<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Dairy Mart Convenience Stores, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Charles Nirenberg
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[X] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:* N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
*Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
Preliminary Copy, Dated October 11, 1995
- --------------------------------------------------------------------------------
1995 ANNUAL MEETING OF STOCKHOLDERS
OF DAIRY MART CONVENIENCE STORES, INC.
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
CHARLES NIRENBERG
This Proxy Statement and the enclosed [COLOR] proxy card are furnished in
connection with the solicitation of proxies by Charles Nirenberg for use at the
1995 Annual Meeting of Stockholders of Dairy Mart Convenience Stores, Inc., a
Delaware corporation (the "Company"), to be held on Tuesday, October 31, 1995 at
10:00 a.m. at the Sheraton Hartford Hotel located at 315 Trumbull Street,
Hartford, Connecticut and any adjournment thereof (the "Annual Meeting"). The
principal executive offices of the Company are located at One Vision Drive,
Enfield, Connecticut 06082.
At the Annual Meeting, stockholders entitled to vote thereat will be asked
to consider and vote upon (i) a proposal to elect directors, (ii) a proposal to
adopt the Dairy Mart Convenience Stores, Inc. 1995 Stock Option Plan for Outside
Directors (the "1995 Outside Directors Plan"), (iii) a proposal to adopt the
Dairy Mart Convenience Stores, Inc. 1995 Stock Option and Incentive Award Plan
(the "1995 Award Plan") and (iv) a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent accountants for the fiscal year ending
February 3, 1996. With respect to the proposal to elect directors, at the Annual
Meeting a Board of seven (7) directors is to be elected for a term expiring upon
the 1996 Annual Meeting of Stockholders of the Company and the due election and
qualification of their successors. Two of the directors (the "Class A
Directors") are to be elected by the holders of the Company's Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), and five of the
directors ("Class B Directors") are to be elected by the holders of the
Company's Class B Common Stock, par value $.01 per share ("Class B Common
Stock"). Charles Nirenberg is soliciting proxies pursuant to this Proxy
Statement, among other things, to elect Charles Nirenberg, Mitchell J.
Kupperman, M. Howard Jacobson, Joseph F. Leonardo and Thomas O'Brien
(collectively, the "Nirenberg Nominees") as Class B Directors.
Unless revoked prior to the Annual Meeting, all proxies received by
Charles Nirenberg will be voted at the Annual Meeting in accordance with the
specifications indicated by each stockholder thereon or, in the absence of such
specifications, in favor of the election of the Nirenberg Nominees as Class B
Directors, in favor of the proposal to adopt the 1995 Outside Directors Plan,
against the proposal to adopt the 1995 Award Plan and in favor of the proposal
to ratify the selection of Arthur Andersen LLP as the Company's independent
accountants for the fiscal year ending February 3, 1996, and, with respect to
any other business which may properly come before the Annual Meeting, in the
discretion of Charles Nirenberg.
The record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting is September 29, 1995 (the "Record Date"). As of the
close of business on the Record Date, there were 2,797,387 shares of Class A
Common Stock and 2,783,060 shares of Class B Common Stock issued and
outstanding.
This Proxy Statement and the enclosed [COLOR] proxy card are first being
furnished to stockholders of the Company on or about October [__], 1995. The
principal executive office of Charles Nirenberg is located at c/o First
Merchants Group, Devonshire Place, Suite 106, 48 Holy Family Road, Holyoke, MA
01040.
<PAGE>
-2-
THE NIRENBERG NOMINEES SUPPORT THE RESTRUCTURING
OF THE COMPANY'S MANAGEMENT
All of the Nirenberg Nominees are committed to the restructuring of the
Company's Management, including the replacement of the Company's Chief Executive
Officer. If elected, the Nirenberg Nominees will, subject in all respects to
their fiduciary duties, seek to cause the Board to restructure the management of
the Company by, among other things, terminating the employment of the Company's
Chief Executive Officer and electing as his successor Charles Nirenberg, and
reviewing other senior management positions and taking such action as may be
appropriate.
As discussed in more detail in "Background and Reasons for the
Solicitation" below, Mr. Nirenberg has been dissatisfied with the financial
perfomance of the Company for some time. Concerned about the Company's
financial performance and his large economic interest in the Company, Mr.
Nirenberg, who is a director of the Company and, through certain partnership
interests, is the majority stockholder of the Company, has sought an active role
in making decisions about the the conduct of the Company's business. The
current Board and senior management have, to date, not allowed Mr. Nirenberg to
play a significant and active role in making decisions about the conduct of the
Company's business, nor have they implemented any of the suggestions and
proposals made by Mr. Nirenberg for purposes of improving the financial
performance of the Company. If, like Mr. Nirenberg, you believe that the Board
and the Company's senior management should be responsive to suggestions and
proposals made by stockholders, particularly the Company's majority stockholder,
with respect to the conduct of the Company's business, Mr. Nirenberg urges you
to vote your [COLOR] proxy card FOR each of the Nirenberg Nominees.
CHARLES NIRENBERG URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED [COLOR]
PROXY CARD TO VOTE FOR THE ELECTION OF THE NIRENBERG NOMINEES.
A VOTE FOR THE NIRENBERG NOMINEES WILL PROVIDE YOU, AS THE OWNERS OF THE
COMPANY, WITH REPRESENTATIVES ON THE BOARD WHO ARE COMMITTED TO THE
RESTRUCTURING OF THE COMPANY'S MANAGEMENT, INCLUDING THE REPLACEMENT OF THE
COMPANY'S CHIEF EXECUTIVE OFFICER.
CHARLES NIRENBERG URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE
COMPANY. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY DELIVERING A
WRITTEN NOTICE OF REVOCATION TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY OR A
LATER DATED PROXY FOR THE ANNUAL MEETING TO CHARLES NIRENBERG, C/O GEORGESON &
COMPANY, INC. ("GEORGESON") AT WALL STREET PLAZA, 88 PINE STREET, NEW YORK, NEW
YORK 10005, OR TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY, OR BY VOTING IN
PERSON AT THE ANNUAL MEETING. SEE "PROXY PROCEDURES" BELOW.
VOTING RIGHTS, QUORUM AND REQUIRED VOTES
Holders of both classes of Common Stock vote or consent as a single class
on all matters, except for the election of directors. On those matters on which
the holders of Class A Common Stock and the holders of Class B Common Stock vote
together as a single class, the holders of Class B Common Stock have one vote
per share and the holders of Class A Common Stock have one-tenth of a vote per
share. With respect to the election of directors, holders of Class A Common
Stock are entitled to elect 25% of the directors on the Board (rounded to the
nearest whole number) to be elected by the holders of Common Stock, so long as
the number of outstanding shares of Class A Common Stock is at least 10% of the
total number of outstanding shares of both classes of Common Stock. The holders
of Class B Common Stock elect the remaining directors to be elected by the
holders of Common Stock, so long as the number of outstanding shares of Class B
Common Stock is at least 12.5% of the total number of shares outstanding of both
classes of Common Stock. Since the number of shares of outstanding Class A
Common Stock and Class B Common Stock on the
<PAGE>
-3-
Record Date was greater than 10% and 12.5%, respectively, of the total number of
then outstanding shares of both classes of Common Stock and since the total
number of directors that constitute the Board has been fixed at seven (7)
directors, the holders of Class A Common Stock are entitled to elect two (2) of
the seven (7) directors to be elected at the Annual Meeting and the holders of
Class B Common Stock are entitled to elect the remaining five (5) directors at
the Annual Meeting.
Under Delaware law and pursuant to the Company's Amended and Restated By-
Laws, the presence in person or by proxy of the holders of a majority of the
combined voting power of both classes of Common Stock entitled to vote at the
Annual Meeting is necessary for a quorum to transact business for matters as to
which both classes of Common Stock vote together, including the proposal to
adopt the 1995 Outside Directors Plan, the proposal to adopt the 1995 Award Plan
and the proposal to ratify the appointment of Arthur Andersen LLP as the
Company's independent accountants. With respect to matters as to which each
class is entitled to vote separately, including the election of directors by the
respective classes, the presence in person or by proxy of the holders of one-
third of the shares of Common Stock of the applicable class present in person or
by proxy is necessary for a quorum to transact such business.
In order for any nominee for election as a Class A Director to be elected
as such at the Annual Meeting, such nominee must receive the affirmative vote of
a plurality of the votes cast by the holders of Class A Common Stock represented
in person or by proxy at the Annual Meeting, voting separately as a class. In
order for any nominee for election as a Class B Director to be elected as such
at the Annual Meeting, such nominee must receive the affirmative vote of a
plurality of the votes cast by the holders of Class B Common Stock represented
in person or by proxy at the Annual Meeting, voting separately as a class. In
order for the 1995 Outside Directors Plan to be adopted, the 1995 Award Plan to
be adopted and the appointment of Arthur Andersen & Co. to be ratified, the
affirmative vote of the holders of a majority of the combined voting power of
both classes of Common Stock present in person or by proxy is necessary.
Broker non-votes (i.e., shares held of record by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or the
persons entitled to vote as to the manner in which such shares should be voted
on a particular proposal and (ii) the broker or nominee does not have
discretionary voting power on such particular proposal) and proxies that
withhold authority to vote for the election of any nominee as a director or that
reflect abstentions will be deemed present for the purpose of determining the
presence of a quorum for the transaction of business. Broker non-votes and
proxies that withhold authority to vote for the election of any nominee as a
director will have no effect on the outcome of voting on any proposal to elect
nominees as directors. Broker non-votes and abstentions with respect to any
other proposal to be voted on at the Annual Meeting will have the effect of a
vote against such proposals.
PROXY PROCEDURES
IN ORDER FOR YOUR VIEWS ON THE ABOVE-DESCRIBED PROPOSALS TO BE REPRESENTED
AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE THE ENCLOSED [COLOR] PROXY
CARD AND RETURN IT TO CHARLES NIRENBERG, C/O GEORGESON & COMPANY, INC. AT WALL
STREET PLAZA, 88 PINE STREET, NEW YORK, NEW YORK 10005, IN THE ENCLOSED ENVELOPE
IN TIME TO BE VOTED AT THE ANNUAL MEETING. Execution of the [COLOR] proxy card
will not affect your right to attend the Annual Meeting and to vote in person.
Any proxy may be revoked at any time prior to the Annual Meeting by delivering a
written notice of revocation or a later dated proxy for the Annual Meeting to
Charles Nirenberg or to the Chief Financial Officer of the Company, or by voting
in person at the Annual Meeting. ONLY THE LATER OF YOUR LATEST DATED PROXY OR
PERSONAL VOTE AT THE ANNUAL MEETING WILL BE COUNTED AMONG THE VOTES VOTED AT THE
ANNUAL MEETING.
Only stockholders of record as of the close of business on the Record Date
will be entitled to vote at the Annual Meeting. If you were a stockholder of
record at the close of business on the Record Date, you will retain your voting
rights for the Annual Meeting even if you sell your shares after the Record
Date. ACCORDINGLY, IT IS IMPORTANT THAT YOU VOTE THE SHARES HELD BY YOU ON THE
RECORD DATE, OR GRANT A PROXY TO VOTE SUCH SHARES ON THE [COLOR] PROXY CARD,
EVEN IF YOU SELL SUCH SHARES AFTER THE RECORD DATE.
<PAGE>
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If any of your shares are held in the name of a brokerage firm, bank, bank
nominee or other institution at the close of the Record Date, only such
institution can vote such shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for your
account and instruct that person to execute on your behalf the [COLOR] proxy
card.
PRINCIPAL SHAREHOLDERS
Information concerning beneficial ownership of the Company's Common Stock
by each shareholder (other than the Nirenberg Nominees and their associates)
that is the beneficial owner of 5% or more of either class of Common Stock as of
September 18, 1995 is hereby incorporated by reference to the section captioned
"Principal Shareholders" in the Company's proxy statement relating to the Annual
Meeting. See "Ownership of Equity Securities by the Nirenberg Nominees and
their Associates" for information concerning beneficial ownership of the
Company's Common Stock by each of the Nirenberg Nominees and their respective
associates.
PROPOSAL ONE
ELECTION OF DIRECTORS
Structure of the Board of Directors and Management's Nominees
The Company currently has a Board of seven (7) directors, consisting of
two Class A Directors and five Class B Directors, whose terms expire upon the
due election and qualification of their successors at the Annual Meeting. At
the Annual Meeting, a new Board of seven directors is to be elected for a term
expiring upon the 1996 Annual Meeting of Stockholders of the Company and the due
election and qualification of their successors. Of the seven directors to be
elected at the Annual Meeting, two will be Class A Directors to be elected by
the holders of Class A Common Stock and five will be Class B Directors to be
elected by the holders of Class B Common Stock.
Management and the current Board of Directors of the Company have
nominated Messrs. Frank W. Barrett, and John W. Everets, Jr. for election as
Class A Directors ("Dairy Mart's Class A Nominees") and Messrs.
Gregory G. Landry, Robert B. Stein, Jr., Theodore W. Leed, Truby G. Proctor, Jr.
and J. Kermit Birchfield for election as Class B Directors ("Dairy Mart's Class
B Nominees"). Messrs. Barrett, Everets, Landry, Leed and Stein are current
members of the Board of Directors of the Company (the "Board"), with Messrs.
Barrett and Leed being the current Class A Directors and Messrs. Everets, Landry
and Stein being three of the current five Class B Directors. Messrs. Charles
Nirenberg and Mitchell J. Kupperman are the other two current Class B Directors
but they have not been nominated for reelection by management and the current
Board. Instead, management and the current Board have nominated Messrs.
Birchfield and Proctor for election as Class B Directors in lieu of Messrs.
Nirenberg and Kupperman.
Nirenberg's Nominees for Election as Class B Directors
In lieu of Dairy Mart's Class B Nominees, Charles Nirenberg proposes that
the Company's Class B stockholders elect Charles Nirenberg, Mitchell J.
Kupperman, M. Howard Jacobson, Joseph F. Leonardo and Thomas O'Brien
(collectively, the "Nirenberg Nominees") as the five Class B Directors of the
Company at the Annual Meeting. Each Nirenberg Nominee, if elected, will hold
office until the 1996 Annual Meeting of Stockholders of the Company and his
successor has been duly elected and qualified or until the earlier of his death,
resignation or removal.
Election of each Nirenberg Nominee at the Annual Meeting will require the
affirmative vote of a plurality of the votes cast for the election of Class B
Directors by the holders of Class B Common Stock
<PAGE>
-5-
present in person or represented by proxy at the Annual Meeting, voting
separately as a class. Accordingly, of the Nirenberg Nominees and Dairy Mart's
Class B Nominees, those five nominees that receive the most votes cast at the
Annual Meeting for the election of Class B Directors by the holders of Class B
Common Stock present in person or represented by proxy at the Annual Meeting,
voting separately as a class, will be elected as the Class B Directors.
The accompanying [COLOR] proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote FOR the election
of the Nirenberg Nominees by marking the proper box on the [COLOR] proxy card.
You may also withhold your vote for any of the Nirenberg Nominees by writing the
name of such nominee in the space provided on the [COLOR] proxy card. IF NO
MARKING IS MADE AND YOU HAVE SIGNED AND DATED THE PROXY CARD, YOU WILL BE DEEMED
TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY THE [COLOR] PROXY
CARD FOR THE ELECTION OF ALL OF THE NIRENBERG NOMINEES.
Charles Nirenberg believes that it is in your best interest to elect the
Nirenberg Nominees at the Annual Meeting. ALL OF THE NIRENBERG NOMINEES ARE
COMMITTED TO THE RESTRUCTURING OF THE COMPANY'S MANAGEMENT, INCLUDING THE
REPLACEMENT OF THE COMPANY'S CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER.
CHARLES NIRENBERG STRONGLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
NIRENBERG NOMINEES.
Messrs. Nirenberg and Kupperman have initiated litigation against the
Company and certain members of the current Board. See ``BACKGROUND AND REASONS
FOR THE SOLICITATION; CERTAIN LEGAL PROCEEDINGS.''
Advance Notification of Proposed Nominations of Directors by Shareholders
In addition to the right of the Board to make nominations of persons for
election as directors, nominations may be made at a meeting of shareholders by
any shareholder of the Company entitled to vote for the election of directors at
the meeting, provided that such shareholder complies with certain advance notice
procedures set forth in the Company's Certificate of Incorporation. Advance
notification of such proposed nominations by a shareholder must be given
pursuant to timely notice in writing to the Chairman of the Nominations
Committee of the Board.
To be timely, a shareholder's notice must be delivered to, or mailed and
received by, the Chairman of the Nominations Committee of the Board in care of
the Secretary of the Company at the principal executive offices of the Company
not less than 14 days nor more than 60 days prior to the meeting of shareholders
called for the election of directors; provided, however, that if fewer than 21
days notice of the date of the meeting is given to shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the tenth day following the day on which notice of the meeting was
mailed to shareholders. A shareholder's notice must set forth as to each person
whom the shareholder proposes to nominate for election or re-election as a
director: (i) the name, age, business address, and, if known, residence address
of such person, (ii) the principal occupation or employment of such person,
(iii) the class and number of shares of stock of the Company that are
beneficially owned by such person, and (iv) any other information reasonably
requested by the Company.
On September 30, 1995, Mr. Nirenberg gave advance written notice, as
required by the provisions of the Company's Certificate of Incorporation
described above, of his intention to nominate the Nirenberg Nominees for
election as Class B Directors at the Annual Meeting. In order to compy with
certain provisions of the Company's Certificate of Incorporation that require
that nominations for elections of directors that are proposed to be made by a
shareholder may be made only at a meeting of shareholders called for the
election of directors at which the nominating shareholder is present in person
or by proxy, Mr. Nirenberg expects that he will be present at the Annual Meeting
in person for purposes of formally nominating the Nirenberg Nominees for
election as Class B Directors.
<PAGE>
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Information as to the Nirenberg Nominees
There is shown below for each Nirenberg Nominee, as reported to Mr.
Nirenberg, the name, age and family relationship, if any, with any other
Nirenberg Nominee, or with any director or officer of the Compay; the principal
occupation and employment over at least the last five years; the position, if
any, with the Company; the period of service as a director of the Company; and
certain other directorships held.
<TABLE>
<CAPTION>
Director
Name Age Offices Held Since
- ---- --- ------------ ----------
<S> <C> <C> <C>
Charles Nirenberg 71 Director 1972
Mitchell J. Kupperman 43 Executive Vice 1988
President-
Human Resources,
Secretary and Director
M. Howard Jacobson 62 None New Nominee
Joseph F. Leonardo 47 None New Nominee
Thomas O'Brien 56 None New Nominee
</TABLE>
CHARLES NIRENBERG. Mr. Nirenberg is the founder of the Company. He served
as Chief Executive Officer and President from the formation of the Company in
1957 through January 1989, when he resigned as President. In March 1992 Mr.
Nirenberg resigned as Chief Executive Officer. He has served as a Director of
the Company from 1957 through the present. He became Chairman of the Company on
________ and served in that capacity until August 10, 1995, when he was removed
by the Company on account of action taken by Messrs. Nirenberg and Kupperman to
elect Class B Directors by written consent without a meeting. See "BACKGROUND
AND REASONS FOR THE SOLICITATION; CERTAIN LEGAL PROCEEDINGS." Mr. Nirenberg is
Mr. Kupperman's father-in-law.
MITCHELL J. KUPPERMAN. Mr. Kupperman joined the Company in 1983 as
Director of Human Resources and was named Vice President-Human Resources in
1985. He was elected Executive Vice President-Human Resources and Secretary of
the Company in 1989 and has served in such positions through the present. In
August 1995, Mr. Kupperman was placed on leave of absence from the Company on
account of action taken by Messrs. Nirenberg and Kupperman to elect Class B
Directors by written consent without a meeting. See "BACKGROUND AND REASONS FOR
THE SOLICITATION; CERTAIN LEGAL PROCEEDINGS."
M. HOWARD JACOBSON. Mr. Jacobson is currently a Senior Advisor of Bankers
Trust, The Private Bank, which position he has held since 1991. From 1989 to
1991, he was a Senior Advisor of Prudential-Bache Capital Funding. Mr. Jacobson
is a director of the following companies: Allmerica P&C Companies; Boston
Chicken, Inc.; Cyplex; Immulogic Pharmaceutical Corporation; Stoneyfield Farm,
Inc.; Wyman-Gordon Company. Additionally, Mr. Jacobson serves as an Advisory
Director of Lily Transportation Corporation.
JOSEPH F. LEONARDO. Since 1992, Mr. Leonardo has been President and Chief
Executive Officer of Leonardo Management Corporation, which provides consulting
services in strategic planning, operations, finance and marketing to the
convenience store industry. Prior to forming
<PAGE>
-7-
Leonardo Management Corporation, Mr. Leonardo served as President and Chief
Executive Officer of TOC Retail Inc. from 1988 to 1992.
THOMAS O'BRIEN. Mr. O'Brien has been Dean of the University of
Massachusetts School of Management since 1987.
Ownership of Equity Securities by the Nirenberg Nominees and their Associates
The table below sets forth information as of September 29, 1995, as
reported to Mr. Nirenberg, as to the beneficial ownership of each class of
Common Stock of the Company by each Nirenberg Nominee, each associate of a
Nirenberg Nominee and by all Nirenberg Nominees and their associates as a group.
<TABLE>
<CAPTION>
Shares of Percent of Class A Shares of Percent of Class B
Class A Common Common Stock Class B Common Common Stock
Stock Owned Outstanding Stock Owned Outstanding
Name and Beneficially as of Beneficially as of
Principal Business Address as of 9/29/95 9/29/95(1) as of 9/29/95 9/29/95(2)
- --------------------------- -------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
DM Associates Limited
Partnership 0 0 1,858,743 66.79%
c/o Dairy Mart Convenience
Stores, Inc.
One Vision Drive
Enfield, CT 06082
New DM Management
Associates I 0 0 1,531,399(3) 55.0%
c/o Dairy Mart Convenience
Stores, Inc.
One Vision Drive
Enfield, CT 06082
New DM Management
Associates II 0 0 327,344(4) 11.8%
c/o Dairy Mart Convenience
Stores, Inc.
One Vision Drive
Enfield, CT 06082
FCN Properties Corporation 0 0 1,220,000(5) 43.8%
c/o First Merchants Group
Devonshire Place, Suite 106
48 Holy Family Road
Holyoke, MA 01040
</TABLE>
<PAGE>
-8-
<TABLE>
<S> <C> <C> <C> <C>
Charles Nirenberg 500 * 1,531,349(6) 55.0%
c/o First Merchants Group
Devonshire Place, Suite 106
48 Holy Family Road
Holyoke, MA 01040
Mitchell J. Kupperman 65,361(7) 2.3% 1,524,863(8) 54.8%
c/o First Merchants Group
Devonshire Place, Suite 106
48 Holy Family Road
Holyoke, MA 01040
M. Howard Jacobson 0 0 0 0
46 Powder Hill Way
Westborough, MA 01581
Joseph F. Leonardo 0 0 0 0
Leonardo Management
Corporation
445 Douglas Avenue
2005-22
Altamonte Springs, FL 32714
Thomas O'Brien 0 0 0 0
School of Management
University of Massachusetts
Amherst, MA 01003
Nirenberg Nominees and
their associates as a
group (9 persons) 65,861 2.3% 1,877,597(9) 67.5%(9)
</TABLE>
- -----------------------------
* Represents less than one percent (1%) of the issued and outstanding shares
of Class A Common Stock.
(1) Based on 2,797,387 shares of Class A Common Stock issued and outstanding as
of September 29, 1995.
(2) Based on 2,783,060 shares of Class B Common Stock issued and outstanding as
of September 29, 1995.
(3) DM Management Associates I, a Connecticut general partnership ("DM I"), is
a general partner of DM Associates Limited Partnership, a Connecticut limited
partnership ("DM Associates"). Charles Nirenberg is the managing partner, and
Mitchell J. Kupperman, Robert B. Stein, Jr. and Gregory G. Landry are partners,
of DM I. Of the 1,858,743 shares of Class B Common Stock owned by DM Associates,
DM I has the power to direct the voting and disposition of 1,531,399 of such
shares. Messrs. Nirenberg, Kupperman, Stein and Landry share voting power with
respect to such 1,531,399 shares in their capacities as partners of DM I.
(4) DM Management Associates II, a Connecticut general partnership ("DM II"),
is a special general partner of DM Associates. Charles Nirenberg is the managing
partner, and Mitchell J. Kupperman, Robert B. Stein, Jr., Gregory G. Landry and
Frank Colaccino are partners, of DM II. Of the 1,858,743 shares of Class B
Common Stock owned by DM Associates, DM II has the power to direct the voting
and disposition of the
<PAGE>
-9-
remaining 327,344 of such shares. Messrs. Landry and Colaccino share voting
power with respect to such 327,344 shares in their capacities as partners of DM
II, and Mr. Landry has sole dispositive power over such 327,344 shares.
(5) FCN Properties Corporation, a Connecticut corporation ("FCN"), is a creditor
of DM Associates and, as such, is the pledgee of 1,220,000 shares of Class B
Common Stock owned by DM Associates. Mr. Nirenberg is the sole officer, director
and stockholder of FCN.
(6) Includes: (i) 500 shares of Class B Common Stock which Mr. Nirenberg
beneficially owns individually and has sole voting and dispositive power and
(ii) 1,530,849 shares of Class B Common Stock as to which Mr. Nirenberg shares
voting power with Messrs. Stein, Landry and Kupperman, as general partners of DM
I, and as to which Mr. Nirenberg has sole dispositive power as managing partner
of DM I. Mr. Nirenberg, as an officer, director and the sole shareholder of FCN,
also has shared voting and dispositive power, together with FCN, with respect to
1,220,000 of the 1,530,849 Shares listed in clause (ii) above, which 1,220,000
shares are subject to a pledge from DM Associates to FCN. Mr. Nirenberg
disclaims beneficial ownership of the 1,530,849 shares referred to in clause
(ii) above, except to the extent of his pecuniary interest therein.
(7) Includes (i) 60,000 shares which are subject to currently exercisable
options and ________ shares held by various members of Mr. Kupperman's family.
Mr. Kupperman disclaims beneficial ownership of all of such _____________
shares.
(8) Includes (i) 18,354 shares of Class B Common Stock which Mr. Kupperman
beneficially owns individually and has sole voting and dispositive power and
(ii) 1,506,509 Shares as to which Mr. Kupperman shares voting power with Messrs.
Nirenberg, Stein and Landry, as general partners of DM I. Mr. Kupperman
disclaims beneficial ownership of the 1,506,509 shares referred to in clause
(ii) above, except to the extent of his pecuniary interest therein.
(9) Includes 352,234 shares of the 1,858,743 shares of owned by DM Associates,
as to which 352,234 shares neither Mr. Nirenberg nor Mr. Kupperman has the power
or authority to vote.
The following table sets forth certain information with respect to shares
of Class A Stock and Class B Stock purchased or sold by any of the Nirenberg
Nominees within the past two years:
<TABLE>
<CAPTION>
Name Number of Shares Purchased (Sold) Date of Transaction Price
---- --------------------------------- ------------------- -----
<S> <C> <C> <C>
Charles Nirenberg Purchase of 500 shares of Class A
Common Stock
Purchase of 500 shares of Class B
Common Stock
Mitchell J. Kupperman
M. Howard Jacobson
Joseph F. Leonardo
Thomas O'Brien
</TABLE>
<PAGE>
-10-
COMPENSATION OF THE NIRENBERG NOMINEES
Of the five Nirenberg Nominees, only Messrs. Kupperman and Nirenberg
have served as officers or directors of the Company.
Executive Compensation
The following table provides certain information for the Company's past
three fiscal years regarding the cash and other compensation paid to, earned by,
or awarded to Messrs. Kupperman and Nirenberg.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Securities
Underlying All Other
Name and Principal Position Year Annual Compensation Options(#) Compensation($)(1)
- --------------------------- ---- ------------------- ------------- ------------------
Salary($) Bonus($)
--------- ---------
<S> <C> <C> <C> <C> <C>
Mitchell J. Kupperman 1995 $208,655 $25,000 67,500(2) $ 14,213
Executive Vice President- 1994 $205,000 $ 7,500 5,000 $ 12,794
Human Resources(3) 1993 $215,000 $ 0 0 $ 6,899
Charles Nirenberg, 1995 $500,000 $ 0 0 $ 0
Chairman of the Company(4) 1994 $500,000 $ 0 0 $ 0
1993 $500,000 $ 0 0 $ 567
- ------------
</TABLE>
(1) Includes amounts contributed by the Company for the benefit of Messrs.
Kupperman and Nirenberg to its qualified profit sharing plan and premiums
paid by the Company for split-dollar and life insurance for the benefit of
Messrs. Kupperman and Nirenberg during the applicable fiscal years.
Company contributions to its qualified profit sharing plan for each of the
1995, 1994 and 1993 fiscal years, respectively, included $2,080, $661 and
$531 for Mitchell J. Kupperman, and $0, $0 and $567 for Charles Nirenberg.
Premiums paid on split-dollar and life insurance for each of the 1995, 1994
and 1993 fiscal years, respectively, included $12,133, $12,133 and $6,368
for Mitchell J. Kupperman.
(2) The options to purchase shares of Class A Common Stock granted to Mr.
Kupperman in fiscal 1995 were granted to replace existing options, except
for new options to purchase 10,000 shares that were granted to Mr.
Kupperman.
(3) Dr. Kupperman was placed on leave of absence on August 10, 1995, on account
of action taken by Messrs. Nirenberg and Kupperman to elect Class B
Directors by written consent without a meeting and certain litigation
commenced by Messrs. Nirenberg and Kupperman against the Company and
certain members of the current Board. See "BACKGROUND AND REASONS FOR THE
SOLICITATION; CERTAIN LEGAL PROCEEDINGS."
(4) Mr. Nirenberg has an employment agreement with the Company pursuant to
which Mr. Nirenberg is employed as Chairman of the Company for a five year
term that began on February 1, 1992 and ends on January 31, 1997, unless
terminated earlier. Under the employment agreement, Mr. Nirenberg receives
an annual salary of $500,000, payable in installments according to the
Company's normal compensation policy, plus customary fringe benefits. If
Mr. Nirenberg dies during the term of the employment agreement, his
designated beneficiary is entitled to receive his salary for the remainder
of the term. The Company had purchased insurance insuring the life of Mr.
Nirenberg and had designated itself as beneficiary. Mr. Nirenberg was
removed from his position as Chairman of the Company on August 10, 1995, on
account of action taken by Messrs. Nirenberg and Kupperman to elect Class B
Directors by written consent without a meeting and certain litigation
commenced by Messrs. Nirenberg and Kupperman against the Company and
certain members of the current Board. See "BACKGROUND AND REASONS FOR THE
SOLICITATION; CERTAIN LEGAL PROCEEDINGS." The Company is no longer paying
Mr. Nirenberg's salary and has cancelled the life insurance policy insuring
the life of Mr. Nirenberg.
Option Grants in Last Fiscal Year
<PAGE>
-11-
The table below provides certain information regarding stock options
granted during the Company's last fiscal year to the Messrs. Kupperman and
Nirenberg:
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Numer of Potential Realiable value at
Securities % of Total Assumed Annual Rates of
Name Underlying Options Granted Exercise Stock Price Appreciation for
- ---- Options to Employees Price Expiration Option Term
Granted(#)(1) in FY 1995 (per sh) (2) Date(1) ----------------------------
------------- --------------- ------------ ---------- 5% 10%
------- -------
<S> <C> <C> <C> <C> <C> <C>
Mitchell J. Kupperman 26,250 3.9% $2.75 10/31/99 $19,944 $44,071
30,000 4.5% 2.75 01/27/02 35,037 82,288
10,000 1.5% 2.75 09/11/00 9,205 20,850
5,000 0.7% 2.75 02/23/03 6,903 16,706
10,000 1.5% 2.88 11/01/04 18,081 45,820
6,250 0.9% 2.75 05/06/97 2,315 4,822
Charles Nirenberg -- -- -- -- -- --
</TABLE>
___________
(1) All options granted in the last fiscal year to Mr. Kupperman were granted
to replace options previously granted (the "Repriced Options') except for
the options whose exercise price is $2.88, which options were granted for
the first time. The Repriced Options continued the vesting schedules
contained in the options that were replaced. Each option (other than the
Repriced Options) becomes fully exercisable over four years, with 25% of
the shares subject to the option becoming exercisable on each anniversary
of the option grant date. Except for the Repriced Options, all options
expire ten years from the date of grant, unless sooner terminated by, for
example, the failure to exercise an option, to the extent it is then
exercisable, before three months after termination of employment, except
for termination in the case of death, in which case, the option is
exercisable within one year from the date of death by the optionee's
executor, administrator or personal representative, to the extent it is
then exercisable.
(2) All options were granted at an exercise price per share equal to the fair
market value of the Common Stock on the date of grant, as quoted on the
Nasdaq National Market.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The table below sets forth information regarding stock options that were
exercised, if any, during the past fiscal year, and unexercised stock options
held as of January [28], 1995, by Messrs. Kupperman and Nirenberg:
<TABLE>
<CAPTION>
Numbers of Securities Value of Unexercised
Shares Acquired Underlying Unexercised In-the Money Options
on Exercise Value Options at FY-End(#) at FY-End
Name of Options(#) Realized Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ---------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mitchell J.Kupperman 0 0 70,000/21,250 $58,300/$17,450
Charles Nirenberg 0 0 0/0 0/0
</TABLE>
- -------------------
(1) Values are calculated for options "in the money" by subtracting the
exercise price per share from the closing price per share of the applicable
class of the Company's Class A and Class B Common Stock on January 28,
1995, which amounts were $3.63 and $3.63 per share, respectively.
Ms. Kupperman has options to purchase shares of Common Stock at
exercise prices greater than the fair market value of the applicable class
of Common Stock as of January 28, 1995. Such options are not "in-the-
money" and their value is, therefore, not disclosed above.
TEN-YEAR OPTION REPRICING
The table below sets forth information regarding the repricing, at any time
during the last ten fiscal years, of stock options held by Messrs. Kupperman and
Nirenberg years.
<TABLE>
<CAPTION>
Market Length Of
Number Of Price Of Exercise Original
Securities Stock At Price At Option Term
Underlying Time Of Time Of Remaining
Options Repricing Or Repricing Or New At Date Of
Repriced Or Amendment Amendment Exercise Repricing Or
Name Date Amended (#) ($) $) Price ($) Amendment
---- -------- ------------ ------------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mitchell J. Kupperman, 10/20/94 26,250 $2.75 $6.20 $2.75 5 yrs, 11 days
Executive Vice President- 10/20/94 30,000 2.75 7.25 2.75 7 yrs, 99 days
Human Resources 10/20/94 10,000 2.75 4.60 2.75 5 yrs, 326 days
10/20/94 5,000 2.75 5.25 2.75 8 yrs, 126 days
10/20/94 6,250 2.75 6.60 2.75 2 yrs, 198 days
Charles Nirenberg, -- -- -- -- -- --
Chairman of the Company
</TABLE>
SEVERANCE AGREEMENT WITH MITCHELL J. KUPPERMAN
In September 1994, the Company entered into a severance agreement (the
"Severance Agreement") with Mr. Kupperman. The Severance Agreement is for a
term of two (2) years. Under the Severance Agreement, if Mr. Kupperman's
employment is terminated for any reason, other than by the Company for cause or
by the employee without good reason, or as a result of death or disability, then
the employee will receive his salary and bonus through the date of termination.
If Mr. Kupperman dies or is disabled, he will also receive any additional
benefits that are provided under the Company's death and disability programs in
effect at the time of death or disability.
The Severance Agreement provides that if Mr. Kupperman's termination is by
the Company without cause or by Mr. Kupperman for good reason, and not as a
result of Mr. Kupperman's death or disability, then Mr. Kupperman will receive
his full salary and bonus through the date of termination. The amount of Mr.
Kupperman's bonus will be the highest of the aggregate bonus payments earned by
Mr. Kupperman for any of the last three twelve month periods prior to the date
of termination. The Severance Agreement also provides that after such
termination Mr. Kupperman will also receive a severance payment equal to two (2)
times the sum of his full base salary and annual bonus. If any payment in
connection with the termination of Mr. Kupperman's employment under the
Severance Agreement would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), then the Company
will pay Mr. Kupperman an additional payment equal to the amount of any excise
tax assessed under Section 4999 of the Code and the amount of all income taxes
and excise taxes assessed against Mr. Kupperman as a result of Mr. Kupperman's
receipt of the additional payment.
<PAGE>
-12-
Directors' Compensation
Directors that are also employees of the Company receive no compensation
for their services as directors. Messrs. Nirenberg and Kupperman were executive
officers of the Company throughout fiscal 1995 and, therefore, received no
compensation for their sevices as directors during such fiscal year.
CERTAIN INFORMATION REGARDING DM ASSOCIATES
DM Associates is the owner of record of 1,858,743 shares of Class B Common
Stock of the Company, representing approximately 66.8% of the issued and
outstanding shares of Class B Common Stock, and 60.7% of the total voting power
of both classes of the Common Stock. The general partners of DM Associates are
DM I and DM II, both of which are general partnerships. DM I and DM II are the
beneficial owners of 1,531,399 and 327,344 shares, respectively, of the
1,858,743 shares of Class B Common Stock owned of record by DM Associates. The
general partners of DM I are Robert B. Stein, Jr., Charles Nirenberg, Mitchell
J. Kupperman, and Gregory G. Landry. The general partners of DM II are the
foregoing individuals and Frank Colaccino.
In March 1992, DM Associates financed part of the purchase of its 1,858,743
shares of Class B Common Stock by obtaining a $7,100,000 loan (the "Loan") from
the Connecticut Development Authority ("CDA"). The Loan is secured by DM
Associates' collateral pledge of 1,220,000 shares of Class B Common Stock owned
by DM Associates (the "Pledged Shares"), representing 43.8% of the issued and
outstanding shares of Class B Common Stock and 39.8% of the total voting power
of both classes of Common Stock.
On September 30, 1994, FCN Properties Corporation ("FCN"), a corporation
owned and controlled by Charles Nirenberg, purchased all of the CDA's right,
title and interest in and to the Loan. FCN paid the CDA $3,600,000 in cash and
gave the CDA a promissory note for $3,500,000 (the "FCN Note") for the Loan. In
order to secure the FCN Note to the CDA, FCN granted a lien to the CDA on, among
other things, FCN's rights to the Pledged Shares (the "FCN Lien").
The Loan provides that a default under the Loan will result upon certain
events occurring. If a default occurs under the Loan, FCN has the right to sell
or otherwise dispose of the Pledged Shares. If a default occurs under the FCN
Note or the FCN Lien while there is a default under the Loan, CDA has the right
to sell or otherwise dispose of the Pledged Shares. In the event that either
FCN or CDA sells or otherwise disposes of the Pledged Shares, such a sale or
disposal could result in a change in control of the Company. Unless a default
occurs under the Loan, DM Associates has the right to vote the Pledged Shares,
subject to having received the required consents of FCN with respect to certain
matters.
The limited partnership agreement of DM Associates provides that if the term
of the limited partnership is extended beyond September 12, 1997, any limited
partner whose percentage interest in DM Associates is greater than 30% may sell
all or a portion of his or its interest, subject to DM Associates' right of
first refusal to purchase such interest. If DM Associates and such limited
partner do not agree on the terms of acquiring such limited partner's interest,
and there is not a third party purchaser, such limited partner has the right to:
(i) demand the dissolution of DM Associates and the distribution of its assets
to its partners; or (ii) cause such assets to be sold. The limited partnership
agreement also requires DM I and DM II to consult with a limited partner of DM
Associates before voting any shares at a meeting of the Company's shareholders
or exercising any consensual rights of such shares. If DM I and/or DM II votes
or exercises consensual rights of such shares in a manner in which such limited
partner does not agree, the limited partner may dissolve DM Associates. As DM
Associates' principal asset is its 1,858,743 shares of Class B Common Stock, if
such a dissolution or sale occurs, a change in control of the Company could
result.
In September 1994, the former general partner of DM Associates, DM Management
Associates (the "Former General Partner") was dissolved. By virtue of its
ownership of the 1,858,743 shares of Class B Common Stock, DM Associates
effectively has the power to elect all of the Class B directors of the Company,
who together represent a majority of the members of the Board of Directors.
Prior to this action, the Former General Partner was itself a general
partnership comprised of Messrs. Stein, Landry and Kupperman and Mr. Colaccino,
the Company's former President and Chief Executive Officer and a member of the
Board of Directors.
In January 1995, DM Associates appointed DM I and DM II as new general
partners and the limited partnership agreement of DM Associates was amended in
certain respects.
PROPOSAL TWO
ADOPTION OF THE 1995 OUTSIDE DIRECTORS PLAN
Charles Nirenberg anticipates that at the Annual Meeting the stockholders
will be asked to adopt the 1995 Outside Directors Plan. All of the information
concerning the 1995 Outside Directors Plan and all other information set forth
under the caption "Item 2 -- ADOPTION OF THE DAIRY MART CONVENIENCE STORES, INC.
1995 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS" in the Company's Proxy Statement
relating to the Annual Meeting is hereby incorporated by reference.
Charles Nirenberg recommends that you vote FOR the adoption of the 1995
Outside Directors Plan. Adoption of the 1995 Outside Directors Plan will
require the affirmative vote of a majority of the combined voting power of the
shares of Class A Common Stock and Class B Common Stock represented in person or
by proxy at the Annual Meeting.
The accompanying [COLOR] proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote FOR, AGAINST OR
ABSTAIN from the adoption of the 1995 Outside Directors Plan. IF NO MARKING IS
MADE AND YOU HAVE SIGNED AND DATED THE PROXY CARD, YOU WILL BE DEEMED TO HAVE
GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY THE [COLOR] PROXY CARD FOR
THE ADOPTION OF THE 1995 OUTSIDE DIRECTORS PLAN.
PROPOSAL THREE
ADOPTION OF THE 1995 AWARD PLAN
Charles Nirenberg anticipates that at the Annual Meeting the stockholders
will be asked to adopt the 1995 Award Plan. All of the information concerning
the 1995 Outside Directors Plan and all other information set forth under the
caption "Item 3 -- ADOPTION OF THE DAIRY MART CONVENIENCE STORES, INC. 1995
STOCK OPTION AND INCENTIVE AWARD PLAN" in the Company's Proxy Statement relating
to the Annual Meeting is hereby incorporated by reference.
Charles Nirenberg recommends that you vote AGAINST the adoption of the 1995
Award Plan. Adoption of the 1995 Award Plan will require the affirmative vote
of a majority of the combined voting power of the shares of Class A Common Stock
and Class B Common Stock represented in person or by proxy at the Annual
Meeting.
The accompanying [COLOR] proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote FOR, AGAINST OR
ABSTAIN from the adoption of the 1995 Award Plan. IF NO MARKING IS MADE AND YOU
HAVE SIGNED AND DATED THE PROXY CARD, YOU WILL BE DEEMED TO HAVE GIVEN A
DIRECTION TO VOTE THE SHARES REPRESENTED BY THE [COLOR] PROXY CARD AGAINST THE
ADOPTION OF THE 1995 AWARD PLAN.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
<PAGE>
-13-
Charles Nirenberg anticipates that at the Annual Meeting the stockholders
will again be asked to ratify the appointment of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending on January [27],
1996. Charles Nirenberg recommends that you vote FOR the ratification of such
appointment. Ratification of such appointment of Arthur Andersen LLP will
require the affirmative vote of a majority of the combined voting power of the
shares of Class A Common Stock and Class B Common Stock represented in person or
by proxy at the Annual Meeting.
The accompanying [COLOR] proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote FOR, AGAINST OR
ABSTAIN from the ratification of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending on January [27], 1996. IF NO
MARKING IS MADE AND YOU HAVE SIGNED AND DATED THE PROXY CARD, YOU WILL BE DEEMED
TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY THE [COLOR] PROXY
CARD FOR THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING ON JANUARY [27], 1996.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Except as set forth above, Charles Nirenberg is not aware of any proposals
to be brought before the Annual Meeting. Should other proposals be brought
before the Annual Meeting, Charles Nirenberg intends to vote on such matters at
his discretion.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone, telecopier
and/or in person. Solicitations may be made by Charles Nirenberg, any of the
Nirenberg Nominees and/or any agent of Charles Nirenberg, none of whom will
receive additional consideration for such solicitations. Charles Nirenberg has
requested banks, brokerage firms and other custodians, nominees and fiduciaries
to forward all of its solicitation materials to the beneficial owners of the
Shares they hold of record. Charles Nirenberg will reimburse these record
holders for customary clerical and mailing expenses incurred by them in
forwarding these materials to their customers.
Charles Nirenberg has retained Georgeson for solicitation and advisory
services in connection with this solicitation of proxies, for which Georgeson is
to receive a fee of $______, together with reimbursement for its reasonable out-
of-pocket expenses. Charles Nirenberg has also agreed to indemnify Georgeson
against certain liabilities and expenses, including liabilities and expenses
under the federal securities laws. Georgeson will solicit proxies for the
Annual Meeting from individuals, brokers, banks, bank nominees and other
institutional stockholders. It is anticipated that Georgeson will employ
approximately ____ persons to solicit votes from the Company's stockholders for
the Annual Meeting.
The entire process of soliciting proxies for the Annual Meeting is being
borne by Charles Nirenberg. [Charles Nirenberg will not seek reimbursement for
such expenses from the Company.] Costs incidental to this solicitation of
proxies include expenses for printing, postage, legal, [accounting, public
relations,] soliciting [,advertising] and related expenses and are expected to
be approximately $________. Total costs incurred to date in furtherance of or
in connection with this solicitation of proxies are approximately $____________.
If Charles Nirenberg should withdraw or materially amend the terms of this
solicitation of proxies prior to the Annual Meeting, Charles Nirenberg will
disseminate such information regarding such changes to
<PAGE>
-14-
the Company's stockholders and, in appropriate circumstances, will provide
stockholders with a reasonable opportunity to revoke their proxies prior to the
Annual Meeting.
BACKGROUND AND REASONS FOR THE SOLICITATION; CERTAIN LEGAL PROCEEDINGS
Mr. Nirenberg has been dissatisfied with the financial perfomance of the
Company for some time. Concerned about the Company's financial performance and
his large economic interest in the Company, Mr. Nirenberg, who is a director of
the Company and, through certain partnership interests, is the majority
stockholder of the Company, sought an active role in making decisions about the
the conduct of the Company's business. However, the current Board and senior
management in effect denied, and to date continue to deny, Mr. Nirenberg the
ability to play a significant and active role in making decisions about the
conduct of the Company's business. Moreover, the current Board and senior
management have not implemented any of the suggestions and proposals made by Mr.
Nirenberg at various times in the past for purposes of improving the financial
performance of the Company.
Strongly believing that broad management policies could easily be
implemented to improve the performance of the Company, and therefore the return
to stockholders, Mr. Nirenberg began to take steps to make management
accountable to the wishes and concerns of the Company's stockholders. Because
the current Board was and continues to be aligned with senior management, Mr.
Nirenberg decided that changes needed to be made to the Board to make it more
independent from senior management. Accordingly, in May 1995, Mr. Nirenberg
submitted a proposal to the nominations committee established by the Board (the
"Nominations Committee") (i) seeking to increase the size of the Board from
eight to nine directors and (ii) nominating all of the current members of the
Board, other than John Everets, Jr., for reelection to the Board at the
Company's 1995 Annual Meeting of Stockholders, together with three additional
individuals nominated by Mr. Nirenberg. Of such three additional individuals,
Mr. Nirenberg intended that two would be nominees for election as Class B
directors and one would be a nominee for election as an additional Class A
director. Of the two additional nominees for election as Class B directors, one
would fill the existing vacancy in the Board and the other would stand for
election in lieu of Mr. John Everett.
Mr. Nirenberg believed that, if his proposal were implemented in the form
proposed, he would have enough support in the newly-constituted Board to win the
appointment as the Company's Chief Executive Officer, which, in turn, would
enable him to make the necessary changes in senior management and to implement
the policies required to improve the performance of the Company. Senior
management responded by postponing the date of the 1995 Annual Meeting of
Stockholders from August 7, 1995 to October 31, 1995, by implementing very
generous employment agreements with substantial "golden parachutes", amending
the Company's bylaws to remove the ability of Mr. Nirenberg to call a special
meeting of stockholders and by taking other actions for purposes of entrenching
themselves. Having been deprived of the opportunity to make changes in the
composition of the Board on August 7, 1995, the date originally fixed by the
Board for the 1995 Annual Meeting of Stockholders, Mr. Nirenberg decided to take
action prior to the 1995 Annual Meeting of Stockholders.
On August 8, 1995, Mr. Nirenberg, as the Managing Partner of DM I, a
General Partner of DM Associates, and Mitchell J. Kupperman, a Partner of DM I,
caused DM I to execute and deliver, for and on behalf of DM Associates, a
written consent (the "August Consent") with respect to certain of the shares of
Class B Common Stock of the Company owned by DM Associates, representing at
least a majority of the issued and outstanding shares of Class B Common Stock of
the Company, for purposes of electing to the Board, as Class B Directors, (i)
the incumbent Class B directors other than John Everets, Jr. and Robert B.
Stein, Jr. and (ii) Thomas O'Brien and M. Howard Jacobson as successors to
Messrs. Everets and Stein. The August Consent was delivered to the Company on
August 8, 1995 and provided, by its own terms, that the changes in the
composition of the Board described above were to become effective immediately
upon delivery of the August Consent.
<PAGE>
-15-
Also on August 8, 1995, Messrs. Nirenberg and Kupperman filed a complaint
with the Delaware Chancery Court against Robert B. Stein, Jr., John W. Everets,
Jr., Gregory G. Landry, Frank W. Barrett, Theodore W. Leed (collectively, the
"Director Defendants") and the Company, as a nominal defendant, seeking a
declaration pursuant to Section 225 of the Delaware General Corporation Law
that, as a result of the delivery of the August Consent, Messrs. Nirenberg,
Kupperman, Landry, O'Brien and Jacobson were duly elected as the Class B
Directors of the Company. The complaint, in the alternative, requested relief
pursuant to Section 211 of the Delaware General Corporation Law in the form of
an order accelerating and fixing the date of the Annual Meeting, as well as
fixing the record date in connection therewith.
On August 14, 1995, the Delaware Chancery Court entered an Order for
Preservation of Status Quo. The Order provided among other things that the
individuals serving as Directors of the Company as of August 7, 1995 shall
remain in control of the affairs of the Company until the litigation is finally
resolved. The Order also provided that the Defendant Directors and the Company
shall not take, or cause or permit the Company to take, specified actions
without prior notice to, and approval of, the Court, including the issuance of
voting securities or the funding of a trust, the creation of which was
authorized by action taken by resolution of the Board on August 10, 1995.
The parties stipulated, and the Court ordered, on September 5, 1995, that
the Defendant Directors and the Company would not change, nor seek to change,
the record date for the Annual Meeting, September 29, 1995 (the "Record Date"),
or the date fixed for the Annual Meeting, October 31, 1995. The parties also
agreed to stay the Section 211 claim.
On September 13, 1995, a hearing was held in the Delaware Chancery Court on
the claim of Messrs. Nirenberg and Kupperman that the August Consent was
effective to elect Messrs. Nirenberg, Kupperman, Landry, O'Brien and Jacobson as
the Class B Directors of the Company. On that date, the Delaware Chancery Court
ruled that the August Consent was ineffective to effect such election. The
Court ruled that prior to the holding of the Annual Meeting, Messrs. Nirenberg
and Kupperman could not elect Class B directors without removing from office
incumbent Class B directors. The Court stated, in substance, that since the
Company's Certificate of Incorporation requires a vote of 2/3 of the issued and
outstanding Class B Common Stock of the Company for removal of Class B Directors
and the August Consent was not delivered on behalf of the holders of 2/3 of the
issued and outstanding Class B Common Stock of the Company, the August Consent
was not effective to elect Messrs. Nirenberg, Kupperman, Landry, O'Brien and
Jacobson as Class B Directors. Messrs. Nirenberg and Kupperman do not agree
with the ruling of the Delaware Chancery Court. The order is not a final order
of the Court because of the pendency of the Section 211 claim, and no appeal has
been taken.
On September 16, 1995, the Delaware Chancery Court entered an Order which
provided, among other things, that the Status Quo Order, referenced above, was
vacated; that Plaintiffs' motion to lift the stay proceedings with respect to
their Section 211 claim was denied, without prejudice; requiring that the
Director Defendants and the Company notify the Plaintiffs and the Court two
business days in advance of certain actions, including issuing voting securities
or funding a trust, the creation of which was authorized by action of the Board
of Directors adopted on August 10, 1995; and until September 29, 1995 or further
order of the Court, binding the Company not to effect any transaction which
would have the effect of changing the relative voting power of the Company's
stockholders in a manner which would adversely affect Plaintiffs' relative
voting powers.
On September 29, 1995, Messrs. Nirenberg and Kupperman caused DM I to
execute and deliver, for and on behalf of DM Associates, a second written
consent (the "September Consent") with respect to certain of the shares of Class
B Common Stock of the Company owned by DM Associates, representing at least a
majority of the issued and outstanding shares of Class B Common Stock of the
Company, for purposes of electing to the Board, as Class B directors, (i) the
incumbent Class B directors other than John Everets, Jr., Robert Stein, Jr. and
Gregory Landry and (ii) Thomas O'Brien, M. Howard Jacobson and Joseph Leonardo
as successors to Messrs. Everets, Stein and Landry. If the September Consent is
effective, the composition of
<PAGE>
-16-
the Board has been altered by the September Consent so as to consist of Messrs.
Theodore Leed and Frank Barrett, as Class A directors, and the Nirenberg
Nominees, as Class B directors.
The rationale of the September 13, 1995 order of the Court, if applied to
the September Consent, would mean that the September Consent was ineffective.
The September Consent was delivered because the Director Defendants had argued,
in response to the delivery of the August Consent, that all directors must be
elected by holders of record on a common record date. Since September 29, 1995
is the record date both for elections to be held at the Annual Meeting on
October 31, 1995 and for the election of the Class B Directors by the September
Consent, the delivery of the September Consent obviates one of the objections
raised by the Director Defendants to the August Consent. The September Consent
does not obviate other objections raised by the Director Defendants to the
August Consent. Messrs. Nirenberg and Kupperman anticipate that the Director
Defendants will not recognize the effectiveness of the September Consent unless
required to do so. They further anticipate that the Delaware Chancery Court, if
asked to rule, would conclude that the September Consent was ineffective to
elect the Nirenberg Nominees as Class B Directors for the same reason that it
found the August Consent to be ineffective. Messrs. Nirenberg and Kupperman
expect that to obtain a ruling that either the August Consent or the September
Consent was effective, they will need to seek a ruling of the Delaware Supreme
Court.
Since there can be no assurance as to the outcome of an appeal to the
Delaware Superior Court, Mr. Nirenberg intends to seek to elect the Nirenberg
Nominees as Class B Directors at the Annual Meeting. On September 30, 1995, Mr.
Nirenberg submitted to Theodore Leed, as Chairman of the Nominations Committee,
notice that he intends to nominate the Nirenberg Nominees for election as Class
B Directors at the Annual Meeting.
Messrs. Nirenberg and Kupperman, in their capacity as partners of DM I,
intend to cause DM I to direct the vote by DM Associates of at least 1,506,509
of the 1,858,743 shares held of record by DM Associates on the Record Date, for
purposes of causing the election of the Nirenberg Nominees as the Class B
Directors of the Company at the Annual Meeting. Since on the Record Date there
were 2,783,060 shares of Class B Common Stock issued and outstanding, the
1,506,509 shares of Class B Common Stock which Messrs. Nirenberg and Kupperman
intend to cause DM Associates to vote in favor of the election of the Nirenberg
Nominees constitute approximately 54.13% of the total number of shares of Class
B Common Stock entitled to vote at the Annual Meeting.
Although Messrs. Nirenberg and Kupperman expect that they will be able to
direct sufficient voting power on behalf of DM Associates to elect the Nirenberg
Nominees at the Annual Meeting, Mr. Nirenberg nevertheless is soliciting proxies
from other Class B stockholders. Proxies solicited by Mr. Nirenberg will be
voted in favor of the election of the Nirenberg Nominees as Class B Directors.
All of the Nirenberg Nominees are committed to the restructuring of the
Company's Management, including the replacement of the Company's Chief Executive
Officer. If elected, the Nirenberg Nominees will, subject in all respects to
their fiduciary duties, seek to cause the Board to restructure the management of
the Company by, among other things, terminating the employment of the Company's
Chief Executive Officer and electing as his successor Charles Nirenberg, and
reviewing other senior management positions and taking such action as may be
appropriate. Mr. Nirenberg anticipates that, in his capacity as the newly-
appointed Chief Executive Officer of the Company, he would recommend to the
newly-elected Board that Joseph Leonardo be appointed as President of the
Company, and that, in such position, Mr. Leonardo would be in charge of the
management of the day-to-day affairs of the Company.
<PAGE>
-17-
CERTAIN ADDITIONAL INFORMATION
The proxy statement to be distributed by the Company on behalf of the Board
is expected to contain additional information with respect to the Record Date,
the number of Shares outstanding at the close of business on the Record Date,
the voting and revocation of proxies, the Company's nominees for the election of
directors, other proposals, the vote required to approve such election and
proposals, the beneficial owners of 5% or more of the Shares, the Share
ownership of the Company's officers and directors, filings made pursuant to
Section 16 of the Securities and Exchange Act of 1934, as amended, the date by
which stockholder proposals intended to be submitted at the Company's next
annual meeting of stockholders must be received by the Company for inclusion in
its proxy statement for such meeting, as well as information relating to other
matters. Such information, which Charles Nirenberg has not independently
verified, is incorporated by reference in this Proxy Statement upon reliance on
the Company, except to the extent that such information contradicts information
contained in this Proxy Statement or is otherwise adverse to Charles Nirenberg.
Charles Nirenberg assumes no responsibility for the accuracy or completeness of
any information contained herein which is based on, or incorporated by reference
to, the Company's Proxy Statement or the Company's public filings.
October __, 1995
<PAGE>
-18-
IMPORTANT
Your proxy is important. No matter how many shares you own, please give
Charles Nirenberg your proxy FOR the election of the Nirenberg Nominees FOR the
adoption of the 1995 outside Directors Plan, AGAINST the adoption of the 1995
Award Plan and FOR the notification of the appointment of Arthur Anderson LLP as
the Company's independent accountants for the fund year ending February 3, 1996
by:
SIGNING the enclosed [COLOR] proxy card
DATING the enclosed [COLOR] proxy card and
MAILING the enclosed [COLOR] proxy card TODAY in the enclosed envelope
provided (no postage required if mailed in the United States).
If you have already submitted a proxy to the Company for the Annual
Meeting, you may change your vote to a vote FOR the election of the Nirenberg
Nominees by signing, dating and returning the enclosed [COLOR] proxy card for
the Annual Meeting, which must be dated after any proxy you may have submitted
to the Company. Only your latest dated proxy for the Annual Meeting will be
voted at such meeting.
If you have any questions or require any additional information concerning
this Proxy Statement or the proposal by Charles Nirenberg to elect the Nirenberg
Nominees, please contact Georgeson & Company, Inc. at the address set forth
below. IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK,
BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY UPON
RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE THE [COLOR]
PROXY CARD.
GEORGESON & COMPANY, INC.
WALL STREET PLAZA
88 PINE STREET
NEW YORK, NEW YORK 10005
1-800-_____________
<PAGE>
Preliminary Copy, Dated October 11, 1995
DAIRY MART CONVENIENCE STORES, INC.
1995 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY CHARLES NIRENBERG
The undersigned stockholder of Dairy Mart Convenience Stores, Inc. hereby
appoints Charles Nirenberg with full power of substitution, for and in the name
of the undersigned, to represent and to vote, as designated below, all shares of
Class B Common Stock, par value $.01 per share, of Dairy Mart Convenience
Stores, Inc. that the undersigned is entitled to vote if personally present at
the 1995 Annual Meeting of Stockholders of Dairy Mart Convenience Stores, Inc.,
and at any adjournment thereof. The undersigned hereby revokes any previous
proxies with respect to the matters covered by this Proxy.
CHARLES NIRENBERG RECOMMENDS A VOTE FOR PROPOSALS 1, 2 and 4 AND A VOTE
AGAINST PROPOSAL 3.
(Please mark each proposal with an "X" in the appropriate box.)
1. ELECTION OF CLASS B DIRECTORS
Election of M. Howard Jacobson, Thomas O'Brien, Joseph F. Leonardo,
Mitchell J. Kupperman and Charles Nirenberg as Class B Directors whose terms
expire in 1996.
[__] FOR all nominees [__] WITHHOLD AUTHORITY
except as marked for all nominees
below
[INSTRUCTION: To withhold authority to vote for one or more nominees, mark FOR
above and print the name(s) of the person(s) with respect to whom you wish to
withhold authority to vote in the space provided below.]
__________________________________________________________________
2. ADOPTION OF THE DAIRY MART CONVENIENCE STORES, INC. 1995 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS.
[__] FOR [__] AGAINST [__] ABSTAIN
3. ADOPTION OF THE DAIRY MART CONVENIENCE STORES, INC. 1995 STOCK OPTION AND
INCENTIVE AWARD PLAN.
[__] FOR [__] AGAINST [__] ABSTAIN
4. APPOINTMENT OF ARTHUR ANDERSEN & CO. AS 1996 INDEPENDENT AUDITORS.
[__] FOR [__] AGAINST [__] ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF, IF
SUCH OTHER BUSINESS ADVERSELY AFFECTS CHARLES NIRENBERG.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
IN THE ENCLOSED ENVELOPE PROVIDED
(CONTINUED ON OTHER SIDE)
<PAGE>
-2-
(CONTINUED FROM OTHER SIDE)
This Proxy, when properly executed, will be voted in the manner marked
herein by the undersigned stockholder. IF NO MARKING IS MADE, THIS PROXY WILL
BE DEEMED TO BE A DIRECTION TO VOTE FOR PROPOSAL 1, FOR PROPOSAL 2, AGAINST
PROPOSAL 3 AND FOR PROPOSAL 4.
Please date and sign this
Proxy exactly as your name
appears hereon.
____________________________
(Signature)
____________________________
(Signature, if held jointly)
____________________________
(Title)
Dated: ___________________
To vote in accordance with Charles When shares are held by joint
Nirenberg's recommendation, tenants, both should sign.
just sign and date this Proxy; When signing as attorney-in-
no boxes need to be checked. fact, executor, administrator,
trustee, guardian, corporate
officer or partner, please give full
title as such. If a corporation,
please sign in corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
