plan year and (ii) if the plan is so amended, a supplemental notice will be given to eligible employees 30 days prior to the last day of the plan year informing them of such an amendment.  If the employer elects during the plan year to satisfy the ADP test safe harbor requirements by providing a safe harbor nonelective contribution, the amendment shall be adopted not later than 30 days before the last day of the plan year.  The supplemental notice

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shall be distributed no later than 30 days prior to the last day of the plan year and shall state that a 3% safe harbor nonelective contribution will be made for the plan year.

ARTICLE VI – ADMINISTRATION OF THE PLAN

Section 6.1 – Fiduciary Responsibility

(a)Fiduciary Standards – A fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and –

For the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan;

With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

By diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of ERISA.

(b)Allocation of Fiduciary Responsibility

(1)It is intended to allocate to each fiduciary, either named or otherwise, the individual responsibility for the prudent execution of the functions assigned to him.  None of the allocated responsibilities or any other responsibilities shall be shared by two or more fiduciaries unless specifically provided for in the plan.

(2)When one fiduciary is required to follow the directions of another fiduciary, the two fiduciaries shall not be deemed to share such responsibility.  Instead, the responsibility of the fiduciary giving the directions shall be deemed to be his sole responsibility and the responsibility of the fiduciary receiving directions shall be to follow those directions insofar as such instructions on their face are proper under applicable law.

(3)Any person or group of persons may serve in more than one fiduciary capacity with respect to this plan.

(4)A fiduciary under this plan may employ one or more persons, including independent accountants, attorneys and actuaries to render advice with regard to any responsibility such fiduciary has under the plan.

(c)Indemnification by Employer – Unless resulting from the gross negligence, willful misconduct or lack of good faith on the part of a fiduciary who is an officer or employee of the employer, the employer shall indemnify and save harmless such fiduciary from, against, for and in respect of any and all damages, losses, obligations, liabilities, liens, deficiencies, costs and expenses, including without limitation, reasonable attorney's fees and other costs and expenses incident to any suit, action, investigation, claim or proceedings suffered in connection with his acting as a fiduciary under the plan.

(d)Named Fiduciary – The person or persons named by the employer as having fiduciary responsibility for the management and control of plan assets shall be known as the "named fiduciary" hereunder.  Such responsibility shall include the appointment of the plan administrator (Section 6.2(a)) and the investment manager (Section 6.4(b)) and the deciding of benefit appeals (Section 6.3).  The employer shall retain the authority to appoint the trustee (Section 6.4(a)).  The named fiduciary possesses exclusive authority to monitor the plan’s receipt of contributions and enforce the collection of delinquent contributions to the trust.

Section 6.2 – Plan Administrator

(a)Appointment of Plan Administrator

The named fiduciary shall appoint a plan administrator who may be a person or an administrative committee consisting of no more than five members.  Vacancies occurring upon resignation or removal of

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a plan administrator or a committee member shall be filled promptly by the named fiduciary.  Any plan administrator may resign at any time by giving notice of his resignation to the named fiduciary, and any plan administrator may be removed at any time by the named fiduciary.  The named fiduciary shall review at regular intervals the performance of the plan administrator(s) and shall re-evaluate the appointment of such administrator(s).  After the named fiduciary has appointed the plan administrator and has received a written notice of acceptance, the fiduciary responsibility for administration of the plan shall be the responsibility of the plan administrator or plan administrative committee.

(b)Duties and Powers of Plan Administrator

The plan administrator shall have the following duties and discretionary powers and such other duties and discretionary powers as relate to the administration of the plan:

(1)To determine in a nondiscriminatory manner all questions relating to the eligibility of employees to become participants.

(2)To determine in a nondiscriminatory manner eligibility for benefits and to determine and certify the amount and kind of benefits payable to participants.

(3)To authorize all disbursements from the fund.

(4)To appoint or employ any independent person to perform necessary plan functions and to assist in the fulfillment of administrative responsibilities as he deems advisable, including the retention of a third party administrator, custodian, auditor, accountant, actuary, or attorney.

(5)When appropriate, to select an insurance company and annuity contracts that, in his opinion, will best carry out the purposes of the plan.

(6)To construe and interpret any ambiguities in the plan and to make, publish, interpret, alter, amend or revoke rules for the regulation of the plan that are consistent with the terms of the plan and with ERISA.

(7)To prepare and distribute, in such manner as determined to be appropriate, information explaining the plan.

(c)Allocation of Fiduciary Responsibility Within Plan Administrative Committee

If the plan administrator is a plan administrative committee, the committee shall choose from its members a chairperson and a secretary.  The committee may allocate responsibility for those duties and powers listed in Section 6.2(b)(1) and (2) (except determination of qualification for disability retirement) and other purely ministerial duties to one or more members of the committee.  The committee shall review at regular intervals the performance of any committee member to whom fiduciary responsibility has been allocated and shall re-evaluate such allocation of responsibility.  After the plan administrative committee has made such allocations of responsibilities and has received written notice of acceptance, the fiduciary responsibilities for such administrative duties and powers shall then be considered as the responsibilities of such committee member(s).

(d)Miscellaneous Provisions

(1)Plan Administrative Committee Actions – The actions of such committee shall be determined by the vote or other affirmative expression of a majority of its members.  Either the chairperson or the secretary may execute any certificate or other written direction on behalf of the committee.  A member of the committee who is a participant shall not vote on any question relating specifically to himself.  If the remaining members of the committee, by majority vote thereof, are unable to come to a determination of any such question, the named fiduciary shall appoint a substitute member who shall act as a member of the committee for the special vote.

(2)Expenses – The plan administrator shall serve without compensation for service as such.  All reasonable expenses of the plan administrator shall be paid by the employer or from the fund.

(3)Examination of Records – The plan administrator shall make available to any participant for examination during business hours such of the plan records as pertain only to the participant involved.

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(4)Information to the Plan Administrator – To enable the plan administrator to perform the administrative functions, the employer shall supply full and timely information to the plan administrator on all participants as the plan administrator may require.

Section 6.3 – Claims Procedure

(a)Notification of Claim Determination – The plan administrator shall notify each participant in writing of his determination of benefits.  If the plan administrator denies any benefit, such written denial shall include:

· The specific reasons for denial;

· Reference to provisions on which the denial is based;

· A description of and reason for any additional information needed to process the claim; and

· A description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

If a claim is wholly or partially denied, the plan administrator shall notify the claimant of the plan's adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the plan, unless the plan administrator determines that special circumstances require an extension of time for processing the claim.  If the plan administrator determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90‑day period.  In no event shall such extension exceed a period of 90 days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the plan expects to render the benefit determination.

(b)Appeal – The participant or his duly authorized representative may:

· Make a written request for a review of the participant's case by the named fiduciary;

· Review upon request and free of charge, have reasonable access to, and have copies of, all documents, records, and other information relevant to the claimant's claim for benefits;

· Submit written issues, comments, documents, records, and other information relating to the claim for benefits, without regard to whether such information was submitted or considered in the initial benefit determination.

The written request for review must be submitted no later than 60 days after receiving written notification of denial of benefits.  A document, record, or other information shall be considered relevant to a claimant's claim if such document, record, or other information:

· Was relied upon in making the benefit determination;

· Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or

· Demonstrates compliance with the administrative processes and safeguards required by law in making the benefit determination.

(c)Appeal Procedure

(1)Except as provided in Section 6.3(c)(2), the named fiduciary must render a decision no later than 60 days after receiving the written request for review, unless circumstances make it impossible to do so; but in no event shall the decision be rendered later than 120 days after the request for review is received.  If the named fiduciary determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant by the plan administrator prior to the termination of the initial 60-day period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the plan expects to render the determination on review.

(2)If the named fiduciary is a committee or board of trustees that holds regularly scheduled meetings at least quarterly, Section 6.3(c)(1) shall not apply.  The named fiduciary shall instead make a benefit determination no later than the date of the meeting of the committee or board that immediately follows

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the plan's receipt of a request for review, unless the request for review is filed within 30 days preceding the date of such meeting.  In such case, a benefit determination may be made by no later than the date of the second meeting following the plan's receipt of the request for review.  If special circumstances require a further extension of time for processing, a benefit determination shall be rendered not later than the third meeting of the committee or board following the plan's receipt of the request for review.  If such an extension of time for review is required because of special circumstances, the plan administrator shall provide the claimant with written notice of the extension, describing the special circumstances and the date as of which the benefit determination will be made, prior to the commencement of the extension.  The plan administrator shall notify the claimant of the benefit determination as soon as possible, but not later than 5 days after the benefit determination is made.

(3)The review shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  If the claim is denied upon review, the written notice of denial shall include the items listed in Section 6.3(a) and the statement required by Regulation section 2560.503‑1(j)(5)(iii) regarding the possible availability of alternative dispute resolution options.

(d)Limitation on Time Period for Litigation of a Benefit Claim – Following receipt of the written rendering of the named fiduciary's decision under Section 6.3(c), the participant shall have 365 days in which to file suit in the appropriate court.  Thereafter, the right to contest the decision shall be waived.

Section 6.4 – Trust Fund

(a)Appointment of Trustee

The employer shall appoint a trustee for the proper care and custody of all funds, securities and other properties in the trust, and for investment of plan assets (or for execution of such orders as it receives from an investment manager appointed for investment of plan assets).  The duties and powers of the trustee shall be set forth in a trust agreement executed by the employer, which is incorporated herein by reference.  The named fiduciary shall review at regular intervals the performance of the trustee and shall re-evaluate the appointment of such trustee.  After the employer has appointed the trustee and the named fiduciary has received a written notice of acceptance of its responsibility, the fiduciary responsibility with respect to the proper care and custody of plan assets shall be considered as the responsibility of the trustee.  Unless otherwise allocated to an investment manager, the fiduciary responsibility with respect to investment of plan assets shall likewise be considered as the responsibility of the trustee.

(b)Appointment of Investment Manager

The named fiduciary may appoint an investment manager who is other than the trustee, which investment manager may be a bank or an investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940.  Such investment manager, if appointed, shall have sole discretion in the investment of plan assets, subject to the funding policy.  The named fiduciary shall review at regular intervals no less frequently than annually, the performance of such investment manager and shall re-evaluate the appointment of such investment manager.  After the named fiduciary has appointed an investment manager and has received a written notice of acceptance of its responsibility, the fiduciary responsibility with respect to investment of plan assets shall be considered as the responsibility of the investment manager.

(c)Funding Policy

The named fiduciary shall determine and communicate in writing to the fiduciary responsible for investment of plan assets the funding policy for the plan.  The funding policy shall set forth the plan's short-range and long-range financial needs, so that said fiduciary may coordinate the investment of plan assets with the plan's financial needs.

(d)Valuation of the Fund

The fund shall be valued by the trustee on the last day of each plan year and as of any interim allocation date determined by the plan administrator.  The valuation shall be made on the basis of the current fair market value of all property in the fund.

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(e)Expenses

The trust fund may pay the expenses incurred in the administration of the plan and the investment of the fund, provided the cost is reasonable.  Such expenses shall include legal fees incurred by the plan administrator or the trustee, provided such fiduciaries are not proven to have committed a prohibited transaction.  If the trust fund pays the expenses, the expenses shall be allocated against the participant accounts on a pro rata basis, unless otherwise specifically provided in the summary plan description.  Certain expenses incurred with respect to a particular participant or beneficiary may be allocated against the participant's account on a direct basis.  The plan administrator shall communicate such expense charges to the participant through a written notice.

ARTICLE VII – AMENDMENT AND TERMINATION OF PLAN

Section 7.1 – Right to Discontinue and Amend

It is the expectation of the employer that it will continue this plan indefinitely and make the payments of its contributions hereunder, but the continuance of the plan is not assumed as a contractual obligation of the employer and the right is reserved by the employer, at any time, to reduce, suspend or discontinue its contributions hereunder.

Section 7.2 – Amendments

Except as herein limited, the employer shall have the right to amend this plan at any time to any extent that it may deem advisable.  Such amendment shall be stated in writing.  It shall be authorized by action of the board of directors under the corporate by-laws if the employer is a corporation, by action of the agreement of the partners as required under the partnership agreement if the employer is a partnership, or by action of the sole proprietor if the employer is a sole proprietorship.  The authorization of an employer's board of directors shall designate the person to execute the amendment.

The employer's right to amend the plan shall be limited as follows:

(a)No amendment shall increase the duties or liabilities of the plan administrator, the trustee, or other fiduciary without their respective written consent.

(b)No amendments shall have the effect of vesting in the employer any interest in or control over any contracts issued pursuant hereto or any other property in the fund.

(c)No amendment to the plan shall be effective to the extent that it has the effect of decreasing a participant's accrued benefit.  This includes a plan amendment that decreases a participant’s accrued benefit, or otherwise places greater restrictions or conditions on a participant’s rights to Code section 411(d)(6) protected benefits, even if the amendment merely adds a restriction or condition that is permitted under the vesting rules in Code section 411(a)(3) through (11).  Notwithstanding the preceding sentence, a participant's account balance may be reduced to the extent permitted under Code section 412(d)(2) or to the extent permitted under Regulation sections 1.411(d)-3 and 1.411(d)-4.  For purposes of this paragraph, a plan amendment that has the effect of decreasing a participant's account balance, with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit.  Furthermore, if the vesting schedule of a plan is amended, in the case of an employee who is a participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such employee's right to his employer-derived accrued benefit will not be less than his percentage computed under the plan without regard to such amendment.

(d)No amendment to the plan shall be effective to eliminate or restrict an optional form of benefit.  The preceding sentence shall not apply to a plan amendment that eliminates or restricts the ability of a participant to receive payment of his or her account balance under a particular optional form of benefit if the amendment provides a single-sum distribution form that is otherwise identical to the optional form of benefit being eliminated or restricted.  For this purpose, a single-sum distribution form is otherwise identical only if the single-sum distribution form is identical in all respects to the eliminated or restricted optional form of benefit (or would be identical except that it provides greater rights to the participant) except with respect to the timing of payments after commencement.

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(e)No amendment to the vesting schedule adopted by the employer hereunder shall deprive a participant of his vested portion of his employer contribution accounts to the date of such amendment.  If the plan's vesting schedule is amended, or the plan is amended in any way that directly or indirectly affects the computation of the participant's nonforfeitable percentage or if the plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each participant with at least 3 years of service with the employer may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the plan without regard to such amendment or change.  For participants who do not have at least one hour of service in any plan year beginning after December 31, 1988, "5 years of service" shall be substituted for "3 years of service" in the preceding sentence.  The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of:

(1)60 days after the amendment is adopted;

(2)60 days after the amendment becomes effective; or

(3)60 days after the participant is issued written notice of the amendment by the employer or plan administrator.

Section 7.3 – Protection of Benefits in Case of Plan Merger

In the event of a merger or consolidation with, or transfer of assets or liabilities to any other plan, each participant will receive a benefit immediately after such merger, consolidation or transfer (if the plan then terminated) that is at least equal to the benefit the participant was entitled to immediately before such merger, consolidation or transfer (if the plan had terminated).

Effective October1,2008, the transfer of amounts from this trust to a nonqualified foreign trust shall be treated as a distribution from this plan.  Further, the transfer of assets and liabilities from this plan to a plan that satisfies Puerto Rico Code section 1165 shall also be treated as a distribution from this plan.

Section 7.4 – Termination of Plan

(a)When Plan Terminates – This plan shall terminate upon the happening of any of the following events:  legal adjudication of the employer as bankrupt; a general assignment by the employer to or for the benefit of its creditors; the legal dissolution of the employer; or termination of the plan by the employer.

(b)Allocation of Assets – Upon termination, partial termination, or complete discontinuance of employer contributions, the account balance(s) of each affected participant who is an active participant or who is not an active participant but has neither received a complete distribution of his vested accrued benefit nor incurred five one-year breaks in service (as defined in Section 4.1) shall be 100% vested and nonforfeitable.  The amount of the fund assets shall be allocated to each participant, subject to provisions for expenses of administration of the liquidation, in the ratio that such participant's account(s) bears to all accounts.  If a participant under this plan has terminated his employment at any time after the first day of the plan year in which the employer made his final contribution to the plan, and if any portion of any account of such terminated participant was forfeited and reallocated to the remaining participants, such forfeiture shall be reversed and the forfeited amount shall be credited to the account of such terminated participant.

ARTICLE VIII – MISCELLANEOUS PROVISIONS

Section 8.1 – Exclusive Benefit – Non-Reversion

The plan is created for the exclusive benefit of the employees of the employer and shall be interpreted in a manner consistent with its being a qualified plan as defined in section 401(a) of the Internal Revenue Code and with ERISA.  The corpus or income of the trust may not be diverted to or used for other than the exclusive benefit of the participants or their beneficiaries (except for defraying reasonable expenses of administering the plan).

Notwithstanding the above, a contribution paid by the employer to the trust may be repaid to the employer under the following circumstances:

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(a)Any contribution made by the employer because of a mistake of fact must be returned to the employer within one year of the contribution.

(b)In the event the deduction of a contribution made by the employer is disallowed under Code section 404, such contribution (to the extent disallowed) must be returned to the employer within one year of the disallowance of the deduction.

(c)If the Commissioner of Internal Revenue determines that the plan is not initially qualified under the Internal Revenue Code, any contribution made incident to that initial qualification by the employer must be returned to the employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the employer's return for the taxable year in which the plan is adopted, or such later date as the Secretary of the Treasury may prescribe.

Section 8.2 – Inalienability of Benefits

No benefit or interest available hereunder including any annuity contract distributed herefrom shall be subject to assignment or alienation, either voluntarily or involuntarily.  The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order as defined in Code section 414(p), or any domestic relations order entered before January 1, 1985.  A loan made to a participant and secured by his nonforfeitable account balance(s) under Section 4.4(b) will not be treated as an assignment or alienation and such securing account balance(s) shall be subject to attachment by the plan in the event of default.

Notwithstanding the preceding paragraph, effective with respect to judgments, orders, and decrees issued, and settlement agreements entered into, on or after August 5, 1997, a participant’s benefit (and that of his spouse) shall be reduced to satisfy liabilities of the participant to the plan due to (1) the participant being convicted of committing a crime involving the plan, (2) a civil judgment (or consent order or decree) entered by a court in an action brought in connection with a violation of the fiduciary provisions of part 4 of subtitle B of Title I of ERISA, or (3) a settlement agreement between the Secretary of Labor or the Pension Benefit Guaranty Corporation and the participant in connection with a violation of such fiduciary provisions of ERISA.  No reduction shall be made pursuant to this paragraph, unless the judgment, order, decree, or settlement agreement shall expressly provide for the offset of all or part of the amount ordered or required to be paid to the Plan against the participant’s benefits provided under the Plan.

Section 8.3 – Employer-Employee Relationship

This plan is not to be construed as creating or changing any contract of employment between the employer and its employees, and the employer retains the right to deal with its employees in the same manner as though this plan had not been created.

Section 8.4 – Binding Agreement

This plan shall be binding on the heirs, executors, administrators, successors and assigns as such terms may be applicable to any or all parties hereto, and on any participants, present or future.

Section 8.5 – Separability

If any provision of this plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof and this plan shall be construed and enforced as if such provision had not been included.

Section 8.6 – Construction

The plan shall be construed in accordance with the laws of the state in which the employer was incorporated (or is domiciled in the case of an unincorporated employer) and with ERISA.

Section 8.7 – Copies of Plan

This plan may be executed in any number of counterparts, each of which shall be deemed as an original, and said counterparts shall constitute but one and the same instrument that may be sufficiently evidenced by any one counterpart.

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Section 8.8 – Interpretation

Wherever appropriate, words used in this plan in the singular may include the plural or the plural may be read as singular, and the masculine may include the feminine.

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The Internal Revenue Service has issued an advisory letter with respect to the volume submitter specimen plan (VS) sponsored by Conrad Siegel Actuaries from which this plan was created.  This letter constitutes a determination as to the qualification of the plan as adopted by a particular employer only under the circumstances, and to the extent, described herein.  An employer adopting a VS plan may rely on that plan's advisory letter if the employer's plan is identical to an approved specimen plan with a currently valid favorable advisory letter, the employer has not amended the plan other than to choose options provided under the approved plan or to adopt compliance amendments provided by the sponsor, and the employer has followed the terms of the plan.  Such an employer can forego filing Form 5307 and can rely on the plan's favorable advisory letter with respect to the qualification requirements, except with respect to the plan’s satisfaction of the nondiscrimination requirements where a safe harbor provision has not been adopted.  The advisory letter does not constitute a ruling or determination as to the exempt status of the related trust.

2015 COMPLIANCE AMENDMENT
TO THE
Weis Markets, Inc. Retirement Savings Plan

As authorized by Section 7.2 of the Weis Markets, Inc. Retirement Savings Plan ("Plan") as amended and restated effective January 1, 2015, the employer, Weis Markets, Inc.,  hereby amends the Plan to comply with certain law and regulatory changes effective as of the 2015 plan year not otherwise incorporated into the Plan.  This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.The employer hereby amends the Plan in the following manner:

First: Spouse

Effective as of June 26, 2013, in response to the overturning of the Defense of Marriage Act, 110 Stat. 2419, section 3 by the Supreme Court in United States v. Windsor, Section 1.7(c) is amended to redefine "spouse" for purposes of the Plan and to reference the marriage certificate as evidence of marriage.  As amended, Section 1.7(c) shall read as follows:

(c)Spouse means the person married to the participant at the time of the determination as evidenced by a marriage certificate valid under the marriage licensing laws of the place of issuance.  

Second: Rollover/Transfer Contributions

Section 3.7 is amended to eliminate references to conduit individual retirement accounts and simplify the evidence requirements for the source plan.  As amended, Section 3.7(a)shall read as follows:

(a)Rollover Contributions – A participant may contribute to his rollover/transfer account any amounts that he previously received as a lump sum distribution (as defined in Code section 402(e)(4)(D)) provided that he transfers such distribution to this plan within sixty (60) days after receipt.

Before accepting a rollover contribution, the trustee may require an employee to furnish satisfactory evidence that the proposed transfer is in fact a "rollover contribution" that the Code permits an employee to make to a qualified plan.  If and to the extent the transferring plan is represented to be a retirement plan qualified under 401(a) that is not sponsored by a church or governmental agency, the employee shall not be required to furnish such evidence, except with respect to Roth or other after-tax accounting.  Further, no evidence shall be required when the check is issued by a financial institution indicating that the distribution is from an individual retirement account, 403(b) account, or a governmental entity 457(b) account previously maintained for the benefit of the employee.  The acceptable sources for a rollover contribution shall be as set forth in Section 3.7(b).  Notwithstanding the preceding or the provisions of Section 3.7(b), this plan will not accept a rollover from a Roth elective deferral account or a Code section 408A Roth individual retirement account.

As amended, Section 3.7(b) shall contain an additional provision that shall read as follows:

If the plan administrator later determines that the contribution was an invalid transfer contribution, the plan administrator shall distribute the amount of the invalid contribution, plus any earnings attributable thereto, to the employee within a reasonable time after such determination.

Third: Payment Election Procedures

Section 4.3(e) is amended to permit a terminating participant to elect multiple destinations for his direct rollover distributions so that he may designate the allocation of the pretax amounts.  As amended, Section 4.3(e) shall contain an additional paragraph that shall read as follows:

If and to the extent the participant elects multiple destinations for his direct rollover distributions, he may designate the allocation of the pretax amounts.

Fourth: Effective Date

This amendment  is effective as ofJanuary 1, 2015, except as otherwise provided herein.

Fifth: Remaining Plan Provisions

All other provisions of the Plan remain in full force and effect.

316_«UFD»:Copyright © 2012 byConrad Siegel Actuaries60

EX-21

	
		
			Weis Markets, Inc. Exhibit 21
		

EX-31.1

	
		
			Weis Markets, Inc. Exhibit 31.1
		

EX-31.2

	
		
			Weis Markets, Inc. Exhibit 31.2
		

EX-32

	
		
			Weis Markets, Inc. Exhibit 32
		

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 26, 2015	Mar. 18, 2016	Jun. 27, 2015
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 26, 2015
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2015
Entity Registrant Name	WEIS MARKETS INC
Trading Symbol	wmk
Entity Central Index Key	0000105418
Current Fiscal Year End Date	--12-26
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,898,443
Entity Current Reporting Status	Yes
Entity Public Float			$ 519,000,000
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 26, 2015	Dec. 27, 2014
Assets
Cash and cash equivalents	$ 17,596	$ 22,986
Marketable securities	91,629	73,959
SERP investment	9,079	9,121
Accounts receivable, net	88,083	70,642
Inventories	229,399	239,641
Prepaid expenses and other current assets	17,198	17,432
Income taxes recoverable	1,666	612
Total current assets	454,650	434,393
Property and equipment, net	738,985	716,860
Goodwill	35,162	35,162
Intangible and other assets, net	7,162	4,704
Total assets	1,235,959	1,191,119
Liabilities
Accounts payable	160,441	144,812
Accrued expenses	37,819	34,590
Accrued self-insurance	16,770	18,676
Deferred revenue, net	6,898	6,720
Total current liabilities	221,928	204,798
Postretirement benefit obligations	14,368	18,672
Accrued self-insurance	22,761	22,364
Deferred income taxes	97,020	97,280
Other	8,135	3,242
Total liabilities	364,212	346,356
Shareholders' Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued, 26,898,443 shares outstanding	9,949	9,949
Retained earnings	1,007,894	980,842
Accumulated other comprehensive income, net	4,761	4,829
Shareholders' equity before treasury stock	1,022,604	995,620
Treasury stock at cost, 6,149,364 shares	(150,857)	(150,857)
Total shareholders' equity	871,747	844,763
Total liabilities and shareholders' equity	$ 1,235,959	$ 1,191,119

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 26, 2015	Dec. 27, 2014
Consolidated Balance Sheets [Abstract]
Common Stock, Par Value	$ 0	$ 0
Common Stock, Shares Authorized	100,800,000	100,800,000
Common Stock, Shares Issued	33,047,807	33,047,807
Common Stock, Shares Outstanding	26,898,443	26,898,443
Treasury Stock, Shares	6,149,364	6,149,364

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Consolidated Statements of Income [Abstract]
Net sales	$ 2,876,748	$ 2,776,683	$ 2,692,588
Cost of sales, including warehousing and distribution expenses	2,090,016	2,023,721	1,947,120
Gross profit on sales	786,732	752,962	745,468
Operating, general and administrative expenses	695,953	671,587	631,796
Income from operations	90,779	81,375	113,672
Investment income	1,552	2,287	4,684
Income before provision for income taxes	92,331	83,662	118,356
Provision for income taxes	33,001	29,281	45,170
Net income	$ 59,330	$ 54,381	$ 73,186
Weighted-average shares outstanding, basic and diluted	26,898,443	26,898,443	26,898,443
Cash dividends per share	$ 1.20	$ 1.20	$ 1.20
Basic and diluted earnings per share	$ 2.21	$ 2.02	$ 2.72

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 59,330	$ 54,381	$ 73,186
Other comprehensive (loss) income by component, net of tax:
Unrealized holding (losses) gains arising during period (Net of deferred taxes of $37, $644 and $23, respectively)	(52)	927	(36)
Reclassification adjustment for gains included in net income (Net of deferred taxes of $11 and $26 and $730, respectively)	(16)	(37)	(1,044)
Other comprehensive (loss) income, net of tax	(68)	890	(1,080)
Comprehensive income, net of tax	$ 59,262	$ 55,271	$ 72,106

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Unrealized holding (losses) gains arising during period, deferred taxes	$ 37	$ 644	$ 23
Reclassification adjustment for gains included in net income, deferred taxes	$ 11	$ 26	$ 730

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balance, at Dec. 29, 2012	$ 9,949	$ 917,831	$ 5,019	$ (150,857)	$ 781,942
Balance, shares at Dec. 29, 2012	33,047,807			6,149,364
Net income	$ 0	73,186	0	$ 0	73,186
Other comprehensive income (loss), net of reclassification adjustments and tax	0	0	(1,080)	0	(1,080)
Dividends paid	0	(32,278)	0	0	(32,278)
Balance, at Dec. 28, 2013	$ 9,949	958,739	3,939	$ (150,857)	821,770
Balance, shares at Dec. 28, 2013	33,047,807			6,149,364
Net income	$ 0	54,381	0	$ 0	54,381
Other comprehensive income (loss), net of reclassification adjustments and tax	0	0	890	0	890
Dividends paid	0	(32,278)	0	0	(32,278)
Balance, at Dec. 27, 2014	$ 9,949	980,842	4,829	$ (150,857)	844,763
Balance, shares at Dec. 27, 2014	33,047,807			6,149,364
Net income	$ 0	59,330	0	$ 0	59,330
Other comprehensive income (loss), net of reclassification adjustments and tax	0	0	(68)	0	(68)
Dividends paid	0	(32,278)	0	0	(32,278)
Balance, at Dec. 26, 2015	$ 9,949	$ 1,007,894	$ 4,761	$ (150,857)	$ 871,747
Balance, shares at Dec. 26, 2015	33,047,807			6,149,364

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Cash flows from operating activities:
Net income	$ 59,330	$ 54,381	$ 73,186
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	61,834	59,004	51,068
Amortization	8,280	7,865	7,207
Gain on disposition of fixed assets	(54)	(2,630)	(2,033)
Impairment of fixed assets	0	0	2,088
Gain on sale of marketable securities	(27)	(63)	(1,775)
Gain on sale of intangible assets	0	0	(780)
Deferred income taxes	(212)	3,235	11,402
Changes in operating assets and liabilities:
Inventories	10,242	811	4,791
Accounts receivable and prepaid expenses	(17,127)	(13,588)	(10,512)
Income taxes recoverable	(1,054)	(612)	0
Accounts payable and other liabilities	14,403	17,230	7,056
Income taxes payable	0	(1,628)	269
Other	1,118	(895)	665
Net cash provided by operating activities	136,733	123,110	142,632
Cash flows from investing activities:
Purchase of property and equipment	(90,210)	(79,177)	(128,055)
Proceeds from the sale of property and equipment	1,929	3,614	4,451
Purchase of marketable securities	(31,329)	(20,118)	(12,635)
Proceeds from maturities of marketable securities	3,201	4,050	1,150
Proceeds from the sale of marketable securities	9,171	7,668	30,170
Purchase of intangible assets	(2,649)	(1,479)	(937)
Proceeds from the sale of intangible assets	0	0	780
Change in SERP investment	42	(369)	(1,694)
Net cash used in investing activities	(109,845)	(85,811)	(106,770)
Cash flows from financing activities:
Dividends paid	(32,278)	(32,278)	(32,278)
Net cash used in financing activities	(32,278)	(32,278)	(32,278)
Net (decrease) increase in cash and cash equivalents	(5,390)	5,021	3,584
Cash and cash equivalents at beginning of year	22,986	17,965	14,381
Cash and cash equivalents at end of year	$ 17,596	$ 22,986	$ 17,965

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 26, 2015

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1   Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies utilized in preparing the Company’s Consolidated Financial Statements:

(a)  Description of Business

Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924.  The Company is engaged principally in the retail sale of food in Pennsylvania and surrounding states.  The Company’s operations are reported as a single reportable segment.  There was no material change in the nature of the Company's business during fiscal 2015.

(b)  Definition of Fiscal Year

The Company’s fiscal year ends on the last Saturday in December.  Fiscal 2015 was comprised of 52 weeks, ending on December 26, 2015.  Fiscal 2014 was comprised of 52 weeks, ending on December 27, 2014.  Fiscal 2013 was comprised of 52 weeks, ending on December 28, 2013.  References to years in this Annual Report relate to fiscal years.

(c)  Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.

(d)  Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America.  Actual results could differ from those estimates.

(e)  Correction for Immaterial Prior Period Misstatements

The Company corrected the “Loss (gain) on disposition/impairment of fixed assets” originally reported as a net loss of $55,000 in the 2013 Consolidated Statement of Cash Flows into the “Gain on disposition of fixed assets” of $2.0 million and the “Impairment of fixed assets” of $2.1 million. There is no cash impact on the 2013 Consolidated Statement of Cash Flows related to this change, since both line items still net to the originally reported $55,000.

(f)  Cash and Cash Equivalents

The Company maintains its cash balances in the form of core checking accounts and money market accounts.  The Company maintains cash deposits with banks that at times exceed applicable insurance limits.  The Company reduces its exposure to credit risk by maintaining such deposits with high quality financial institutions that management believes are creditworthy.

The Company considers investments with an original maturity of three months or less to be cash equivalents.  Investment amounts classified as cash equivalents as of December 26, 2015 and December 27, 2014 totaled $7.7 million and $14.4 million, respectively.

(g)  Investments

Marketable securities consist of municipal bonds and equity securities.  The Company invests primarily in high-grade marketable debt securities.  The Company classifies all of its marketable securities as available-for-sale.

Available-for-sale securities are recorded at fair value as determined by quoted market price based on national markets.  Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized.  A decline in the fair value below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.  Dividend and interest income is recognized when earned.  Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities.

(h)  Accounts Receivable

Accounts receivable are stated net of an allowance for uncollectible accounts of $1,967,000 and $1,578,000 as of December 26, 2015 and December 27, 2014, respectively.  The reserve balance relates to amounts due from pharmacy third party providers, retail customer returned checks, manufacturing customers, vendors and tenants.  The Company maintains an allowance for the amount of receivables deemed to be uncollectible and calculates this amount based upon historical collection activity adjusted for current conditions.  Customer electronic payments accepted at the point of sale are classified as accounts receivable until collected.

Note 1   Summary of Significant Accounting Policies (continued)

(i)  Inventories

Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods.  The Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using average cost.  The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.  Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the last physical count to the financial statement date. 

(j)  Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided on the cost of buildings and improvements and equipment using the straight-line method.

Leasehold improvements are amortized using the straight-line method over the terms of the leases or the useful lives of the assets, whichever is shorter.

Maintenance and repairs are expensed and renewals and betterments are capitalized.  When assets are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited or charged to “Operating, general and administrative expenses.”

(k)  Goodwill and Intangible Assets

Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests when indicators of impairment are identified.

To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its stock value.  Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company.  Estimated future cash flows are based on the Company’s internal projection model.  The stock value evaluation consists of measuring the average market capitalization of the Company against its total asset value of its sole reporting unit. 

The Company’s intangible assets and related accumulated amortization at December 26, 2015 and December 27, 2014 consisted of the following:

			December 26, 2015						December 27, 2014
			Accumulated						Accumulated
(dollars in thousands)		Gross	Amortization			Net		Gross	Amortization			Net
Lease Acquisitions		3,654		2,604		1,050		3,654		2,418		1,236
Liquor Licenses		5,965		-		5,965		3,358		-		3,358
Customer Lists		162		15		147		120		10		110
Total	$	9,781	$	2,619	$	7,162	$	7,132	$	2,428	$	4,704

Intangible assets with a definite useful life are generally amortized on a straight-line basis over periods up to 30 years.  Estimated amortization expense for the next five fiscal years is approximately $191,000 in 2016, $191,000 in 2017, $191,000 in 2018, $191,000 in 2019 and $188,000 in 2020.  As of December 26, 2015, the Company’s intangible assets with indefinite lives consisted of goodwill and Pennsylvania liquor licenses.

Note 1   Summary of Significant Accounting Policies (continued)

(l)  Impairment of Long-Lived Assets

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives.  The Company completes an impairment test annually.  The Company also reviews its property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.  Recoverability is measured by a comparison of the carrying amount to the net undiscounted cash flows expected to be generated by the asset.  An impairment loss would be recorded for the excess of net book value over the fair value of the asset impaired.  The fair value is estimated based on expected discounted future cash flows.

With respect to owned property and equipment associated with closed stores, the value of the property and equipment is adjusted to reflect recoverable values based on the Company’s prior history of disposing of similar assets and current economic conditions.

In accordance with Accounting Standards Codification No. 360, Property, Plant and Equipment, the Company recorded a pre-tax charge of $2.1 million in the third quarter of 2013 for the impairment of long-lived assets, including equipment and leasehold improvements. The charge was a result of management determining that the net book value of four properties was impaired. This charge was included as a component of "Operating, general and administrative expenses."

The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results.  The Company believes that, based on current conditions, materially different reported results are not likely to result from long-lived asset impairments.  However, a change in assumptions or market conditions could result in a change in estimated future cash flows and the likelihood of materially different reported results.

(m)  Store Closing Costs

The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs associated with the store closing commitments.  Currently, closed stores have remaining lease terms ranging from one to three years, and the liabilities associated with these closed store leases are paid over the terms of the lease.  Closed store lease liabilities totaled $212,000 and $955,000 as of December 26, 2015 and December 27, 2014, respectively.  The Company estimates the lease liabilities, net of estimated sublease income, using the undiscounted rent payments of closed stores.  Other exit costs include estimated real estate taxes, common area maintenance, insurance and utility costs to be incurred after the store closes over the remaining lease term.  Store closings are generally completed within one year after the decision to close.  Adjustments to closed store liabilities and other exit costs primarily relate to changes in sublease income and actual exit costs differing from original estimates.  Adjustments are made for changes in estimates in the period in which the changes become known.  Any excess store closing liability remaining upon settlement of the obligation is reversed to income in the period that such settlement is determined.  Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs, or that no longer is needed for its originally intended purpose, is adjusted to income in the proper period. Inventory write-downs, if any, in connection with store closings are classified in cost of sales.  Costs to transfer inventory and equipment from closed stores are expensed as incurred.

The following table summarizes accrual activity for future lease obligations of stores that were closed in the normal course of business:

		Future Lease
(dollars in thousands)		Obligations
Balance at December 28, 2013	$	1,193
Additions		119
Payments		(375)
Adjustments		18
Balance at December 27, 2014		955
Additions		0
Payments		(578)
Adjustments		(165)
Balance at December 26, 2015	$	212

Note 1   Summary of Significant Accounting Policies (continued)

(n)  Self-Insurance

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims.  The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported.  The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.  The Company was liable for associate health claims up to an annual maximum of $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member as of and after March 1, 2014.  As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible.  The Company is liable for workers' compensation claims up to $2,000,000 per claim.  Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $1,000,000.  Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

(o)  Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in our Consolidated Financial Statements.  Refer to Note 8 to the Consolidated Financial Statements for the amount of unrecognized tax benefits and other disclosures related to uncertain tax positions.  To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such amounts are accrued and classified as a component of income tax expense. 

(p)  Earnings Per Share

Earnings per share are based on the weighted-average number of common shares outstanding. 

(q)  Revenue Recognition

Revenue from the sale of products to the Company’s customers is recognized at the point of sale.  Discounts provided to customers at the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.  Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts.  The Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer data tracking software.  Sales are reduced by these estimates over the life of the program.  Discounts to customers at the point of sale provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are redeemable at any retailer that accepts those discounts.  The Company records “Deferred revenue” for the sale of gift cards and revenue is recognized in “Net sales” at the time of customer redemption for products.  Gift card breakage income is recognized in “Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote.  Sales tax is excluded from “Net sales.”  The Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.  Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.

(r)  Cost of Sales, Including Warehousing and Distribution Expenses

“Cost of sales, including warehousing and distribution expenses” consists of direct product costs (net of discounts and allowances), distribution center and transportation costs, as well as manufacturing facility operations.

(s)  Vendor Allowances

Vendor allowances related to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as they are earned, in accordance with the underlying agreement.  Off-invoice and bill-back allowances are used to reduce direct product costs upon the receipt of goods.  Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized when the related inventory is sold.  Volume incentive discounts are realized as a reduction of cost of sales at the time it is deemed probable and reasonably estimable that the incentive target will be reached.  Long-term contract incentives, which require an exclusive vendor relationship, are allocated over the life of the contract.  Promotional allowance funds for specific vendor-sponsored programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement.  Cash discounts for prompt payment of invoices are realized in cost of sales as invoices are paid.  Warehouse and back-haul allowances provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.  Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially set up in the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is complete.  Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses also recorded in cost of sales. 

Note 1   Summary of Significant Accounting Policies (continued)

(s)  Vendor Allowances (continued)

Vendor allowances recorded as credits in cost of sales totaled $97.0 million in 2015, $89.5 million in 2014 and $76.4 million in 2013.  Vendor paid cooperative advertising credits totaled $17.1 million in 2015, $16.0 million in 2014 and $16.0 million in 2013.  These credits were netted against advertising costs within “Operating, general and administrative expenses.”  The Company had accounts receivable due from vendors of $842,000 and $395,000for earned advertising credits and $8.1 million and $5.7 million for earned promotional discounts as of December 26, 2015 and December 27, 2014, respectively.  The Company had $823,000 and $734,000 in unearned income included in accrued liabilities for unearned vendor programs under long-term contracts for display and shelf space allocation as of December 26, 2015 and December 27, 2014, respectively.

(t)  Operating, General and Administrative Expenses

Business operating costs including expenses generated from administration and purchasing functions, are recorded in “Operating, general and administrative expenses” in the Consolidated Statements of Income.  Business operating costs include items such as wages, benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, depreciation, leasehold amortization and costs for outside provided services.

(u)  Advertising Costs

The Company expenses advertising costs as incurred.  The Company recorded advertising expense, before vendor paid cooperative advertising credits, of $23.1 million in 2015, $24.6 million in 2014 and $23.5 million in 2013 in “Operating, general and administrative expenses.”

(v)  Rental Income

The Company leases or subleases space to tenants in owned, vacated and open store facilities.  Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”  All leases are operating leases, as disclosed in Note 5.

(w) Basis of Presentation

In conjunction with the September 26, 2015 quarterly financial statement close process, and while researching alternative methods to calculate retained claim liability for the Company’s self-insured workers compensation and general liability insurance programs, the Company discovered errors in the application of the actuarial methods used to estimate the obligation of future payments resulting from claims due to past events.  These errors primarily related to the Company’s selection of loss development factors and the application of such factors to the population of claims.  The impact of these prior period misstatements to the Company’s Consolidated Financial Statements resulted in the understatement of workers compensation and general liability expense with a corresponding understatement of self-insurance liabilities over multiple fiscal periods through June 27, 2015. Consequently, the Company has restated certain prior period amounts to correct these errors.

Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99 and 108, the Company concluded that these errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s quarterly and annual financial statements that have been previously filed in the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.  As a result, amendment of such reports was not required.   In preparing the Company’s Consolidated Financial Statements for the thirteen and thirty-nine weeks ended September 26, 2015 and for each of the three years in the period ended December 26, 2015, the Company made appropriate revisions to its financial statements for historical periods.  Such changes were reflected in the financial results for the thirteen and thirty-nine weeks ended September 26, 2015 and are also reflected in the historical financial results included in these Consolidated Financial Statements.  

The effect of these errors decreased net income by $786,000, or $0.03 per share, for the year ended December 27, 2014 and increased net income by $1.5 million, or $0.05 per share, for the year ended December 28, 2013.  These errors also increased total liabilities by $13.1 million at December 27, 2014 and reduced retained earnings by $13.7 million at December 29, 2012.  Additional information about these corrections, including a reconciliation of each financial statement line item affected, has been included in Note 7 to the Company’s Consolidated Financial Statements contained in its Quarterly Report on Form 10-Q for the period ended September 26, 2015.

Note 1   Summary of Significant Accounting Policies (continued)

(x)  Current Relevant Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”)  issued Accounting Standards Update ("ASU") 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  ASU 2014-08 amends guidance on reporting discontinued operations only if the disposal of a component of an entity or group of components of an entity represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. It also allows companies to have significant continuing involvement and continuing cash flows with the discontinued operations. Additional disclosures are also required for discontinued operations and individually material disposal transactions that do not meet the definition of a discontinued operation.  The standard should be applied prospectively for all disposals of components of an entity and for all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014, including interim periods within that reporting period.  Adoption of the ASU did not have an impact on the Company’s 2015 Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amended the existing accounting standards for revenue recognition.  ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.  The standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  In August 2015, the FASB issued a one-year deferral of the effective date of this new guidance resulting in it now being effective for the Company beginning in fiscal year 2018.  Early adoption is not permitted.  The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application.  The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic 718): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures.  The new requirements are effective for the annual periods ending after December 15, 2016, and for interim periods and annual periods thereafter.  Early adoption is permitted.  Adoption of the new ASU will not have an impact on the Company’s Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330):  Simplifying the Measurement of Inventory.  ASU 2015-11 amends guidance on the measurement of inventory from lower of cost or market to net realizable value.  The amendment applies to all inventory other than those measured by Last-In-First-Out (LIFO) and the Retail Inventory Method (RIM).  The amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period.  Early adoption is permitted.  Adoption of the new ASU will not have a material impact on the Company’s Consolidated Financial Statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.  ASU 2015-16 requires that any effect on earnings due to depreciation, amortization or other income effects, due to a change to the provisional amounts be recorded in the current period’s financial statements as if the accounting had been completed at the acquisition date.  The portion of the amount recorded in the current-period earnings, which would have been recorded in the previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date, must be presented separately on the face of the income statement or disclosed in the notes to the financial statements by line item.  The amendment is effective for the fiscal year beginning after December 15, 2015. The amendments are to be applied prospectively to any adjustments occurring after the effective date. Adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.  ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The Company adopted ASU 2015-17 for the fiscal year ended December 26, 2015 and applied it retrospectively. The Company reclassified $5.8 million out of “Total current liabilities” related to “Deferred income taxes” in the December 27, 2014 Consolidated Balance Sheet and into noncurrent “Deferred income taxes.”

Note 1   Summary of Significant Accounting Policies (continued)

(x)  Current Relevant Accounting Standards (continued)

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842).  ASU 2016-02 requires lessees to recognize assets and liabilities for the rights and obligations created by their leases with lease terms more than 12 months.  Current guidance only requires capital leases to be recognized on the balance sheet.  However, the ASU 2016-02 now requires that both capital and operating leases be recognized on the balance sheet.  The effect on cash flows will strictly depend on whether the lease is classified as an operating lease or capital lease.  The ASU 2016-02 will require disclosures to aid investors and other financial statement users to better understand the amount, timing and uncertainty of the cash flows arising from leases.  These disclosures are to include qualitative and quantitative information about the amounts recorded in the financial statements.  This update remains unchanged for lessors. However, new guidance contains targeted improvements to align, where necessary, the lessor’s accounting with the lessee’s accounting standards.  ASU 2016-02 will become effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.

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Investments

12 Months Ended

Dec. 26, 2015

Investments [Abstract]

Investments

Note 2  Investments

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Consolidated Balance Sheets.  FASB has established three levels of inputs that may be used to measure fair value:

Level 1  Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2  Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3  Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available.  The Company’s bond portfolio is valued using Level 2 inputs.  The Company’s bonds are valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm(s), which include various third party pricing services.  These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.  In addition, the Company engages an independent firm to value a sample of the Company’s municipal bond holdings annually in order to validate the investment’s assigned fair value.

The Company accrues interest on its bond portfolio throughout the life of each bond held.  Dividends from the equity securities are recognized as received.  Both interest and dividends are recognized in “Investment income” on the Company’s Consolidated Statements of Income.

Marketable securities, as of December 26, 2015 and December 27, 2014, consisted of:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 26, 2015	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,682	$	-	$	7,880
Level 2
Municipal bonds		82,347		1,468		(66)		83,749
	$	83,545	$	8,150	$	(66)	$	91,629

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 27, 2014	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,683	$	-	$	7,881
Level 2
Municipal bonds		64,561		1,613		(96)		66,078
	$	65,759	$	8,296	$	(96)	$	73,959

Note 2  Investments (continued)

Maturities of marketable securities classified as available-for-sale at December 26, 2015, were as follows:

		Amortized		Fair
(dollars in thousands)		Cost		Value
Available-for-sale:
Due within one year	$	9,775	$	9,839
Due after one year through five years		52,426		53,285
Due after five years through ten years		20,146		20,625
Equity securities		1,198		7,880
	$	83,545	$	91,629

The Company also maintains a non-qualified supplemental executive retirement plan and a non-qualified pharmacist deferred compensation plan for certain of its associates which allows them to defer income to future periods.  Participants in the plans earn a return on their deferrals based on mutual fund investments.  The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans.  Such investments are reported on the balance sheet as SERP investments, are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in investment income.  The changes in the underlying liability to the employee are recorded in operating expenses.

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Inventories

12 Months Ended

Dec. 26, 2015

Inventories [Abstract]

Inventories

Note 3  Inventories

Merchandise inventories, as of December 26, 2015 and December 27, 2014, were valued as follows:

(dollars in thousands)		2015		2014
LIFO	$	181,321	$	193,621
Average cost		48,078		46,020
	$	229,399	$	239,641

Management believes the use of the LIFO method for valuing certain inventories represents the most appropriate matching of costs and revenues in the Company’s circumstances.  If all inventories were valued on the average cost method, which approximates current cost, total inventories would have been $81,347,000 and $79,933,000 higher than as reported on the above methods as of December 26, 2015 and December 27, 2014, respectively. During 2015, the Company had certain decrements in its LIFO pools, which had an insignificant impact on the cost of sales.

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Property and Equipment

12 Months Ended

Dec. 26, 2015

Property and Equipment [Abstract]

Property and Equipment

Note 4  Property and Equipment

Property and equipment, as of December 26, 2015 and December 27, 2014, consisted of:

	Useful Life
(dollars in thousands)	(in years)		2015		2014
Land		$	106,125	$	103,240
Buildings and improvements	10-60		586,903		544,309
Equipment	3-12		949,975		911,169
Leasehold improvements	5-20		190,249		193,842
Total, at cost			1,833,252		1,752,560
Less accumulated depreciation and amortization			1,094,267		1,035,700
		$	738,985	$	716,860

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Lease Commitments

12 Months Ended

Dec. 26, 2015

Lease Commitments [Abstract]

Lease Commitments

Note 5  Lease Commitments 

At December 26, 2015, the Company leased approximately 50% of its open store facilities under operating leases that expire at various dates through 2029.  These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus contingent rentals as a percentage of annual sales and a number of leases require the Company to pay for all or a portion of insurance, real estate taxes, water and sewer rentals, and repairs, the cost of which is charged to the related expense category rather than being accounted for as rent expense.  Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years.  Rents on operating leases, including agreements with step rents, are charged to expense on a straight-line basis over the minimum lease term.  Additionally, the Company has operating leases for certain transportation and other equipment.

Rent expense and income on all leases consisted of:

(dollars in thousands)		2015		2014		2013
Minimum annual rentals	$	34,794	$	35,183	$	32,817
Contingent rentals		452		409		386
Lease or sublease income		(7,069)		(6,881)		(6,452)
	$	28,177	$	28,711	$	26,751

The following is a schedule by years of future minimum rental payments required under operating leases and total minimum sublease and lease rental income to be received that have initial or remaining non-cancelable lease terms in excess of one year as of December 26, 2015.

(dollars in thousands)		Leases		Subleases
2016	$	32,237	$	(3,151)
2017		30,492		(3,148)
2018		28,413		(2,486)
2019		23,214		(1,604)
2020		17,096		(1,355)
Thereafter		62,410		(6,500)
	$	193,862	$	(18,244)

The Company has $32,000 accrued as of December 26, 2015 and had $455,000 accrued as of December 27, 2014, for future minimum rental payments due on previously closed stores, reduced by the estimated sublease income to be received.  The future minimum rental payments required under operating leases and estimated sublease income for these locations are included in the above schedule.

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Retirement Plans

12 Months Ended

Dec. 26, 2015

Retirement Plans [Abstract]

Retirement Plans

Note 6  Retirement Plans

The Company has a retirement savings plan, the Weis Markets, Inc. Retirement Savings Plan, covering substantially all full-time associates.  The plan has a contributory component as well as a noncontributory profit-sharing component for certain associates. The noncontributory component covers eligible associates which included certain salaried associates, store management and administrative support personnel.  The Company also has three non-qualified supplemental retirement plans covering highly compensated employees of the Company.  The Company’s policy is to fund retirement plan costs as accrued, with the exception of the deferred compensation plan.  Employer contributions to the qualified retirement plans are made at the sole discretion of the Company.

Retirement plan costs:

(dollars in thousands)		2015		2014		2013
Retirement savings plan		3,161		3,010		3,465
Deferred compensation plan		(318)		1,328		126
Supplemental executive retirement plan		484		1,061		2,025
Deferred compensation plan for pharmacists		(165)		(228)		178
	$	3,162	$	5,171	$	5,794

The Company maintains a non-qualified deferred compensation plan for the payment of specific amounts of annual retirement benefits to certain officers or their beneficiaries over an actuarially computed normal life expectancy.  Currently, there are no active officers in the plan.  The expected payments under the plan provisions were determined through actuarial calculations dependent on the age of the recipient, using an assumed discount rate.  The plan is unfunded and accounted for on an accrual basis.  The recorded liability at December 26, 2015 is $7,264,000, which is based on expected payments to be made over the remaining lives of the beneficiaries.  This amount is included in “Accrued expenses” and “Postretirement benefit obligations” in the Consolidated Balance Sheets.  The expected payment amounts are approximately $1,975,000 for each of 2016 and 2017, and approximately $1,013,000 for the years thereafter dependent on the lives of the beneficiaries.

The Company also maintains a non-qualified supplemental executive retirement plan and a non-qualified pharmacist deferred compensation plan for certain of its associates.  These plans are designed to provide retirement benefits and salary deferral opportunities because of limitations imposed by the Internal Revenue Code and the Regulations implemented by the Internal Revenue Service.  These plans are unfunded and accounted for on an accrual basis.  Participants in these plans are excluded from participation in the profit sharing portion of the Weis Markets, Inc. Retirement Savings Plan once their yearly earnings exceed the IRS highly compensated threshold.  The Board of Directors annually determines the amount of the allocation to the plans at its sole discretion.  The allocation among the various plan participants is made in both flat dollar amounts and in relationship to their compensation.  Plan participants are 100% vested in their accounts after six years of service with the Company.  Benefits are distributed among participants upon reaching the applicable retirement age.  Substantial risk of benefit forfeiture does exist for participants in these plans.  The present value of accumulated benefits amounted to $9,079,000 and $9,646,000 at December 26, 2015 and December 27, 2014, respectively, and is included in “Postretirement benefit obligations” in the Consolidated Balance Sheets. 

The Company has no other postretirement benefit plans.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 26, 2015

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note 7  Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable securities.  The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.

		Unrealized Gains
		on Available-for-Sale
(dollars in thousands)		Marketable Securities
Accumulated other comprehensive income balance as of December 28, 2013	$	3,939
Other comprehensive income before reclassifications		927
Amounts reclassified from accumulated other comprehensive income		(37)
Net current period other comprehensive income		890
Accumulated other comprehensive income balance as of December 27, 2014	$	4,829
Other comprehensive loss before reclassifications		(52)
Amounts reclassified from accumulated other comprehensive income		(16)
Net current period other comprehensive loss		(68)
Accumulated other comprehensive income balance as of December 26, 2015	$	4,761

The following table sets forth the effects on net income of the amounts reclassified out of accumulated other comprehensive income for the periods ended December 26, 2015, December 27, 2014 and December 28, 2013.

		Gains Reclassified from
		Accumulated Other Comprehensive Income to the
		Consolidated Statements of Income
(dollars in thousands)	Location		2015		2014		2013
Unrealized gains on available-for-sale marketable securities
	Investment income	$	27	$	63	$	1,774
	Provision for income taxes		(11)		(26)		(730)
Total amount reclassified, net of tax		$	16	$	37	$	1,044

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Income Taxes

12 Months Ended

Dec. 26, 2015

Income Taxes [Abstract]

Income Taxes

Note 8  Income Taxes

The provision (benefit) for income taxes consists of:

(dollars in thousands)		2015		2014		2013
Current:
Federal	$	29,888	$	24,809	$	26,994
State		3,325		1,237		6,774
Deferred:
Federal		(188)		2,559		8,973
State		(24)		676		2,429
	$	33,001	$	29,281	$	45,170

The reconciliation of income taxes computed at the federal statutory rate (35% in 2015, 2014 and 2013) to the provision for income taxes is:

(dollars in thousands)		2015		2014		2013
Income taxes at federal statutory rate	$	32,316	$	29,282	$	41,425
State income taxes, net of federal income tax benefit		1,112		1,436		5,981
Other		(427)		(1,437)		(2,236)
Provision for income taxes (effective tax rate 35.7%,  35.0% and 38.2%, respectively)	$	33,001	$	29,281	$	45,170

Cash paid for federal income taxes was $28.0 million,  $25.0 million and$26.4 million in 2015, 2014 and 2013 respectively.Cash paid for state income taxes was $2.2 million,  $1.8 million and $3.5 million in 2015, 2014 and 2013 respectively.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 26, 2015 and December 27, 2014, are:

(dollars in thousands)		2015		2014
Deferred tax assets:
Accounts receivable	$	813	$	615
Compensated absences		983		362
Long term employment incentives		3,143		1,161
Employee benefit plans		10,485		10,734
General liability insurance		4,048		3,655
Postretirement benefit obligations		5,906		7,676
Net operating loss carryforwards		5,926		6,218
Other		2,173		1,359
Total deferred tax assets		33,477		31,780
Deferred tax liabilities:
Inventories		(6,808)		(7,459)
Unrealized gains on marketable securities		(3,323)		(3,371)
Nondeductible accruals and other		(9,240)		(6,522)
Depreciation		(111,126)		(111,708)
Total deferred tax liabilities		(130,497)		(129,060)
Net deferred tax liability	$	(97,020)	$	(97,280)

The Company adopted ASU 2015-17 for the fiscal year ended December 26, 2015 and applied it retrospectively. The Company reclassified $5.8 million out of “Total current liabilities” related to “Deferred income taxes” in the December 27, 2014 Consolidated Balance Sheet and into noncurrent “Deferred income taxes.”

Note 8  Income Taxes (continued)

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

(dollars in thousands)		2015		2014
Unrecognized tax benefits at beginning of year	$	-	$	-
Increases based on tax positions related to the current year		1,264		-
Additions for tax positions of prior year		-		-
Reductions for tax positions of prior years		-		-
Settlements		-		-
Expiration of the statute of limitations for assessment of taxes		-		-
Unrecognized tax benefits at end of year	$	1,264	$	-

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1,264,000 in 2015 and $0 in 2014.

The Company’s U.S. Federal income tax filings have been examined by the Internal Revenue Service through 2008.  The Company or one of its subsidiaries files tax returns in various states.  The tax years subject to examination in Pennsylvania, where the majority of the Company's revenues are generated, are 2011 to 2015. 

The Company has net operating loss carryforwards of $88.5 million available for state income tax purposes.  The net operating losses will begin to expire starting in 2027.  The Company expects to fully utilize these net operating loss carryforwards.

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Acquisition of Business

12 Months Ended

Dec. 26, 2015

Acquisition of Business [Abstract]

Acquisition of Business

Note 9  Acquisition of Business

Fiscal 2015 Acquisitions

The Company paid $7.9 million for the property and equipment related to the purchase of a store in Hanover, Pennsylvania on August 31, 2015 from C&S Wholesale Grocers to expand current market share.  The purchase price was allocated between land, building and equipment of $1.9 million, $5.9 million and $112,000, respectively, in accordance with our accounting policies for business combinations.  No Goodwill was recognized.

Fiscal 2014 Acquisitions

There were no acquisitions for fiscal 2014.

Fiscal 2013 Acquisitions

There were no acquisitions for fiscal 2013.

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Summary of Quarterly Results

12 Months Ended

Dec. 26, 2015

Summary of Quarterly Results [Abstract]

Summary of Quarterly Results

Note 10  Summary of Quarterly Results (Unaudited)

Quarterly financial data for 2015 and 2014 are as follows:

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 28, 2015		June 27, 2015		September 26, 2015		December 26, 2015
Net sales	$	712,426	$	718,380	$	711,879	$	734,063
Gross profit on sales		195,115		198,919		194,147		198,551
Net income		13,323		16,644		12,788		16,575
Basic and diluted earnings per share		.50		.62		.48		.61

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 29, 2014		June 28, 2014		September 27, 2014		December 27, 2014
Net sales	$	687,127	$	691,875	$	683,893	$	713,788
Gross profit on sales		186,768		187,724		185,677		192,793
Net income		14,570		12,602		13,511		13,698
Basic and diluted earnings per share		.54		.47		.50		.51

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Fair Value Information

12 Months Ended

Dec. 26, 2015

Fair Value Information [Abstract]

Fair Value Information

Note 11  Fair Value Information

The carrying amounts for cash, accounts receivable and accounts payable approximate fair value because of the short maturities of these instruments.  The fair values of the Company’s marketable securities, as disclosed in Note 2, are based on quoted market prices and institutional pricing guidelines for those securities not classified as Level 1 securities. The Company’s SERP investments are classified as trading securities and are carried at fair value using Level 1 inputs.

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Commitments and Contingencies

12 Months Ended

Dec. 26, 2015

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 12  Commitments and Contingencies

The Company is involved in various legal actions arising out of the normal course of business.  The Company also accrues for tax contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated, based on experience.  In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

At December 26, 2015, the Company had a $30 million line of credit, of which $16.9 million was committed to outstanding letters of credit.  The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.  The Company does not anticipate drawing on any of them.  The Company has a $50 million short-term credit facility agreement to fund future financing activities.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 26, 2015

Summary of Significant Accounting Policies [Abstract]

Description of Business [Policy Text Block]

(a)  Description of Business

Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924.  The Company is engaged principally in the retail sale of food in Pennsylvania and surrounding states.  The Company’s operations are reported as a single reportable segment.  There was no material change in the nature of the Company's business during fiscal 2015.

Definition of Fiscal Year [Policy Text Block]

(b)  Definition of Fiscal Year

The Company’s fiscal year ends on the last Saturday in December.  Fiscal 2015 was comprised of 52 weeks, ending on December 26, 2015.  Fiscal 2014 was comprised of 52 weeks, ending on December 27, 2014.  Fiscal 2013 was comprised of 52 weeks, ending on December 28, 2013.  References to years in this Annual Report relate to fiscal years.

Principles of Consolidation [Policy Text Block]

(c)  Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates [Policy Text Block]

(d)  Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America.  Actual results could differ from those estimates.

Correction for Immaterial Prior Period Misstatements [Policy Text Block]

(e)  Correction for Immaterial Prior Period Misstatements

The Company corrected the “Loss (gain) on disposition/impairment of fixed assets” originally reported as a net loss of $55,000 in the 2013 Consolidated Statement of Cash Flows into the “Gain on disposition of fixed assets” of $2.0 million and the “Impairment of fixed assets” of $2.1 million. There is no cash impact on the 2013 Consolidated Statement of Cash Flows related to this change, since both line items still net to the originally reported $55,000.

Cash and Cash Equivalents [Policy Text Block]

(f)  Cash and Cash Equivalents

The Company maintains its cash balances in the form of core checking accounts and money market accounts.  The Company maintains cash deposits with banks that at times exceed applicable insurance limits.  The Company reduces its exposure to credit risk by maintaining such deposits with high quality financial institutions that management believes are creditworthy.

The Company considers investments with an original maturity of three months or less to be cash equivalents.  Investment amounts classified as cash equivalents as of December 26, 2015 and December 27, 2014 totaled $7.7 million and $14.4 million, respectively.

Investments [Policy Text Block]

(g)  Investments

Marketable securities consist of municipal bonds and equity securities.  The Company invests primarily in high-grade marketable debt securities.  The Company classifies all of its marketable securities as available-for-sale.

Available-for-sale securities are recorded at fair value as determined by quoted market price based on national markets.  Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized.  A decline in the fair value below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.  Dividend and interest income is recognized when earned.  Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities.

Accounts Receivable [Policy Text Block]

(h)  Accounts Receivable

Accounts receivable are stated net of an allowance for uncollectible accounts of $1,967,000 and $1,578,000 as of December 26, 2015 and December 27, 2014, respectively.  The reserve balance relates to amounts due from pharmacy third party providers, retail customer returned checks, manufacturing customers, vendors and tenants.  The Company maintains an allowance for the amount of receivables deemed to be uncollectible and calculates this amount based upon historical collection activity adjusted for current conditions.  Customer electronic payments accepted at the point of sale are classified as accounts receivable until collected.

Inventories [Policy Text Block]

(i)  Inventories

Inventories are valued at the lower of cost or market, using both the last-in, first-out (LIFO) and average cost methods.  The Company’s center store and pharmacy inventories are valued using LIFO and the Company’s fresh inventories are valued using average cost.  The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities.  Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the last physical count to the financial statement date. 

Property and Equipment [Policy Text Block]

(j)  Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided on the cost of buildings and improvements and equipment using the straight-line method.

Leasehold improvements are amortized using the straight-line method over the terms of the leases or the useful lives of the assets, whichever is shorter.

Maintenance and repairs are expensed and renewals and betterments are capitalized.  When assets are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited or charged to “Operating, general and administrative expenses.”

Goodwill and Intangible Assets [Policy Text Block]

(k)  Goodwill and Intangible Assets

Intangible assets with an indefinite useful life are not amortized until their useful life is determined to be no longer indefinite and are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Goodwill is not amortized but tested for impairment for each reporting unit on an annual basis and between annual tests when indicators of impairment are identified.

To derive the fair value of the Company’s sole reporting unit, the Company uses an income approach along with an analysis of its stock value.  Under the income approach, fair value of a reporting unit is determined based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company.  Estimated future cash flows are based on the Company’s internal projection model.  The stock value evaluation consists of measuring the average market capitalization of the Company against its total asset value of its sole reporting unit. 

The Company’s intangible assets and related accumulated amortization at December 26, 2015 and December 27, 2014 consisted of the following:

			December 26, 2015						December 27, 2014
			Accumulated						Accumulated
(dollars in thousands)		Gross	Amortization			Net		Gross	Amortization			Net
Lease Acquisitions		3,654		2,604		1,050		3,654		2,418		1,236
Liquor Licenses		5,965		-		5,965		3,358		-		3,358
Customer Lists		162		15		147		120		10		110
Total	$	9,781	$	2,619	$	7,162	$	7,132	$	2,428	$	4,704

Intangible assets with a definite useful life are generally amortized on a straight-line basis over periods up to 30 years.  Estimated amortization expense for the next five fiscal years is approximately $191,000 in 2016, $191,000 in 2017, $191,000 in 2018, $191,000 in 2019 and $188,000 in 2020.  As of December 26, 2015, the Company’s intangible assets with indefinite lives consisted of goodwill and Pennsylvania liquor licenses.

Impairment of Long-Lived Assets [Policy Text Block]

(l)  Impairment of Long-Lived Assets

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives.  The Company completes an impairment test annually.  The Company also reviews its property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.  Recoverability is measured by a comparison of the carrying amount to the net undiscounted cash flows expected to be generated by the asset.  An impairment loss would be recorded for the excess of net book value over the fair value of the asset impaired.  The fair value is estimated based on expected discounted future cash flows.

With respect to owned property and equipment associated with closed stores, the value of the property and equipment is adjusted to reflect recoverable values based on the Company’s prior history of disposing of similar assets and current economic conditions.

In accordance with Accounting Standards Codification No. 360, Property, Plant and Equipment, the Company recorded a pre-tax charge of $2.1 million in the third quarter of 2013 for the impairment of long-lived assets, including equipment and leasehold improvements. The charge was a result of management determining that the net book value of four properties was impaired. This charge was included as a component of "Operating, general and administrative expenses."

The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results.  The Company believes that, based on current conditions, materially different reported results are not likely to result from long-lived asset impairments.  However, a change in assumptions or market conditions could result in a change in estimated future cash flows and the likelihood of materially different reported results.

Store Closing Costs [Policy Text Block]

(m)  Store Closing Costs

The Company provides for closed store liabilities relating to the estimated post-closing lease liabilities and related other exit costs associated with the store closing commitments.  Currently, closed stores have remaining lease terms ranging from one to three years, and the liabilities associated with these closed store leases are paid over the terms of the lease.  Closed store lease liabilities totaled $212,000 and $955,000 as of December 26, 2015 and December 27, 2014, respectively.  The Company estimates the lease liabilities, net of estimated sublease income, using the undiscounted rent payments of closed stores.  Other exit costs include estimated real estate taxes, common area maintenance, insurance and utility costs to be incurred after the store closes over the remaining lease term.  Store closings are generally completed within one year after the decision to close.  Adjustments to closed store liabilities and other exit costs primarily relate to changes in sublease income and actual exit costs differing from original estimates.  Adjustments are made for changes in estimates in the period in which the changes become known.  Any excess store closing liability remaining upon settlement of the obligation is reversed to income in the period that such settlement is determined.  Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs, or that no longer is needed for its originally intended purpose, is adjusted to income in the proper period. Inventory write-downs, if any, in connection with store closings are classified in cost of sales.  Costs to transfer inventory and equipment from closed stores are expensed as incurred.

The following table summarizes accrual activity for future lease obligations of stores that were closed in the normal course of business:

		Future Lease
(dollars in thousands)		Obligations
Balance at December 28, 2013	$	1,193
Additions		119
Payments		(375)
Adjustments		18
Balance at December 27, 2014		955
Additions		0
Payments		(578)
Adjustments		(165)
Balance at December 26, 2015	$	212

Self-Insurance [Policy Text Block]

(n)  Self-Insurance

The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and associate medical benefit claims.  The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported.  The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.  The Company was liable for associate health claims up to an annual maximum of $1,250,000 per member prior to March 1, 2013, $2,000,000 per member prior to March 1, 2014 and an unlimited amount per member as of and after March 1, 2014.  As of March 1, 2014, the Company purchased stop loss insurance which carries a $500,000 specific deductible with a $250,000 aggregating deductible.  The Company is liable for workers' compensation claims up to $2,000,000 per claim.  Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $100,000 to $1,000,000.  Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

Income Taxes [Policy Text Block]

(o)  Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in our Consolidated Financial Statements.  Refer to Note 8 to the Consolidated Financial Statements for the amount of unrecognized tax benefits and other disclosures related to uncertain tax positions.  To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such amounts are accrued and classified as a component of income tax expense. 

Earnings Per Share [Policy Text Block]

(p)  Earnings Per Share

Earnings per share are based on the weighted-average number of common shares outstanding. 

Revenue Recognition [Policy Text Block]

(q)  Revenue Recognition

Revenue from the sale of products to the Company’s customers is recognized at the point of sale.  Discounts provided to customers at the point of sale through the Weis Club Preferred Shopper loyalty program are recognized as a reduction in sales as products are sold.  Periodically, the Company will run a point based sales incentive program that rewards customers with future sales discounts.  The Company makes reasonable and reliable estimates of the amount of future discounts based upon historical experience and its customer data tracking software.  Sales are reduced by these estimates over the life of the program.  Discounts to customers at the point of sale provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the discounts are redeemable at any retailer that accepts those discounts.  The Company records “Deferred revenue” for the sale of gift cards and revenue is recognized in “Net sales” at the time of customer redemption for products.  Gift card breakage income is recognized in “Operating, general and administrative expenses” based upon historical redemption patterns and represents the balance of gift cards for which the Company believes the likelihood of redemption by the customer is remote.  Sales tax is excluded from “Net sales.”  The Company charges sales tax on all taxable customer purchases and remits these taxes monthly to the appropriate taxing jurisdiction.  Merchandise return activity is immaterial to revenues due to products being returned quickly and the unit cost is relatively low.

Cost of Sales, Including Warehousing and Distribution Expenses [Policy Text Block]

(r)  Cost of Sales, Including Warehousing and Distribution Expenses

“Cost of sales, including warehousing and distribution expenses” consists of direct product costs (net of discounts and allowances), distribution center and transportation costs, as well as manufacturing facility operations.

Vendor Allowances [Policy Text Block]

(s)  Vendor Allowances

Vendor allowances related to the Company's buying and merchandising activities are recorded as a reduction of cost of sales as they are earned, in accordance with the underlying agreement.  Off-invoice and bill-back allowances are used to reduce direct product costs upon the receipt of goods.  Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized when the related inventory is sold.  Volume incentive discounts are realized as a reduction of cost of sales at the time it is deemed probable and reasonably estimable that the incentive target will be reached.  Long-term contract incentives, which require an exclusive vendor relationship, are allocated over the life of the contract.  Promotional allowance funds for specific vendor-sponsored programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement.  Cash discounts for prompt payment of invoices are realized in cost of sales as invoices are paid.  Warehouse and back-haul allowances provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.  Warehouse rack and slotting allowances are recorded in cost of sales when new items are initially set up in the Company's distribution system, which is when the related expenses are incurred and performance under the agreement is complete.  Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses also recorded in cost of sales. 

Note 1   Summary of Significant Accounting Policies (continued)

(s)  Vendor Allowances (continued)

Vendor allowances recorded as credits in cost of sales totaled $97.0 million in 2015, $89.5 million in 2014 and $76.4 million in 2013.  Vendor paid cooperative advertising credits totaled $17.1 million in 2015, $16.0 million in 2014 and $16.0 million in 2013.  These credits were netted against advertising costs within “Operating, general and administrative expenses.”  The Company had accounts receivable due from vendors of $842,000 and $395,000for earned advertising credits and $8.1 million and $5.7 million for earned promotional discounts as of December 26, 2015 and December 27, 2014, respectively.  The Company had $823,000 and $734,000 in unearned income included in accrued liabilities for unearned vendor programs under long-term contracts for display and shelf space allocation as of December 26, 2015 and December 27, 2014, respectively.

Operating, General and Administrative Expenses [Policy Text Block]

(t)  Operating, General and Administrative Expenses

Business operating costs including expenses generated from administration and purchasing functions, are recorded in “Operating, general and administrative expenses” in the Consolidated Statements of Income.  Business operating costs include items such as wages, benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, depreciation, leasehold amortization and costs for outside provided services.

Advertising Costs [Policy Text Block]

(u)  Advertising Costs

The Company expenses advertising costs as incurred.  The Company recorded advertising expense, before vendor paid cooperative advertising credits, of $23.1 million in 2015, $24.6 million in 2014 and $23.5 million in 2013 in “Operating, general and administrative expenses.”

Rental Income [Policy Text Block]

(v)  Rental Income

The Company leases or subleases space to tenants in owned, vacated and open store facilities.  Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”  All leases are operating leases, as disclosed in Note 5.

Basis of Presentation [Policy Text Block]

(w) Basis of Presentation

In conjunction with the September 26, 2015 quarterly financial statement close process, and while researching alternative methods to calculate retained claim liability for the Company’s self-insured workers compensation and general liability insurance programs, the Company discovered errors in the application of the actuarial methods used to estimate the obligation of future payments resulting from claims due to past events.  These errors primarily related to the Company’s selection of loss development factors and the application of such factors to the population of claims.  The impact of these prior period misstatements to the Company’s Consolidated Financial Statements resulted in the understatement of workers compensation and general liability expense with a corresponding understatement of self-insurance liabilities over multiple fiscal periods through June 27, 2015. Consequently, the Company has restated certain prior period amounts to correct these errors.

Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99 and 108, the Company concluded that these errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s quarterly and annual financial statements that have been previously filed in the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.  As a result, amendment of such reports was not required.   In preparing the Company’s Consolidated Financial Statements for the thirteen and thirty-nine weeks ended September 26, 2015 and for each of the three years in the period ended December 26, 2015, the Company made appropriate revisions to its financial statements for historical periods.  Such changes were reflected in the financial results for the thirteen and thirty-nine weeks ended September 26, 2015 and are also reflected in the historical financial results included in these Consolidated Financial Statements.  

The effect of these errors decreased net income by $786,000, or $0.03 per share, for the year ended December 27, 2014 and increased net income by $1.5 million, or $0.05 per share, for the year ended December 28, 2013.  These errors also increased total liabilities by $13.1 million at December 27, 2014 and reduced retained earnings by $13.7 million at December 29, 2012.  Additional information about these corrections, including a reconciliation of each financial statement line item affected, has been included in Note 7 to the Company’s Consolidated Financial Statements contained in its Quarterly Report on Form 10-Q for the period ended September 26, 2015.

New Accounting Pronouncements, Policy [Policy Text Block]

(x)  Current Relevant Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”)  issued Accounting Standards Update ("ASU") 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  ASU 2014-08 amends guidance on reporting discontinued operations only if the disposal of a component of an entity or group of components of an entity represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. It also allows companies to have significant continuing involvement and continuing cash flows with the discontinued operations. Additional disclosures are also required for discontinued operations and individually material disposal transactions that do not meet the definition of a discontinued operation.  The standard should be applied prospectively for all disposals of components of an entity and for all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014, including interim periods within that reporting period.  Adoption of the ASU did not have an impact on the Company’s 2015 Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amended the existing accounting standards for revenue recognition.  ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.  The standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  In August 2015, the FASB issued a one-year deferral of the effective date of this new guidance resulting in it now being effective for the Company beginning in fiscal year 2018.  Early adoption is not permitted.  The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application.  The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic 718): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures.  The new requirements are effective for the annual periods ending after December 15, 2016, and for interim periods and annual periods thereafter.  Early adoption is permitted.  Adoption of the new ASU will not have an impact on the Company’s Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330):  Simplifying the Measurement of Inventory.  ASU 2015-11 amends guidance on the measurement of inventory from lower of cost or market to net realizable value.  The amendment applies to all inventory other than those measured by Last-In-First-Out (LIFO) and the Retail Inventory Method (RIM).  The amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period.  Early adoption is permitted.  Adoption of the new ASU will not have a material impact on the Company’s Consolidated Financial Statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.  ASU 2015-16 requires that any effect on earnings due to depreciation, amortization or other income effects, due to a change to the provisional amounts be recorded in the current period’s financial statements as if the accounting had been completed at the acquisition date.  The portion of the amount recorded in the current-period earnings, which would have been recorded in the previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date, must be presented separately on the face of the income statement or disclosed in the notes to the financial statements by line item.  The amendment is effective for the fiscal year beginning after December 15, 2015. The amendments are to be applied prospectively to any adjustments occurring after the effective date. Adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.  ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The Company adopted ASU 2015-17 for the fiscal year ended December 26, 2015 and applied it retrospectively. The Company reclassified $5.8 million out of “Total current liabilities” related to “Deferred income taxes” in the December 27, 2014 Consolidated Balance Sheet and into noncurrent “Deferred income taxes.”

Note 1   Summary of Significant Accounting Policies (continued)

(x)  Current Relevant Accounting Standards (continued)

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842).  ASU 2016-02 requires lessees to recognize assets and liabilities for the rights and obligations created by their leases with lease terms more than 12 months.  Current guidance only requires capital leases to be recognized on the balance sheet.  However, the ASU 2016-02 now requires that both capital and operating leases be recognized on the balance sheet.  The effect on cash flows will strictly depend on whether the lease is classified as an operating lease or capital lease.  The ASU 2016-02 will require disclosures to aid investors and other financial statement users to better understand the amount, timing and uncertainty of the cash flows arising from leases.  These disclosures are to include qualitative and quantitative information about the amounts recorded in the financial statements.  This update remains unchanged for lessors. However, new guidance contains targeted improvements to align, where necessary, the lessor’s accounting with the lessee’s accounting standards.  ASU 2016-02 will become effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated Financial Statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 26, 2015

Summary of Significant Accounting Policies [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

The Company’s intangible assets and related accumulated amortization at December 26, 2015 and December 27, 2014 consisted of the following:

			December 26, 2015						December 27, 2014
			Accumulated						Accumulated
(dollars in thousands)		Gross	Amortization			Net		Gross	Amortization			Net
Lease Acquisitions		3,654		2,604		1,050		3,654		2,418		1,236
Liquor Licenses		5,965		-		5,965		3,358		-		3,358
Customer Lists		162		15		147		120		10		110
Total	$	9,781	$	2,619	$	7,162	$	7,132	$	2,428	$	4,704

Restructuring and Related Costs [Table Text Block]

The following table summarizes accrual activity for future lease obligations of stores that were closed in the normal course of business:

		Future Lease
(dollars in thousands)		Obligations
Balance at December 28, 2013	$	1,193
Additions		119
Payments		(375)
Adjustments		18
Balance at December 27, 2014		955
Additions		0
Payments		(578)
Adjustments		(165)
Balance at December 26, 2015	$	212

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Investments (Tables)

12 Months Ended

Dec. 26, 2015

Investments [Abstract]

Marketable securities [Table Text Block]

Marketable securities, as of December 26, 2015 and December 27, 2014, consisted of:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 26, 2015	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,682	$	-	$	7,880
Level 2
Municipal bonds		82,347		1,468		(66)		83,749
	$	83,545	$	8,150	$	(66)	$	91,629

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized		Fair
December 27, 2014	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities	$	1,198	$	6,683	$	-	$	7,881
Level 2
Municipal bonds		64,561		1,613		(96)		66,078
	$	65,759	$	8,296	$	(96)	$	73,959

Maturities of marketable securities classified as available-for-sale [Table Text Block]

		Amortized		Fair
(dollars in thousands)		Cost		Value
Available-for-sale:
Due within one year	$	9,775	$	9,839
Due after one year through five years		52,426		53,285
Due after five years through ten years		20,146		20,625
Equity securities		1,198		7,880
	$	83,545	$	91,629

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Inventories (Tables)

12 Months Ended

Dec. 26, 2015

Inventories [Abstract]

Merchandise Inventories [Table Text Block]

(dollars in thousands)		2015		2014
LIFO	$	181,321	$	193,621
Average cost		48,078		46,020
	$	229,399	$	239,641

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Property and Equipment (Table)

12 Months Ended

Dec. 26, 2015

Property and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	Useful Life
(dollars in thousands)	(in years)		2015		2014
Land		$	106,125	$	103,240
Buildings and improvements	10-60		586,903		544,309
Equipment	3-12		949,975		911,169
Leasehold improvements	5-20		190,249		193,842
Total, at cost			1,833,252		1,752,560
Less accumulated depreciation and amortization			1,094,267		1,035,700
		$	738,985	$	716,860

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Lease Commitments (Tables)

12 Months Ended

Dec. 26, 2015

Lease Commitments [Abstract]

Schedule of Rent Expense [Table Text Block]

(dollars in thousands)		2015		2014		2013
Minimum annual rentals	$	34,794	$	35,183	$	32,817
Contingent rentals		452		409		386
Lease or sublease income		(7,069)		(6,881)		(6,452)
	$	28,177	$	28,711	$	26,751

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

(dollars in thousands)		Leases		Subleases
2016	$	32,237	$	(3,151)
2017		30,492		(3,148)
2018		28,413		(2,486)
2019		23,214		(1,604)
2020		17,096		(1,355)
Thereafter		62,410		(6,500)
	$	193,862	$	(18,244)

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Retirement Plans (Tables)

12 Months Ended

Dec. 26, 2015

Retirement Plans [Abstract]

Schedule of Costs of Retirement Plans [Table Text Block]

(dollars in thousands)		2015		2014		2013
Retirement savings plan		3,161		3,010		3,465
Deferred compensation plan		(318)		1,328		126
Supplemental executive retirement plan		484		1,061		2,025
Deferred compensation plan for pharmacists		(165)		(228)		178
	$	3,162	$	5,171	$	5,794

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 26, 2015

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

		Unrealized Gains
		on Available-for-Sale
(dollars in thousands)		Marketable Securities
Accumulated other comprehensive income balance as of December 28, 2013	$	3,939
Other comprehensive income before reclassifications		927
Amounts reclassified from accumulated other comprehensive income		(37)
Net current period other comprehensive income		890
Accumulated other comprehensive income balance as of December 27, 2014	$	4,829
Other comprehensive loss before reclassifications		(52)
Amounts reclassified from accumulated other comprehensive income		(16)
Net current period other comprehensive loss		(68)
Accumulated other comprehensive income balance as of December 26, 2015	$	4,761

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

		Gains Reclassified from
		Accumulated Other Comprehensive Income to the
		Consolidated Statements of Income
(dollars in thousands)	Location		2015		2014		2013
Unrealized gains on available-for-sale marketable securities
	Investment income	$	27	$	63	$	1,774
	Provision for income taxes		(11)		(26)		(730)
Total amount reclassified, net of tax		$	16	$	37	$	1,044

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Income Taxes (Tables)

12 Months Ended

Dec. 26, 2015

Income Taxes [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

(dollars in thousands)		2015		2014		2013
Current:
Federal	$	29,888	$	24,809	$	26,994
State		3,325		1,237		6,774
Deferred:
Federal		(188)		2,559		8,973
State		(24)		676		2,429
	$	33,001	$	29,281	$	45,170

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

(dollars in thousands)		2015		2014		2013
Income taxes at federal statutory rate	$	32,316	$	29,282	$	41,425
State income taxes, net of federal income tax benefit		1,112		1,436		5,981
Other		(427)		(1,437)		(2,236)
Provision for income taxes (effective tax rate 35.7%,  35.0% and 38.2%, respectively)	$	33,001	$	29,281	$	45,170

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

(dollars in thousands)		2015		2014
Deferred tax assets:
Accounts receivable	$	813	$	615
Compensated absences		983		362
Long term employment incentives		3,143		1,161
Employee benefit plans		10,485		10,734
General liability insurance		4,048		3,655
Postretirement benefit obligations		5,906		7,676
Net operating loss carryforwards		5,926		6,218
Other		2,173		1,359
Total deferred tax assets		33,477		31,780
Deferred tax liabilities:
Inventories		(6,808)		(7,459)
Unrealized gains on marketable securities		(3,323)		(3,371)
Nondeductible accruals and other		(9,240)		(6,522)
Depreciation		(111,126)		(111,708)
Total deferred tax liabilities		(130,497)		(129,060)
Net deferred tax liability	$	(97,020)	$	(97,280)

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

(dollars in thousands)		2015		2014
Unrecognized tax benefits at beginning of year	$	-	$	-
Increases based on tax positions related to the current year		1,264		-
Additions for tax positions of prior year		-		-
Reductions for tax positions of prior years		-		-
Settlements		-		-
Expiration of the statute of limitations for assessment of taxes		-		-
Unrecognized tax benefits at end of year	$	1,264	$	-

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Summary of Quarterly Results (Tables)

12 Months Ended

Dec. 26, 2015

Summary of Quarterly Results [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 28, 2015		June 27, 2015		September 26, 2015		December 26, 2015
Net sales	$	712,426	$	718,380	$	711,879	$	734,063
Gross profit on sales		195,115		198,919		194,147		198,551
Net income		13,323		16,644		12,788		16,575
Basic and diluted earnings per share		.50		.62		.48		.61

(dollars in thousands, except per share amounts)	Thirteen Weeks Ended
	March 29, 2014		June 28, 2014		September 27, 2014		December 27, 2014
Net sales	$	687,127	$	691,875	$	683,893	$	713,788
Gross profit on sales		186,768		187,724		185,677		192,793
Net income		14,570		12,602		13,511		13,698
Basic and diluted earnings per share		.54		.47		.50		.51

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Summary of Significant Accounting Policies (Narrative) (Details) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 26, 2015 USD ($) $ / shares	Sep. 26, 2015 USD ($) $ / shares	Jun. 27, 2015 USD ($) $ / shares	Mar. 28, 2015 USD ($) $ / shares	Dec. 27, 2014 USD ($) $ / shares	Sep. 27, 2014 USD ($) $ / shares	Jun. 28, 2014 USD ($) $ / shares	Mar. 29, 2014 USD ($) $ / shares	Sep. 28, 2013 USD ($) site	Dec. 26, 2015 USD ($) $ / shares	Dec. 27, 2014 USD ($) $ / shares	Dec. 28, 2013 USD ($) $ / shares	Mar. 01, 2014 USD ($)	Dec. 29, 2012 USD ($)
Cash Equivalents, at Carrying Value	$ 7,700				$ 14,400					$ 7,700	$ 14,400
Allowance for Doubtful Accounts Receivable	1,967				1,578					1,967	1,578
Impairment of Long-Lived Assets Held-for-use									$ 2,088	0	0	$ 2,088
Properties impaired | site									4
Self Insurance, Maximum of Workers Compensation Claims Liability per Associate per Claim										2,000
Stop loss insurance specific deductible													$ 500
Stop loss insurance aggregating deductible													$ 250
Cost of Goods Sold, Vendor Allowances										97,000	89,500	76,400
Vendor Paid Cooperative Advertising Credits										17,100	16,000	16,000
Accounts Receivable, Earned Advertising Credits	842				395					842	395
Accounts Receivable, Earned Promotional Discounts	8,100				5,700					8,100	5,700
Unearned Income for Vendor Programs	823				734					823	734
Advertising Expense										23,100	24,600	23,500
Net income	$ 16,575	$ 12,788	$ 16,644	$ 13,323	$ 13,698	$ 13,511	$ 12,602	$ 14,570		$ 59,330	$ 54,381	$ 73,186
Basic and diluted earnings per share | $ / shares	$ 0.61	$ 0.48	$ 0.62	$ 0.50	$ 0.51	$ 0.50	$ 0.47	$ 0.54		$ 2.21	$ 2.02	$ 2.72
Liabilities	$ 364,212				$ 346,356					$ 364,212	$ 346,356
Retained earnings	$ 1,007,894				980,842					1,007,894	980,842
Accounting Standards Update 2015-17 Member
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Current Deferred Income Taxes											5,800
Prior to March 1, 2013 [Member]
Self Insurance, Annual Maximum of Health Claims Liability per Associate										1,250
Between March 1, 2013 to March 1, 2014 [Member]
Self Insurance, Annual Maximum of Health Claims Liability per Associate										2,000
Maximum [Member]
Property and Casualty Insurance, Deductible										1,000
Minimum [Member]
Property and Casualty Insurance, Deductible										$ 100
Self-Insurance Error Correction [Member]
Net income											$ (786)	$ 1,500
Basic and diluted earnings per share | $ / shares											$ 0.03	$ 0.05
Liabilities					$ 13,100						$ 13,100
Retained earnings														$ 13,700

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Summary of Significant Accounting Policies (Intangible Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Finite-Lived Intangible Assets [Line Items]
Gross	$ 9,781	$ 7,132
Accumulated Amortization	2,619	2,428
Net	7,162	4,704
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	191
Finite-Lived Intangible Assets, Amortization Expense, Year Two	191
Finite-Lived Intangible Assets, Amortization Expense, Year Three	191
Finite-Lived Intangible Assets, Amortization Expense, Year Four	191
Finite-Lived Intangible Assets, Amortization Expense, Year Five	188
Lease Acquisitions [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	3,654	3,654
Accumulated Amortization	2,604	2,418
Net	1,050	1,236
Liquor Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	5,965	3,358
Accumulated Amortization	0	0
Net	5,965	3,358
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	162	120
Accumulated Amortization	15	10
Net	$ 147	$ 110
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	30 years

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Summary of Significant Accounting Policies (Changes in Future Closed Store Lease Obligations) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Restructuring Cost and Reserve [Line Items]
Closed store lease liabilities, Beginning Balance	$ 955
Closed store lease liabilities, Ending Balance	$ 212	$ 955
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Remaining lease term of closed stores	3 years
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Remaining lease term of closed stores	1 year
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Closed store lease liabilities, Beginning Balance	$ 955	1,193
Additions	0	119
Payments	(578)	(375)
Adjustments	(165)	18
Closed store lease liabilities, Ending Balance	$ 212	$ 955

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Summary of Significant Accounting Policies (Correction for Immaterial Prior Period Misstatements) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 28, 2013	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Gain on disposition of fixed assets		$ 54	$ 2,630	$ 2,033
Impairment of fixed assets	$ 2,088	$ 0	$ 0	2,088
Opening cash impact of reclassification of fixed asset gains (losses) and associated impairment				0
As Previously Reported [Member]
Loss (gain) on disposition/impairment of fixed assets				$ (55)

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Investments (Available For Sale Securities) (Details) - USD ($) $ in Thousands	Dec. 26, 2015	Dec. 27, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost, Total	$ 83,545	$ 65,759
Gross Unrealized Holding Gains	8,150	8,296
Gross Unrealized Holding Losses	(66)	(96)
Fair Value	91,629	73,959
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost, Total	1,198	1,198
Gross Unrealized Holding Gains	6,682	6,683
Gross Unrealized Holding Losses	0	0
Fair Value	7,880	7,881
Municipal Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost, Total	82,347	64,561
Gross Unrealized Holding Gains	1,468	1,613
Gross Unrealized Holding Losses	(66)	(96)
Fair Value	$ 83,749	$ 66,078

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Investments (Maturities of Marketable Securities) (Details) - USD ($) $ in Thousands	Dec. 26, 2015	Dec. 27, 2014
Investments [Abstract]
Amortized Cost, Due within one year	$ 9,775
Fair Value, Due within one year	9,839
Amortized Cost, Due after one year through five years	52,426
Fair Value, Due after one year through five years	53,285
Amortized Cost, Due after five years through ten years	20,146
Fair Value, Due after five years through ten years	20,625
Amortized Cost, Equity securities	1,198
Fair Value, Equity securities	7,880
Available-for-sale Securities, Amortized Cost, Total	83,545	$ 65,759
Available-for-sale Securities, Fair Value, Total	$ 91,629	$ 73,959

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Inventories (Merchandise Inventories) (Details) - USD ($) $ in Thousands	Dec. 26, 2015	Dec. 27, 2014
Inventories [Abstract]
LIFO	$ 181,321	$ 193,621
Average Cost	48,078	46,020
Inventories	229,399	239,641
Excess of Replacement or Current Costs over Stated LIFO Value	$ 81,347	$ 79,933

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Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 1,833,252	$ 1,752,560
Less accumulated depreciation and amortization	1,094,267	1,035,700
Property and equipment, net	738,985	716,860
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	106,125	103,240
Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	586,903	544,309
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	949,975	911,169
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 190,249	$ 193,842
Maximum [Member] | Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	60 years
Maximum [Member] | Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	12 years
Maximum [Member] | Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	20 years
Minimum [Member] | Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	10 years
Minimum [Member] | Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Minimum [Member] | Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years

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Lease Commitments (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Operating Leased Assets [Line Items]
Percentage of facilities under operating lease	50.00%
Lease Expiration Date	Dec. 31, 2029
Accrued Rent	$ 32	$ 455
Maximum [Member]
Operating Leased Assets [Line Items]
Lessee Leasing Arrangements, Operating Leases, Renewal Term	20 years
Minimum [Member]
Operating Leased Assets [Line Items]
Lessee Leasing Arrangements, Operating Leases, Renewal Term	5 years

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Lease Commitments (Rent Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Lease Commitments [Abstract]
Minimum annual rentals	$ 34,794	$ 35,183	$ 32,817
Contingent rentals	452	409	386
Lease or sublease income	(7,069)	(6,881)	(6,452)
Operating Leases, Rent Expense, Net, Total	$ 28,177	$ 28,711	$ 26,751

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Lease Commitments (Future Minimum Payments) (Details) $ in Thousands	Dec. 26, 2015 USD ($)
Lease Commitments [Abstract]
Operating Leases, Future Minimum Payments Due, Next Twelve Months	$ 32,237
Operating Leases, Future Minimum Payments, Due in Two Years	30,492
Operating Leases, Future Minimum Payments, Due in Three Years	28,413
Operating Leases, Future Minimum Payments, Due in Four Years	23,214
Operating Leases, Future Minimum Payments, Due in Five Years	17,096
Operating Leases, Future Minimum Payments, Due Thereafter	62,410
Operating Leases, Future Minimum Payments Due, Total	193,862
Operating Leases, Future Minimum Payments Receivable, Current	(3,151)
Operating Leases, Future Minimum Payments Receivable, in Two Years	(3,148)
Operating Leases, Future Minimum Payments Receivable, in Three Years	(2,486)
Operating Leases, Future Minimum Payments Receivable, in Four Years	(1,604)
Operating Leases, Future Minimum Payments Receivable, in Five Years	(1,355)
Operating Leases, Future Minimum Payments Receivable, Thereafter	(6,500)
Operating Leases, Future Minimum Payments Receivable, Total	$ (18,244)

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Retirement Plans (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 26, 2015 USD ($)	Dec. 27, 2014 USD ($)
Retirement Plans [Abstract]
Number of supplemental retirement plans	3
Retirement Plans, Accumulated Benefit Obligation	$ 9,079	$ 9,646
Deferred Compensation Arrangement with Individual, Requisite Service Period	6 years

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Retirement Plans (Retirement Plan Costs) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Defined Benefit Plan Disclosure [Line Items]
Pension Expense	$ 3,162	$ 5,171	$ 5,794
Retirement savings plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Expense	3,161	3,010	3,465
Deferred compensation plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Expense	(318)	1,328	126
Supplemental executive retirement plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Expense	484	1,061	2,025
Deferred compensation plan for pharmacists [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Expense	$ (165)	$ (228)	$ 178

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Retirement Plans (Change in Benefit Obligation) (Details) $ in Thousands	Dec. 26, 2015 USD ($)
Retirement Plans [Abstract]
Benefit obligations	$ 7,264

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Retirement Plans (Estimated future benefit payments) (Details) $ in Thousands	Dec. 26, 2015 USD ($)
Retirement Plans [Abstract]
2016	$ 1,975
2017	1,975
Thereafter	$ 1,013

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Accumulated Other Comprehensive Income (Schedule of Accumulated Other Comprehensive Income) (Details) - Accumulated Net Investment Gain (Loss) Attributable to Parent [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income balance, beginning balance	$ 4,829	$ 3,939
Other comprehensive (loss) income before reclassifications	(52)	927
Amounts reclassified from accumulated other comprehensive income	(16)	(37)
Net current period other comprehensive (loss) income	(68)	890
Accumulated other comprehensive income balance, ending balance	$ 4,761	$ 4,829

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Accumulated Other Comprehensive Income (Reclassifications out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 26, 2015	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Investment income									$ 1,552	$ 2,287	$ 4,684
Provision for income taxes									(33,001)	(29,281)	(45,170)
Net income	$ 16,575	$ 12,788	$ 16,644	$ 13,323	$ 13,698	$ 13,511	$ 12,602	$ 14,570	59,330	54,381	73,186
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Investment income									27	63	1,774
Provision for income taxes									(11)	(26)	(730)
Net income									$ 16	$ 37	$ 1,044

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Operating Loss Carryforwards	$ 88.5
Earliest Tax Year [Member]
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2027
Latest Tax Year [Member]
Internal Revenue Service income tax examination, year	2008
Federal [Member]
Income Taxes Paid	$ 28.0	$ 25.0	$ 26.4
State [Member]
Income Taxes Paid	$ 2.2	1.8	$ 3.5
Pennsylvania [Member] | Earliest Tax Year [Member]
Open Tax Year	2011
Pennsylvania [Member] | Latest Tax Year [Member]
Open Tax Year	2015
Accounting Standards Update 2015-17 Member
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Current Deferred Income Taxes		$ 5.8

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Income Taxes (Provision for Income Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Income Taxes [Abstract]
Current Federal Income Tax Expense (Benefit)	$ 29,888	$ 24,809	$ 26,994
Current State Income Tax Expense (Benefit)	3,325	1,237	6,774
Deferred Federal Income Tax Expense (Benefit)	(188)	2,559	8,973
Deferred State Income Tax Expense (Benefit)	(24)	676	2,429
Provision for income taxes	$ 33,001	$ 29,281	$ 45,170

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Income Taxes (Reconciliation of Income Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Income Taxes [Abstract]
Income taxes at federal statutory rate	$ 32,316	$ 29,282	$ 41,425
State income taxes, net of federal income tax benefit	1,112	1,436	5,981
Other	(427)	(1,437)	(2,236)
Provision for income taxes	$ 33,001	$ 29,281	$ 45,170
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	35.00%	35.00%	35.00%
Effective Income Tax Rate Reconciliation, Percent	35.70%	35.00%	38.20%

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Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands	Dec. 26, 2015	Dec. 27, 2014
Income Taxes [Abstract]
Accounts receivable	$ 813	$ 615
Compensated absences	983	362
Long term employment incentives	3,143	1,161
Employee benefit plans	10,485	10,734
General liability insurance	4,048	3,655
Postretirement benefit obligations	5,906	7,676
Net operating loss carryforwards	5,926	6,218
Other	2,173	1,359
Total deferred tax assets	33,477	31,780
Inventories	(6,808)	(7,459)
Unrealized gains on marketable securities	(3,323)	(3,371)
Nondeductible accruals and other	(9,240)	(6,522)
Depreciation	(111,126)	(111,708)
Total deferred tax liabilities	(130,497)	(129,060)
Net deferred tax liability	$ (97,020)	$ (97,280)

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Income Taxes (Schedule of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 26, 2015	Dec. 27, 2014
Income Taxes [Abstract]
Unrecognized tax benefits at beginning of year	$ 0	$ 0
Increases based on tax positions related to the current year	1,264	0
Additions for tax positions of prior year	0	0
Reductions for tax positions of prior years	0	0
Settlements	0	0
Expiration of the statute of limitations for assessment of taxes	0	0
Unrecognized tax benefits at end of year	1,264	0
Unrecognized tax benefits that would impact effective tax rate	$ 1,264	$ 0

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Acquisition of Business (Narrative) (Details)		12 Months Ended
	Aug. 31, 2015 USD ($)	Dec. 27, 2014 entity	Dec. 28, 2013 entity
Business Acquisition [Line Items]
Number of Businesses Acquired | entity		0	0
C&S Wholesale Grocers [Member]
Business Acquisition [Line Items]
Purchase price	$ 7,900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Land	1,900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Building	5,900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Equipment	112,000
Goodwill recognized	$ 0

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Summary of Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 26, 2015	Sep. 26, 2015	Jun. 27, 2015	Mar. 28, 2015	Dec. 27, 2014	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 26, 2015	Dec. 27, 2014	Dec. 28, 2013
Summary of Quarterly Results [Abstract]
Net sales	$ 734,063	$ 711,879	$ 718,380	$ 712,426	$ 713,788	$ 683,893	$ 691,875	$ 687,127	$ 2,876,748	$ 2,776,683	$ 2,692,588
Gross profit on sales	198,551	194,147	198,919	195,115	192,793	185,677	187,724	186,768	786,732	752,962	745,468
Net income	$ 16,575	$ 12,788	$ 16,644	$ 13,323	$ 13,698	$ 13,511	$ 12,602	$ 14,570	$ 59,330	$ 54,381	$ 73,186
Basic and diluted earnings per share	$ 0.61	$ 0.48	$ 0.62	$ 0.50	$ 0.51	$ 0.50	$ 0.47	$ 0.54	$ 2.21	$ 2.02	$ 2.72

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Commitments and Contingencies (Details) $ in Millions	Dec. 26, 2015 USD ($)
Line of Credit [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 30.0
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Amount Outstanding	16.9
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 50.0