<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Uni-Marts, Inc.
- ----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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<PAGE> 2
UNI-MARTS, INC.
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
May 22, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Uni-Marts, Inc. The meeting will be held at the Ramada Inn State College, 1450
South Atherton Street, State College, Pennsylvania, on Thursday, June 18, 1998,
commencing at 10:00 A.M.
Please note that we have moved the location of our annual meeting. In
order to facilitate check-in, we will require admission tickets for
stockholders who wish to attend the meeting in person. The admission ticket is
attached to the enclosed proxy card. If you are a stockholder whose shares are
not registered in your own name and you plan to attend the meeting, please
bring a copy of the voting form sent to you by your broker or other evidence of
stock ownership.
At the meeting, you will be asked to vote on the election of two
directors who will serve until the Annual Meeting of Stockholders in 2001 and
the ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 1998.
A copy of the company's fiscal 1997 Annual Report was mailed to
stockholders of record on February 11, 1998. If you did not receive a copy at
that time, and one is not enclosed in this mailing, please contact our investor
relations department at 814-234-6000, ext. 2405, and one will be mailed to you
promptly.
Your vote is important. Whether or not you plan to attend the meeting,
please sign, date and mail your proxy in the enclosed postage-paid 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 Ramada Inn State
College, 1450 South Atherton Street, State College, Pennsylvania, at 10:00 A.M.
on Thursday, June 18, 1998, for the following purposes:
1. To elect two directors who will serve until the Annual Meeting of
Stockholders in 2001;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 1998;
and
3. 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 April
23, 1998 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
May 22, 1998
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.
If you plan to attend the meeting in person, please bring the admission ticket
attached to the enclosed proxy card. If you are a stockholder whose shares are
not registered in your own name and you plan to attend the meeting, please
bring a copy of the voting form sent to you by your broker or other evidence of
stock ownership.
<PAGE> 4
UNI-MARTS, INC.
477 East Beaver Avenue
State College, PA 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
June 18, 1998 (the "Annual Meeting") and any adjournment thereof. This Proxy
Statement and the accompanying proxy card are first being mailed to
stockholders on or about May 22, 1998. 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 per
share, at the close of business on April 23, 1998 are entitled to notice of,
and to vote at, the Annual Meeting. As of such date, there were outstanding
6,818,884 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 ChaseMellon
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 1997 Annual Report, which includes financial statements for
the fiscal year ended September 30, 1997, is enclosed or was sent to you
previously.
1
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is composed of three classes. Class III and Class
I Directors will serve until the Annual Meetings of Stockholders in 1999 and
2000, respectively, and thereafter for terms of three years until their
successors have been elected and qualified. The Directors comprising Class II
will be elected at the Annual Meeting and will serve until the Annual Meeting
of Stockholders in 2001 and thereafter for terms of three years until their
successors have been elected and qualified. Class I is composed of three
Directors and Class II and Class III are each composed of two 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 either 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 and proposed Director continuing
in office, 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 2001:
Name Age Position
- ---- --- --------
J. Kirk Gallaher 51 Executive Vice President, Chief
Financial Officer and Director
Stephen B. Krumholz (2)(3) 48 Director Nominee (a)
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ABOVE
NOMINEES.
Directors whose present terms continue until 1999:
Name Age Position
- ---- --- --------
M. Michael Arjmand(1)(2)(3) 50 Director (a)
Daniel D. Sahakian (2) 65 Director
Directors and proposed Directors whose present terms continue until 2000:
Name Age Position
- ---- --- --------
Henry D. Sahakian 61 Chairman of the Board and Chief
Executive Officer
Herbert C. Graves (1) 71 Director (a)
Gerold C. Shea (1) 58 Director (a)
(a) Charles C. Pearson resigned as a Director in November 1997. M. Michael
Arjmand was appointed by the Board of Directors to complete Mr.
Pearson's unexpired term. G. David Gearhart and Jeremiah A. Keating
have declined to stand for election for another term as Directors and
the Board of Directors nominated Stephen B. Krumholz for election as a
Director. Bruce K. Heim, Joseph V. Paterno and Michael J. Serventi
submitted letters of resignation in April 1998, effective on the
2
<PAGE> 6
earlier of the date of the 1998 Annual Meeting of Stockholders or June
30, 1998. The Board of Directors has appointed Herbert C. Graves and
Gerold C. Shea to fill the unexpired terms of Messrs. Heim and
Serventi.
- -------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Stock Option Committee.
Henry D. Sahakian is the founder of the Company and has served as Chairman
of the Board and Chief Executive Officer since the Company's inception. He
also served as the Company's President until October 1994. He assumed the
duties of President and Chief Operating Officer in December 1997.
M. Michael Arjmand is the founder and current Chief Executive Officer of
the Centre Analytical Laboratories, Inc., a contract research company located
in State College, Pennsylvania, and has served as Chairman of the Board of that
firm since 1986. Mr. Arjmand became a Director of the Company in April 1998.
J. Kirk Gallaher joined the Company in April 1980 and has served as
Executive Vice President and Chief Financial Officer since October 1994. From
1987 to 1994, Mr. Gallaher served as the Company's Senior Vice President and
Chief Financial Officer. Mr. Gallaher became a Director of the Company in
October 1986.
Herbert C. Graves has served since 1989 as Chairman of the Board and Chief
Executive Officer of the Standard Steel Division of Freedom Forge Corp., a
steel manufacturer located in Lewistown, Pennsylvania. Mr. Graves also served
as that company's President from 1989 to 1994. Mr. Graves is expected to
become a Director of the Company in June 1998.
Stephen B. Krumholz was employed from 1972 to 1998 by The Southland
Corporation ("Southland"), headquartered in Dallas, Texas, and served as that
company's Executive Vice President and Chief Operating Officer from 1993 to
1998. Southland operates or franchises 5,400 7-Eleven and other convenience
stores in the United States and Canada and is affiliated with another 11,700
7-Eleven convenience stores in the United States, Japan and other countries.
Prior to 1993, Mr. Krumholz served in other executive and management positions
with Southland. Mr. Krumholz is expected to become a Director of the Company
in June 1998.
Daniel D. Sahakian has served for the past 17 years as President and Chief
Executive Officer of HFL Corporation and for the past 10 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.
Gerold C. Shea has served as the President of Interconnect Enterprises, a
petroleum industry consulting firm located in Downingtown, Pennsylvania, since
1995. From 1963 to 1995, he was employed by Sun Co., Inc., a major petroleum
refiner and retailer, and served as that company's Vice President, Sunoco and
Atlantic Brand, from 1991 to 1995. In that position, he directed
retail marketing at 5,000 service stations and convenience stores. Prior to
that, Mr. Shea served in other executive and management positions with Sun.
Mr. Shea is expected to become a Director of the Company in June 1998.
For information with respect to the share ownership of the Company's
Directors, see "Principal Stockholders."
3
<PAGE> 7
The Board of Directors met seven times during the last fiscal year. In
fiscal year 1997, the Board of Directors had an Audit Committee, a Compensation
Committee, an Executive Committee, a Nominating Committee, a Stock Option
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 four times during the last
fiscal year. The Executive Committee met as needed between full board meetings
to discuss and act upon certain significant matters affecting the Company. The
Nominating Committee considered nominees recommended by security holders
pursuant to procedures set forth in the Company's By-laws. The Stock Option
Committee administers the Company's 1996 Equity Compensation Plan. The Stock
Option Committee met two times during the last fiscal year. The Strategic
Planning Review Committee met periodically to review and make recommendations
regarding the Company's strategic plan. The Strategic Planning Review Committee
met three times during the last fiscal year. The Executive Committee and the
Nominating Committee did not meet 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.
The Board of Directors has chosen to have the duties of the Strategic
Planning Review Committee performed by the entire Board of Directors and has
decided to eliminate the Executive Committee and Nominating Committee.
4
<PAGE> 8
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 fiscal years ended September 30 as listed
below:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
--------------------------------------
Awards Payouts
--------------------------- --------
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> <C>
Henry D. Sahakian, 1997 294,500 0 22,410 0 28,050 60,279(a)(b)(c)
Chairman of the Board 1996 288,900 0 14,940 1,500 57,221 61,133(a)(b)(c)
and Chief Executive 1995 270,000 167,832 13,000 1,650 0 61,342(a)(b)(c)
Officer
Charles R. Markham, 1997 170,014 0 15,480 0 21,000 50,499(a)(b)(c)
President, Chief 1996 160,500 0 10,320 1,030 34,046 50,638(a)(b)(c)
Operating Officer 1995 150,000 105,894 8,500 1,120 0 50,733(a)(b)(c)
and Director (d)
J. Kirk Gallaher, 1997 147,000 0 11,145 0 16,450 24,682(a)(b)(c)
Executive Vice President, 1996 139,100 0 7,430 740 29,601 24,804(a)(b)(c)
Chief Financial Officer 1995 130,000 93,906 6,500 840 0 24,879(a)(b)(c)
and Director
Howard D. Romines, 1997 113,000 0 4,605 0 6,450 21,779(a)(b)(c)
Executive Vice 1996 107,000 0 3,070 310 0 21,931(a)(b)(c)
President (e) 1995 100,000 31,968 2,500 335 0 21,958(a)(b)(c)
</TABLE>
- ----------------------
(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
snd Howard D. Romines in the amounts of $53,610, $44,605, $18,851 and
$15,751, respectively, for the fiscal year ended September 30, 1997,
$54,188, $44,605, $18,851 and $15,751, respectively, for the fiscal year
ended September 30, 1996 and $54,365, $44,605, $18,851 and $15,751,
respectively, for the fiscal year ended September 30, 1995.
(b) Includes Company credits 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 $1,669, $894, $831 and $1,028,
respectively, for the fiscal year ended September 30, 1997, $1,945,
$1,033, $953 and $1,180, respectively, for the fiscal year ended September
30, 1996 and $1,977, $1,128, $1,028 and $1,207, respectively, for the
fiscal year ended September 30, 1995.
(d) Mr. Markham retired on December 8, 1997 pursuant to an agreement which
provides, among other things, for his salary to continue until May 15,
1998 and for certain other benefits.
(e) Mr. Romines retired on October 20, 1997 and executed a general release
which released the Company from all claims he might have against the
Company.
5
<PAGE> 9
GRANTS OF STOCK OPTIONS. The following table sets forth incentive stock
options granted to executive officers during the fiscal year ended September
30, 1997:
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants For Option Terms
------------------------------------------------ -------------------
% of Total
Options/SARs
Options/ Granted to Exercise
SARs Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- ---- ---------- ------------ --------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Henry D. Sahakian 22,410 26.6% 6.25(1) 11-03-06(1) 65,297 158,566
Charles R. Markham 15,480 18.4% 6.25 11-03-06 60,825 154,132
J. Kirk Gallaher 11,145 13.2% 6.25 11-03-06 43,792 110,969
Howard D. Romines 4,605 5.5% 6.25 11-03-06 18,094 45,851
</TABLE>
(1) Mr. Sahakian received stock option grants for 11,205 shares with an
exercise price of $6.875 which expire November 3, 2001 and 11,205
shares with an exercise price of $6.25 which expire on November
3, 2006.
STOCK OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUES. The
following table sets forth information concerning stock options exercised
during the 1997 fiscal year and the value of stock options held at the end of
the fiscal year ended September 30, 1997 by each of the Company's executive
officers:
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs
Shares FY-End (#) at FY-End ($)
Acquired Value --------------- --------------
on Realized Exercisable/ Exercisable/
Name Exercise ($) Unexercisable Unexercisable
- ---- -------- -------- --------------- --------------
<S> <C> <C> <C> <C>
Henry D. Sahakian 0 0 41,040/22,410 0/0
Charles R. Markham 0 0 34,820/15,480 55,875/0
J. Kirk Gallaher 0 0 34,290/11,145 3,375/0
Howard D. Romines 0 0 12,870/4,605 1,125/0
</TABLE>
All options held by the named individuals were fully exercisable at
September 30, 1997 except options granted on November 4, 1996.
COMPENSATION OF DIRECTORS. During the 1997 fiscal year, each Director who
was not an employee of the Company received a retainer of $7,500, of which
$5,000 was paid in shares of Common Stock. Each nonemployee Director also
received grants of stock options to purchase 4,000 shares of the
6
<PAGE> 10
Company's Common Stock (3,000 shares for Mr. Gearhart and Mr. Pearson) at an
exercise price of $5.625, for serving as a Director during fiscal year 1997.
Each nonemployee Director also received $1,000 for each board or committee
meeting attended. Committee chairmen received $2,000 for each meeting they
chaired.
EMPLOYMENT AGREEMENTS. The Company is a party to change-in-control
agreements with each of Messrs. Henry D. Sahakian and Gallaher 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 during fiscal year 1997 were Messrs. Heim, Pearson and Daniel D.
Sahakian.
In fiscal year 1997, the Company purchased a property from Nicholas, Heim
and Kissinger Associates, a partnership in which Bruce K. Heim is also a
partner, for $1,500,000. The Company also paid rents to Nicholas, Heim and
Kissinger Associates of $35,500.
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
remaining term of 10 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 1997 was $27,600.
During fiscal year 1997, the Company leased five store locations and two
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 five 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 two 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 during fiscal year 1997 was $184,700.
The Company leases its corporate headquarters, certain storage facilities
and three 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 in years 1991 to 1997, expire in 1997 to 2000 and provide for
a current aggregate rent of $391,000. 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 $385,600
for fiscal year 1997. The three leases of store locations from HFL Corporation
which were entered into from August 1995 to October 1997 are for terms of five
years with renewal options and provide for annual rents aggregating $78,500.
The aggregate rent paid under these leases to HFL Corporation during fiscal
year 1997 was $74,700.
During fiscal year 1997, the Company received from HFL Corporation $11,700
as 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.
7
<PAGE> 11
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. Henry D. Sahakian exercised his option in
fiscal year 1996. Daniel D. Sahakian exercised his option in 1998.
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION
COMMITTEE OF THE BOARD OF DIRECTORS 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 separate committee
administers the Company's Stock Option Plan (the "Stock Option Committee").
The Committee and the Stock Option Committee both are composed entirely of
nonemployee directors. The Company's compensation policy, effectuated by the
Committees, 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 short and 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 Committees are strongly committed to maximizing stockholder value through
consistent growth and profitability.
The Company's overall compensation program for its executive officers is
comprised of the following elements:
A. Base Salary;
B. Annual Bonus Plan; and
C. Stock Option Plan.(1)
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, both in related areas and in general
industry. During fiscal year 1997, the Committee reviewed a compensation study
prepared by an independent accounting firm and information contained in the
proxy statements of other public companies in the convenience store and related
industries 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 to the officers is competitive with
that generally offered by comparable convenience store operators and other
similarly sized businesses.
- -----------------------------------
(1) As discussed below, in prior years the Company made three-year grants
under a Performance Unit Plan pursuant to which payments were made in the
fiscal year ended September 30, 1997. Payments may also be made in the next
fiscal year as prior grants mature.
8
<PAGE> 12
BONUSES
For the fiscal year ended September 30, 1997, no 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 an increase of the Company's earnings per share (after the bonuses are taken
into account) over prior fiscal years (without regard to extraordinary items)
and consistent with the Company's budget. Since earnings per share did not
equal or exceed that of the previous fiscal year, no bonuses were earned under
the Plan by any executive officer. The Committee believes that the 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 and the Stock Option Committee believe 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 retention and
foster an executive officer's proprietary interest in the Company. Under the
Stock Option Plan, options are issued at a price equal to the fair market value
of a share on the date of grant and the options generally 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 increase their stock ownership. In
addition, the Committee takes the number of shares subject to options 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, in recent
years, stock option grants have been extended to many other individuals
employed by the Company.
PERFORMANCE UNIT PLAN
The Committee decided not to make further grants under the Performance
Unit Plan in fiscal year 1997 although payments were made for such year
pursuant to grants made to executives in fiscal year 1995. Under the plan, the
amount of compensation is determined over succeeding three-year periods of time
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. Each Performance Unit has an initial value of $50 and the
performance period ends three years following grant. 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 awards of the Chief Executive Officer
are determined by the Committee and the Stock Option Committee, in conformity
with the policies described above. Mr. Sahakian was paid a base salary for the
fiscal year ended September 30, 1997 of $294,500. In order to keep Mr.
Sahakian's base salary in line with the Committee's philosophy for the future,
Mr. Sahakian's base salary was not increased for the fiscal year commencing
October 1, 1997 (nor was the base salary of any other
9
<PAGE> 13
executive officer) in light of the Company's financial performance. 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 to 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 meets the requirements of Section 162(m). In light of this, the
Committee does not believe that Section 162(m) will have any adverse effect on
the Company but continues to evaluate the Company's compensation program in
light of that restriction.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Bruce K. Heim, Chairman Charles C. Pearson, Jr., Chairman
Charles C. Pearson, Jr. G. David Gearhart
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 four companies: Southland Corporation, 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, 1992, and reinvestment of all dividends.
9/30/92 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
------- ------- ------- ------- ------- -------
Uni-Marts, Inc. 100 191 190 271 324 213
S & P 500 100 113 117 152 183 257
Peer Group 100 139 152 106 99 98
11
<PAGE> 15
CERTAIN TRANSACTIONS
The Company received commissions of $428,800 in fiscal year 1997 from
TeleBeam Incorporated ("TeleBeam") for coin-operated telephones installed at
certain convenience store locations and for the sale of prepaid telephone
cards. The Company also made payments of $577,000 in fiscal year 1997 to
TeleBeam for discounted prepaid telephone cards and telephone service. The
majority of the stock of TeleBeam is beneficially owned or controlled by
persons related to Henry D. Sahakian and the following Directors of the Company
also serve as Directors of TeleBeam: Henry D. Sahakian, Bruce K. Heim and
Joseph V. Paterno.
In management's opinion, 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 April 23, 1998, 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,
(iii) two former Executive Officers of the Company and (iv) all of the
Directors and Executive Officers as a group. As of such date, there were
6,818,884 shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Common Stock
Beneficial Ownership (1)
--------------------------
Name and Address of Beneficial Owner (2) Shares Percentage
- ---------------------------------------- ------------- ----------
<S> <C> <C>
Henry D. Sahakian 646,323 (3) 9.4%
M. Michael Arjmand 0 0
J. Kirk Gallaher 95,272 (4) 1.4
G. David Gearhart 13,617 (5) 0.2
Bruce K. Heim 48,529 (6) 0.7
Jeremiah A. Keating 16,375 (7) 0.2
Charles R. Markham, 1005 Greenbriar Drive, State College, PA 16801 36,394 0.5
Joseph V. Paterno 28,475 (8) 0.4
Howard D. Romines, 24 Cricklewood Circle, State College, PA 16803 462 0.0
Daniel D. Sahakian 426,394 (9) 6.2
Michael J. Serventi 253,139 (10) 3.7
All Directors and Executive Officers as a Group (10 persons) 1,564,980 22.4
Alexander Sahakian Trust 423,500 6.2
Armen D. Sahakian 379,279 5.7
Linda Ordoukhanian, 1580 Massachusetts Avenue, #6D, Cambridge, MA 02181 838,468 (11) 12.3
Armineh Ordoukhanian-Petrossian, 20 Rayburn Road, Belmont, MA 02178 (11)
Elsa Ordoukhanian, 925 Waverly Street, #304 Palo Alto, CA 94301 (11)
Nancy Ordoukhanian, 1580 Massachusetts Avenue, #6D, Cambridge, MA 02178 (11)
Getty Petroleum Marketing Inc., 125 Jericho Turnpike, Jericho, NY 11753 487,000 7.1
Dimensional Fund Advisors, Inc., 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401 400,500 (12) 5.9
</TABLE>
- ---------------------------
(1) Includes options to purchase Common Stock granted pursuant to the
Company's equity compensation plans.
(2) Except as noted, the addresses of all beneficial owners listed are in
care of the Company.
12
<PAGE> 16
(3) Includes 92,400 shares held by Henry D. Sahakian jointly with his wife,
28,000 shares owned by his wife, 8,616 shares held in the Savings Plan
and options to purchase 63,450 shares of Common Stock. 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 two trusts.
(4) Includes 48,457 shares held by Mr. Gallaher jointly with his wife, 1,380
shares held in the Savings Plan and options to purchase 45,435 shares of
Common Stock.
(5) Includes 3,036 shares held by Mr. Gearhart jointly with his wife and
options to purchase 7,750 shares of Common Stock.
(6) Includes 30,142 shares owned by Mr. Heim's wife and options to purchase
11,000 shares of Common Stock.
(7) Includes 1,100 shares held by Mr. Keating jointly with his wife and
options to purchase 11,000 shares of Common Stock.
(8) Includes 13,100 shares held by Mr. Paterno jointly with his wife and
options to purchase 11,000 shares of Common Stock.
(9) Includes 37,950 shares held jointly with his wife, 70,115 shares held for
two trusts and options to purchase 11,000 shares of Common Stock. The
beneficial ownership in the table above does not include 635,250 shares
held by two trusts for the benefit of Daniel D. Sahakian's children.
(10) Includes options to purchase 11,000 shares of Common Stock.
(11) According to Schedule 13D filed on March 30, 1998, each of Armineh
Ordoukhanian-Petrossian, Elsa Ordoukhanian and Nancy Ordoukhanian has
granted to Linda Ordoukhanian a proxy to vote all shares of Common Stock
owned by her. Armineh Ordoukhanian-Petrossian may be deemed to be the
beneficial owner of 209,620 shares of Common Stock with sole power to
dispose of such shares and shared power to vote such shares. Elsa
Ordoukhanian and Nancy Ordoukhanian may each be deemed to be the
beneficial owner of 209,616 shares of Common Stock with sole power to
dispose of such shares and shared power to vote such shares. Each of the
named persons shares voting power with respect to the shares of Common
Stock owned by her with Linda Ordoukhanian by virtue of the proxy granted
by each of the named persons to Linda Ordoukhanian. Linda Ordoukhanian
may be deemed to be the beneficial owner of 838,468 shares of Common
Stock, including 209,616 shares of Common Stock over which she has sole
voting and investment power, and 628,852 shares of Common Stock over
which she shares voting power by virtue of the proxies granted to her by
the other named persons. The group formed by these persons may be deemed
to beneficially own 838,468 shares of Common Stock.
(12) According to Schedule 13G filed on February 9, 1998, Dimensional Fund
Advisors Inc. ("Dimensional"), a registered investment advisor, is deemed
to have beneficial ownership of 400,500 shares of Common Stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, for all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
13
<PAGE> 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 or with respect to the fiscal year ended September 30,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent shareholders were complied with; except
that Mr. Joseph V. Paterno inadvertently failed to timely file a report showing
change in ownership arising from a charitable contribution in December 1996.
PROPOSAL II
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,
1997. The Company intends to utilize the services of Deloitte & Touche LLP for
the fiscal year ending September 30, 1998. 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 no later than September 30, 1998 to
be considered for inclusion in the Company's proxy materials for the Annual
Meeting to be held in 1999.
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
May 22, 1998
14
<PAGE> 18
APPENDIX
UNI-MARTS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON JUNE 18, 1998 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 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, June 18, 1998,
at 10:00 AM, and any adjournment thereof, as set forth on the reverse hereof.
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE)
...........................................................................
1. ELECTION OF DIRECTORS J. Kirk Gallaher, 2. PROPOSAL TO RATIFY THE
Stephen B. Krumholz APPOINTMENT OF DELOITTE
& TOUCHE LLP AS THE
FOR ALL NOMINEES WITHHOLD AUTHORITY COMPANY'S INDEPENDENT
LISTED ABOVE TO VOTE FOR AUDITORS FOR THE FISCAL
(Except as marked to ALL NOMINEES YEAR ENDING SEPTEMBER
the contrary below) LISTED ABOVE 30, 1998.
/ / / / FOR AGAINST ABSTAIN
/ / / / / /
(Instruction: To withhold authority to vote for
any nominee, write that nominee's name on the
line below.)
- -----------------------------------------------
Date: , 1998
-----------------------
-----------------------------------
-----------------------------------
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.
<PAGE> 19
"CORPORATE LOGO HERE"
ADMISSION TICKET
1998 ANNUAL MEETING OF STOCKHOLDERS
Thursday, June 18, 1998
10:00 AM
Ramada Inn State College
1450 South Atherton Street
State College, PA 16801
This ticket, or other evidence of stock ownership, must be presented
to enter the meeting.
Admits Stockholder(s)
