<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
DAIRY MART CONVENIENCE STORES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
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<PAGE> 2
[DAIRY MART LOGO]
DAIRY MART CONVENIENCE STORES, INC.
ONE DAIRY MART WAY, 300 EXECUTIVE PARKWAY WEST, HUDSON, OHIO
Dear Dairy Mart Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of Dairy Mart Convenience Stores, Inc. (the "Company") to be held at 10:00 a.m.
(Eastern time) on Thursday, May 25, 2000, at the Sheraton Suites, 1989 Front
Street, Cuyahoga Falls, Ohio 44221. At the Annual Meeting, eight persons will be
elected to the Board of Directors. The Board of Directors recommends election of
each of the named nominees. Such other business will be transacted as may
properly come before the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE ANNUAL
MEETING REGARDLESS OF THE SIZE OF YOUR HOLDINGS. WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING WHITE PROXY CARD IN THE ENCLOSED ENVELOPE IN ORDER TO MAKE CERTAIN
THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING.
If you have any questions or comments, please contact our proxy solicitors,
MacKenzie Partners at (800) 322-2885.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
Dairy Mart Convenience Stores, Inc.
/s/ Robert B. Stein, Jr.
Robert B. Stein, Jr.
Chairman of the Board, President and
Chief Executive Officer
May 5, 2000
<PAGE> 3
DAIRY MART CONVENIENCE STORES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 2000
Notice is hereby given that the 2000 Annual Meeting of Shareholders of
Dairy Mart Convenience Stores, Inc. will be held at the Sheraton Suites, 1989
Front Street, Cuyahoga Falls, Ohio 44221, on Thursday, May 25, 2000 at 10:00
a.m. (Eastern time), for the following purposes:
1. To elect eight members to the Board of Directors;
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 11, 2000 are
entitled to notice of and to vote at said meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Robert B. Stein, Jr.
Robert B. Stein, Jr.,
Chairman of the Board, President and
Chief Executive Officer
May 5, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU EXPECT TO BE PRESENT, PLEASE FILL IN, DATE, SIGN AND
RETURN THE ENCLOSED WHITE PROXY CARD IN THE ACCOMPANYING ADDRESSED,
POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON.
YOUR BOARD OF DIRECTORS ALSO URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU
BY THE COMMITTEE OF CONCERNED DAIRY MART SHAREHOLDERS. EVEN IF YOU HAVE
PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU BY THE COMMITTEE OF CONCERNED
DAIRY MART SHAREHOLDERS, YOU CAN REVOKE THAT EARLIER PROXY BY
SIGNING, DATING, AND MAILING THE ENCLOSED WHITE PROXY CARD IN THE
ENVELOPE PROVIDED.
<PAGE> 4
DAIRY MART CONVENIENCE STORES, INC.
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Dairy Mart
Convenience Stores, Inc., One Dairy Mart Way, 300 Executive Parkway West,
Hudson, Ohio 44236 for use at the Annual Meeting of Shareholders to be held on
Thursday, May 25, 2000, and at any and all adjournments or postponements
thereof. This Proxy Statement and the accompanying proxy are being mailed to
shareholders on or about May 5, 2000.
At the Annual Meeting, the Board of Directors will propose that the
Company's shareholders elect eight nominees to the Board of Directors to hold
office until the next Annual Meeting and until the election and qualification of
their successors.
The Committee of Concerned Dairy Mart Shareholders (the "Committee of
Concerned Shareholders"), a group of individuals who collectively own less than
6% of the Common Stock of the Company, has filed a preliminary proxy statement
with the Securities and Exchange Commission ("SEC") which indicates that it will
be soliciting proxies for eight nominees for election to the Company's Board of
Directors in opposition to the Board of Directors' nominees.
Shares of Common Stock, par value $ .01 per share, of the Company (the
"Common Stock") represented by properly executed proxies will be voted as
directed on the proxy. Properly executed proxies containing no voting directions
to the contrary will be voted for the election of the nominees named below. A
proxy may be revoked at any time before it is voted at the Annual Meeting by
notifying the Chief Financial Officer of the Company in writing at the address
set forth above, by submitting a properly executed proxy bearing a later date,
or by revoking the proxy at the Annual Meeting. Attendance at the Annual Meeting
will not by itself operate to revoke a proxy.
The Board of Directors is soliciting votes FOR the Company's slate of
nominees for election to the Board of Directors. A WHITE proxy card is enclosed
for your use. THE BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN, DATE AND
RETURN THE WHITE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid
if mailed in the United States.
If you have any questions or need further assistance in voting your shares,
please call:
MacKenzie Partners
156 Fifth Avenue, P.H. 3
New York, NY 10010
CALL TOLL FREE (800) 322-2885
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY
THE COMMITTEE OF CONCERNED SHAREHOLDERS. IF YOU HAVE ALREADY DONE SO, YOU MAY
REVOKE YOUR PREVIOUSLY SIGNED PROXY BY DELIVERING A WRITTEN NOTICE OF REVOCATION
OR A LATER DATED PROXY CARD IN THE ENCLOSED ENVELOPE.
<PAGE> 5
Remember, it will not help your Board of Directors to return the Committee
of Concerned Shareholders' proxy card voting to "abstain." Do not return any
card sent to you by the Committee of Concerned Shareholders. The only way to
support your Board of Directors' nominees is to vote "FOR" those nominees on the
WHITE proxy card.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER, OR OTHER NOMINEE,
ONLY YOUR BANK OR BROKER OR OTHER NOMINEE CAN VOTE YOUR SHARES AND ONLY UPON
YOUR SPECIFIC INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT HIM OR HER TO VOTE THE WHITE PROXY CARD AS SOON AS
POSSIBLE.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 11, 2000 as
the record date for the determination of shareholders entitled to notice of this
Annual Meeting, and only shareholders of record on that date will be entitled to
vote at the meeting. As of April 11, 2000, there were 4,895,594 shares of Common
Stock issued and outstanding.
On February 8, 2000, the Company's shareholders approved a reclassification
of the Company's former Class A and Class B Common Stock into a new, single
class of Common Stock. Under the terms of the reclassification, which became
effective at the open of business February 9, 2000, each share of the former
Class A Common Stock was converted into one share of the new Common Stock and
each share of the former Class B Common Stock was converted into 1.1 shares of
the new Common Stock. Each share of the new Common Stock is entitled to one vote
on all matters and will vote on the election of all directors.
YOUR VOTE AT THIS YEAR'S ANNUAL MEETING IS ESPECIALLY IMPORTANT.
PLEASE SIGN AND DATE THE ENCLOSED WHITE PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE PROMPTLY.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock by each shareholder known by the Company
to be the beneficial owner of 5% or more of the Company's Common Stock as of
April 11, 2000. This information is furnished in accordance with the SEC
regulations relating to any persons known by the Company to be the beneficial
owners of 5% or more of Common Stock. In preparing the following table, the
Company
2
<PAGE> 6
has relied on information filed by such persons with the SEC, and in some cases,
other information provided to the Company by such persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP OUTSTANDING SHARES
------------------- ----------------- ------------------
<S> <C> <C>
DM Associates Limited Partnership............... 702,617(1) 14.4%
300 Executive Parkway West
Hudson, Ohio
New DM Management Associates I.................. 702,617(1) 14.4%
300 Executive Parkway West
Hudson, Ohio
Robert B. Stein, Jr............................. 981,682(1)(7) 19.1%
300 Executive Parkway West
Hudson, Ohio
Gregory G. Landry............................... 872,742(1)(8) 17.3%
300 Executive Parkway West
Hudson, Ohio
Triumph-Connecticut Limited Partnership......... 813,348(2) 14.3%
28 State Street, 37th Floor
Boston, Massachusetts
Thomas W. Janes................................. 825,473(3) 14.4%
28 State Street, 37th Floor
Boston, Massachusetts
The IDS Mutual Fund Group....................... 396,573(4) 7.5%
IDS Tower 10
Minneapolis, Minnesota
American International Group, Inc............... 382,753(5) 7.3%
70 Pine Street
New York, New York
William L. Musser, Jr........................... 314,900(6) 6.4%
and New Frontier Capital, L.P.
919 Third Avenue
New York, New York
</TABLE>
NOTES TO TABLE
(1) DM Associates Limited Partnership ("DM Associates") is the owner of record
of 702,617 shares of Common Stock of the Company, representing approximately
14.4% of the issued and outstanding shares of Common Stock. The general
partner of DM Associates is New DM Management Associates I ("DM Management
I"), which is a general partnership. The general partners of DM Management I
are Robert B. Stein, Jr. and Gregory G. Landry, each of whom owns 50% of the
partnership interest of DM Management I.
As the sole general partner of DM Associates, DM Management I has the power
to vote and dispose of the 702,617 shares of Common Stock owned by DM
Associates, subject to the
3
<PAGE> 7
required consent of a class of limited partners of DM Associates for sales
of more than 396,000 shares. The partnership agreement of DM Management I
provides that a majority of the partnership interests of DM Management I are
required to vote the shares of Common Stock owned by DM Associates.
As the managing general partner of DM Management I, Mr. Stein has sole
dispositive power with respect to the 702,617 shares owned by DM Associates,
subject to the limitation described above. As general partners of DM
Management I, Messrs. Stein and Landry share voting power with respect to
the 702,617 shares owned by DM Associates.
(2) Triumph-Connecticut Limited Partnership ("Triumph"), Triumph's general
partner, Triumph-Connecticut Capital Advisors, Limited Partnership
("TCCALP"), and TCCALP's general partners, Triumph-Capital Group, Inc.,
Fredrick W. McCarthy, Fredrick S. Moseley, IV, E. Mark Noonan, Thomas W.
Janes, John M. Chapman and Richard J. Williams, reported on a Schedule 13D
filed with the SEC their shared beneficial ownership of currently
exercisable warrants to purchase an aggregate of 765,000 shares of Common
Stock. Due to the stock reclassification on February 9, 2000, and
anti-dilution provisions contained in the warrants, the number of warrants
has increased to 813,348. If the 813,348 shares underlying the warrants were
issued, they would represent approximately 14.3% of the total number of
issued and outstanding shares of the Company's Common Stock.
(3) Includes 11,125 shares of Common Stock that Mr. Janes is, or within 60 days
of April 11, 2000, will be, entitled to purchase upon the exercise of stock
options. The shares of Common Stock for Mr. Janes also include the 813,348
shares set forth for Triumph as described in footnote 2 above. Mr. Janes'
pecuniary interest in such shares is based upon his status as a general
partner of TCCALP, general partner of Triumph, the entity holding the
shares, and is not discernible. Mr. Janes disclaims beneficial ownership of
all such shares other than those attributable to him as a general partner of
TCCALP.
(4) The IDS Mutual Fund Group, through nominees, holds currently exercisable
warrants to purchase an aggregate of 396,573 shares of Common Stock.
(5) American International Group, Inc. and its affiliates hold currently
exercisable warrants to purchase an aggregate of 382,753 shares of Common
Stock.
(6) New Frontier Capital, L.P., and William L. Musser, Jr., in his capacity as
General Partner, reported on a Schedule 13D filed with the SEC its
beneficial ownership, as an investment advisor, of 314,900 shares of Common
Stock.
(7) Includes 235,939 shares of Common Stock issuable to Mr. Stein within 60 days
of April 11, 2000, pursuant to employee stock options and grants. Mr. Stein
also has the power to dispose of 2,451 shares held in his 401(k) account
that are included above.
(8) Includes 155,750 shares of Common Stock issuable to Mr. Landry within 60
days of April 11, 2000, pursuant to employee stock options and grants.
4
<PAGE> 8
INFORMATION CONCERNING NOMINEES AND CERTAIN EXECUTIVE OFFICERS
BOARD OF DIRECTORS' NOMINEES FOR ELECTION AS DIRECTORS
Eight directors have been nominated for election by the Nominating
Committee of the Board of Directors at this Annual Meeting, to hold office until
the next Annual Meeting and until the election and qualification of their
successors. The Nominating Committee has nominated Albert T. Adams, Frank W.
Barrett, J. Kermit Birchfield, Jr., John W. Everets, William A. Foley, Thomas W.
Janes, Gregory G. Landry, and Robert B. Stein, Jr. as directors. All of the
nominees are currently serving on the Board. It is intended that shares
represented by proxy will be voted in favor of all of these persons.
THE COMMITTEE OF CONCERNED SHAREHOLDERS' NOMINEES
The Committee of Concerned Shareholders filed a preliminary proxy statement
with the SEC on April 19, 2000 indicating that it intends to solicit proxies for
eight individuals for election to the Company's Board of Directors and
containing information regarding its nominees.
The Board of Directors believes that the election of the individuals
nominated by the Committee of Concerned Shareholders would not be in the best
interests of the Company and its shareholders. The current Directors are
intimately familiar with the Company and the industry in which it operates. The
Board of Directors is fully committed to maximizing value for all of the
Company's shareholders. The Board of Directors believes that a change in the
Board of Directors at this time would be highly disruptive to the strategy the
Company is actively pursuing and could raise significant concerns with current
and future business partners. Moreover, uncertainties arising from such a change
could result in the loss of key personnel who are unique and important to the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE
EIGHT NOMINEES OF THE BOARD OF DIRECTORS DESCRIBED BELOW AND NOT VOTE IN
FAVOR OF ANY NOMINEES OF THE COMMITTEE OF CONCERNED SHAREHOLDERS
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
The following table sets forth certain information concerning the ownership
of the Common Stock and other matters with respect to the nominees, the named
executive officers listed in the
5
<PAGE> 9
Summary Compensation Table and all directors and executive officers as a group,
as of April 11, 2000.
<TABLE>
<CAPTION>
AGGREGATE NUMBER PERCENT OF
NAME (AGE) DIRECTOR OF SHARES OUTSTANDING
DIRECTORS SINCE BENEFICIALLY OWNED SHARES
---------- -------- ------------------ -----------
<S> <C> <C> <C>
Albert T. Adams (49)........................ 1998 9,375(1) (*)
Frank W. Barrett (60)....................... 1983 19,500(2) (*)
J. Kermit Birchfield, Jr. (60).............. 1996 19,325(3) (*)
John W. Everets (53)........................ 1994 26,625(4) (*)
William A. Foley (52)....................... 1999 875(5) (*)
Thomas W. Janes (44)........................ 1995 825,473(6)(15) 14.4%
Gregory G. Landry (42)...................... 1991 872,742(7)(14) 17.3%
Robert B. Stein, Jr. (42)................... 1992 981,682(8)(14) 19.1%
</TABLE>
<TABLE>
<CAPTION>
NAMED EXECUTIVE
OFFICERS
---------------
<S> <C> <C> <C>
Susan D. Adams (42)......................... N/A 11,875(9) (*)
Alice R. Guiney (46)........................ N/A 13,174(10) (*)
Dennis J. Tewell (43)....................... N/A 25,595(11) (*)
Dale R. Valvo (50).......................... N/A 7,483(12) (*)
</TABLE>
<TABLE>
<CAPTION>
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP
---------------------------
<S> <C> <C> <C>
(15 persons)................................ N/A 2,158,101(13) 34.5%
</TABLE>
(*) Owns less than 1% of the issued and outstanding shares of Common Stock.
(1) Includes 3,500 shares of Common Stock that Mr. Adams is, or within 60 days
of April 11, 2000, will be, entitled to purchase upon the exercise of stock
options.
(2) Includes 17,125 shares of Common Stock that Mr. Barrett is, or within 60
days of April 11, 2000, will be, entitled to purchase upon the exercise of
stock options.
(3) Includes 11,125 shares of Common Stock that Mr. Birchfield is, or within 60
days of April 11, 2000, will be, entitled to purchase upon the exercise of
stock options.
(4) Includes 14,625 shares of Common Stock that Mr. Everets is, or within 60
days of April 11, 2000, will be, entitled to purchase upon the exercise of
stock options.
(5) Includes 875 shares of Common Stock that Mr. Foley is, or within 60 days of
April 11, 2000, will be, entitled to purchase upon the exercise of stock
options.
(6) Includes 11,125 shares of Common Stock that Mr. Janes is, or within 60 days
of April 11, 2000, will be, entitled to purchase upon the exercise of stock
options.
(7) Includes 155,750 shares of Common Stock issuable to Mr. Landry within 60
days of April 11, 2000, pursuant to employee stock options and grants.
(8) Includes 235,939 shares of Common Stock issuable to Mr. Stein within 60
days of April 11, 2000, pursuant to employee stock options and grants. Mr.
Stein also has the power to dispose of 2,451 shares held in his 401(k)
account that are included above.
6
<PAGE> 10
(9) Includes 11,875 shares of Common Stock that Ms. Adams is, or within 60 days
of April 11, 2000, will be, entitled to purchase upon the exercise of stock
options.
(10) Includes 13,125 shares of Common Stock that Ms. Guiney is, or within 60
days of April 11, 2000, will be, entitled to purchase upon the exercise of
stock options.
(11) Includes 21,875 shares of Common Stock that Mr. Tewell is, or within 60
days of April 11, 2000, will be, entitled to purchase upon the exercise of
stock options.
(12) Includes 6,875 shares of Common Stock that Mr. Valvo is, or within 60 days
of April 11, 2000, will be, entitled to purchase upon the exercise of stock
options.
(13) Includes exercisable, within 60 days of April 11, 2000, stock options
granted to all directors and executive officers of the Company to purchase
504,189 shares of Common Stock, and currently exercisable warrants to
purchase 813,348 shares of Common Stock.
(14) Messrs. Stein and Landry are the general partners of DM Management I
(described in footnote 1 to the Principal Shareholders table above). The
shares of Common Stock set forth in this table for Messrs. Stein and Landry
include the shares beneficially owned by them in their capacity as general
partners of DM Management I.
(15) The shares of Common Stock set forth in this table for Mr. Janes include
the 813,348 shares set forth for Triumph in the Principal Shareholders
table. Mr. Janes' pecuniary interest in such shares is based upon his
status as general partner of TCCALP, general partner of Triumph, the entity
holding the shares, and is not discernible. Mr. Janes disclaims beneficial
ownership of all such shares other than those attributable to him as a
general partner of TCCALP.
7
<PAGE> 11
INFORMATION AS TO BOARD OF DIRECTORS' NOMINEES FOR ELECTION AS DIRECTORS
The following sets forth certain information concerning the Company's
nominees for election to the Board of Directors at the Annual Meeting.
ALBERT T. ADAMS
Albert T. Adams has been a partner with the law firm of Baker & Hostetler
LLP in Cleveland, Ohio, since 1984, and has been affiliated with the firm since
1977. Mr. Adams is a graduate of Harvard College, Harvard Business School and
Harvard Law School. He serves as a member of the Board of Trustees of the
Greater Cleveland Roundtable and of the Western Reserve Historical Society. Mr.
Adams is a director of American Industrial Properties REIT, Associated Estates
Realty Corporation, Boykin Lodging Company, Captec Net Lease Realty, Inc. and
Developers Diversified Realty Corporation.
FRANK W. BARRETT
Mr. Barrett is Executive Vice President of Family Bank, FSB, a subsidiary
of Peoples Heritage Financial Group. He previously served as Senior Vice
President for Bank of Ireland First Holdings, Inc. from September 1990 to
December 1993, as Senior Vice President for Connecticut National Bank from May
1990 to September 1990, and as Senior Vice President for Shawmut Bank, N.A. from
January 1988 to May 1990. Mr. Barrett is a member of the Board of Directors of
the Providence and Worcester Railroad, which provides freight rail service in
Connecticut, Massachusetts and Rhode Island.
J. KERMIT BIRCHFIELD, JR.
Mr. Birchfield has been the Chairman of the Board of Displaytech, Inc., a
manufacturer of high resolution miniature ferro-electric liquid crystal displays
since 1995. From June 1990 to November 1994 he served as Senior Vice President
and General Counsel of M/A-COM, Inc., a telecommunications company. Mr.
Birchfield is a member of the Board of Directors of HPSC, Inc., a publicly held
company that provides financing for the purchase of health care equipment,
Intermountain Gas Company, Inc., an Idaho public utility company, and the
Compass Group of Mutual Funds of MFS, Inc., a wholly owned subsidiary of Sun
Life of Canada, a registered mutual funds company.
JOHN W. EVERETS
Mr. Everets has been Chairman of the Board and Chief Executive Officer of
HPSC, Inc., a publicly held company that provides financing for health care
equipment since July 1993 and has been a director of HPSC, Inc. since 1983. He
was Chairman of the Board of T.O. Richardson Co., Inc., a financial services
company, from January 1990 until July 1993. Mr. Everets is also a director of
Eastern Company, a publicly held manufacturing company.
WILLIAM A. FOLEY
Mr. Foley has been the Chairman, President, Chief Executive Officer and a
Director of LESCO, Inc., the leading manufacturer and direct marketer of turf
care products and equipment, since July 1993. He was President and Chief
Executive Officer of Imperial Wall Coverings, Inc., a
8
<PAGE> 12
wallpaper producer and subsidiary of Collins & Aikman, Inc. from October 1990
until February 1993. Mr. Foley is also a director of Libbey, Inc., a producer of
glass products.
THOMAS W. JANES
Mr. Janes has been a Managing Director since 1990 of Triumph Capital Group,
Inc., a firm engaged in investment management and investment banking. He is also
a general partner of Triumph-Connecticut Capital Advisors Limited Partnership,
the general partner of Triumph-Connecticut Limited Partnership.
GREGORY G. LANDRY
Mr. Landry has served as Chief Financial Officer of the Company since
August 1990, was named Executive Vice President of the Company in April 1992,
and Vice Chairman in April 2000. Mr. Landry joined the Company in October 1985
and served in various financial positions, including Treasurer. He is a
certified public accountant and a member of the American Institute of Certified
Public Accountants.
ROBERT B. STEIN, JR.
Mr. Stein was elected President of the Company in September 1994, Chief
Executive Officer in June 1995 and Chairman of the Board of Directors in
December 1995. He joined the Company in 1983 and served in various positions
including Treasurer, General Manager of the Midwest Region, and Executive Vice
President-Operations and Marketing. Mr. Stein is also a director of LESCO, Inc.
9
<PAGE> 13
EXECUTIVE OFFICERS
Listed below are the names, positions and ages of the executive officers of
the Company as of April 19, 2000. Each executive officer will serve until his
successor is selected by the Board of Directors or until the earlier of his
earlier resignation or removal.
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
Robert B. Stein, Jr........... Chairman of the Board, President and 42
Chief Executive Officer
Gregory G. Landry............. Vice Chairman and 42
Chief Financial Officer
J. Wayne Colley............... Executive Vice President and 54
Chief Operating Officer
Dennis J. Tewell.............. Senior Vice President Marketing 43
Alice R. Guiney............... Vice President Human Resources 46
Susan D. Adams................ Vice President Finance and Treasurer 42
Dale R. Valvo................. Vice President Gasoline and Store Development 50
</TABLE>
ROBERT B. STEIN, JR.
Mr. Stein was elected President of the Company in September 1994, Chief
Executive Officer in June 1995 and Chairman of the Board of Directors in
December 1995. He joined the Company in 1983 and served in various positions
including Treasurer, General Manager of the Midwest Region, and Executive Vice
President Operations and Marketing. Mr. Stein is also a director of LESCO, Inc.
GREGORY G. LANDRY
Mr. Landry has served as Chief Financial Officer since August 1990, was
named Executive Vice President of the Company in April 1992, and Vice Chairman
in April 2000. Mr. Landry joined the Company in October 1985 and served in
various financial positions, including Treasurer. He is a certified public
accountant and a member of the American Institute of Certified Public
Accountants.
J. WAYNE COLLEY
Mr. Colley joined the Company in January 2000 as Executive Vice President
and Chief Operating Officer. From August 1993 to October 1997, Mr. Colley served
as Sr. Vice President Logistics with Hechinger Stores, Inc., a home improvement
retailer, after which time he retired until joining the Company. Mr. Colley has
also served as Sr. Vice President Prototype Development and Vice President Store
Operations with Ames Department Stores, Executive Vice President and Chief
Operating Officer, Office World, Inc. and Vice President Merchandise
Presentation, McCrory Stores.
DENNIS J. TEWELL
Mr. Tewell was named Senior Vice President Marketing in May 1999. Mr.
Tewell served as Vice President Business Development and Franchise Operations
from February 1997 to May 1999. Mr. Tewell joined the former CONNA Corporation
in 1985 and has served as Vice President
10
<PAGE> 14
Franchise Operations, Vice President Business Development, Vice President Store
Operations, Director of Operations, Strategic Planning Coordinator in the
Southeast Region, and special consultant for the Company's international
operations in Europe.
ALICE R. GUINEY
Ms. Guiney was named Vice President Human Resources in November 1996. Prior
to joining the Company, Ms. Guiney directed corporate and field operational
disciplines of human resources for Sunglass Hut International in Coral Gables,
Florida. Ms. Guiney also held the positions of Director of Merchandising and
Director of Administration during her tenure with Burdines Department Stores.
SUSAN D. ADAMS
Ms. Adams was named Vice President Finance and Treasurer in December 1997.
Prior to joining the Company, Ms. Adams served as Assistant Treasurer for
Doubletree Corporation. She has also served as Assistant Treasurer for Circle K
Corporation.
DALE R. VALVO
Mr. Valvo was named Vice President Gasoline and Store Development in
February 1999. He joined the Company in April 1998 as Vice President Gasoline
Operations. Prior to joining the Company, Mr. Valvo was General Manager
Marketing-Southeast Business Unit for Fina Oil and Chemical Company. Mr. Valvo
also served as President of Harken Marketing Company, a subsidiary of Harken
Energy Corporation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5, all transactions
occurring during fiscal year 2000 which required the reporting of changes in
beneficial ownership of the Company's Common Stock were timely filed for all of
the Company's executive officers and directors, except for the initial statement
of beneficial ownership for Mr. Foley which was not timely filed with the
Securities and Exchange Commission.
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<PAGE> 15
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the 2000 fiscal year, the Board of Directors of the Company held
seven meetings. None of the directors attended fewer than 75% of the total
number of meetings of the Board of Directors and committees of which they were
members.
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee. The Audit Committee currently consists of
Messrs. Barrett, Birchfield, Janes and Everets and is responsible for
recommending the appointment of independent accountants and for reviewing the
reports and expenses of the audits conducted by the Company's independent
accountants. The Compensation Committee currently consists of Messrs. Adams,
Barrett, Everets and Foley and is responsible for recommending the compensation
to be paid to the Company's executive officers and for administering the
Company's stock option plans. The Nominating Committee currently consists of
Messrs. Adams, Birchfield, Everets and Stein and is responsible for receiving
and recommending to the Board of Directors the nominees for persons to serve as
directors of the Company. During the 2000 fiscal year there were six meetings of
the Compensation Committee and one meeting each of the Audit Committee and the
Nominating Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors during the last fiscal year were Messrs. Adams, Barrett, Everets and
Foley. Mr. Adams is a partner of Baker & Hostetler LLP, which acts as the
Company's general outside legal counsel. No member of the Compensation Committee
was at any time during fiscal year 2000, or at any other time, an officer or
employee of the Company. Mr. Foley is the Chairman, President, Chief Executive
Officer and Director of LESCO, Inc. Mr. Stein also serves as a director of
LESCO, Inc. No other executive officer of the Company serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
SHAREHOLDER NOMINATIONS OF DIRECTORS
In addition to the right of the Board of Directors of the Company 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 who complies with certain notice
procedures set forth in the Company's Certificate of Incorporation. Such
nominations, other than those made by or at the direction of the Board of
Directors, must be made pursuant to timely notice in writing to the Secretary of
the Company. To be timely, a shareholder's notice must be delivered to, or
mailed and received 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 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. All such shareholder nominations may be made only at a meeting of
shareholders called for the election of Directors at which that shareholder is
present in person or by proxy.
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<PAGE> 16
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS' COMPENSATION
The table below provides certain information for the Company's past three
fiscal years regarding the cash and other compensation paid to, earned by, or
awarded to the six most highly compensated executive officers whose total annual
salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(a)
------------------------------------------ ---------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION UNDERLYING COMPENSATION
POSITION YEAR SALARY BONUS (b) OPTIONS (c)
-------- ------ -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Stein, Jr......... 2000 $391,346 $50,000 $1,611 -- $9,430
President, Chief Executive 1999 374,998 -- 45,983 183,750 10,270
Officer and 1998 331,738 80,000 43,869 -- 9,126
Chairman of the Board
Gregory G. Landry........... 2000 264,615 37,500 -- -- 9,220
Vice Chairman and 1999 244,998 -- -- 105,000 10,009
Chief Financial Officer 1998 239,230 40,000 1,846 -- 8,670
Susan D. Adams.............. 2000 129,904 10,000 6,000 7,500 550
Vice President Finance and 1999 125,000 -- 45,193 -- 536
Treasurer 1998 26,442 -- 15,983 20,000 --
Alice R. Guiney............. 2000 129,904 10,000 2,265 7,500 550
Vice President Human 1999 125,000 -- 1,508 -- 388
Resources 1998 125,000 -- 32,771 15,000 --
Dennis J. Tewell............ 2000 141,346 10,000 6,000 7,500 550
Senior Vice President 1999 116,061 -- 5,500 -- 388
Marketing 1998 105,261 10,000 -- 10,000 246
Dale R. Valvo............... 2000 133,750 10,000 6,000 7,500 550
Vice President Gasoline and 1999 89,216 -- 5,000 20,000 865
Store Development 1998 -- -- -- -- --
</TABLE>
(a) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payments during fiscal years 2000, 1999 or 1998.
(b) Other annual compensation for the following named executive officers
includes the following amounts paid on behalf of, or received by, each
officer: (i) In fiscal year 2000, Mr. Stein received $894 for relocation
expense and $717 in tax reimbursement. In fiscal year 1999, Mr. Stein
received $27,731 for relocation expense and $18,252 in tax reimbursement. In
fiscal year 1998, Mr. Stein received $42,915 for relocation expense; (ii) In
fiscal year 1998 Mr. Landry received $539 for relocation expense and $432 in
tax reimbursement; (iii) In fiscal year 2000, Ms. Adams received $6,000 in
automobile allowance. In fiscal year 1999, Ms. Adams received $24,100 for
relocation expense, $14,093 in tax reimbursement, and $7,000 in automobile
allowance. In fiscal year 1998, Ms. Adams received $8,934 for relocation
expense and $7,049 in tax reimbursement. Ms. Adams has been employed by the
Company since November 2, 1997; (iv) In fiscal year 2000, Ms. Guiney was
paid $2,265 for automobile allowance. In fiscal year 1999, Ms. Guiney was
paid $1,508 for automobile allowance. In fiscal year 1998, Ms. Guiney was
paid $20,591 for
13
<PAGE> 17
relocation expense and $12,180 in tax reimbursement; (v) For Mr. Tewell, the
amounts represent automobile allowances; (vi) For Mr. Valvo the amounts
represent automobile allowances. Mr. Valvo has been employed by the Company
since April 1, 1998.
(c) Includes amounts contributed for the benefit of the Company's executive
officers to the Company's qualified profit sharing plan and premiums paid by
the Company for split-dollar and life insurance for the benefit of certain
executive officers during the applicable years. Company contributions to the
qualified profit sharing plan for each of the 2000, 1999, and 1998 fiscal
years, respectively, included $550, $388 and $246 for Mr. Stein, $550, $388
and $0, for Mr. Landry, $550, $536 and $0 for Ms. Adams, $550, $338 and $0
for Ms. Guiney, $550, $388 and $246 for Mr. Tewell, and $550, $865 and $0
for Mr. Valvo. Premiums paid on split-dollar and life insurance for each of
the 2000, 1999, and 1998 fiscal years, respectively, included $8,880, $9,882
and $8,880 for Mr. Stein, and $8,670, $9,621 and $8,670 for Mr. Landry.
LONG-TERM INCENTIVE AWARDS IN LAST FISCAL YEAR
The Company did not grant stock awards in fiscal year 2000 to any of the
executive officers listed in the Summary Compensation Table above.
OPTIONS GRANTS IN LAST FISCAL YEAR
The table below provides certain information regarding stock options
granted during the Company's last fiscal year to the named executive officers
listed in the Summary Compensation Table above.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------- POTENTIAL REALIZABLE
NUMBER VALUE AT ASSUMED
OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL EXERCISE PRICE APPRECIATION
UNDERLYING OPTIONS PRICE FOR OPTION TERM
OPTIONS GRANTED TO PER (c)
GRANTED EMPLOYEES IN SHARE ----------------------
NAME (a) FISCAL YEAR (b) EXPIRATION DATE 5% 10%
---- ---------- ------------ -------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Stein,
Jr................. -- -- -- -- -- --
Gregory G. Landry.... -- -- -- -- -- --
Susan D. Adams....... 7,500 3.0% $3.00 March 11, 2009 $14,150 $35,859
Alice R. Guiney...... 7,500 3.0% $3.00 March 11, 2009 $14,150 $35,859
Dennis J. Tewell..... 7,500 3.0% $3.00 March 11, 2009 $14,150 $35,839
Dale R. Valvo........ 7,500 3.0% $3.00 March 11, 2009 $14,150 $35,859
</TABLE>
(a) The options become fully exercisable over four years, with 25% of the shares
subject to the option becoming exercisable on each anniversary of the option
grant date. 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.
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<PAGE> 18
(b) All options were granted at an exercise price per share equal to the fair
market value of the Company's Common Stock, on the date of grant, as quoted
on the American Stock Exchange (AMEX).
(c) The amounts shown as potential realizable value illustrate what might be
realizable upon exercise immediately prior to expiration of the option term
using the 5% and 10% appreciation rates established in regulations of the
Securities and Exchange Commission, compounded annually. The potential
realizable value is not intended to predict future appreciation of the
Company's stock. The values shown do not consider nontransferability or
termination of the options upon termination of employment.
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 29, 2000, by the executive officers listed in the Summary
Compensation Table above.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
NUMBER OF OPTIONS AT FISCAL
SHARES ACQUIRED FISCAL YEAR END YEAR END (1)
ON EXERCISE OF VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME OPTIONS REALIZED UNEXERCISABLE(U) UNEXERCISABLE(U)
---- --------------- -------- ----------------- ----------------
<S> <C> <C> <C> <C>
Robert B. Stein, Jr...... 12,500 $9,375 210,938(E) $ 21,420(E)
137,812(U) --(U)
Gregory G. Landry........ 8,125 6,094 137,750(E) 26,177(E)
78,750(U) --(U)
Susan D. Adams........... -- -- 10,000(E) --(E)
17,500(U) 1,875(U)
Alice R. Guiney.......... -- -- 11,250(E) --(E)
16,250(U) 1,875(U)
Dennis J. Tewell......... -- -- 20,000(E) 6,460(E)
12,500(U) 1,875(U)
Dale R. Valvo............ -- -- 5,000(E) --
22,500(U) 1,875(U)
</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 Company's Common
Stock on January 29, 2000, which was $3.25. Certain of the executive
officers have 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 29, 2000. Such options are not "in the money" and, therefore,
their value is not disclosed above.
15
<PAGE> 19
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In March 1998, the Company adopted a Supplemental Executive Retirement Plan
(the "SERP") to provide additional retirement benefits, payable in a lump sum,
to certain executive officers. Currently, only Messrs. Stein and Landry
participate in the SERP. The SERP is an unfunded plan; however, the Company
intends to use the cash surrender value of key life insurance policies purchased
by the Company on the lives of Messrs. Stein and Landry to fund its obligations
under the Plan. Messrs. Stein and Landry have no claim or right to the proceeds
of the cash surrender value of the insurance policies that are payable upon
their death. To the extent they have an accrued vested benefit under the SERP,
they will only have a claim against the general assets of the Company. Messrs.
Stein and Landry are each 100% vested as of the end of fiscal year 2000.
The benefits under the SERP are payable in a lump sum, which reflects the
annual life benefit determined under the SERP, discounted to its present value.
The lump sum benefit is based on providing the participant the present value of
an annual annuity commencing at age 65 and payable through participant's death
equal to (a) 50% of the average of participant's three greatest years of
compensation during participant's last five years of service with the Company
multiplied by a percentage equal to the actual years of service credited through
retirement divided by the years of service the participant could have been
credited with through the age of 65, less (b) the actuarial equivalent value, as
determined under the SERP, of (i) half the participant's Social Security
benefits and (ii) all Company contributions or allocations on the participant's
behalf to or under any other deferred compensation or retirement-type plans,
such as the Company 401(k) matching contribution, plus deemed interest equal to
seven percent compounded annually, on such contributions or allocations. Stock
option grants and incentive stock awards are not considered under the SERP as
Company contributions or allocations under a retirement plan. The portion of the
benefit that is based on the percentage of years of service credited to the
participant will accelerate to 100% upon (a) a change of control that is not
approved by two-thirds of the Board of Directors or (b) the Company terminating
the participant without "good cause."
The compensation covered under the SERP is generally the same compensation
that is covered in the Summary Compensation Table for Messrs. Stein and Landry,
except that compensation under the SERP does not include the Company 401(k)
match or compensation from any equity based compensation plan including stock
options and incentive stock awards.
If Messrs. Stein and Landry, who are both currently 42 years of age,
retired at age 65 and they both received annual increases in their compensation
each year through age 65, they would be entitled to an accrued lump sum benefit
of approximately $4,196,000 and $2,695,000 respectively, at age 65. If any
excise taxes are due on such payments, the payments will be grossed up to cover
such taxes.
DIRECTORS' COMPENSATION
Messrs. Barrett, Birchfield, and Janes received Directors' fees of $21,500,
$18,500 and $15,500, respectively, for the fiscal year 2000. Messrs. Adams,
Everets, and Foley deferred $21,000, $22,000 and $15,000, respectively, in
Directors' fees pursuant to the Directors' Deferred Compensation Plan that was
adopted in fiscal year 1999. Under the plan, a Director's compensation is
credited to the Director's account and valued thereafter as if the Director had
invested the deferred amount in the Company's Common Stock. The annual fee for
outside Directors for the 2000 fiscal year is $12,000 plus $1,000 for each
regular or special meeting of the Board attended, plus $500 for telephonic
meetings. The remaining Directors, who are employees of the Company, receive no
Directors' fees.
16
<PAGE> 20
In February 1999, Messrs. Barrett, Everets, Birchfield, Janes and Adams each
received options to purchase 3,500 shares of the Company's Common Stock at $3.38
per share, pursuant to the stock option plan for outside directors. In addition,
Messrs. Adams and Foley each received options to purchase 3,500 shares of the
Company's Common Stock at $3.75 per share, as their initial stock option grants
pursuant to the stock option plan for outside directors. Mr. Foley was elected
to the Board of Directors in fiscal year 2000. Mr. Adams was elected to the
Board of Directors in fiscal year 1998 but did not receive his initial stock
option grant until fiscal year 2000.
EMPLOYMENT AGREEMENTS
In January 2000, the Company entered into employment agreements with
Messrs. Stein, Landry and Colley. The employment agreements for Messrs. Stein
and Landry commenced on January 1, 2000 and are initially for three (3) year
terms. The employment agreement for Mr. Colley commenced on January 18, 2000 and
is initially for a term which shall terminate on December 31, 2002. Each of the
employment agreements provide that commencing on January 1, 2001 and each
January 1 thereafter, each term is automatically extended one additional year
such that the remaining unexpired term shall be three (3) years unless the
Company or the employee gives notice before December 31st of each year that it
or he does not desire to have the term extended. Under the employment
agreements, Messrs. Stein, Landry and Colley receive annual salaries that may be
increased, but may not be decreased. In addition, the employment agreements
provide that the Board of Directors, or a committee thereof, may award each
employee annual bonuses if performance criteria to be determined by the Board
are met.
Under the employment agreements, if the employee's employment is terminated
for any reason, other than by the Company without cause or by the employee for
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 the employee
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. In addition, if an employee is disabled and there is no
disability program in effect or if an employee dies, then the employee's
beneficiary will receive 100% of the employee's annual salary plus an amount
equal to the highest of the aggregate bonus payments earned by the employee for
any of the last three 12-month periods prior to the date of termination.
The employment agreements provide that if the employee's termination is by
the Company without cause or by the employee for good reason, and not as a
result of the employee's death or disability, the employee will receive his full
salary and bonus through the date of termination. The amount of the employee's
bonus will be the highest of the aggregate bonus payments earned by the employee
for any of the last three 12-month periods prior to the date of termination. The
agreement for Mr. Colley also provides that after such termination, Mr. Colley
will receive a severance payment equal to 100% of the sum of his then current
full base salary and annual bonus. The agreements for Messrs. Stein and Landry
also provide that after such termination, each of Messrs. Stein and Landry will
receive a severance payment equal to three (3) times the sum of his then current
full base salary and annual bonus. If any payment in connection with the
termination of the employee's employment under the employment 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 the employee an
additional payment equal to the amount of any excise tax the employee incurs as
a result of the employee's receipt of the additional payment.
17
<PAGE> 21
If the members of the Committee of Concerned Shareholders were elected as
directors at this Annual Meeting, that change in the composition of the Board of
Directors of the Company would constitute a "change of control" under the
employment agreements, but would not result in the obligation of the Company to
make any severance payments to Messrs. Stein, Landry and Colley, unless their
employment is subsequently terminated by the Company without cause or by that
employee for good reason. Under the employment agreements, "good reason"
includes, among other things, the following:
- The assignment to the employee of any duties or responsibilities
inconsistent with his status of his current position with the Company,
his removal from that position or a diminution in the nature or status of
his responsibilities from those currently in effect.
- In the case of Messrs. Stein and Landry, the failure by the Board to
renominate them for election as a director of the Company.
- A change in the person or body to whom the employee reports if following
that change the employee is subject to unreasonable demands regarding his
business time and efforts, abusive or embarrassing treatment or other
material adverse changes in his working environment and conditions.
While the failure of Messrs. Stein and Landry to be elected at the Annual
Meeting would not result in the obligation of the Company to make any severance
payments to Messrs. Stein and Landry, they would be entitled to terminate their
employment for good reason if they were not renominated at the next annual
meeting of the Company. In addition, Mr. Stein would be entitled to terminate
his employment for good reason if the Board appoints Mr. Colaccino President and
Chief Executive Officer of the Company.
If the members of the Committee of Concerned Shareholders were elected to
the Board of Directors of the Company and, immediately thereafter, the Company
terminated Messrs. Stein, Landry and/or Colley without cause or those employees
terminated their employment for good reason, Mr. Stein would be entitled to
approximately $1,350,000 in severance payments, Mr. Landry would be entitled to
approximately $937,500 in severance payments and Mr. Colley would be entitled to
approximately $250,000 in severance payments.
18
<PAGE> 22
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is composed entirely of outside directors. The Compensation
Committee, which consists of Messrs. Everets (Chairman), Adams, Barrett, and
Foley, is responsible for establishing and administering the Company's executive
compensation policies and the Company's stock option and other employee equity
plans. This report addresses the compensation policies for the fiscal year 2000
for executive officers and in particular for Mr. Robert B. Stein, Jr. in his
capacity as President, Chief Executive Officer and Chairman of the Board.
GENERAL COMPENSATION POLICY
The objectives of the Company's executive compensation program are to:
- Provide a competitive compensation package that will attract and
retain superior talent and reward performance;
- Support the achievement of desired Company performance; and
- Align the interests of executives with the long-term interests of
shareholders through award opportunities that can result in ownership
of shares of the Company's Common Stock, thereby encouraging the
achievement of superior results over an extended period.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised primarily
of: (i) base salary, which is set on an annual basis; (ii) annual incentive
bonuses, which are based on the achievement of predetermined financial
objectives of the Company and individual objectives; (iii) discretionary
bonuses, which are granted under special circumstances; (iv) supplemental
executive retirement plan benefit; and (v) long-term incentive compensation in
the form of periodic stock option and restricted stock grants, with the
objective of aligning the executive officers' long-term interests with those of
the shareholders and encouraging the achievement of superior results over an
extended period.
The Compensation Committee performs annual reviews of executive
compensation, during which the Compensation Committee reviews executive
compensation packages of the Company compared with available information on
other national and regional convenience store chains, including some, but not
all, of the companies included in the Peer Group Index (defined below).
In considering compensation of the Company's executives, one of the factors
the Compensation Committee takes into account is the anticipated tax treatment
to the Company of various components of compensation. The Company does not
believe Section 162(m) of the Internal Revenue Code of 1986, as amended, which
generally disallows a tax deduction for certain compensation in excess of $1
million to any of the executive officers appearing in the Summary Compensation
Table above, will have an effect on the Company. The Compensation Committee has
considered the requirements of Section 162(m) of the Code and its related
regulations. It is the Company's present policy to take
19
<PAGE> 23
reasonable measures to preserve the full deductibility of substantially all
executive compensation, to the extent consistent with its other compensation
objectives.
BASE SALARY
The Compensation Committee reviews base salary levels for the Company's
executive officers on an annual basis. In determining salaries, the Compensation
Committee takes into consideration individual experience and performance, and
comparable compensation data available on other national and regional
convenience store chains. The Company seeks to set base salaries to be
competitive with compensation paid by comparable companies to persons with
similar experience.
ANNUAL INCENTIVE BONUSES
The Compensation Committee determines the amount of annual cash bonuses
based on achievement of predetermined financial, operational and strategic
objectives. Giving greatest weight to the attainment of financial targets,
specifically pre-tax earnings and cash flow, the Company also awards bonuses
based on various operational and strategic objectives geared to specific
management groups (i.e., financial, management, information systems,
construction and marketing), and for Mr. Robert B. Stein, Jr. individually.
LONG-TERM INCENTIVE COMPENSATION
Long-term incentive compensation, in the form of stock options and
restricted stock grants, allows the executive officers to share in any
appreciation in the value of the Company's Common Stock. The Compensation
Committee believes that an enhanced market value for the Company's shares of
Common Stock should be a primary objective of senior management, and that stock
option and restricted stock grant participation align executive officers'
interests with those of the shareholders. The amounts of the awards are designed
to reward past performance and create incentives to meet long-term objectives.
In determining the amount of each grant, the Compensation Committee takes into
account the number of shares held by the executive prior to the grant.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("SERP")
The Company adopted the SERP to provide additional retirement benefits to
certain key executives. It is intended to attract and retain these executives.
The benefits primarily accrue under the SERP based on compensation paid to the
executive and the years of service the executive provides to the Company.
Currently only Messrs. Stein and Landry participate in the SERP. The Company
believes that these benefits are reasonable in relation to the executive
compensation practices of other companies.
NON-QUALIFIED COMPENSATION PLAN
In fiscal year 2000, the Company adopted a non-qualified compensation plan
for its "highly compensated employees," a group of which includes, but is not
limited to, the executive officers set forth in the Executive Officer's
Compensation table. Under the Company's 401(k) Savings and Profit Sharing Plan,
"highly compensated employees" are not able to receive the same tax deferred
savings and company match as the "non-highly compensated employees" are able to
receive. A purpose of the non-qualified plan is to permit the "highly
compensated employees" to receive the same level of
20
<PAGE> 24
company match received by the non-highly compensated employees under the
Company's 401(k) plan. Another purpose of the non-qualified plan is to permit
the "highly compensated employees" to increase their tax deferred savings above
what they would otherwise be permitted under the Company's 401(k) plan. There
are certain risks inherent in the non-qualified plan which are not present in
the 401(k) plan. Distributions under the plan, including deferral amounts,
company match and earnings are paid from the general assets of the company and
are required to be distributed to the employee upon a termination of service
prior to normal retirement. Thus, the non-qualified plan participant might be
forced to receive deferred income earlier than anticipated, creating negative
tax consequences. In addition, non-qualified plan participants are general
creditors of the Company and are not secured in the same way as the 401(k)
participant.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Stein, who holds the positions of Chairman of the Board, President and
Chief Executive Officer, was paid a base salary of $391,346 in fiscal year 2000.
Effective May 23, 1999, Mr. Stein's base salary was increased to $400,000 per
year. The Compensation Committee set Mr. Stein's base salary based in part on
information and advice provided by outside consultants relating to compensation
paid to executives with similar responsibility and companies of similar size.
Mr. Stein also was paid a discretionary bonus of $50,000 in fiscal year 2000. In
setting Mr. Stein's discretionary bonus, the Compensation Committee considered
the following factors, among others: comparable store sales increased, gallons
of gasoline increased based on comparable stores, store expansion continued at
appropriate levels, improved profitability for fiscal year 1999 and the Company
was selected as the number one convenience store chain in the country by
Convenience Store Decisions magazine.
THE COMPENSATION COMMITTEE:
John W. Everets, Chairman
Albert T. Adams
Frank W. Barrett
William A. Foley
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<PAGE> 25
PERFORMANCE GRAPH
The Performance Graph set forth below compares the performance of the
former Class A Common Stock over the past five years with (i) the cumulative
total return on the American Stock Exchange Stock Market (the "AMEX") and (ii) a
peer group index consisting of AMEX Stocks Standard Industry Codes 5410-5419
(grocery stores) ("Peer Group Index").
The figures presented assume the reinvestment of all dividends into shares
of Common Stock on the dividend payment date and that $100 was invested in
Common Stock and in the AMEX Stock Market Index (U.S. Companies) and Peer Group
Index on January 29, 1995, and held through January 29, 2000 (the end of the
Company's most recent fiscal year).
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Dairy Mart Convenience Stores, Inc.
Prepared by the Center for Research in Security Prices
Produced on 04/06/2000 including data to 01/29/2000
[GRAPH]
<TABLE>
<CAPTION>
AMEX STOCKS (SIC 5410-
DAIRY MART CONVENIENCE AMEX STOCK MARKET (US 5419 US COMPANIES)
STORES, INC. COMPANIES) GROCERY STORES
---------------------- --------------------- ----------------------
<S> <C> <C> <C>
01/27/1995 100 100 100
01/28/1995 100 103.158 105.173
03/29/1995 95.082 104.036 106.21
04/28/1995 111.475 107.132 118.197
05/26/1999 137.705 110.025 126.375
06/29/1995 131.148 111.889 126.219
07/28/1995 124.59 118.206 138.954
08/29/1995 160.656 119.474 134.115
09/29/1995 147.541 124.182 140.457
10/27/1995 157.377 118.095 142.623
11/29/1995 177.049 121.758 150.96
12/29/1995 147.541 125.203 142.232
02/02/1996 147.541 124.996 148.334
02/29/1996 157.377 127.376 149.494
03/29/1996 157.377 128.552 150.273
04/29/1996 144.262 133.56 144.986
05/29/1996 157.377 136.903 155.637
06/28/1996 154.098 129.779 163.77
07/29/1996 157.377 118.882 151.949
08/29/1996 157.377 123.469 155.522
09/27/1996 131.148 125.916 157.299
10/29/1996 131.148 123.198 153.112
11/29/1996 129.508 129.147 154.862
12/27/1996 114.754 127.204 159.402
01/31/1997 150.82 130.168 152.503
02/28/1997 137.705 132.558 150.742
03/27/1997 124.59 128.23 149.759
04/29/1997 121.312 121.444 150.892
05/29/1997 157.377 134.166 152.936
06/27/1997 152.459 138.78 157.629
07/29/1997 160.656 143.687 152.515
08/29/1997 147.541 146.882 151.975
09/29/1997 144.262 158.127 153.745
10/29/1997 127.869 152.997 142.832
11/28/1997 118.033 153.073 158.019
12/29/1997 129.508 154.957 156.797
01/30/1998 109.836 156.313 152.388
02/27/1998 114.754 165.951 171.051
03/27/1998 111.476 174.412 179.57
04/29/1998 98.361 176.772 172.334
05/29/1998 111.476 170.269 203.976
06/29/1998 101.639 174.213 203.011
07/29/1998 101.64 172.401 204.165
08/28/1998 93.443 148.085 201.449
09/29/1998 98.361 149.872 202.832
10/29/1998 91.803 153.745 203.569
11/27/1998 114.754 163.192 213.842
12/29/1998 100 166.243 199.447
01/29/1999 91.803 178.304 200.26
02/26/1999 88.525 174.388 186.476
03/29/1999 98.361 176.431 185.283
04/29/1999 95.082 189.567 162.945
05/28/1999 101.64 192.534 169.671
06/29/1999 98.361 191.56 164.811
07/29/1999 95.082 193.147 192.913
08/27/1999 140.984 190.013 197.934
09/29/1999 98.361 189.235 182.432
10/29/1999 85.246 191.509 158.438
11/29/1999 114.754 204.639 156.841
12/29/1999 88.525 212.388 145.462
01/28/2000 85.246 211.448 152.485
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighed daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.00 on 01/27/1995
22
<PAGE> 26
CERTAIN TRANSACTIONS
STOCK OWNED BY DM ASSOCIATES
DM Associates Limited Partnership ("DM Associates") is the owner of record
of 702,617 shares of Common Stock of the Company, representing approximately
14.4% of the issued and outstanding shares of Common Stock. The general partner
of DM Associates is New DM Management Associates I, which is a general
partnership. The general partners of New DM Management Associates I are Robert
B. Stein, Jr., a Director and the Chairman of the Board, Chief Executive Officer
and President of the Company, and Gregory G. Landry, a Director and the Vice
Chairman and Chief Financial Officer of the Company.
OUTSIDE COUNSEL
Albert T. Adams, one of the Company's directors, is a partner of Baker &
Hostetler LLP, which acts as the Company's general outside legal counsel. The
Company expects that Baker & Hostetler will continue to provide legal services
in that capacity in fiscal year 2001.
OTHER TRANSACTIONS
On April 16, 1999 the Company entered into an IT Services Agreement with
EmpowerWare, Inc. EmpowerWare, Inc. is a Connecticut-based company specializing
in financial and retail accounting software. It is owned by Scott Stein, the
former Vice President Management Information Systems of the Company and the
brother of Robert B. Stein, Jr. Scott Stein resigned from the Company on April
30, 1999. In connection with his resignation he received a stay on bonus of
$65,000. For a monthly fee of approximately $55,000 (plus expenses) EmpowerWare,
Inc. provides relationship management, project management and administration,
software upgrades, production support and other services. The term of the
Agreement is from May 3, 1999 to May 1, 2001, unless otherwise terminated or
extended in accordance with its terms. The Company believes that the fees
payable to EmpowerWare, Inc. are on terms no less favorable than would be
available in an arm's-length transaction with any other vendor.
REQUIRED VOTES OF SHAREHOLDERS
Under Delaware law and pursuant to the Company's Bylaws, the presence in
person or by proxy of the holders of a majority of the voting power of the
Common Stock entitled to vote at the Annual Meeting is necessary for a quorum to
transact business at the Annual Meeting. In order for the nominees to be elected
as Directors by the shareholders, the affirmative vote of a plurality of the
Common Stock present in person or by proxy is necessary. Abstentions, broker
non-votes and shares represented by proxies that are marked to "withhold
authority," will be counted for the purpose of determining if a quorum is
present, but will not be included in the vote total and, therefore, will have no
effect on the vote.
COST AND METHOD OF SOLICITATION
The Company will bear the cost of this solicitation. While no precise
estimate of this cost can be made at the present time, the Company currently
estimates that it will spend a total of approximately
23
<PAGE> 27
$50,000 for its solicitation of proxies, including expenditures for attorneys,
solicitors and advertising, printing, transportation and related expenses, but
excluding the salaries and wages of regular employees and officers and the
normal expenses of an uncontested proxy solicitation for the election of
directors. As of May 2, 2000, the Company has incurred proxy solicitation
expenses of approximately $2,000. In addition to soliciting proxies by mail,
Directors of the Company may solicit proxies in person or by telephone or
telecopy.
The Company will also reimburse brokers, fiduciaries, custodians and other
nominees, as well as persons holding stock for others who have the right to give
voting instructions, for out-of-pocket expenses incurred in forwarding this
proxy statement and related materials to, and obtaining instructions or
authorizations relating to such materials from, beneficial owners of the
Company's capital stock. The Company will pay for the cost of these
solicitations, but these individuals will receive no additional compensation for
these solicitation services. The Company has retained the proxy solicitation
firm of MacKenzie Partners ("MacKenzie") at estimated fees of not more than
$25,000 in the aggregate, plus reasonable out-of-pocket expenses, to participate
in the solicitation of proxies and revocations. The Company also has agreed to
indemnify MacKenzie against certain liabilities and expenses. The Company
estimates that approximately 35 employees of MacKenzie will be involved in the
solicitation of proxies on behalf of the Company.
INFORMATION CONCERNING DIRECTORS WHO MAY SOLICIT PROXIES
Under the applicable regulations of the SEC, each of the Directors of the
Company is deemed to be a "Participant" in the Company's solicitation of
proxies. The following table sets forth (a) the name, business address and
principal occupation of the Directors and nominees as a Director of the Company
and any officers and employees of the Company who may also solicit proxies from
shareholders of the Company ("Participants") and (b) the dates, types and
amounts of each Participant's purchases and sales of the Company's Common Stock
within the past two years. Unless otherwise indicated, the principal occupation
refers to such person's position with the Company and the business address is
300 Executive Parkway West, Hudson, Ohio 44236.
Except as otherwise indicated, shares of Common Stock of the Company owned
of record by each Participant are also owned beneficially by such Participant.
The number of shares of Common Stock of the Company owned by each Director or
nominee is set forth in the table under "Principal Owners of Common Stock."
<TABLE>
<CAPTION>
PURCHASE (P),
DATE OF SALE (S)
NAME, BUSINESS ADDRESS TRANSACTION OR AWARD (A) TYPE AND AMOUNT
---------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
Albert T. Adams................. 5/05/98 P 5,000 Common Stock
Partner 6/25/98 A 5,000 Common Stock Options
Baker & Hostetler 6/25/98 A 5,500 Common Stock Options
3200 National City Center 2/01/99 A 3,500 Common Stock Options
1900 East 9th Street 6/10/99 A 3,500 Common Stock Options
Cleveland, Ohio 44114-3485 2/01/00 A 3,500 Common Stock Options
</TABLE>
24
<PAGE> 28
<TABLE>
<CAPTION>
PURCHASE (P),
DATE OF SALE (S)
NAME, BUSINESS ADDRESS TRANSACTION OR AWARD (A) TYPE AND AMOUNT
---------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
Frank W. Barrett................ 6/25/98 A 5,000 Common Stock Options
Executive Vice President 6/25/98 A 5,500 Common Stock Options
Family Bank, FSB 2/01/99 A 3,500 Common Stock Options
1441 Main Street 2/01/00 A 3,500 Common Stock Options
Springfield, MA 01101 5/02/00 P 2,000 Common Stock
J. Kermit Birchfield, Jr........ 6/25/98 A 5,000 Common Stock Options
Chairman 6/25/98 A 5,500 Common Stock Options
Displaytech, Inc. 2/01/99 A 3,500 Common Stock Options
2602 Clover Basin Drive 2/01/00 A 3,500 Common Stock Options
Longmont, CO 80503 5/02/00 P 5,000 Common Stock
John W. Everets................. 6/25/98 A 5,000 Common Stock Options
Chairman of the Board & CEO 6/25/98 A 5,500 Common Stock Options
HPSC, Inc. 2/01/99 A 3,500 Common Stock Options
60 State Street 2/01/00 A 3,500 Common Stock Options
Boston, MA 02109 5/02/00 P 5,000 Common Stock
William A. Foley................ 6/10/99 A 3,500 Common Stock Options
Chairman, President & CEO 2/01/00 A 3,500 Common Stock Options
LESCO, Inc. 5/02/00 P 1,000 Common Stock
20005 Lake Road
Rocky River, OH 44116
Thomas W. Janes................. 6/25/98 A 5,000 Common Stock Options
Managing Director and 6/25/98 A 5,500 Common Stock Options
General Partner 2/01/99 A 3,500 Common Stock Options
Triumph Connecticut Limited 2/01/00 A 3,500 Common Stock Options
Partnership
28 State Street, 37th Floor
Boston, MA 02109
Gregory G. Landry............... 6/25/98 A 50,000 Common Stock Options
Vice Chairman and 6/25/98 A 55,000 Common Stock Options
Chief Financial Officer 11/01/99 P 8,125 Common Stock
4/05/00 A 66,000 Common Stock Options
4/05/00 A 18,000 Common Stock
5/03/00 P 2,500 Common Stock
</TABLE>
25
<PAGE> 29
<TABLE>
<CAPTION>
PURCHASE (P),
DATE OF SALE (S)
NAME, BUSINESS ADDRESS TRANSACTION OR AWARD (A) TYPE AND AMOUNT
---------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
Robert B. Stein, Jr............. 6/25/98 A 87,500 Common Stock Options
Chairman of the Board, 6/25/98 A 96,250 Common Stock Options
President and 7/06/98 P 1,000 Common Stock
Chief Executive Officer 8/24/98 P 1,000 Common Stock
7/01/98 P 2,451 Common Stock (1)
11/01/99 P 12,500 Common Stock
4/05/00 A 125,000 Common Stock Options
4/05/00 A 25,000 Common Stock
5/02/00 P 14,000 Common Stock
5/03/00 P 11,000 Common Stock
</TABLE>
- ---------------
(1) Shares include cumulative total of shares purchased pursuant to the
Company's 401(k) plan between 7/01/98 and 12/31/99.
Except as described in this Proxy Statement, none of the Participants nor
any of their respective affiliates or associates (together, the "Participant
Affiliates") (i) directly or indirectly beneficially owns any securities of the
Company or of any subsidiary of the Company or (ii) has had any relationship
with the Company in any capacity other than as a shareholder, employee, officer
or director. Furthermore, except as described in the Proxy Statement, no
Participant or Participant Affiliate is either a party to any transaction or
series of transactions since January 31, 1999, or has knowledge of any currently
proposed transaction or series of transactions, (i) to which the Company or any
of its subsidiaries was or is to be a party, (ii) in which the amount involved
exceeds $60,000, and (iii) in which any Participant or Participant Affiliate has
or will have, a direct or indirect material interest.
Except as described in this Proxy Statement, no Participant or Participant
Affiliates has entered into any agreement or understanding with any person
respecting any (i) future employment by the Company or its affiliates or (ii)
any transactions to which the Company or any of its affiliates will or may be a
party. Except as described in this Proxy Statement, there are no contracts,
arrangements or understandings by any Participant or Participant Affiliates
within the past year with any person with respect to any capital stock of the
Company.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal in the Company's Proxy
Statement for the fiscal year 2001 Annual Meeting of the Shareholders of the
Company may do so in accordance with Securities and Exchange Commission Rule
14a-8 and is advised that the proposal must be received by the Company's Chief
Financial Officer at the Company's principal office located at One Dairy Mart
Way, 300 Executive Parkway West, Hudson, Ohio 44236, no later than December 22,
2000. For those shareholder proposals which are not submitted in accordance with
Rule 14a-8, the proxies designated by the Board of Directors may exercise their
discretionary voting authority, without any discussion on the proposal in next
year's Proxy Statement, with respect to any proposal which is received by the
Company after March 30, 2001.
26
<PAGE> 30
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, was the
Independent Auditors for the Company for fiscal year 2000. Representatives of
the firm are expected to be present at the Annual Meeting to respond to
appropriate questions and have the opportunity to make a statement if they so
desire.
GENERAL
The Company's Annual Report to Shareholders contains financial statements
for the fiscal year ended January 29, 2000, as well as other information
concerning the operations of the Company.
The Company is not aware of any matters other than those set forth in this
Proxy Statement or referred to in the accompanying Notice of Annual Meeting of
Shareholders, which will be presented at the Annual Meeting. However, if any
other matters should properly come before the meeting, it is intended that
proxies will be voted thereon in accordance with the best judgment of the person
or persons voting such proxies.
27
<PAGE> 31
IMPORTANT
1. Be sure to vote on the WHITE proxy card. We urge you not to sign any proxy
card which is sent to you by the Committee of Concerned Shareholders.
2. If any of your shares are held in the name of a bank, broker or other
nominee, please contact the person responsible for your account and direct
him or her to vote on the WHITE proxy "FOR" the Board of Directors' nominees.
3. If you have any questions or need assistance in voting your shares, please
call toll free:
MacKenzie Partners
156 Fifth Avenue, P.H. 3
New York, NY 10010
CALL TOLL FREE (800) 322-2885
<PAGE> 32
YOUR VOTE IS IMPORTANT
PLEASE VOTE TODAY
DETACH HERE
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
PROXY
DAIRY MART CONVENIENCE STORES, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert B. Stein, Jr., Gregory
G. Landry and Albert T. Adams, and each or any of them, with full
power of substitution, the proxies of the undersigned to vote all of
the shares of Common Stock of Dairy Mart Convenience Stores, Inc.
("Dairy Mart") which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Dairy Mart to be held at the
Sheraton Suites, 1989 Front Street, Cuyahoga Falls, Ohio 44221 on
the 25th day of May, 2000 at 10:00 a.m. (Eastern time), and at any
adjournment or postponement thereof, with all the powers the
undersigned would possess if personally present upon:
PLEASE RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 33
PLEASE SIGN, DATE
AND RETURN THE
ATTACHED PROXY CARD
DETACH HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ITS NOMINEES.
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHELD
1. Election of [ ] [ ] NOMINEES: 2. In their discretion such other matters as may
Directors Albert T. Adams properly come before the meeting.
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEES Frank W. Barrett
J. Kermit Birchfield, Jr.
John W. Everets
William A. Foley
Thomas W. Jones UNLESS A CONTRARY DIRECTION IS INDICATED, THE
__________________________________________________ Gregory G. Landry SHARES REPRESENTED BY THIS PROXY SHALL BE
(TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE Robert B. Stein, Jr. VOTED FOR THE ELECTION OF THE NOMINEES AS
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED.) DIRECTORS AND IN THE DISCRETION OF THE
PROXIES AS TO OTHER MATTERS.
SIGNATURE _____________________ TITLE ________________ DATE ___________________
SIGNATURE _____________________ TITLE ________________ DATE ___________________
NOTE: Please sign above exactly as the shares are issued. When shares
are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by an authorized
person.
</TABLE>
