<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240,14a-11(c) or
Section 240,14a-12
Uni-Marts, Inc.
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(Name of Registrant as Specified in its Charter)
----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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 filings.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE> 2
UNI-MARTS, INC.
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
January 25, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Uni-Marts, Inc. The meeting will be held at the Days Inn Penn State, 240 South
Pugh Street, State College, Pennsylvania, on Thursday, February 22, 1996,
commencing at 10:00 A.M.
At the meeting, you will be asked to vote on the following proposals:
1. Election of three directors who will serve until the Annual
Meeting of Stockholders in 1999;
2. Approval of the Company's 1996 Equity Compensation Plan;
3. Amendment of the Company's existing Equity Compensation Plan to
provide for grants of nonqualified stock options to nonemployee
directors based on years of service; and
4. Ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending
September 30, 1996.
Your vote is important. Whether or not you plan to attend the meeting,
please sign, date and mail your proxy in the enclosed postpaid envelope
promptly.
Sincerely,
/S/ HENRY D. SAHAKIAN
HENRY D. SAHAKIAN
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------
UNI-MARTS, INC.
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
---------
TO THE STOCKHOLDERS:
You are hereby notified that the Annual Meeting of Stockholders of
Uni-Marts, Inc., a Delaware corporation, will be held at the Days Inn Penn
State, 240 South Pugh Street, State College, Pennsylvania, at 10:00 A.M. on
Thursday, February 22, 1996, for the following purposes:
1. To elect three directors who will serve until the Annual Meeting
of Stockholders in 1999;
2. To approve the Company's 1996 Equity Compensation Plan;
3. To amend the Company's existing Equity Compensation Plan to
provide for grants of nonqualified stock options to nonemployee
directors based on years of service;
4. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending
September 30, 1996; and
5. To transact such other business as may properly come before the
meeting. The Board of Directors is not aware of any other
business to be presented to a vote of the stockholders at the
Annual Meeting.
Information relating to the above matters is set forth in the attached
Proxy Statement. Only stockholders of record at the close of business on
January 4, 1996 are entitled to receive notice of and to vote at the Annual
Meeting and any adjournment thereof.
/S/ HARRY A. MARTIN
HARRY A. MARTIN
Secretary
State College, Pennsylvania
January 25, 1996
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY.
<PAGE> 4
UNI-MARTS, INC.
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
---------
PROXY STATEMENT
---------
This Proxy Statement is furnished to the stockholders of Uni-Marts,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors of the Company of proxies to be voted at the Annual Meeting of
Stockholders on February 22, 1996 (the "Annual Meeting") and any adjournment
thereof. This Proxy Statement and the accompanying proxy card are first being
mailed to stockholders on or about January 25, 1996. The expense of preparing,
printing and mailing the Proxy Statement will be paid by the Company. In
addition to the use of the mail, proxies may be solicited personally or by
telephone by regular employees of the Company without additional compensation.
The Company will reimburse banks, brokers and other custodians, nominees and
fiduciaries for their costs in sending the proxy materials to the beneficial
owners of the Company's stock.
Shares represented by valid proxies will be voted in accordance
with instructions contained therein or, in the absence of such instructions, in
accordance with the recommendations of the Board of Directors. A proxy may be
revoked by a stockholder by written notice of such revocation or by a later
dated proxy delivered to the Secretary of the Company at any time prior to the
shares represented by such proxy being voted.
Holders of record of the Company's Common Stock, par value $.10, at
the close of business on January 4, 1996 are entitled to notice of, and to vote
at, the Annual Meeting. As of such date, there were outstanding 6,385,910
shares of the Company's Common Stock. Each stockholder has one vote per share
on all items of business properly presented at the Annual Meeting. Under the
Amended and Restated By-laws of the Company, the presence of a quorum is
required for the transaction of business at the Annual Meeting. The presence at
the Annual Meeting, in person or by proxy, of a majority of the total number of
shares issued and outstanding and entitled to vote thereat and a majority of the
voting power of the shares issued and outstanding shall constitute a quorum for
the transaction of business. Action on all matters scheduled to come before the
Annual Meeting will be authorized by the affirmative vote of the majority of
shares present in person or represented by proxy and entitled to vote on such
matters. Abstentions and broker nonvotes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to the stockholders, whereas broker nonvotes are not counted for purposes of
determining whether a proposal has been approved. Votes cast by stockholders
will be counted by Chemical Mellon Shareholder Services, L.L.C., the Company's
transfer agent. The Company does not have any policy with respect to
maintaining the confidentiality of proxies, ballots or vote tabulations.
A copy of the 1995 Annual Report, which includes financial
statements for the fiscal year ended September 30, 1995, is enclosed.
1
<PAGE> 5
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors is composed of three classes. Class I and
Class II Directors will serve until the Annual Meetings of Stockholders in 1997
and 1998, respectively, and thereafter for terms of three years until their
successors have been elected and qualified. The Directors comprising Class III
will be elected at the Annual Meeting and will serve until the Annual Meeting of
Stockholders in 1999 and thereafter for terms of three years until their
successors have been elected and qualified. Class I and Class III are each
composed of three Directors and Class II is composed of four Directors.
The proxy agents of the Board of Directors intend to vote, unless
instructed otherwise, for election of the nominees named below. If for any
reason any of the nominees becomes unable or is unwilling to serve, at the time
of the Annual Meeting the persons named in the enclosed proxy card will have
discretionary authority to vote for a substitute nominee or nominees. It is not
anticipated that any nominee will be unavailable for election. Directors shall
be elected by a majority of the votes cast.
The following sets forth information as to each nominee for
election as a Director at the Annual Meeting, each Director continuing in office
and an Executive Officer who is not a Director, including their ages, present
principal occupations, other business experience for at least the last five
years and memberships on committees of the Board of Directors:
Nominees for election at the Annual Meeting with terms expiring in
1999:
Name Age Position
- ---- --- --------
Joseph V. Paterno (1)(3)(5) 69 Director
Charles C. Pearson, Jr. (2)(3) 56 Director
Daniel D. Sahakian (2)(3)(4) 63 Director
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ABOVE
NOMINEES.
Directors whose present terms continue until 1997:
Name Age Position
- ---- --- --------
Henry D. Sahakian (3)(4)(5) 59 Chairman of the Board and Chief
Executive Officer
Bruce K. Heim (2)(3)(4) 54 Director
Michael J. Serventi (1)(5) 45 Director
Directors whose present terms continue until 1998:
Name Age Position
- ---- --- --------
J. Kirk Gallaher 49 Executive Vice President, Chief
Financial Officer and Director
G. David Gearhart (3)(4)(5) 43 Director
Jeremiah A. Keating (1)(5) 56 Director
Charles R. Markham 60 President, Chief Operating
Officer and Director
2
<PAGE> 6
Executive Officer:
Name Age Position
- ---- --- --------
Howard D. Romines 61 Executive Vice President
- --------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Nominating Committee.
(5) Member of the Strategic Planning Review Committee.
Henry D. Sahakian is the founder of the Company and has served as
Chairman of the Board since the Company's inception. He also served as the
Company's President until 1994.
J. Kirk Gallaher joined the Company in April 1980 and has served as
Executive Vice President and Chief Financial Officer since 1994. From 1987 to
1994, Mr. Gallaher served as the Company's Senior Vice President. Mr. Gallaher
became a Director of the Company in October 1986.
G. David Gearhart became Senior Vice President and Managing Director of
Grenzebach Glier & Associates, Inc. in 1995. He was Senior Vice President for
Development and University Relations of The Pennsylvania State University for
the preceding ten years. Mr. Gearhart became a Director of the Company in
October 1994.
Bruce K. Heim has served for the past 13 years as Chairman of the Board
and President of Keystone Real Estate Group, Inc., a property management and
investment company located in State College, Pennsylvania. Mr. Heim became a
Director of the Company in November 1977.
Jeremiah A. Keating has been President of Jet Aviation Business Jets,
Inc., a company providing charter aircraft services located in Teterboro, New
Jersey, since February 1990. Mr. Keating became a Director of the Company in
September 1987.
Charles R. Markham joined the Company in February 1975 and has served as
President and Chief Operating Officer since 1994. From 1981 to 1994, Mr.
Markham served as the Company's Executive Vice President. Mr. Markham became a
Director of the Company in January 1978.
Joseph V. Paterno has been the head coach of The Pennsylvania State
University football team for the past 28 years. Mr. Paterno became a Director
of the Company in December 1986.
Charles C. Pearson, Jr. has been Market President and Chief Executive
Officer of PNC Bank, Central PA, a subsidiary of PNC Bank, Pittsburgh, PA, since
1994. From 1988 to 1994, he was President and Chief Executive Officer of United
Federal Bancorp, Inc. until its acquisition by PNC Bank, National Association.
Mr. Pearson became a Director of the Company in October 1994.
3
<PAGE> 7
Howard D. Romines joined the Company in March 1979 and has served as
Executive Vice President since 1994. Mr. Romines served as the Company's Vice
President of Operations from 1985 to 1994.
Daniel D. Sahakian has served for the past 15 years as President and
Chief Executive Officer of HFL Corporation and for the past eight years as
President of Unico Corporation, both of which are controlled by him and Henry D.
Sahakian. HFL Corporation and Unico Corporation are commercial real estate
companies. Mr. Sahakian became a Director of the Company in October 1981. He
is Henry D. Sahakian's brother.
Michael J. Serventi has been President and Chief Executive Officer of
Lew-Mark Baking Co. and Garden State Cookies for the past 12 years. Mr.
Serventi became a Director of the Company in December 1986.
For information with respect to the share ownership of the Company's
Directors, see "Principal Stockholders."
The Board of Directors met five times during the last fiscal year. The
Board of Directors has an Audit Committee, a Compensation Committee, an
Executive Committee, a Nominating Committee and a Strategic Planning Review
Committee. The Audit Committee communicates with and receives information
directly from the Company's independent auditors. The Audit Committee met two
times during the last fiscal year. The Compensation Committee periodically
reviews, implements and administers the compensation policies and programs for
and performance of the Company's executive officers and establishes guidelines
for the compensation of other personnel. The Compensation Committee met three
times during the last fiscal year. The Executive Committee meets as needed
between full board meetings to discuss and act upon certain significant matters
affecting the Company. The Executive Committee met two times during the last
fiscal year. The Nominating Committee considers nominees recommended by
security holders pursuant to procedures set forth in the Company's By-laws. The
Nominating Committee met one time during the last fiscal year. The Strategic
Planning Review Committee meets periodically to review and make recommendations
regarding the Company's strategic plan. The Strategic Planning Review Committee
met two times during the last fiscal year. Each incumbent director attended
more than 75% of the meetings of the Board of Directors and the meetings of
Board Committees on which each Director served.
4
<PAGE> 8
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the total annual compensation paid or
accrued by the Company to or for each executive officer of the Company for the periods listed below.
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
-------------------------------
Awards
-------------------------------
Securities
Annual Compensation Underlying Performance All
----------------------------- Options/SARs Unit Plan Other
Name and Principal Position Year Salary ($) Bonus ($) (# of Shares) (# of Units) Comp. ($)
- ---------------------------- ---- ---------- --------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Henry D. Sahakian, 1995 270,000 167,832 13,000 1,650 61,342 (a)(b)(c)
Chairman of the Board 1994 270,000 115,735 13,100 1,572 20,175 (a)(b)(c)
and Chief Executive Officer 1993 270,000 39,600 0 54,960 (a)(b)(c)
Charles R. Markham, 1995 150,000 105,894 8,500 1,120 50,733 (a)(b)(c)
President, Chief Operating 1994 136,500 94,035 7,960 955 51,132 (a)(b)(c)
Officer and Director 1993 130,250 30,000 0 50,726 (a)(b)(c)
J. Kirk Gallaher, 1995 130,000 93,906 6,500 840 24,879 (a)(b)(c)
Executive Vice President, 1994 122,250 79,570 5,960 715 25,283 (a)(b)(c)
Chief Financial Officer 1993 116,650 30,000 0 24,921 (a)(b)(c)
and Director
Howard D. Romines, 1995 100,000 31,968 2,500 335 21,958 (a)(b)(c)
Executive Vice President (d) 1994 85,000 20,000 2,500 0 21,534 (a)(b)(c)
- -----------------------
(a) Includes premiums paid by the Company on split-dollar insurance policies on the lives of Henry D.
Sahakian, Charles R. Markham, J. Kirk Gallaher and Howard D. Romines in the amounts of $54,365,
$44,605, $18,851 and $15,751, respectively, for the fiscal year ended September 30, 1995, $12,132,
$44,605, $18,851 and $15,752, respectively, for the fiscal year ended September 30, 1994 and, for
Messrs. Sahakian, Markham and Gallaher, $47,630, $44,605 and $18,851, respectively, for the fiscal year
ended September 30, 1993.
(b) Includes Company contributions to the Company's Deferred Compensation Plan in the amount of $5,000 for
each executive officer listed.
(c) Includes Company contributions to the Company's Retirement Savings and Incentive Plan (the "Savings
Plan") for Messrs. Sahakian, Markham, Gallaher and Romines in the amounts of $1,977, $1,128, $1,028 and
$1,207, respectively, for the fiscal year ended September 30, 1995, $3,043, $1,527, $1,432 and $782,
respectively, for the fiscal year ended September 30, 1994 and, for Messrs. Sahakian, Markham and
Gallaher, $2,330, $1,121 and $1,070, respectively, for the fiscal year ended September 30, 1993.
(d) Mr. Romines was elected as an Executive Officer in October 1994.
</TABLE>
5
<PAGE> 9
GRANTS OF STOCK OPTIONS. The following table sets forth incentive stock
options granted to executive officers during the fiscal year ended September 30,
1995.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants For Option Terms
------------------------------------------------------ ------------------
% of Total
Options/SARs
Options/ Granted to Exercise
SARs Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- -------------- ----------- ------------ --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Henry D. Sahakian 13,000 22.0% $5.375 10-16-04 43,944 111,363
Charles R. Markham 8,500 14.4% $5.375 10-16-04 28,733 72,814
J. Kirk Gallaher 6,500 11.0% $5.375 10-16-04 21,972 55,681
Howard D. Romines 2,500 4.2% $5.375 10-16-04 8,451 21,416
</TABLE>
STOCK OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUES. The
following table sets forth information concerning the value of stock options
held at the end of the fiscal year ended September 30, 1995 by each of the
Company's executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs
Shares FY-End (#) at FY-End ($)
Acquired Value --------------- -------------
on Realized Exercisable/ Exercisable/
Name Exercise ($) Unexercisable Unexercisable
---- -------- -------- --------------- -------------
<S> <C> <C> <C> <C>
Henry D. Sahakian 6,000 9,960 73,100/13,000 241,746/21,125
Charles R. Markham 0 0 58,695/8,500 143,865/13,813
J. Kirk Gallaher 20,000 82,500 36,695/6,500 55,615/10,563
Howard D. Romines 0 0 23,665/2,500 60,232/ 4,063
</TABLE>
All options held by the named individuals were fully exercisable at September
30, 1995 except options granted on October 17, 1994.
6
<PAGE> 10
LONG-TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR. The
following table sets forth certain information concerning awards made under the
Company's Performance Unit Plan (the "Performance Plan") to the named executives
during the fiscal year ended September 30, 1995.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR
Performance Estimated Future-Payouts Under
Number of or Other Non-Stock Price-Based Plans
Shares, Units Period Until -------------------------------
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout ($ or #) ($ or #) ($ or #)
---- ------------- ------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Henry D. Sahakian 1,650 3 Years $0 $82,500 $95,000
Charles R. Markham 1,120 3 Years $0 $56,000 $68,500
J. Kirk Gallaher 840 3 Years $0 $42,000 $54,500
Howard D. Romines 335 3 Years $0 $16,750 $29,250
</TABLE>
Units shown in this table represent performance units under the
Performance Plan. The Performance Plan determines the amount of compensation
over three-year periods based upon the performance of the Company as well as
upon each executive officer meeting individual goals consistent with that
officer's position with the Company. The actual value of a performance unit at
the end of the performance period is dependent 50% upon the Company achieving
its cash flow target during the period and 50% upon the individual achieving the
personal goals set for him.
COMPENSATION OF DIRECTORS. Each Director who is not an officer of the
Company received a retainer of $7,500, of which $5,000 was paid in shares of
Common Stock, and a grant of nonqualified stock options to purchase 2,000 shares
of the Company's Common Stock at an exercise price of $5.625 for serving as a
Director during fiscal year 1995. Each Director also received a fee of $1,000
for each board or committee meeting attended. Committee chairmen received
$2,000 for each meeting they chaired.
EMPLOYMENT AGREEMENTS. The Company has entered into a change-in-control
agreement with each of Messrs. Henry D. Sahakian, Markham, Gallaher and Romines
which provides for, among other things, the payment of an amount equal to 2.99
times the officer's base compensation if such officer's employment is terminated
in connection with a change-in-control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Heim, Pearson and Daniel D. Sahakian. Mr. Heim is a
director of Unico Corporation ("Unico"), formerly the Company's parent, the
majority of the stock of which is beneficially owned or controlled by Henry D.
Sahakian and Daniel D. Sahakian.
In fiscal year 1995, the Company acquired real property for $1,605,300
by exercising an option that was controlled by Whitehall Associates, a
partnership in which the Company was a partner. Mr. Heim is also a partner in a
partnership which controls 75% of Whitehall Associates. The Company also paid
rents of $86,300 to Whitehall Associates in fiscal year 1995.
The Company leases one store location from Daniel D. Sahakian which Mr.
Sahakian purchased from HFL Corporation in fiscal year 1995. The lease has a
7
<PAGE> 11
remaining term of 13 years with two five-year and one four-year renewal options,
with the rent increasing by 2% each year. Rent paid to Daniel D. Sahakian under
this lease during fiscal year 1995 was $24,400.
During fiscal year 1995, the Company leased seven store locations and
four other locations from Unico. Certain directors, executive officers and
stockholders of the Company are also directors, executive officers and
stockholders of Unico. Effective October 1, 1992, the leases for seven of these
locations are for terms of 15 years with two five-year and one four-year renewal
options. Annual rental increases are limited to a maximum of 2% each year. The
leases for the remaining four locations are for one-year periods, with rents
increasing by 2% each year, and are cancelable only at the option of the Company
at the end of any year upon six months' written notice. Aggregate rent paid
under these leases to Unico during fiscal year 1995 was $250,200.
The Company leases its corporate headquarters, certain storage
facilities and four of its store locations from HFL Corporation, all of the
stock of which is beneficially owned or controlled by Henry D. Sahakian and
Daniel D. Sahakian. The leases for the corporate headquarters and storage
facilities were entered into between 1991 and 1995 and expire in 1996 to 2000,
and provide for a current aggregate annual rent of $350,700. Some of the leases
are renewable annually subject to increases of 2% to 4%. The aggregate rent
paid to HFL Corporation for the corporate headquarters and storage facilities
was $342,400 for fiscal year 1995. The four leases of store locations from HFL
Corporation were entered into between August 1991 and September 1995, are for
terms of five years with renewal options and provide for annual rents
aggregating $84,100. The aggregate rent paid under these leases to HFL
Corporation during fiscal year 1995 was $83,300.
During fiscal year 1995, the Company received from HFL Corporation
$10,400 for reimbursement for certain general and administrative expenses. The
Company intends to continue to provide some administrative services for HFL
Corporation and expects to be reimbursed therefor.
On February 26, 1993, the Company made a one-time, special grant of
nonqualified stock options to Henry D. Sahakian and Daniel D. Sahakian each to
purchase 150,000 shares of Common Stock at a price of $4.50 per share in
exchange for their relinquishment of effective voting control of the Company as
a result of the elimination of the super-majority voting provisions of the
Company's Class B Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for implementing and administering the Company's compensation
policies and programs for its executive officers. A subcommittee of the
Committee administers the Company's Equity Compensation Plan (the "Stock Option
Committee"). The Committee and the Stock Option Committee both are composed
entirely of nonemployee directors. The Committee's compensation policy is to
provide a comprehensive structure that will (i) motivate the officers to
implement and achieve the Company's strategic and financial goals, (ii) retain
and attract key executive personnel and (iii) align a significant portion of the
compensation of management with the interests of the stockholders through stock
options and other long-term incentives that are designed to provide additional
compensation only when the Company achieves good financial results and all
stockholders benefit. The Company and the Committee are strongly committed to
maximizing stockholder value through consistent growth and profitability.
8
<PAGE> 12
The Company's overall compensation program for its executive officers is
comprised of the following elements:
A. Base Salary;
B. Annual Bonus Plan;
C. Long-Term Incentive Program composed of:
(i) Stock Option Plan; and
(ii) Performance Unit Plan
BASE SALARY AND BENEFITS
The Committee reviews the base salary and benefits provided to each
executive officer on an annual basis and evaluates this compensation against
available data for other businesses. The Committee monitors base salary studies
prepared by independent consulting firms, proxy information and other similar
data to attempt to ensure that the Company continues to provide competitive
levels of compensation. The Committee believes that the compensation provided
is competitive with that generally offered by comparable convenience store
operators and other similarly sized businesses.
BONUSES
For the fiscal year ended September 30, 1995, bonuses were awarded to
the executive officers based upon the terms of the Annual Bonus Plan, as
administered by the Committee. The plan rewards the executive officers based on
the amount of increase of the Company's pre-tax earnings over the previous
fiscal year (without regard to extraordinary items). If pre-tax earnings do not
equal or exceed that of the previous year, no bonuses will be paid to any
executive officer. As illustrated by the statement of earnings set forth in the
Company's Annual Report, the Company's fiscal performance merited the bonuses
paid. Bonuses earned for the fiscal year, as a percent of each individual's
total salary and bonuses, were approximately 38% for Mr. Sahakian, 41% for Mr.
Markham, 42% for Mr. Gallaher and 24% for Mr. Romines. The Committee believes
that the bonus plan is designed to relate executive compensation directly to
Company performance so that such bonuses will provide a financial reward only
for the achievement of substantial business results.
STOCK OPTIONS
The Committee believes that stock ownership by executive officers is
important in order that a portion of each executive's compensation is directly
aligned with the economic interest of the stockholders of the Company. The
Stock Option Committee believes that stock option grants provide opportunities
for capital accumulation, promote long-term stock retention and foster an
executive officer's proprietary interest in the Company. Under the Equity
Compensation Plan, options are issued at a price equal to the fair market value
of a share of Common Stock on the date of grant and the options expire after ten
years. Although the grant of stock options and the number of shares subject to
option are discretionary with the Stock Option Committee, executives have
annually received stock options in order to allow them to increase their stock
ownership. In addition, the Committee takes the number of shares subject to
option and the potential long-term benefit to the executives into account in
setting each executive's overall compensation targets. Because the Company and
the Stock Option Committee believe that stock options are a valuable incentive,
9
<PAGE> 13
in recent years, stock options have been extended to many other individuals
employed by the Company.
PERFORMANCE UNIT PLAN
The objectives of the Performance Plan are to provide a meaningful
long-term incentive to senior executives and encourage their continued
employment by the Company. Under the Performance Plan, the amount of
compensation is determined over succeeding three-year periods based upon the
performance of the Company, as well as upon each executive officer meeting
individual goals consistent with that officer's position with the Company. On
October 1, 1995, a total of 3,580 performance units were granted to the four
executive officers (1,500 for Mr. Sahakian, 1,030 for Mr. Markham, 740 for Mr.
Gallaher and 310 for Mr. Romines). Each performance period unit has an initial
value of $50 and the performance period will end on September 30, 1998. The
actual value of the performance unit at the end of the performance period is
dependent (50%) upon the Company achieving its cash flow target during the
period and (50%) on the individual achieving the personal goals set for him.
The actual value of a performance unit at the end of the period may vary from 0%
to in excess of 100% of the $50 nominal value.
CHIEF EXECUTIVE OFFICER COMPENSATION
The salary, bonus and stock option and performance unit awards of the
Chief Executive Officer are determined by the Committee and the Stock Option
Committee, in conformance with the policies described above. Mr. Sahakian was
paid a base salary for the fiscal year ended September 30, 1995 of $270,000. In
order to keep Mr. Sahakian's base salary and benefits in line with the
Committee's philosophy for the future, Mr. Sahakian's base salary was increased
for the fiscal year commencing October 1, 1995 to $288,900 (the same percentage
increase granted to other executive officers even though Mr. Sahakian had not
received an increase in either of the last two fiscal years). Mr. Sahakian will
continue to participate, and receive potential rewards under, the incentive
based plans established for that purpose. In this way, the Committee is acting
consistently with its philosophy of making much of an executive's total
compensation dependent upon the Company's performance.
The Company continues to monitor the applicability of Section 162(m) of
the Internal Revenue Code of 1986, as amended, which restricts the federal
income tax deduction that may be claimed by a "public company" for compensation
paid the Chief Executive Officer and the four most highly compensated other
officers to $1 million each except to the extent that any amount in excess of
such limit is paid pursuant to a plan containing a performance standard or a
stock option plan that meets certain requirements. The Company's current stock
option plan and the proposed new stock option plan, if approved by stockholders,
meet the requirements of Section 162(m). In light of this, the Committee does
not believe that Section 162(m) will have any adverse affect on the Company but
continues to evaluate the Company's compensation program in light of that
restriction.
Bruce K. Heim, Chairman
Charles C. Pearson, Jr.
Daniel D. Sahakian
10
<PAGE> 14
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder
return on the Company's Common Stock for the last five years with the cumulative
total return on the Standard and Poor's 500 Index and a peer group index based
on the common stock of the following three companies: Casey's General Stores,
Inc., Dairy Mart Convenience Stores, Inc. and Uni-Marts, Inc. The cumulative
total stockholder return set forth in the graph assumes the investment of $100
in the Company's Common Stock and each index on September 30, 1990, and
reinvestment of all dividends.
<TABLE>
<CAPTION>
9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts, Inc. 100 90 79 150 149 213
S & P 500 100 131 146 165 171 221
Peer Group 100 185 200 263 285 525
</TABLE>
11
<PAGE> 15
CERTAIN TRANSACTIONS
The Company received commissions of $310,300 in fiscal 1995 from
Coinfone Telecommunications, Inc. ("CTI") for coin-operated telephones installed
at certain of the Company's convenience store locations. The majority of the
stock of CTI is beneficially owned or controlled by persons related to Henry D.
Sahakian.
The foregoing transaction and those described under "Compensation
Committee Interlocks and Insider Participation" were or are, as the case may be,
on terms which are at least as favorable as could have been obtained with or
from a third party. All such transactions were approved by a majority of the
independent directors of the Board.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of January 4, 1996, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known to the Company to own 5% or more of the outstanding shares of
Common Stock, (ii) each of the Company's Directors and Executive Officers and
(iii) all of the Directors and Executive Officers as a group. As of such date,
there were 6,385,910 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Common Stock
Beneficial Ownership (1)
-----------------------------
Name and Address of Beneficial Owner (2) Shares Percent
- ---------------------------------------- -------------- -------
<S> <C> <C>
Henry D. Sahakian 794,645 (3) 12.0%
Daniel D. Sahakian 1,035,371 (4) 15.8
J. Kirk Gallaher 80,587 (5) 1.3
G. David Gearhart 4,390 (6) 0.1
Bruce K. Heim 38,052 (7) 0.6
Jeremiah A. Keating 5,998 (8) 0.1
Charles R. Markham 85,293 (9) 1.3
Joseph V. Paterno 37,248 (10) 0.6
Charles C. Pearson, Jr. 10,224 (11) 0.2
Howard D. Romines 26,362 (12) 0.4
Michael J. Serventi 242,662 (13) 3.8
All Directors and Executive Officers
as a Group (11 persons) 2,360,832 34.1
Alexander Sahakian Trust 423,500 6.6
Armen Sahakian Trust 423,500 6.6
</TABLE>
- ---------------
(1) Includes options to purchase Common Stock granted pursuant to the
Company's Equity Compensation Plan and certain nonqualified stock
options which are exercisable within 60 days.
(2) Addresses of all beneficial owners listed are in care of the Company.
(3) Includes 92,400 shares held by Henry D. Sahakian jointly with his
wife, 36,500 shares owned by his wife, 6,513 shares held in the
Savings Plan and options to purchase 236,100 shares of Common Stock.
12
<PAGE> 16
Henry D. Sahakian is one of two trustees for two trusts for the
benefit of Daniel D. Sahakian's children. Henry D. Sahakian disclaims
beneficial ownership of and the beneficial ownership in the table
above does not include the stock held by these trusts.
(4) Includes 423,500 shares owned by Daniel D. Sahakian's wife, 44,000
shares held jointly with his wife, 70,115 shares held as trustee for
two trusts and options to purchase 152,000 shares of Common Stock.
The beneficial ownership in the table above does not include 847,000
shares held by two trusts for the benefit of Daniel D. Sahakian's
children.
(5) Includes 36,357 shares held by Mr. Gallaher jointly with his wife,
1,035 shares held in the Savings Plan and options to purchase 43,195
shares of Common Stock.
(6) Includes 1,036 shares held by Mr. Gearhart jointly with his wife and
options to purchase 2,000 shares of Common Stock.
(7) Includes 3,630 shares owned by the Heim Family Partnership, 26,512
shares owned by Mr. Heim's wife and options to purchase 2,000 shares
of Common Stock.
(8) Includes 1,100 shares held by Mr. Keating jointly with his wife and
options to purchase 2,000 shares of Common Stock.
(9) Includes 1,704 shares held in the Savings Plan and options to purchase
67,195 shares of Common Stock.
(10) Includes 32,350 shares held by Mr. Paterno jointly with his wife and
options to purchase 2,000 shares of Common Stock.
(11) Includes options to purchase 2,000 shares of Common Stock.
(12) Includes 2,235 shares held in the Savings Plan and options to purchase
23,665 shares of Common Stock.
(13) Includes options to purchase 2,000 shares of Common Stock.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of its Common Stock to file with the Securities and Exchange Commission
and the American Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to it and written representations that no other reports
were required during the fiscal year ended September 30, 1995, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten-
percent shareholders were complied with.
13
<PAGE> 17
PROPOSAL II
APPROVAL OF THE COMPANY'S
1996 EQUITY COMPENSATION PLAN
THE PROPOSAL
At the Annual Meeting, a proposal will be presented to the
stockholders to approve the adoption of the Company's 1996 Equity Compensation
Plan (the "1996 Plan"). The 1996 Plan was created to assist the Company in
retaining and attracting employees, officers and members of the Board who are
not employees ("Nonemployee Directors") by offering those individuals a
propriety interest in the Company. On November 6, 1995, the Board of Directors
adopted the 1996 Plan, subject to stockholder approval at the Annual Meeting.
The 1996 Plan will not be effective unless or until stockholder approval is
obtained.
VOTE REQUIRED FOR APPROVAL
The proposal to approve the 1996 Plan requires the affirmative vote of
a majority of shares present in person or represented by proxy at the Annual
Meeting. Abstentions may be specified with respect to the proposal and will be
considered present at the Annual Meeting, but will not be counted as affirmative
votes. Abstentions, therefore, will have the practical effect of voting against
the proposal because the affirmative vote of a majority of the shares present at
the Annual Meeting is required to approve the proposal. Broker nonvotes are
considered not present at the Annual Meeting for the purpose of voting on this
proposal and, therefore, will not be voted or have any effect on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL.
DESCRIPTION OF THE PLAN
The 1996 Plan is set forth as Exhibit A to this Proxy Statement. The
description of the 1996 Plan contained herein is qualified in its entirety by
reference to the 1996 Plan document.
GENERAL. The purpose of the 1996 Plan is to encourage stock ownership
by employees and Nonemployee Directors of the Company and its subsidiaries so
that such individuals may acquire or increase their proprietary interest in the
Company and its subsidiaries, participate as a stockholder in its success and
may be encouraged to remain employees or directors of the Company and its
subsidiaries. Subject to certain circumstances discussed below, the 1996 Plan
provides that the Company is authorized to grant options to purchase up to
1,000,000 shares of Common Stock. If and to the extent options granted under
the 1996 Plan terminate or expire without being exercised, the shares subject to
such options again will be available for purposes of the 1996 Plan.
ADMINISTRATION OF THE PLAN. The 1996 Plan will be administered and
interpreted by a Committee of the Board (the "Plan Committee") consisting of not
less than two persons appointed by the Board from among its members who have not
received within the preceding one-year period, an option under the 1996 Plan or
an option or similar award under any other Company plan where the grant was made
on a discretionary basis. In addition, each member of the Plan Committee will
be an "outside" director as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").
14
<PAGE> 18
The Plan Committee, in its discretion, has the authority to designate
the employees (including officers, whether or not they are directors) of the
Company to whom options are to be granted under the 1996 Plan and the number of
options to be granted to each such employee.
GRANTS. Incentives under the 1996 Plan consist of incentive stock
options ("ISOs") within the meaning of Section 422 of the Code, nonqualified
stock options ("NQSOs"), (hereinafter collectively referred to as "Stock
Options") and shares of Common Stock (collectively referred to as "Grants").
All Grants are subject to the terms and conditions set forth in the 1996 Plan
and to those other terms and conditions consistent with the 1996 Plan as the
Plan Committee deems appropriate and as are specified in writing by the Plan
Committee to the designated individual (the "Grant Letter"). The Plan Committee
must approve the form and provisions of each Grant Letter to an individual.
ELIGIBILITY FOR PARTICIPATION. Employees and Nonemployee Directors of
the Company are eligible to participate in the 1996 Plan. As of December 31,
1995, the Company and its subsidiaries employed approximately 2,750 individuals
and seven Nonemployee Directors who would be eligible to participate in the 1996
Plan.
No optionee may receive Stock Options for more than 50% of the number
of shares of Common Stock available for issuance under the 1996 Plan.
The 1996 Plan provides that all Nonemployee Directors will
automatically receive, on the date of the Annual Meeting, Grants of NQSOs to
purchase 2,000 shares of Common Stock and an additional 500 shares of Common
Stock for each year that the Director has served as a Nonemployee Director, up
to a maximum of 4,000 shares per Grant.
The exercise price of NQSOs granted to Nonemployee Directors is equal
to the fair market value of a share of Common Stock on the date of the Annual
Meeting as determined under the terms of the 1996 Plan. These options become
exercisable one year after the date they are granted and expire upon the earlier
of the date the Director ceases to be a Director (except on account of becoming
an employee of the Company or nine months thereafter in the case of death or
disability) or ten years from the date of grant.
The 1996 Plan also provides that all Nonemployee Directors will
automatically receive grants of shares of Common Stock on the date of the Annual
Meeting. The Grants will be equal to and in lieu of two-thirds of the
Nonemployee Director's annual retainer. For purposes of determining the number
of shares to be distributed, the value of a share of Common Stock will be based
on fair market value. Nonemployee Directors may not sell the shares of Common
Stock for six months after the date they are granted.
TERM, PURCHASE PRICE, VESTING AND METHOD OF EXERCISE. The exercise
price of Stock Options granted under the 1996 Plan to employees may not be less
than the fair market value of a share of Common Stock on the date of grant (110%
of the fair market value for an ISO in the case of any person who holds more
than 10% of the combined voting power of all classes of outstanding stock). On
December 31, 1995, the fair market value of the Company's Common Stock was $8.25
per share.
The Stock Options expire upon the earlier of the employee's
termination of employment (subject to extension in the case of death or
disability) or ten years from the date of grant (five years for an ISO in the
15
<PAGE> 19
case of any person who holds more than 10% of the combined voting power of all
classes of outstanding stock).
With respect to Stock Options granted to employees, the total number
of Stock Options to be granted in any year under the 1996 Plan, the number and
selection of the employees to receive Stock Options, the number of Stock Options
granted to each person, the dates when Stock Options become exercisable and the
circumstances under which the exercisability of Stock Options may be accelerated
are wholly within the discretion of the Plan Committee. The aggregate fair
market value of shares, determined on the date of grant, with respect to ISOs
granted to any employee which become exercisable for the first time during any
calendar year may not exceed $100,000.
Under the terms of the 1996 Plan, the price payable upon exercise of a
Stock Option must generally be paid in cash; however, the Plan Committee may
permit, in the Grant Letter, the price to be paid in shares of the Company's
Common Stock.
AMENDMENT AND TERMINATION OF THE PLAN. The Board may make any
amendment to the 1996 Plan, except, without approval of the Company's
stockholders, no such amendment may change the number of shares subject to the
1996 Plan (or the individual limit for any optionee) or change the designation
of the class of employees eligible to receive Stock Options. In addition, the
Company's stockholders must approve amendments to the 1996 Plan as required
under Rule 16b-3 of the Securities Exchange Act of 1934 or Section 162(m) of the
Code.
The 1996 Plan will terminate on October 31, 2006, unless terminated
earlier by the Board or extended by the Board with approval of the stockholders.
AMENDMENT AND TERMINATION OF OUTSTANDING GRANTS. A termination or
amendment of the 1996 Plan that occurs after a Stock Option or Common Stock is
granted will not result in the termination or amendment of the Grant unless the
grantee consents or unless the Plan Committee revokes a Grant the terms of which
are contrary to applicable law. The termination of the 1996 Plan will not
impair the power and authority of the Plan Committee with respect to outstanding
Grants.
ADJUSTMENT PROVISIONS. If there is any change in the number or kind
of shares of Common Stock through the declaration of stock dividends, or if the
value of shares of Common Stock is substantially reduced on account of the
Company's payment of an extraordinary dividend or distribution, or through a
recapitalization, stock split, or combination or exchange of such shares, or
merger, reorganization, or consolidation of the Company, reclassification or
change in the par value or by reason of any other extraordinary or unusual event
without the Company's receipt of consideration, the number of shares of Common
Stock available for Grants, the maximum number of shares of Common Stock subject
to Grants that an individual may receive during the term of the 1996 Plan, the
number of shares subject to automatic Grants to Nonemployee Directors to be made
after such event and the number of such shares covered by outstanding Grants,
and the price per share or the applicable market value of such Grants, will be
proportionately adjusted by the Plan Committee to reflect any increase or
decrease in the number or kind of issued shares of Common Stock.
16
<PAGE> 20
CHANGE IN CONTROL PROVISIONS. In the event of a Change in Control of
the Company (as defined below), all outstanding Stock Options will become
immediately exercisable, unless the Plan Committee determines otherwise.
Optionees will be permitted to elect to exercise any outstanding Stock Options
or to receive a cash payment equal to the excess of the fair market value of the
shares of Common Stock subject to the outstanding Stock Options over the
purchase price to be paid in the Change in Control. The cash payment
alternative is available only if it does not render a Change in Control
ineligible for pooling of interest accounting treatment or desired tax
treatment. If the cash payment is unavailable, the optionee may elect to
receive shares of Common Stock equal to the cash payment.
If an optionee does not make an election in connection with a Change
in Control where the Company is not the surviving corporation, his or her Stock
Options will terminate, unless they are assumed by the surviving or acquiring
company.
A Change in Control of the Company will be deemed to have taken place
if the Company is liquidated or dissolved, all or substantially all of its
assets are sold, any person or group other than Henry D. Sahakian or Daniel D.
Sahakian or members of their immediate families become the beneficial owners of
more than 50% of the combined voting power of the Company's then outstanding
securities or during any two-year period, there is a change in the majority of
the members of the Board, unless such change is approved by existing Directors.
OTHER PLAN PROVISIONS. A Grant under the 1996 Plan will not be
construed as conferring upon any grantee a contract of employment or service,
and such Grant will not confer upon the grantee any rights upon termination of
employment or service, other than certain limited rights as to the exercise of a
Stock Option for a designated period of time following such termination.
FEDERAL INCOME TAX CONSEQUENCES. Set forth below is a general
description of the federal income tax consequences relating to Grants made under
the 1996 Plan. Grantees are urged to consult with their personal tax advisors
concerning the application of the principles discussed below to their own
situations and the application of state and local tax laws.
NONQUALIFIED STOCK OPTIONS. There are no federal income tax
consequences to optionees or to the Company upon the grant of an NQSO under the
1996 Plan. Upon the exercise of NQSOs, optionees will recognize ordinary
compensation income in an amount equal to the excess of the fair market value of
the shares at the time of exercise over the exercise price of the NQSO, and the
Company generally will be entitled to a corresponding federal income tax
deduction. Upon the sale of shares acquired by exercise of an NQSO, an optionee
will have a capital gain or loss (long-term or short-term depending upon the
length of time the shares were held) in an amount equal to the difference
between the amount realized upon the sale and the optionee's adjusted tax basis
in the shares (the exercise price plus the amount of ordinary income recognized
by the optionee at the time of exercise of the NQSO).
INCENTIVE STOCK OPTIONS. Optionees will not be subject to federal
income taxation upon the grant or exercise of ISOs granted under the 1996 Plan,
and the Company will not be entitled to a federal income tax deduction by reason
of such Grant or exercise. However, the amount by which the fair market value
of the shares at the time of exercise exceeds the Stock Option price (or the
optionee's other tax basis in the shares) is an item of tax preference subject
to the alternative minimum tax applicable to the person exercising the ISO. A
17
<PAGE> 21
sale of shares acquired by exercise of an ISO that does not occur within one
year after the exercise or within two years after the grant of the ISO generally
will result in the recognition of long-term capital gain or loss in the amount
of the difference between the amount realized on the sale and the Stock Option
price (or the optionee's other tax basis in the shares), and the Company will
not be entitled to any tax deduction in connection therewith.
If such sale occurs within one year from the date of exercise of the
ISO or within two years from the date of grant (a "disqualifying disposition")
and is a transaction in which a loss, if sustained, would be recognized, the
optionee generally will recognize ordinary compensation income equal to the
lesser of (i) the excess of the fair market value of the shares on the date of
exercise over the exercise price (or the optionee's other tax basis in the
shares), or (ii) the excess of the amount realized on the sale of the shares
over the exercise price (or the optionee's other tax basis in the shares). In
the case of a disqualifying disposition where a loss, if sustained, would not be
recognized, the optionee will recognize ordinary income equal to the excess of
the fair market value of the shares on the date of exercise over the Stock
Option price (or the optionee's other tax basis in the shares). Any amount
realized on a disqualifying disposition in excess of the amount treated as
ordinary compensation income (or any loss realized) will be a long-term or a
short-term capital gain (or loss), depending upon the length of time the shares
were held. The Company generally will be entitled to a tax deduction on a
disqualifying disposition corresponding to the ordinary compensation income
recognized by the optionee.
Generally, where previously acquired Common Stock is used to exercise
an outstanding ISO or NQSO, appreciation on such stock will not be recognized as
income. However, if such Common Stock was acquired pursuant to the exercise of
an ISO, a disqualifying disposition will be deemed to have occurred if such
stock is used to exercise another ISO prior to the expiration of the applicable
holding periods.
STOCK GRANTS. A grantee normally will recognize taxable income upon
receipt of a stock grant in an amount equal to the fair market value of the
Common Stock at that time, and the Company will be entitled to a deduction in
the same amount.
TAX WITHHOLDING. The Company may require optionees who exercise NQSOs
to remit an amount sufficient to cover the optionee's federal, state and local
withholding tax obligations associated with the exercise of such NQSOs.
SECTION 162(m). Under Section 162(m) of the Code, the Company may be
precluded from claiming a federal income tax deduction for total remuneration in
excess of $1,000,000 paid to the chief executive officer or to any of the other
four most highly compensated officers in any one year. Total remuneration would
include amounts received upon the exercise of stock options. An exception does
exist, however, for "performance-based compensation," including amounts received
upon the exercise of stock options pursuant to a plan approved by stockholders
that meets certain requirements. The 1996 Plan, when approved by stockholders,
is intended to make grants of Stock Options thereunder meet the requirements of
"performance-based compensation."
18
<PAGE> 22
STOCK OPTION GRANTS
No Grants will be made under the 1996 Plan until after stockholder
approval of the 1996 Plan at the Annual Meeting and until the fiscal year ended
September 30, 1997. For information with respect to the grant of options to
certain executive officers during the year ended September 30, 1995, similar to
those which may be granted under the 1996 Plan, see the table captioned "Option
Grants in Last Fiscal Year".
The table below summarizes the number of Stock Options and shares of
Common Stock that will be granted to Nonemployee Directors during the fiscal
year ending September 30, 1997 under the proposed 1996 Plan, assuming
stockholder approval.
Recipient Option Shares
---------------- -------------
G. David Gearhart 3,000
Bruce K. Heim 4,000
Jeremiah A. Keating 4,000
Joseph V. Paterno 4,000
Charles C. Pearson, Jr. 3,000
Daniel D. Sahakian 4,000
Michael J. Serventi 4,000
PROPOSAL III
APPROVAL OF AMENDMENTS TO THE COMPANY'S
EQUITY COMPENSATION PLAN
THE PROPOSAL
At the Annual Meeting, a proposal will be presented to the stockholders
to approve the adoption of Amendment 1995-1 to the Company's Equity Compensation
Plan (the "Existing Plan"). On November 6, 1995, the Board of Directors adopted
Amendment 1995-1 to the Existing Plan, subject to stockholder approval at the
Annual Meeting. Amendment 1995-1 will not be effective unless or until
stockholder approval is obtained.
Under the proposal, the Existing Plan will be amended to increase the
number of shares of Common Stock subject to the annual nondiscretionary stock
option grant to each member of the Board who is not employed in any capacity by
the Company (hereinafter referred to as a "Nonemployee Director").
VOTE REQUIRED FOR APPROVAL
The proposal to amend the Existing Plan requires the affirmative vote of
a majority of shares present in person or represented by proxy at the Annual
Meeting for its approval. Abstentions may be specified on the proposal and will
be considered present at the Annual Meeting, but will not be counted as
affirmative votes. Abstentions, therefore, will have the practical effect of
voting against the proposal because the affirmative vote of a majority of the
shares present at the Annual Meeting is required to approve the proposal.
Broker nonvotes are considered not present at the Annual Meeting for the purpose
of voting on the proposal and, therefore, will not be voted or have any effect
on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL.
19
<PAGE> 23
DESCRIPTION OF THE PLAN
Amendment 1995-1 to the Existing Plan is set forth as Exhibit B to this
Proxy Statement, and the description of the Existing Plan contained herein is
qualified in its entirety by reference to the Plan document.
GENERAL. In February, 1995, the stockholders approved the Existing
Plan, as amended and restated. The Existing Plan provides for the grant to
employees and Nonemployee Directors of the Company and its subsidiaries of
incentive compensation in the form of incentive stock options ("ISOs"),
nonqualified stock options ("NQSOs") and stock awards. The Existing Plan
permits the grant of stock options and stock awards of up to a maximum amount of
855,000 shares of Common Stock, of which options to purchase 537,195 shares of
stock and stock awards of 6,223 shares of stock have previously been granted.
A Board Committee (the "Plan Committee"), may select the employees to
receive grants under the Existing Plan (the "Grantees"), the amount of Common
Stock to be optioned to each such employee and the terms of each grant. As of
December 31, 1995, the Company and its subsidiaries employed approximately 2,750
individuals who were eligible to participate in the Existing Plan. As of
December 31, 1995, under the Existing Plan, 109,844 Stock Options have been
exercised and 427,351 Stock Options were outstanding and held by all employees
as a group.
The Existing Plan provides that all Nonemployee Directors (there are
currently seven Nonemployee Directors) will automatically receive on the date of
the Annual Meeting, grants of NQSOs to purchase 2,000 shares of Common Stock for
each fiscal year beginning on October 1, 1994. The exercise price of a NQSO
granted to a Nonemployee Director is equal to the fair market value of the
Common Stock on the date it is granted.
The Existing Plan also provides that all Nonemployee Directors will
automatically receive grants of shares of Common Stock on the date of the Annual
Meeting for fiscal years beginning with the October 1, 1993 fiscal year. The
grants will be equal to and in lieu of two-thirds of the Nonemployee Director's
annual retainer. For purposes of determining the number of shares to be
distributed, the value of a share of Common Stock will be based on fair market
value.
The exercise price of Common Stock subject to an ISO or NQSO granted to
an employee may not be less than the fair market value of a share of stock on
the date of grant. On December 31, 1995, the fair market value of the Company's
Common Stock was $8.25 per share. The exercise period for stock options may not
exceed ten years from the date of grant.
PROPOSED AMENDMENT. The Board has amended the Existing Plan, subject to
stockholder approval, to increase the number of shares of Common Stock subject
to the annual grant of NQSOs to Nonemployee Directors. Amendment 1995-1 to the
Existing Plan provides that, as of October 2, 1995, each Nonemployee Director
was granted a NQSO to purchase 250 shares of Common Stock for each year of
service as a Nonemployee Director, up to a maximum of 1,000 shares of Common
Stock. Amendment 1995-1 also provides that, on the date of the 1996 Annual
Meeting, each Nonemployee Director will receive a NQSO to purchase 2,000 shares
of Common Stock, plus 500 shares of Common Stock for each year of service as a
Nonemployee Director, up to a maximum of 4,000 shares per grant.
20
<PAGE> 24
NONEMPLOYEE DIRECTOR GRANTS
The table below summarizes the number of Stock Options that will be
granted to Nonemployee Directors under the proposed Amendment 1995-1 to the
Existing Plan, assuming stockholder approval. The table sets forth the
information with respect to all current Nonemployee Directors.
NEW PLAN BENEFITS
EQUITY COMPENSATION PLAN, AS AMENDED BY AMENDMENT 1995-1
Recipient (1) Number of Option Shares
--------- ------------------------------
October 2, February 22,
1995 1996
---------- ------------
G. David Gearhart 250 2,500
Bruce K. Heim 1,000 4,000
Jeremiah A. Keating 1,000 4,000
Joseph V. Paterno 1,000 4,000
Charles C. Pearson, Jr. 250 2,500
Daniel D. Sahakian 1,000 4,000
Michael J. Serventi 1,000 4,000
- --------------------
(1) Since only Nonemployee Directors are eligible for the increased stock
option grants under Amendment 1995-1 to the Existing Plan, information
with respect to only the Nonemployee Director Group is provided in this
table.
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP, Philadelphia, Pennsylvania, has acted
as the Company's independent auditors for the fiscal year ended September 30,
1995. The Company intends to utilize the services of Deloitte & Touche LLP for
the fiscal year ending September 30, 1996. A member of that firm will be
present at the Annual Meeting to respond to appropriate questions from
stockholders. He may also make a statement. The proxy agents of the Board of
Directors intend to vote, unless instructed otherwise, for the ratification of
the appointment of the firm of Deloitte & Touche LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF THE ABOVE-NAMED INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
For the next annual meeting of stockholders, stockholder proposals must
be received by the Secretary of the Company not later than September 27, 1996 to
be considered for inclusion in the Company's proxy materials for the Annual
Meeting to be held in 1997.
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OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented
for action, but, if any other matter properly comes before the Annual Meeting,
it is intended that the persons voting the accompanying proxy will vote the
shares represented thereby in accordance with their best judgment.
By Order of the Board of Directors,
/S/ HARRY A. MARTIN
Harry A. Martin
Secretary
State College, Pennsylvania
January 25, 1996
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EXHIBIT A
UNI-MARTS, INC.
1996 EQUITY COMPENSATION PLAN
1. PURPOSE
The Uni-Marts, Inc. 1996 Equity Compensation Plan (the "Plan") is
intended to be an incentive and to encourage stock ownership by employees and
nonemployee directors of the Board of Directors (the "Nonemployee Directors") of
Uni-Marts, Inc., a Delaware corporation (the "Corporation"), or any of its
subsidiary corporations (the "Subsidiaries"), as defined in Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code"), so that designated
employees and Nonemployee Directors may acquire or increase their proprietary
interest in the success of the Corporation and its Subsidiaries, and so that
they may be encouraged to remain employees or Nonemployee Directors of the
Corporation or its Subsidiaries. The grants made pursuant to the Plan include
incentive stock options within the meaning of Section 422 of the Code
("Incentive Stock Options"), nonqualified stock options ("Nonqualified Stock
Options") (collectively the "Stock Options") and "formula" stock awards to
Nonemployee Directors. To the extent that any Stock Option does not qualify as
an Incentive Stock Option, it shall constitute a separate Nonqualified Stock
Option.
2. ADMINISTRATION
The Plan shall be administered and interpreted by a committee (the
"Committee") appointed by the Board of Directors of the Corporation (the
"Board"). The Committee shall consist of not less than two Board members. No
Committee member may have received, within the preceding one-year period, a
Stock Option under the Plan or an option or similar award under any other
Corporation plan where such award was made on a discretionary basis so that the
Committee member will be a "disinterested person" as defined under Rule 16b-3 of
the Securities Exchange Act of 1934 (the "Exchange Act"). Any Committee member
who does not satisfy the foregoing requirement shall not serve in any capacity
in administering the Plan until one year has elapsed from the date such option
or award was granted. In addition to the foregoing, each Committee member will
be an "outside director" as defined under Section 162(m) of the Code and related
Treasury regulations.
The Board may from time to time remove members from, or add members to,
the Committee. Vacancies on the Committee, howsoever caused, shall be filled by
the Board. The Committee shall select one of its members as Chairman and shall
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee at a meeting at which a quorum is present, or acts reduced to
or approved in writing by a majority of the members of the Committee, shall be
the valid acts of the Committee. The Committee shall from time to time, in its
discretion, designate the employees who shall be granted Stock Options and the
amount of stock to be optioned to each.
The Committee shall have the sole authority to (i) determine the
individuals to whom Stock Options shall be granted under the Plan, (ii)
determine the type, size and terms of the Stock Options to be granted to each
such individual, (iii) determine the time when the Stock Options will be granted
and the duration of the exercise period, including the criteria for vesting and
the acceleration of vesting, and (iv) deal with any other matters arising under
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the Plan. Nonemployee Directors shall only receive grants pursuant to the
provisions of Section 6.
The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in the
best interest of the Corporation and in keeping with the objectives of the Plan.
No member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Grant issued under it.
Notwithstanding the foregoing, administration of Section 6 of the Plan
is intended to be self-executing in accordance with the express terms and
conditions of such Section. However, to the extent that determinations are
required with respect to ministerial matters under the Plan with respect to
grants to Nonemployee Directors, such determinations shall be made by the Board.
In no event shall such determinations affect the eligibility of Grants made or
to be made under the Plan as "formula grants" within the meaning of Rule 16b-
3(c)(2)(ii) under the Exchange Act, or any applicable regulations.
3. ELIGIBILITY
The persons who shall be eligible to receive Stock Options shall be
employees (including employees who are officers or members of the Board) and
Nonemployee Directors of the Corporation or its Subsidiaries; provided, however,
that Nonemployee Directors may only receive Nonqualified Stock Options and stock
grants pursuant to Section 6 (collectively, the "Grants"). All Grants shall be
subject to the terms and conditions set forth herein and to those other terms
and conditions consistent with this Plan as the Committee deems appropriate and
as are specified in writing by the Committee to the individual (the "Grant
Letter"). The Committee shall approve the form and provisions of each Grant
Letter to an individual. With the exception of Grants to Nonemployee Directors,
Grants under a particular Section of the Plan need not be uniform as among the
grantees.
Grants made pursuant to the Plan shall not affect in any way the right
or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
4. STOCK
(a) The stock subject to the Grants issued hereunder shall be shares of
the Corporation's authorized common stock (the "Common Stock"). The aggregate
number of shares which may be issued under Grants shall not exceed 1,000,000
shares of Common Stock. The limitation established by the preceding sentence
shall be subject to adjustment as provided in Section 4(b). During the term of
the Plan, the maximum aggregate number of shares of Common Stock that shall be
subject to Stock Options granted under the Plan to any single optionee shall not
exceed 50% of the aggregate limitation specified above.
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In the event that any outstanding Stock Option under the Plan for any
reason expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such Stock Option may again be subject to a Stock Option
under the Plan.
(b) If there is any change in the number or kind of shares of Common
Stock issuable under the Plan through the declaration of stock dividends or if
the value of outstanding shares of Common Stock is substantially reduced due to
the Corporation's payment of an extraordinary dividend or distribution, or
through a recapitalization, stock splits, or combinations or exchanges of such
shares, or merger, reorganization or consolidation of the Corporation,
reclassification or change in par value or by reason of any other extraordinary
or unusual events affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, the maximum number of shares of Common
Stock available for Grants, the maximum number of shares of Common Stock for
which any one individual participating in the Plan may be granted over the term
of the Plan, the number of shares covered by outstanding Grants, the number of
shares specified in Section 6 subject to Grants to Nonemployee Directors, and
the price per share or the applicable market value of such Grants, and the other
terms and conditions of the Grants, as the Committee may deem necessary or
desirable, shall be proportionately adjusted by the Committee to reflect any
increase or decrease in the number or kind of issued shares of Common Stock to
preclude the enlargement or dilution of rights and benefits under such Grants;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated.
The adjustments determined by the Committee shall be final, binding and
conclusive. Notwithstanding the foregoing, no adjustment shall be authorized or
made pursuant to this Section to the extent that such authority or adjustment
would cause any Incentive Stock Option to fail to comply with Section 422 of the
Code.
In the event of a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
5. TERMS AND CONDITIONS OF STOCK OPTIONS
(a) NUMBER OF SHARES. Each Grant Letter shall state the number of
shares to which it pertains.
(b) OPTION PRICE. Each Grant Letter shall state the option price,
which shall not be less than 100% of the fair market value of the shares of
Common Stock of the Corporation on the date of the granting of the Stock Option.
During such time as such stock is not listed upon an established stock exchange
or traded in the over-the-counter market, the fair market value per share shall
be determined by the Committee at least annually by relying upon whatever
evidence it deems appropriate which may include, but need not be limited to,
recent sales of the Common Stock, opinions of professional appraisers and recent
sales of comparable shares of other companies.
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If the Common Stock is traded in the over-the-counter market, the fair
market value shall be the mean between the dealer "bid" and "ask" prices of the
Common Stock in the New York over-the-counter market on the day the Stock Option
is granted, as reported by the National Association of Securities Dealers, Inc.
If the Common Stock is listed upon an established stock exchange or exchanges,
the fair market value shall be the highest closing price of the Common Stock on
such stock exchange or exchanges on the day the Stock Option is granted, or if
no sale of the Common Stock shall have been made on any stock exchange on that
day, on the next preceding day on which there was a sale of such stock. Subject
to the foregoing, the Committee in fixing the option price shall have full
authority and discretion.
(c) MEDIUM AND TIME OF PAYMENT. Unless otherwise specified in the
Grant Letter, the option price shall be payable in United States dollars upon
the exercise of the Stock Option and may be paid in cash or by check.
(d) TERM AND EXERCISE OF OPTIONS. Unless otherwise specified in the
Grant Letter, no Stock Option shall be exercisable either in whole or in part
prior to 12 months from the date it is granted. Each Grant Letter shall state
the date on which the Stock Option shall expire and no Stock Option shall be
exercisable after ten years from the date on which it is granted. Stock Options
may only be exercised by an optionee for so long as he is an employee of the
Corporation or its Subsidiaries, except as otherwise provided in Section 5(f).
The Grant Letter may provide that the Stock Option may be exercisable in
installments rather than exercisable immediately in full. In such case, subject
to the right of cumulation provided in the last sentence of this subsection,
during each twelve-month period commencing 12 months from the date of the
granting of the Stock Option, each Stock Option shall be exercisable as to not
more than that percentage of the total number of shares covered thereby as the
Committee shall specify in the Grant Letter, until all shares covered by the
Stock Option shall have been purchased.
The Committee may provide, in the case of a Stock Option not immediately
exercisable in full, for the acceleration of the time at which the Stock Option
may be exercised; provided, however, that all outstanding Stock Options shall
become immediately exercisable upon a Change of Control of the Corporation (as
defined herein), unless the Committee, in its sole discretion specifies
otherwise.
Not less than 100 shares may be purchased at any one time unless the
number purchased is the total number at the time purchasable under the Stock
Option. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, in any subsequent period, but not later than
ten years from the date the Stock Option is granted.
(e) MANNER OF EXERCISE. An optionee may exercise a Stock Option which
has become exercisable by delivering a notice of exercise to the Committee with
accompanying payment of the option price in accordance with (g) below. Such
notice may instruct the Corporation to deliver shares of Common Stock due upon
the exercise of the Stock Option to any registered broker or dealer designated
by the Corporation ("Designated Broker") in lieu of delivery to the optionee.
Such instructions must designate the account into which the shares are to be
deposited. The optionee may tender this notice of exercise, which has been
properly executed by the optionee, and the aforementioned delivery instructions
any Designated Broker.
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(f) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY.
(i) In the event the optionee during his lifetime ceases to be an
employee of the Corporation or a Subsidiary for any reason other than
death, any Stock Option which is otherwise exercisable by the optionee
shall immediately terminate; provided, however, that in the case of an
optionee who is disabled within the meaning of Section 22(e)(3) of the
Code, such Option shall be exercisable for a nine-month period beginning
on the date on which he ceases to be an employee. Whether authorized
leave of absence or absence for military or governmental service shall
constitute termination of employment, for the purposes of the Plan,
shall be determined by the Committee, which determination, shall be
final and conclusive.
(ii) In the event of the death of an optionee while he is an
employee of the Corporation or a Subsidiary, any Stock Option which was
otherwise exercisable by the optionee at the date of death may be
exercised by his personal representative at any time prior to the
expiration of nine months from the date of death, but in any event no
later than the date of expiration of the option exercise period.
(iii) Notwithstanding the foregoing, in the event the optionee
during the optionee's lifetime ceases to be an employee of the
Corporation simultaneously with or after a Change in Control of the
Corporation (as defined herein), for any reason other than death,
disability (within the meaning of Section 22(e)(3) of the Code),
approved retirement, or a termination for cause as determined pursuant
to the Corporation's personnel policies before any such transaction,
unless the optionee elects otherwise, the Corporation shall be required
to pay to the optionee, in cash, an amount equal to the excess over the
purchase price of the then fair market value of the shares of Common
Stock subject to the optionee's outstanding Stock Options; provided,
however, that if any right granted pursuant to this Subsection would
make the Change in Control ineligible for pooling of interests
accounting treatment under APB No. 16 or any subsequent similar
authority, that but for this provision would otherwise be eligible for
such accounting treatment, or would otherwise affect the tax treatment
of such Change in Control, the optionee shall not receive a cash payment
in lieu of the exercise of his or her Stock Options.
(g) SATISFACTION OF OPTION PRICE. In addition to the other powers
granted to the Committee under this Plan, the Committee shall have the
discretion to include in any Stock Option grant the right of the optionee (i) to
pay for the stock with stock of the corporation granting the option, (ii) to
receive a loan from the Corporation to pay for the stock, with such terms as
shall not cause the Stock Option to become disqualified as an "incentive stock
option" as defined in Section 422 of the Code and/or (iii) to receive such
assistance from the Corporation in obtaining a loan from a financial institution
as is necessary in the sole discretion of the Committee.
(h) RULE 16b-3 RESTRICTIONS. Unless an optionee could otherwise
transfer Common Stock issued pursuant to a Stock Option granted hereunder
without incurring liability under Section 16(b) of the Exchange Act, at least
six months must elapse from the date of acquisition of a Stock Option to the
date of disposition of the Common Stock issued upon exercise of such option.
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(i) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option
shall provide that to the extent that the aggregate fair market value of the
Common Stock on the date of the grant with respect to which Incentive Stock
Options are exercisable for the first time by an optionee during any calendar
year under the Plan or any other stock option plan of the Corporation exceeds
$100,000, then such option as to the excess shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any employee
who, at the time of grant, owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Corporation or parent
of the Corporation, unless the option price per share is not less than 110% of
the fair market value of Common Stock on the date of grant and the option
exercise period is not more than five years from the date of grant.
6. GRANTS TO NONEMPLOYEE DIRECTORS
(a) OPTION GRANTS TO NONEMPLOYEE DIRECTORS. On the day of the annual
meeting of stockholders (the "Date of Grant"), each Nonemployee Director shall
receive a Nonqualified Stock Option (a "Formula Grant Option") to purchase 2,000
shares of Common Stock of the Corporation, plus 500 shares of Common Stock for
each full year the Nonemployee Director has served as a member of the Board as a
Nonemployee Director, up to a maximum of 4,000 shares of Common Stock per grant.
The option price of a Formula Grant Option shall be equal to the fair market
value of a share of Common Stock on the Date of Grant, as determined under
Section 5(b) of the Plan. Formula Grant Options shall become exercisable one
year following the Date of Grant. Formula Grant Options shall have a term of
ten years after the Date of Grant, provided that the optionee remains a
Nonemployee Director or employee of the Corporation.
Upon a Nonemployee Director ceasing to be a Director for any reason
other than death or disability or as a result of becoming an employee of the
Corporation, such Director's Formula Grant Options shall immediately terminate.
In the event a Nonemployee Director ceases to be a Director by reason of death
or disability, such Director's Formula Grant Options may thereafter be exercised
in accordance with the applicable provisions of Section 5(e) of the Plan. In
the event a Nonemployee Director ceases to be a Director by reason of his
becoming an employee of the Corporation and his employment with the Corporation
is subsequently terminated, such Director's Formula Grant Options may thereafter
be exercised in accordance with the provisions in Section 5(f) of the Plan.
(b) STOCK GRANTS TO NONEMPLOYEE DIRECTORS. On the date of the annual
meeting of stockholders, each Nonemployee Director shall receive a grant of
shares of Common Stock equal in value to 2/3 of the amount of the annual
retainer due to such Director for the fiscal year in which the Date of Grant
occurs.
For purposes of determining the amount of shares to be distributed, the
fair market value of a share of Common Stock shall be determined in accordance
with the provisions of Section 5(b). Such shares shall not be sold for six
months following the Date of Grant. No other restrictions shall apply to such
shares.
(c) Notwithstanding any other provision of the Plan, this Section 6 may
not be amended more than once every six months, except for amendments necessary
to conform the Plan to changes of the provisions of, or the regulations relating
to, the Code.
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7. TRANSFERABILITY OF OPTIONS
Only the optionee or his or her authorized legal representative may
exercise rights under a Stock Option. Such persons may not transfer those
rights except by will or by the laws of descent and distribution or, if
permitted under Rule 16b-3 of the Exchange Act and if permitted in any specific
case by the Committee in its sole discretion, pursuant to a qualified domestic
relations order as defined under the Code or Title I of ERISA or the regulations
thereunder. When an optionee dies, the personal representative or other person
entitled to succeed to the rights of the optionee ("Successor Optionee") may
exercise such rights. A Successor Optionee must furnish proof satisfactory to
the Corporation of his or her right to receive the Stock Option under the
optionee's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may permit an employee to
transfer rights under a Nonqualified Stock Option to the employee's spouse or a
lineal descendant or to one or more trusts for the benefit of such family
members or to partnerships in which such family members are the only partners (a
"Family Transfer") provided that the employee receives no consideration for a
Family Transfer and the Grant Letter relating to the Stock Options transferred
in a Family Transfer continue to be subject to the same terms and conditions
that were applicable to such Stock Options immediately prior to the Family
Transfer.
8. CHANGE IN CONTROL OF THE CORPORATION
The Committee shall determine, in its sole discretion, whether a Change
in Control has occurred or will occur pursuant to the following rules and its
determination shall be final and conclusive. As used herein, a "Change in
Control" shall be deemed to have occurred if:
(a) A liquidation or dissolution of or the sale of all or substantially
all of the Corporation's assets occurs;
(b) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split, or sale or
transfer of assets, any person or group (as such terms are used in and under
Section 13(d) of the Exchange Act) other than Henry Sahakian or Daniel Sahakian
or members of their immediate families, becomes the beneficial owner (as defined
in Rule 13-d under the Exchange Act), directly or indirectly, of securities of
the Corporation representing more than 50% of the combined voting power of the
Corporation's then outstanding securities; or
(c) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Corporation's shareholders, of each new Director was approved by a vote
of at least two-thirds of the Directors then still in office who were Directors
at the beginning of the period.
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9. CONSEQUENCES OF A CHANGE IN CONTROL
(a) NOTICE.
(i) If a Change in Control as described in Section 8(a) or (b) of
the Plan will occur, then, at least 10 days after the approval by the
stockholders of the Corporation (or approval by the Board, if
stockholder action is not required) of such Change in Control, the
Corporation shall give each optionee with any outstanding Stock Options
written notice of such proposed Change in Control.
(ii) If a Change in Control as described in Section 8(b) may occur
without approval by stockholders (or approval by the Board) and does so
occur, or a Change in Control as described in 8(c) occurs, then, at
least 10 days after such Change in Control, the Corporation shall give
each optionee with any outstanding Stock Options written notice of the
Change of Control.
(b) ELECTION PERIOD. In connection with the Change in Control and
effective only upon such Change in Control, each such optionee shall thereupon
have the right, within 20 days after such written notice is sent by the
Corporation (the "Election Period"), to make an election as described in
Subsection (c) with respect to all of his or her outstanding Stock Options
(whether the right to exercise such Stock Options has then accrued or the right
to exercise such Stock Options will occur or has occurred upon the Change in
Control pursuant to Section 5(d) of the Plan).
(c) ELECTION RIGHT. During the Election Period, each such optionee
shall have the right to elect:
(i) To exercise in full any installments of such Stock Options
not previously exercised or,
(ii) To surrender all or part of such outstanding Stock Options,
in exchange for a cash payment by the Corporation in an amount equal to
the excess over the purchase price of the then fair market value of the
shares of Common Stock subject to the optionee's outstanding Stock
Options; provided, however, that if the Change in Control is within six
months after the date of grant of a particular Stock Option held by an
optionee who is subject to Section 16(b) of the Exchange Act, any cash
payment to the optionee shall be made on the day which is six months and
one day after the date of grant of such Stock Option.
(d) TERMINATION OF STOCK OPTIONS. If an optionee does not make a
timely election in accordance with Subsection (c) in connection with a Change in
Control described in Section 8(b) where the Corporation is not the surviving
corporation (or survives only as a subsidiary of another corporation), such
Stock Options shall terminate as of the Change in Control. Notwithstanding the
foregoing, an option will not terminate if assumed by the surviving or acquiring
corporation, or its parent, upon a merger or consolidation and, with respect to
an Incentive Stock Option, the assumption of the option occurs under
circumstances which are not deemed a modification of the option within the
meaning of Sections 424(a) and 424(h)(3)(A) of the Code.
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(e) ACCOUNTING AND TAX LIMITATIONS
(i) Notwithstanding the foregoing, if the right described in
Subsection (c)(2) would make the applicable Change in Control ineligible
for pooling of interest accounting treatment under APB No. 16 or any
subsequent similar authority, or make such Change in Control ineligible
for desired tax treatment with respect to such Change in Control, that
but for those provisions would otherwise be eligible for such treatment
the optionee shall receive shares of Common Stock with a fair market
value (as defined in Section 5(b)) equal to the cash that would
otherwise be payable hereunder in substitution for the cash.
(ii) Notwithstanding the foregoing, if the termination of the
Stock Options described in Subsection (d) would make the applicable
Change in Control ineligible for pooling of interest accounting
treatment under APB No. 16 or any subsequent similar authority, that but
for such provision would otherwise be eligible for such treatment, each
affected optionee shall receive a replacement or substitute stock option
issued by the surviving or acquiring corporation.
10. AMENDMENT AND TERMINATION OF THE PLAN
(a) AMENDMENT. The Board, by written resolution, may amend or
terminate the Plan at any time; provided, however, that any amendment that
increases the aggregate number (or individual limit for any single optionee) of
shares of Common Stock that may be issued or transferred under the Plan (other
than by operation of Section 4(b)), or modifies the requirements as to
eligibility for participation in the Plan, shall be subject to approval by the
stockholders of the Corporation, and provided, further, that the Board shall not
amend the Plan without stockholder approval if such approval is required by Rule
16b-3 of the Exchange Act or Section 162(m) of the Code.
(b) TERMINATION OF PLAN. The Plan shall terminate on the tenth
anniversary of its effective date unless terminated earlier by the Board of
Directors of the Corporation or unless extended by the Board with the approval
of the stockholders.
(c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a grantee unless the grantee consents or unless the
Committee acts under Section 21(b) hereof. The termination of the Plan shall
not impair the power and authority of the Committee with respect to an
outstanding Stock Option. Whether or not the Plan has terminated, an
outstanding Stock Option may be terminated or amended under Section 21(b) hereof
or may be amended by agreement of the Corporation and the optionee consistent
with the Plan.
(d) GOVERNING DOCUMENT. The Plan shall be the controlling document.
No other statements, representations, explanatory materials, or examples, oral
or written, may amend the Plan in any manner. The Plan shall be binding upon
and enforceable against the Corporation, its successors and assigns.
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11. COVENANT NOT TO COMPETE; CONFIDENTIALITY AGREEMENT
The Grant Letter may provide that, as a condition of the optionee's
acceptance of the Stock Option, the optionee shall agree to be bound by a
covenant not to compete and/or a confidentiality agreement with the Corporation
containing such terms as the Committee and the Board shall deem advisable.
12. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Grant issued
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within 60 days after institution of any such action, suit or proceeding the
Committee member shall in writing offer the Corporation the opportunity, at its
own expense, to handle and defend the same.
13. FUNDING OF THE PLAN
This Plan shall be unfunded. The Corporation shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of Stock
Options.
14. RIGHTS OF INDIVIDUALS
Nothing in this Plan shall entitle any employee or Nonemployee Director
or other person to any claim or right to be granted a Stock Option under this
Plan. Neither this Plan nor any action taken hereunder shall be construed as
giving any employee or Nonemployee Director any rights to be retained by or in
the employ of the Corporation or any other employment rights.
15. NO FRACTIONAL SHARES
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Stock Option. The Committee shall determine whether
cash, other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
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16. WITHHOLDING OF TAXES
The optionee or other person receiving shares of Common Stock upon the
exercise of a Nonqualified Stock Option shall be required to pay to the
Corporation the amount of any federal, state or local taxes which the
Corporation is required to withhold with respect to the exercise of such
Nonqualified Stock Option or the Corporation shall have the right to deduct from
other wages paid to the employee by the Corporation (including through the
withholding of Common Stock purchased upon the exercise of a Nonqualified Stock
Option, if then authorized by the Committee and applicable law) the amount of
any withholding due with respect to such Nonqualified Stock Option.
17. AGREEMENTS WITH OPTIONEES
Each Stock Option made under this Plan shall be evidenced by a Grant
Letter containing such terms and conditions as the Committee shall approve.
18. REQUIREMENTS FOR ISSUANCE OF SHARES
No Common Stock shall be issued or transferred upon the exercise of any
Stock Option hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Common Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Stock Option made to any optionee hereunder on such optionee's undertaking
in writing to comply with such restrictions on his subsequent disposition of
such shares of Common Stock as the Committee shall deem necessary or advisable
as a result of any applicable law, regulation or official interpretation
thereof, and certificates representing such shares may be legended to reflect
any such restrictions. Certificates representing shares of Common Stock issued
under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations and other
obligations of the Corporation, including any requirement that a legend or
legends be placed thereon.
19. HEADINGS
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
20. EFFECTIVE DATE
Subject to the approval of the Corporation's stockholders, this Plan
shall be effective as of November 1, 1996.
21. MISCELLANEOUS
(a) SUBSTITUTE GRANTS. The Committee may make a grant to an employee
of another corporation who becomes an employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Corporation or any of its subsidiaries in substitution for a stock
option or restricted stock grant granted by such corporation ("Substituted Stock
A-11
<PAGE> 37
Incentives"). The terms and conditions of the substitute grant may vary from
the terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the
substitute grants.
(b) COMPLIANCE WITH LAW. The Plan, the exercise of Stock Options and
the obligations of the Corporation to issue or transfer shares of Common Stock
under Grants shall be subject to all applicable laws and to approvals by an
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Corporation
that the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act.
Notwithstanding anything in the Plan to the contrary, if Rule 16b-3 ceases to
apply to the Plan for any reason, all requirements provided for in the Plan
relating to Rule 16b-3 shall be null and void as of the date Rule 16b-3 so
ceases to apply.
The Committee may revoke any Stock Option if it is contrary to law or
modify a Stock Option to bring it into compliance with any valid and mandatory
government regulation. The Committee may also adopt rules regarding the
withholding of taxes on payments to optionees. The Committee may, in its sole
discretion, agree to limit its authority under this Section.
(c) OWNERSHIP OF STOCK. An optionee or Successor Optionee shall have
no rights as a stockholder with respect to any shares of Common Stock covered by
a Stock Option until the shares are issued or transferred to the optionee or
Successor Optionee on the stock transfer records of the Corporation.
(d) GOVERNING LAW. The validity, construction, interpretation and
effect of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.
UNI-MARTS, INC.
Attest:
- ------------------------------ -------------------------------
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<PAGE> 38
EXHIBIT B
AMENDMENT 1995-1
TO THE UNI-MARTS, INC.
EQUITY COMPENSATION PLAN
1. Section 5(l) of the Plan is amended to read, in its entirety, as
follows:
"(l) OPTION GRANTS TO DIRECTORS. For each fiscal year of the
Corporation, beginning October 1, 1994, on the day of the annual meeting of
stockholders (the `Date of Grant'), each Director shall receive a Nonqualified
Stock Option (a `Formula Grant Option') to purchase 2,000 shares of Common Stock
of the Corporation. As of October 2, 1995, each Director shall receive a
Formula Grant Option to purchase 250 shares of Common Stock for each full year
the Director has served as a nonemployee member of the Board of the Corporation,
up to a maximum of 1,000 shares of Common Stock. On the day of the annual
meeting of stockholders held in 1996, each Director shall receive a Formula
Grant Option to purchase the 2,000 shares of Common Stock described above, plus
500 shares of Common Stock for each full year the Director has served as a
nonemployee member of the Board of the Corporation, up to a maximum of 4,000
shares of Common Stock per grant.
The option price of a Formula Grant Option shall be equal to the fair market
value of a share of Common Stock on the Date of Grant, as determined under
Section 5(b) of the Plan. Formula Grant Options shall become exercisable twelve
months following the Date of Grant. Formula Grant Options shall have a term of
ten years after the Date of Grant, provided that the optionee remains a Director
or an employee of the Corporation.
Upon a Director ceasing to be a Director for any reason other than death or
disability or as a result of becoming an employee of the Corporation, such
Director's Formula Grant Options shall immediately terminate. In the event a
Director ceases to be a Director by reason of death or disability, such
Directors' Formula Grant Options may thereafter be exercised in accordance with
the applicable provisions of Section 5(e) of the Plan. In the event a Director
ceases to be a Director by reason of his becoming an employee of the Corporation
and his employment with the Corporation is subsequently terminated, such
Director's Formula Grant Options may thereafter be exercised in accordance with
the provisions of Section 5(e) of the Plan.
Notwithstanding any other provision of the Plan, this Section 5(l) may not be
amended more than once every six months, except for amendments necessary to
conform the Plan to changes in the provisions of, or the regulations relating
to, the Code."
2. This Amendment 1995-1 shall be effective as of October 2, 1995,
conditioned upon the approval of this Amendment 1995-1 by the Corporation's
stockholders.
B-1
<PAGE> 39
APPENDIX
UNI-MARTS, INC.
PROXY
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders on February 22, 1996 and any adjournment thereof.
This Proxy will be voted as specified on the reverse side hereof. If no
specific direction is given, it will be voted for the election of
Directors, for approval of the 1996 Equity Compensation Plan, for the amendment
of the Equity Compensation Plan and for the ratification of the appointment of
the independent auditors.
The undersigned appoints Henry D. Sahakian and J. Kirk Gallaher, or
any one or more of them acting in the absence of others, proxies, each with full
power of substitution, to vote all shares of Common Stock of the Company which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held on Thursday, February 22,
1996, at 10:00 A.M., and any adjournment thereof, as set forth on the reverse
hereof.
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<PAGE> 40
1. ELECTION OF DIRECTORS Joseph V. Paterno, Charles C. Pearson
Jr., Daniel D. Sahakian
FOR ALL NOMINEES WITHHOLD
LISTED ABOVE AUTHORITY TO (Instruction: To withhold
(except as VOTE FOR ALL authority to vote for any
marked to the NOMINEES LISTED nominee, write that nominee's
contrary below) ABOVE name on the line below.
/ / / / ------------------------------------
2. PROPOSAL TO APPROVE THE 1996 EQUITY COMPENSATION PLAN.
For Against Abstain
/ / / / / /
3. PROPOSAL TO APPROVE AMENDMENT OF THE EQUITY COMPENSATION
PLAN TO INCREASE GRANTS OF NONQUALIFIED STOCK OPTIONS TO
NONEMPLOYEE DIRECTORS.
For Against Abstain
/ / / / / /
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1996.
For Against Abstain
/ / / / / /
Date: -------------------------------
- -------------------------------------
- -------------------------------------
Signature(s)
IMPORTANT: Please sign your name or names exactly as printed on this proxy.
When signing as attorney, executor, administrator, trustee or guardian, give
title as such.
2
