Travel Ports of America, Inc.
3495 Winton Place, Building C
Rochester, New York 14623
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
October 22, 1996
The Annual Meeting of the Shareholders of Travel Ports of America, Inc., a
New York corporation, will be held at the Gateway Banquet & Conference
Center, 4853 West Henrietta Road, Henrietta, New York 14467, on Tuesday,
October 22, 1996, at 9:00 a.m. (local time), for the purpose of considering
and acting upon the following:
1. The election of directors;
2. The approval of the 1996 Employees Incentive Stock Option Plan; and
3. The transaction of such other business as properly may come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on September 13, 1996 are
entitled to notice of and to vote at the meeting.
Shareholders are cordially invited to attend the Annual Meeting. However,
whether or not you plan to attend, you are urged to sign, date and return
promptly the enclosed proxy in the accompanying envelope.
By Order of the Board of Directors
William Burslem III
Secretary
September 16, 1996
TRAVEL PORTS OF AMERICA, INC.
3495 Winton Place, Building C
Rochester, New York 14623
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 22, 1996
This proxy statement is furnished to the shareholders of Travel
Ports of America, Inc. in connection with the solicitation of proxies for
use at the Annual Meeting of Shareholders to be held October 22, 1996, and
at all adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders.
Whether or not you expect to be personally present at the meeting,
you are requested to fill in, sign, date, and return the enclosed form of
proxy. Any person giving such proxy has the right to revoke it at any time
before it is voted. All shares represented by duly executed proxies in the
accompanying form will be voted unless they are revoked prior to the voting
thereof.
The close of business on September 13, 1996 is the record date for
the determination of shareholders entitled to vote at the Annual Meeting of
the Shareholders. The stock transfer books will not be closed. As of August 1,
1996, there were outstanding and entitled to be voted at such meeting
5,254,424 shares of Common Stock. The holders of the Common Stock are
entitled to one vote for each share of Common Stock held on the record date.
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended April 30, 1996, has been included with this proxy statement and
the accompanying proxy.
The solicitation of the accompanying proxy is made by the Board of
Directors of the Company. The solicitation will be by mail and the expense
thereof will be paid by the Company. In addition, solicitation of proxies may
be made by telephone or telegram by officers or regular employees of the
Company.
ELECTION OF DIRECTORS
Nominees for Election as Directors
Seven directors of the Company are to be elected to hold office until
the next annual election and until their respective successors have been duly
elected and qualified. Certain information with respect to the nominees for
election of directors proposed by the Company is set forth below. Should any
one or more of the persons named be unable or unwilling to serve (which is
not expected), the proxies (except proxies marked to the contrary) will be
voted for such other person or persons as the Board of Directors of the
Company may recommend.
The Board of Directors recommends a Vote FOR the election of all
nominees for director.
Biographical Summaries of Nominees
Served as
Name, Principal Occupation Director
Age Since
E. Philip Saunders, Chairman of The Board of Directors
of the Company and Chief Executive Officer 59 1979
John M. Holahan, President of the Company 56 1979
William Burslem III, Vice President, Secretary and
Treasurer of the Company 52 1991
Dante Gullace, Attorney-at-Law 64 1979
William A. DeNight, Independent Business Consultant 62 1986
John F. Kendall, Chief Operating Officer of Perk
Development Corporation 53 1988
John O. Eldredge, * Certified Public Accountant 65 1991
* Member of the Audit Committee of the Board of Directors
Mr. Saunders has been Chairman of the Board of Directors and Chief
Executive Officer of the Company for more than five years. In addition to his
relationship with the Company, he is the Chief Executive Officer of Sugar
Creek Corporation, which operates, through subsidiaries, convenience stores
and a petroleum distribution business.
Mr. Holahan has been President and Chief Operating Officer of the
Company for more than five years.
Mr. Burslem has been the Vice President, Finance; Secretary; and
Chief Financial Officer of the Company for more than five years. He has been
Treasurer since March 1996.
Mr. Gullace has been a member of the firm of Gullace, Easton & Weld,
the Company's counsel, for more than five years.
Mr. DeNight has acted as an independent business consultant, primarily
in the transportation industry, for more than five years.
Mr. Kendall has been Chief Operating Officer of Perk Development
Corporation, which is engaged in the operation of several Perkins Family
Restaurants, for more than five years.
Mr. Eldredge retired from the firm of Eldredge, Fox & Porretti,
Certified Public Accountants, where he was a partner for more than five years.
PRINCIPAL SHAREHOLDERS
Under the regulations of the Securities and Exchange Commission, persons who
have power to vote or dispose of shares of the Company, either alone or
jointly with others, are deemed to be beneficial owners of such shares.
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of the record date by (i) each person known by
the Company to own, beneficially, more than 5% of its outstanding Common
Stock, (ii) each director of the Company other than the directors named under
(i) below, and (iii) all officers and directors of the Company as a group:
Number of Shares
Name (1) Beneficially Owned % of Class
(i) E. Philip Saunders 1,600,000(2) 30.45%
Phoenix Associates II 546,800 10.41%
John M. Holahan 505,000(3) 9.61%
(ii)William A. DeNight 100 less than 1%
John O. Eldredge 1,000 less than 1%
William Burslem III 500(4) less than 1%
(iii)All Officers and Directors as a group,
including those named above 2,106,600(2,3,4) 40.09%
(1) Unless otherwise noted, the shareholders referred to above have sole
voting and investment power with respect to the Common Stock which they own.
(2) Does not include (a) 100,000 shares into which Convertible Debentures
held by Mr. Saunders may be converted or (b) 1,000 shares available if Mr.
Saunders exercises warrants that he holds.
(3) Does not include (a) options to purchase 290,000 shares, granted to Mr.
Holahan under the Company's Incentive Stock Option Plans, discussed below or
(b) 16,666 shares into which Convertible Debentures held by Mr. Holahan may
be converted.
(4) Does not include options to purchase 36,428 shares, granted to Mr.
Burslem under the Company's Incentive Stock Option Plans, discussed below.
CERTAIN BUSINESS RELATIONSHIPS
In March 1984, the Company entered into a 20-year sublease with
Maybrook Realty, Inc., a corporation owned by Mr. Saunders and another
individual, for its Maybrook, New York travel plaza. The lease expires in
March 2004 and provides for the Company to pay rent at the rate of $37,500
per month, plus all utilities, taxes, and other charges and expenses related
to the property. The future minimum rental commitment for the non-cancelable
lease amounts to $262,500 during the balance of fiscal 1996/97, $450,000 in
fiscal 1997/98, $450,000 in fiscal 1998/99, and $2,212,500 for the remaining
term of the lease. The Company has three five-year-renewal options at
monthly rentals of $41,250 (during the first renewal term), $45,375 (during
the second renewal term), and $49,912 (during the third renewal term). The
Company also has an option to purchase the travel plaza for $3,500,000 at the
end of the original term or any renewal term. On the basis of its experience
with other truck stops, the Company believes that the terms of this lease are
at least as favorable as terms that could have been obtained for a similar
facility from a disinterested landlord in arms' length negotiations.
On May 1, 1986, the Company purchased its Belmont, New York facility
from a corporation owned by Messrs. Saunders and Griffith. The facility was
purchased for $450,000 cash, with an additional agreement by the Company to
pay $150,000 more out of future earnings of the facility. To date, the
Company has paid $93,547 of the additional price. On the basis of its
experience with other truck stops, the Company believes the acquisition terms
are at least as favorable as terms that could have been obtained for a
similar facility from a disinterested seller in arms' length negotiations.
In January 1986, the Company entered into a 10-year agreement with
W.W. Griffith Oil Co., Inc. ("Griffith Oil"), a subsidiary of Sugar Creek
Corporation (a corporation owned by Mr. Saunders), pursuant to which Griffith
Oil supplied gasoline and diesel fuel to the Company's facilities in
Dansville, Binghamton, and Belmont, New York. These three locations represent
approximately 16% of the Company's total requirements for petroleum products.
The agreement provided for the Company to purchase products for Griffith
Oil's cost, plus trucking, plus a fixed margin equal to $.01 per gallon. The
Company also buys fuel for other locations from Griffith Oil on the same
basis. In addition, the Company purchases diesel fuel at its Berwick,
Pennsylvania bulk fuel facility from Griffith Oil pursuant to an agreement
that can be canceled at any time. Under this agreement, the Company purchases
product for Griffith Oil's cost plus $.0025 per gallon. During the fiscal
year ended April 30, 1996, the Company purchased approximately $23,710,000 in
petroleum products from Griffith Oil pursuant to these arrangements. On the
basis of its experience in purchasing from other suppliers and its continuous
review of the markets, the Company believes that the terms of these
agreements are as favorable to the Company as the terms available from any
other supplier of petroleum products.
The Company retained Mr. Gullace's law firm as its general counsel in
fiscal year 1995/96 and continues to retain them in 1996/97.
Board of Directors and Committees
There were three meetings of the Board of Directors during the fiscal
year ended April 30, 1996. All directors attended each meeting, except Dante
Gullace who missed one meeting. Each non-employee director is currently paid
$1,000 plus his expenses for attendance at each Board meeting. The Board has
only one committee, the Audit Committee. Except as described below, all of
the remaining functions of the Board are performed by the full Board. All
Directors filed the necessary forms with the Securities and Exchange
Commission on time except for John Eldredge who was one month late in filing
a Form 4 on his purchase of 1,000 shares of stock.
The functions of the Audit Committee are to review the Company's
reports to the shareholders with management and the independent auditors to
assure that appropriate disclosure is made; to recommend the firm of
independent auditors for appointment to perform the annual audit; to review
and approve the scope of the independent auditors' work; to review the
effectiveness of the Company's internal controls; and related matters. The
Committee met with the Company's chief financial officer two times and met
with the Company's independent auditors once during the fiscal year ended
April 30, 1996.
Executive Compensation
The following table sets forth information concerning the cash
compensation paid or accrued by the Company for the Chief Executive Officer
and each executive officer who received total compensation in excess of
$100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Other Annual
Position Year Salary ($) Bonus($) Compensation ($)
E. Philip Saunders 1996 None 79,641 123,800
CEO (1) 1995 None 81,016 123,800
1994 None 115,635 123,800
John M. Holahan 1996 194,029 166,534 None
President and COO 1995 187,720 173,771 None
1994 187,720 205,450 None
William Burslem III 1996 103,396 46,900 None
Vice President, CFO, 1995 102,012 48,864 None
Secretary and Treasurer 1994 99,000 47,066 None
(1) See Report of the Board of Directors on Executive Compensation
There was no Long Term Compensation or Other Compensation of any kind
paid or accrued. The Option/SAR Grants in the last fiscal year are detailed
in the schedule below. There were no Aggregated Option/SAR Exercises in the
last fiscal year. There were no Long-term Incentive Plans - Awards in the
last fiscal year. The Company has no Pension Plan. There were no Ten-year
Option/SAR Repricings in the last fiscal year. There were no other New Plan
Benefits in the last fiscal Year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Individual Grants Annual Rates of
% of Total Options/SARs Stock Price
Options/SARs Granted to Employees Exercise Expiration
Name Granted in Fiscal Year Price Date 5% 10%
E. Philip
Saunders None None None N/A N/A N/A
John M.
Holahan 100,000 100% $3.37 10/24/05 $70,000 $311,000
William
Burslem III None None None N/A N/A N/A
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND APRIL 30, 1996 OPTION/SAR VALUES
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Acquired Value Options/SARs Options/SARs
Name on Exercise Realized at April 30, 1996 at April 30, 1996
E. Philip
Saunders None N/A None N/A
John M.
Holahan None N/A 200,000 $38,000
William
Burslem III 5,200 $9,100 39,800 $30,550
Performance Chart
The following chart compares the five-year cumulative total returns
of Travel Ports of America, Inc. to the CRSP Index for NASDAQ Stock Market
(US Companies) and the CRSP Index for NASDAQ Trucking & Transportation
Stocks. Travel Ports of America, Inc. does not have a peer group that
publishes information that could be used for a comparison. The NASDAQ
Trucking & Transportation Stock was used for our peer comparison.
The chart inserted in the Proxy Statement at this point reflects a
graph comparing Travel Ports of America, Inc. to the Nasdaq Stock Market
(US Companies) and Nasdaq Trucking & Transportation Stocks.
Report of the Board of Directors on Executive Compensation
There is no Compensation Committee as the total Board acts on matters
of compensation. The Board reviews annually the compensation of the Officers.
This review takes into account the performance of the Company over the past
year and three year periods and a projection for future performance over the
next three years.
The CEO does not receive a salary from the Company. His compensation
is based upon a consulting agreement. This agreement provides a monthly
payment of $10,316.67 and a bonus based upon the earnings of the Company. The
bonus section of the agreement ties a significant portion of his compensation
to the earnings of the Company.
The following are members of the Board: E. Philip Saunders, John M.
Holahan, William Burslem III, Dante Gullace, William A. DeNight, John F.
Kendall and John O. Eldredge.
Incentive Stock Option Plans
On July 7, 1986, the Company adopted the Incentive Stock Option Plan
(the "ISO Plan") applicable to officers and key employees of the Company. The
ISO Plan authorizes the issuance of options to purchase an aggregate of
180,000 shares of the Company's Common Stock. Options granted pursuant to the
ISO Plan are intended to constitute incentive stock options under the
Internal Revenue code of 1954, as amended. Under the ISO Plan, options may be
granted at not less than 100% (110% in the case of 10% shareholders) of the
fair market value of the Company's Common Stock on the date of grant, and the
value of the options exercised by any one employee may not exceed $100,000
per year, plus certain carryovers from prior years. Options may not be
granted more than ten years from the ISO Plan date. Options granted under the
ISO Plan must be exercised, if at all, within ten years from the date of
grant. The Shares of Common Stock acquired through exercise of an option may
not be sold for at least two years from the date of the grant of the option,
or one year after the transfer of the shares to the optionee, which ever is
later. Further, the optionee may not transfer any option except by will or
by the laws of descent and distribution. Options granted under the ISO Plan
must be exercised, if at all, within three months after termination of
employment for any reason other than death or disability and within one year
after termination of employment due to death or disability. The Board of
Directors of the Company has the power to impose additional limitations,
conditions and restrictions in connection with the grant of any option.
As of August 1, 1996, options are outstanding as follows: Mr. Burslem
- - - -- 36,436 shares; all executive officers as a group -- 32,000 shares; and all
other employees as a group -- 109,250. During the fiscal year ended April 30,
1996, no options were granted, 14,000 options were exercised and 4,000
options were terminated. This Plan terminated on July 7, 1996. In June 1996,
9,436 options were granted. Options can be exercised or terminated under this
Plan but no further options can be granted.
On October 29, 1991, the Company adopted the 1991 Incentive Stock
Option Plan (the "1991 ISO Plan") applicable to officers and key employees of
the Company. The 1991 ISO Plan authorizes the issuance of options to purchase
an aggregate of 100,000 shares of the Company's Common Stock. Options granted
pursuant to the 1991 ISO Plan are intended to constitute incentive stock
options under the Internal Revenue code of 1986, as amended. Under the 1991
ISO Plan, options may be granted at not less than 100% (110% in the case of
10% shareholders) of the fair market value of the Company's Common Stock on
the date of grant, and the value of the options exercised by any one employee
may not exceed $100,000 per year, plus certain carryovers from prior years.
Options may not be granted more than ten years from the 1991 ISO Plan date.
Options granted under the 1991 ISO Plan must be exercised, if at all, within
ten years from the date of grant. The Shares of Common Stock acquired through
exercise of an option may not be sold for at least two years from the date of
the grant of the option, or one year after the transfer of the shares to the
optionee, which ever is later. Further, the optionee may not transfer any
option except by will or by the laws of descent and distribution. Options
granted under the 1991 ISO Plan must be exercised, if at all, within three
months after termination of employment for any reason other than death or
disability and within one year after termination of employment due to death
or disability. The Board of Directors of the Company has the power to impose
additional limitations, conditions and restrictions in connection with the
grant of any option.
As of August 1, 1996, options are outstanding as follows: Mr. Burslem
- - - - 3,802 shares; all executive officers as a group - 3,802; and all other
employees as a group -- 64,998. During the fiscal year ended April 30, 1996,
no options were granted, 15,200 options were exercised and no options were
terminated.
On October 26, 1993, the Company adopted the 1993 Incentive Stock
Option Plan (the "1993 ISO Plan") applicable to officers and key employees of
the Company. The 1993 ISO Plan authorizes the issuance of options to purchase
an aggregate of 200,000 shares of the Company's Common Stock. Options granted
pursuant to the 1993 ISO Plan are intended to constitute incentive stock
options under the Internal Revenue code of 1986, as amended. Under the 1993
ISO Plan, options may be granted at not less than 100% (110% in the case of
10% shareholders) of the fair market value of the Company's Common Stock on
the date of grant, and the value of the options exercised by any one employee
may not exceed $100,000 per year, plus certain carryovers from prior years.
Options may not be granted more than ten years from the 1993 ISO Plan date.
Options granted under the 1993 ISO Plan must be exercised, if at all, within
ten years from the date of grant. The Shares of Common Stock acquired through
exercise of an option may not be sold for at least two years from the date of
the grant of the option, or one year after the transfer of the shares to the
optionee, which ever is later. Further, the optionee may not transfer any
option except by will or by the laws of descent and distribution. Options
granted under the 1993 ISO Plan must be exercised, if at all, within three
months after termination of employment for any reason other than death or
disability and within one year after termination of employment due to death
or disability. The Board of Directors of the Company has the power to impose
additional limitations, conditions and restrictions in connection with the
grant of any option.
As of August 1, 1996, options are outstanding as follows: Mr. Burslem
- - - -- 5,490 shares, Mr. Holahan -- 100,000 shares; all executive officers as a
group -- 105,490; and all other employees as a group -- 94,500. During the
fiscal year ended April 30, 1996, no options were granted, no options were
exercised and 990 options were terminated.
On October 24, 1995, the Company adopted the 1995 Incentive Stock Option
Plan (the "1993 ISO Plan") applicable to officers and key employees of the
Company. The 1995 ISO Plan authorizes the issuance of options to purchase an
aggregate of 200,000 shares of the Company's Common Stock. Options granted
pursuant to the 1995 ISO Plan are intended to constitute incentive stock
options under the Internal Revenue code of 1986, as amended. Under the 1993
ISO Plan, options may be granted at not less than 100% (110% in the case of
10% shareholders) of the fair market value of the Company's Common Stock on
the date of grant, and the value of the options exercised by any one employee
may not exceed $100,000 per year, plus certain carryovers from prior years.
Options may not be granted more than ten years from the 1995 ISO Plan date.
Options granted under the 1995 ISO Plan must be exercised, if at all, within
ten years from the date of grant. The Shares of Common Stock acquired through
exercise of an option may not be so ld for at least two years from the date
of the grant of the option, or one year after the transfer of the shares to
the optionee, which ever is later. Further, the optionee may not transfer
any option except by will or by the laws of descent and distribution. Options
granted under the 1995 ISO Plan must be exercised, if at all, within three
months after termination of employment for any reason other than death or
disability and within one year after termination of employment due to death
or disability. The Board of Directors of the Company has the power to impose
additional limitations, conditions and restrictions in connection with the
grant of any option.
As of August 1, 1996, options are outstanding as follows: Mr. Holahan
- - - -- 190,000 shares; all executive officers as a group -- 190,000; and all
other employees as a group -- 10,000. During the fiscal year ended April 30,
1996, 100,000 options were granted, no options were exercised and no options
were terminated.
401(k) Plan
The Company maintains a tax-qualified, defined contribution plan that
meets the requirements of Section 401(k) of the Internal Revenue Code (The
"401(k) Plan"). All employees with one (1) year or more of service may elect
to have a portion of their salaries contributed on their behalf to the 401(k)
Plan. Although any amounts contributed to the 401(k) Plan for the benefits
of the participants are immediately and unconditionally vested, such
contributions are not currently taxable income to the participants and are
generally not available to them until termination of employment. The amount
ultimately received by a participant or by a participant's beneficiary may be
more or less than the amount contributed by the participant to the 401(k)
Plan, depending upon the investment experience of the fund chosen by the
participant, and the amount of any Company contributions made on behalf of
the participant. Amounts accrued for the Company's contributions for the
401(k) Plan at April 30, 1996 for executive officers were $4,620.00 for Mr.
Holahan and $2,992.48 for Mr. Burslem.
PROPOSAL TO APPROVE THE 1996 EMPLOYEES INCENTIVE STOCK OPTION PLAN
The Board of Directors has adopted, subject to approval by the
Shareholders, the 1996 Employee Stock Option Plan (the "1996 ISO Plan") which
provides for the granting to key employees of the Company of options to
purchase a maximum of 500,000 shares of common stock of the Company. Options
granted under the 1996 ISO Plan, which is identical to the Company's existing
ISO Plans, discussed above, will qualify as "incentive stock options" under
the Internal Revenue Code of 1986, as amended (the "Code").
The purpose of the 1996 ISO Plan is to provide increased incentive to
key employees and to encourage their ownership of the Company's stock. The
Board of Directors believes that stock option plans are a useful factor in
the development of such employees. As of August 1, 1996, 40,814 options had
been exercised, options to purchase 139,186 shares of the Company's Common
Stock were outstanding, and no shares were available for the grant of options
under the original ISO Plan. As of August 1, 1996, 39,000 options had been
exercised, options to purchase 61,000 shares of the Company's Common Stock
were outstanding, and no shares were available for the grant of options under
the 1991 ISO Plan. As of August 1, 1996, 1010 options had been exercised,
options to purchase 198,980 shares of the Company's Common Stock were
outstanding, and no shares were available for the grant of options under the
1993 ISO Plan. As of August 1, 1996, no options had been exercised, options
to purchase 200,000 shares of the Company's Common Stock were outstanding and
no shares were available for the grant of options under the 1995 ISO Plan.
Accordingly, the Board believes that additional shares should be available
for the grant of options under the 1996 ISO Plan.
The complete text of the 1996 ISO Plan is set forth in Appendix A to
this proxy statement. The following summary of certain provisions of the 1996
ISO Plan is qualified by reference to the text of the 1996 ISO Plan.
The 1996 ISO Plan authorizes the issuance of options to purchase an
aggregate of 500,000 shares of the Company's Common Stock. Options granted
pursuant to the 1996 ISO Plan are intended to constitute incentive stock
options under the Code. Under the 1996 ISO Plan, options may be granted at
not less than 100% (110% in the case of 10% shareholders) of the fair market
value of the Company's Common Stock on the date of grant, and the value of
the options exercised by any one employee may not exceed $100,000 per year,
plus certain carryovers from prior years. Options may not be granted more
than ten years from the date of adoption of the 1996 ISO Plan. Options
granted under the 1996 ISO Plan must be exercised, if at all, within ten
years from the date of grant. Options are not exercisable more than five
years after date of grant for 10% shareholders. The Shares of Common Stock
acquired through the exercise of an option may not be sold for at least two
years from the date of the grant of the option, or one year after the
transfer of the shares of the optionee. Further, the optionee may not
transfer any option except by will or by the laws of descent and distribution.
Options granted under the 1996 ISO Plan must be exercised, if at all, within
three months after termination of employment for any reason other than death
or disability and within one year after termination of employment due to
death or disability. The Board of Directors of the Company has the power to
impose additional limitations, conditions and restrictions in connection with
the grant of any option.
Federal Income Tax Consequences
An optionee does not realize income on the grant of an incentive
stock option. If an optionee exercises an incentive stock option in
accordance with the terms of the option and does not dispose of the shares
acquired within two years from the date of grant of the option nor within one
year from the date of exercise, the optionee will not realize any income by
reason of the exercise and the Company will not be allowed a deduction by
reason of the grant or exercise. The optionee's basis in the shares acquired
upon the exercise will be the amount of cash paid upon exercise. Provided the
optionee holds the shares as a capital asset at the time of sale or other
disposition of the shares, the gain or loss, if any, recognized on the sale
or other disposition will be capital gain or loss. The amount of gain or loss
will be the difference between the amount realized on the disposition of the
shares and the optionee's basis in the shares.
If an optionee disposes of the shares within two years from the date
of grant or within one year from the date of exercise (an "Early Disposition")
, the optionee will realize ordinary income at the time of disposition which
will equal the excess, if any, of the lesser of (a) the amount realized on
the disposition, or (b) the fair market value of the shares on the date of
exercise, over the optionee's basis in the shares. The Company will be
entitled to a deduction in an amount equal to such income. The excess, if any,
of the amount realized on disposition of such shares over the fair market
value of the shares on the date of exercise will be long- or short-term
capital gain, depending upon the holding period of the shares, provided the
optionee holds the shares as a capital asset at the time of disposition. If
an optionee disposes of such shares for less than his or her basis in the
shares, the difference between the amount realized and such basis will be
long- or short-term capital loss, depending upon the holding period of the
shares, provided the optionee holds the shares as a capital asset at the time
of disposition.
The excess of the fair market value of the shares at the time the
incentive stock option is exercised over the exercise price for the shares is
a tax preference item (the "Incentive Stock Option Preference") unless the
optionee makes an Early Disposition of such stock. Section 55 of the Code
imposes an Alternative Minimum Tax equal to the excess, if any, of (a)
tentative minimum tax over (b) his or her "regular" federal income tax.
Tentative minimum tax is computed on Alternative Minimum Taxable Income
("AMTI"). AMTI is adjusted gross income adjusted for allowable deductions,
tax preferences and adjustments (including the optionee's Incentive Stock
Option Preference amount). The exemption amount is $33,750, less 25% of AMTI
exceeding $112,500 for single taxpayers, $45,000, less 25% of AMTI exceeding
$150,000 for married taxpayers filing jointly and $22,500, less 25% of AMTI
exceeding $75,000 for married taxpayers filing separately.
The foregoing is a summary of the federal income tax consequences to
the participants in the 1996 ISO Plan and to the Company, based upon current
income tax laws, regulations and rulings.
Vote Required For Approval of 1996 ISO Plan
The affirmative vote of the holders of a majority of all outstanding
shares of the Company's Common Stock is required for approval of the 1996 ISO
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE 1996 ISO PLAN.
INDEPENDENT AUDITORS
The Board of Directors has selected the accounting firm of Price
Waterhouse to serve as independent auditors for the Company for the fiscal
year ending April 30, 1997. The firm has served as independent accountants
for the Company since 1986.
A representative of Price Waterhouse will be present at the meeting
with the opportunity to make a statement, and will also be available to
respond to appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may
properly be presented for action at the meeting. If any other matters should
come before the meeting requiring the vote of shareholders, the person named
in the enclosed proxy will have discretionary authority to vote proxies in
accordance with their judgment.
ADDITIONAL INFORMATION
A copy of the Annual Report, Form 10-K, filed with the Securities and
Exchange Commission, may be obtained by writing the Company at its executive
offices, 3495 Winton Place, Building C, Rochester, New York 14623, Attention:
Secretary.
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Shareholder proposals intended to be presented at the 1997 Annual
Meeting must be submitted in writing to the Corporate Secretary of the
Company at its principal executive offices located at 3495 Winton Place,
Building C, Rochester, New York 14623 by May 19, 1997.
SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
By order of the Board of Directors
William Burslem III
Secretary
Rochester, New York
September 16, 1996
APPENDIX "A"
TRAVEL PORTS OF AMERICA, INC.
1996 EMPLOYEE'S INCENTIVE STOCK OPTION PLAN
1. Purpose. The Travel Ports of America, Inc. 1996 EMPLOYEE'S
INCENTIVE STOCK OPTION PLAN (hereinafter referred to as the "Plan")
is designed to furnish additional incentive to key employees of
Travel Ports of America, Inc., a New York corporation (hereinafter
referred to as the "Company"), and its parents and subsidiaries,
upon whose judgment, initiative and efforts the successful conduct
of the business of the Company largely depends, by encouraging such
key employees to acquire a proprietary interest in the Company or to
increase the same, and to strengthen the ability of the Company to
attract and retain in its employ persons of training, experience and
ability, Such purpose will be effected through the granting of stock
options, as herein provided, which will be "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986
as the same has been and shall be amended (hereinafter referred to as
the "Code").
2. Eligibility. The persons who shall be eligible to receive options
under the Plan shall be those employees of the Company, or of any of
its parents or subsidiaries within the meaning of Section 424(e) and
(f) of the Code, who are exempt from the overtime provisions of the
Fair Labor Standards Act of 1938, as amended, by reason of employment
in an executive, administrative or professional capacity under 29
U.S.C. Section 213 (a)(1). No option shall be granted to a person who
would, at the time of the grant of such option, own, or be deemed to
own for purposes of Section 422(b)(6) of the Code, more than 10% of
the total combined voting power of all classes of shares of stock of
the Company or its parents or subsidiaries unless at the time of the
grant of the option both the following conditions are met:
(a) The option price is at least 110% of the fair market
value of the shares of stock subject to the option, as defined in
subparagraph 4(a) hereof, and
(b) The option is, by its terms, not exercisable after
the expiration of five years from the date the option is granted.
3. Shares Subject to Options.
(a) Subject to the provisions of Section 4(f) hereof,
options may be granted under the Plan to purchase in the aggregate not
more than 200,000 of the $.01 par value Common Stock of the Company or
of its parents or subsidiaries (hereinafter referred to as "Shares"),
which shares may, in the discretion of the Board of Directors of the
Company, consist either in whole or in part of authorized but unissued
Shares or Shares held in the treasury of the Company. Any Shares
subject to an option which for any reason expires or is terminated
unexercised as to such Shares shall continue to be available for
options under the Plan.
(b) No options shall be granted hereunder to any optionee
that would allow the aggregate fair market value (determined at the
time the options are granted) of the stock subject to all post 1986
incentive stock options, including the incentive stock option in
question, that such optionee may exercise for the first time during
any calendar year, to exceed $100,000. The term "post 1986 incentive
stock option" shall mean all options that are intended to be incentive
stock options and are granted on or after January 1, 1987 under any
stock option plan of the Company or any of its parents or subsidiaries.
If the Company shall ever be deemed to have a "parent" as such term is
used in Section 422 of the Code, then options intended to be incentive
stock options, granted after January 1, 1987, under such parent's stock
option plans, shall be included within the terms of the definition of
"post 1986 incentive stock options."
4. Terms and Conditions of Options. Options shall be granted by
the Board of Directors pursuant to the Plan and shall be subject to the
following terms and conditions:
(a) Price. Each option shall state the number of Shares
subject to the option and the option price, which shall be not less
than the fair market value of the Shares with respect to which the
option is granted at the item of the granting of the option; provided,
however, that the option price shall be at least 110% of the fair
market value in the case of a grant of an option to a person who would
at the time of the grant , own, or be deemed to own for purpose of
Section 422(b)(6) of the Code, more than 10% of the total combined
voting power of all classes of Shares of the Company or its parents or
subsidiaries. For purposes of this subsection, "fair market value"
shall mean:
(1) the mean between the bid and asked price for
the Shares on the business day immediately
preceding the date of the grant of the option,
or
(ii) the most recent sale price for the Shares as
of the date if the grant of the option, or
(iii) such price as shall be determined by the Board
of Directors of the Company in an attempt made
in good faith to meet the requirements of Section
422(b)(4) of the Code.
(b) Term. The term of each option shall be determined
by the Board of Directors of the Company, but in no event shall an
option be exercisable either in whole or in part after the expiration
of ten years from the date on which it is granted (or such shorter
period as is specified in Section 2(b) hereof). Notwithstanding the
foregoing, the Board of Directors and an optionee may, by mutual
agreement, terminate any option granted to such optionee under the
Plan.
(c) Non-Assignment During Life. During the lifetime of the
optionee, the option shall be exercisable only by the optionee and
shall not be assignable or transferable by the optionee, whether
voluntarily or by operation of law or otherwise, and no other person
shall acquire any rights therein.
(d) Death of Optionee. In the event that an optionee shall
die prior to the complete exercise of options granted to optionee
under the Plan, such remaining options may be exercised in whole or
in part after the date of the optionee's death only: (i) by the
optionee's estate or by or on behalf of such person or persons to
whom the optionee's rights under option pass under the optionee's
Will or the laws of descent and distribution, (ii) to the extent that
the optionee was entitled to exercise the option at the date of
optionee's death, (iii) prior to the expiration of the term of the
option, and (iv) within one (1) year after the date of the optionee's
death.
(e) Termination of Employment. An option shall be
exercisable during the lifetime of the optionee to whom it is granted
only if, at all times during the period beginning on the date of the
granting of the option and ending on the day three months before the
date of such exercise, the optionee is an employee of the Company or
its parents or its subsidiaries issuing or assuming an option granted
hereunder in a transaction to which Section 424(a) of the Code
applies; provided, however, that in the case of an optionee who is
disabled , the three month period after cessation of employment during
which an option shall be exercisable shall be one year.
Notwithstanding the foregoing, no option shall be exercisable after
the expiration of the term thereof. For the purposes of this
subsection, an employment relationship will be treated as continuing
intact while the optionee is on military duty, sick leave or other
bona fide leave of absence, such as temporary employment by the
Government, if the period of such leave does not exceed 90 days, or,
if longer, so long as a statute or contract guarantees the optionee's
right to re-employment with the Company, or any of its parents or
subsidiaries, or another corporation issuing or assuming an option
granted hereunder in a transaction to which Section 424(a) of the
Code applies. When the period of leave exceeds 90 days and the
individual's right to re-employment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to
have terminated on the 91st day of such leave.
(f) Anti-Dilution Provisions. Subject to the provisions of
Section 422 of the Code and the regulations promulgated thereunder,
the aggregate number and kind of Shares available for options under
the Plan, and the number and kind of Shares subject to, and the
option price of, each outstanding option shall be proportionately
adjusted by the Board of Directors of the Company for any increase,
decrease or change in the total outstanding Shares of the Company
resulting from a stock dividend, recapitalization, merger,
consolidation, split-up, combination, exchange of Shares or similar
transaction (but not by reason of the issuance or purchase of Shares
by the Company in consideration for money, services or property.)
(g) Power to Establish Other Provisions. Subject to
the provisions of Section 422 of the Code and regulations promulgated
thereunder, options granted under the Plan shall contain such other
terms and conditions as the Board of Directors of the Company shall
deem advisable.
5. Exercise of Option. Options shall be exercised as follows:
(a) Notice of Payment. Each option, or any installment
thereof, shall be exercised, whether in whole or in part, by giving
written notice to the Company at its principal office, specifying the
number of Shares purchased and the purchase price being paid, and
accompanied by the payment of all or such part of the purchase price
as shall be specified in the option, by cash, certified or bank check
payable to the order of the Company. Each such notice shall contain
representations on behalf of the optionee that acknowledges that the
Company is selling the Shares being acquired by the optionee under a
claim of exemption from registration under the Securities Act of 1933
as amended (hereinafter referred to as the "Act"), as a transaction
not involving any public offering; that the optionee represents and
warrants that he is acquiring such Shares with a view to "investment"
and not with a view to distribution or resale; and that the optionee
agrees not to transfer, encumber or dispose of the Shares unless: (i)
a registration statement with respect to the Shares shall be
effective under the Act, together with proof satisfactory to the
Company that there has been compliance with the applicable state law;
or (ii) the Company shall have received an opinion of counsel in form
and content satisfactory to the Company to the effect that the
transfer qualifies under Rule 144 or some other disclosure exemption
from registration and that no violation of the act or applicable
state laws will be involved in such transfer, and/or such other
documentation in connection therewith as the Company's counsel may in
its sole discretion require.
(b) Issuance of Certificates. Certificates representing the
Shares purchased by the optionee shall be issued as soon as
practicable after the optionee has complied with the provisions of
Section 5(a) hereof.
(c) Rights as a Shareholder. The optionee shall have no
rights as a Shareholder with respect to the Shares purchased until
the date of the issuance to the optionee of a Certificate
representing such Shares.
(d) Disposition of Shares. Subject to the provisions of
Section 5(a) hereof, no disposition, within the meaning of Section
424(c) of the Code, of Shares acquired by the exercise of an option
shall be made by an optionee within two years from the date of the
grant of the option or within one year after the transfer of the
Shares to the optionee; provided, however, that the foregoing holding
periods shall not apply to the disposition of Shares after the death
of the optionee by the estate of the optionee, or by a person who
acquired the Shares by bequest or inheritance or by reason of the
death of the optionee. For purposes of the preceding sentence, in the
case of a transfer of Shares by an insolvent optionee to a trustee,
receiver or similar fiduciary in any proceeding under Title 11 of the
United States Code or any similar insolvency proceeding, neither the
assignment, nor any other transfer of such Shares for the benefit of
the optionee's creditors in such proceeding shall constitute a
disposition.
6. Term of Plan. Options may be granted pursuant to the Plan
from time to time within a period of ten years after the date the
Plan is adopted by the Board of Directors of the Company or the date
the Plan is approved by the holders of a majority of the outstanding
Shares of the Company, whichever date is earlier. However, the Plan
shall not take effect until approved by the holders of a majority of
the outstanding Shares of the Company, at a duly constituted meeting
thereof, held within 12 months before or after the date the Plan is
adopted by the Board of Directors of the Company.
7. Amendment and Termination of Plan. Subject to the provisions of
Section 422 of the Code and the regulations promulgated thereunder,
the Board of Directors of the Company, without further approval by
the Shareholders of the Company, may at any time suspend or terminate
the Plan, or may amend it from time to time in any manner; provided,
however, that no amendment shall be effective without prior approval
of the Shareholders of the Company which would: (i) except as
provided in Section 4(f) hereof, increase the maximum number of
Shares for which options may be granted under the Plan; or (ii)
change the eligibility requirements for individuals entitled to
receive options under the Plan.
8. Administration. The Plan shall be administered by the Board
of Directors of the Company and decisions of the Board of Directors
concerning the interpretation and construction of any provision of
the Plan or of any option granted pursuant to the Plan shall be final.
The Company shall effect the grant of options under the Plan in
accordance with the decisions of the Board of Directors of the
Company, which may, from time to time, adopt rules and regulations
for the carrying out of the Plan. For purposes of the Plan, an
option shall be deemed to be granted when a written Incentive Option
Contract is signed on behalf of the Company by its duly authorized
officer or representative. Subject to the express provisions of the
Plan, the Board of Directors of the Company shall have the authority,
in its discretion and without limitation: (a) to determine the
individuals to receive options; the times when such individuals
shall receive options; the number of Shares to be subject to each
option; the term of each option; the date each option shall become
exercisable; whether an option shall be exercisable in whole,
in part, or installments; the number of Shares to be subject to each
installment; the date each installment shall become exercisable; the
term of each installment; the option price of each option; the terms
of payment for Shares purchased by the exercise of each option; (b)
to accelerate the date of exercise of any installment; and (c) to
make all other determinations necessary or advisable for
administering the Plan.
9. Reservation of Shares. The Board of Directors of the Company
shall be under no obligation to reserve Shares to fill options.
Likewise, because of the substantial nature of the conditions which
must be met to entitle employees to deliveries of reserved Shares,
the Board of Directors of the Company shall be under no obligation to
reserve Shares against such deliveries. The optioning and reservation
of Shares for employees hereunder shall not be construed to
constitute the establishment of a trust of the Shares so optioned and
reserved, and no particular Share shall be identified as optioned and
reserved for employees hereunder. The Company shall be deemed to have
complied with the terms of the Plan if, at the time of the issuance
and delivery pursuant to option or reservation, or both, it has a
sufficient number of Shares authorized and unissued for the purpose
of the Plan, irrespective of the date when such Shares were
authorized.
10. Application of Proceeds. The proceeds of the sale of Shares by
the Company under the Plan will constitute general funds of the
Company and may be used by the Company for any purpose.
