SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by Registrant [ ]
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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.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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Uni-Mart Logo
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
January 28, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Uni-Marts, Inc. The meeting will be held at the Comfort Suites, 132 Village
Drive, State College, Pennsylvania on Thursday, February 27, 2003, commencing at
10:00 A.M.
At the meeting, you will be asked to vote on the election of three
directors who will serve until the Annual Meeting of Stockholders in 2006 and
the ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 2003.
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.
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
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 Comfort Suites, 132
Village Drive, State College, Pennsylvania at 10:00 A.M. on Thursday, February
27, 2003, for the following purposes:
1. To elect three Class I Directors who will serve until the Annual
Meeting of Stockholders in 2006;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 2003; 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 January
2, 2003 are entitled to receive notice of and to vote at the Annual Meeting and
any adjournment thereof.
/s/ Mary Ann Miller
Mary Ann Miller
Secretary
State College, Pennsylvania
January 28, 2003
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, 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.
UNI-MARTS, INC.
477 EAST BEAVER AVENUE
STATE COLLEGE, PA 16801-5690
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PROXY STATEMENT
---------------
This Proxy Statement is furnished to the stockholders of Uni-Marts, Inc.
("Uni-Mart" or 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 27, 2003 (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 28, 2003.
The following questions and answers present important information
pertaining to the Annual Meeting:
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record as of the close of business on January 2, 2003 may
vote at the Annual Meeting.
Q: HOW MANY SHARES CAN VOTE?
A: There were 7,137,768 shares issued and outstanding as of the close of
business on January 2, 2003. Every stockholder may cast one vote for each
share owned.
Q: WHAT MAY I VOTE ON?
A: You may vote on the following items:
- the election of three Directors who have been nominated to serve on our
Board of Directors;
- ratification of the appointment by the Board of Directors of Deloitte &
Touche LLP as our independent auditors for the fiscal year ending
September 30, 2003; and
- any other business that is properly presented at the Meeting.
Q: WILL ANY OTHER BUSINESS BE PRESENTED FOR ACTION BY STOCKHOLDERS AT THE
ANNUAL MEETING?
A: Management knows of no business that will be presented at the Annual
Meeting other than that which is set forth in this proxy statement. If any
other matter properly comes before the Annual Meeting, the persons named in
the accompanying proxy card intend to vote the proxies (which confer
discretionary authority to vote on such matters) in accordance with their
best judgment.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON EACH PROPOSAL?
A: The board recommends a vote FOR each board nominee and a vote FOR the
ratification of our independent auditors.
Q: HOW DO I VOTE MY SHARES?
A: The answer depends on whether you own your Uni-Mart shares directly (that
is, you hold stock certificates that show your name as the registered
stockholder) or if your shares are held in a brokerage account or by
another nominee holder.
If you own Uni-Mart shares directly: your proxy is being solicited
directly by us, and you can vote by doing the following: (1) sign and date the
enclosed proxy card, (2) mark the boxes indicating how you wish to vote, and (3)
return the proxy card in the prepaid envelope provided. If you sign your proxy
card but do not indicate how you wish to vote, the proxies will vote your shares
FOR each of the nominees named on the proxy card, FOR each of the proposals
submitted to the stockholders for approval and in their discretion on all other
matters. You can also vote in person if you attend the Meeting.
If you hold your Uni-Mart shares through a broker, bank or other
nominee: you will receive a voting instruction form directly from the nominee
describing how to vote your shares. If you receive a voting instruction card,
you can vote by completing and returning the voting instruction card. You may
also be able to vote by telephone or via the Internet. Please refer to the
instructions provided with your voting instruction card for information about
voting in these ways.
If you hold your shares through a nominee and want to vote at the
Meeting: you must obtain a "legal proxy" from the nominee recordholder
authorizing you to vote at the Meeting.
Q: WHAT IF I WANT TO CHANGE MY VOTE OR REVOKE MY PROXY?
A: A registered stockholder may change his or her vote or revoke his or her
proxy at any time before the Meeting by notifying our corporate secretary,
Mary Ann Miller, in writing, that you revoke your proxy or by filing a duly
executed proxy bearing a later date with Ms. Miller. You may then vote in
person at the Meeting or submit a new proxy card. You may contact our
Transfer Agent to get a new proxy card.
If you hold your shares through a broker, bank or other nominee and wish to
change your vote, you must follow the procedures required by your nominee.
Q: WHAT IS A QUORUM?
A: The presence at the Meeting (in person or by proxy) of shares representing
a majority of the total number of shares issued and outstanding and
entitled to vote at the Annual Meeting constitutes a quorum. A quorum must
be present at the Annual Meeting in order to convene the Meeting.
Q: HOW WILL DIRECTORS BE ELECTED?
A: A plurality of the votes cast at the Annual Meeting is required for the
election of Directors.
Q: WHAT VOTE IS REQUIRED TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
THE INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2003?
A: To ratify the appointment, a majority of the shares of stock that are
present in person or by proxy and entitled to vote at the Annual Meeting
must be voted in favor of the ratification.
2
Q: HOW MANY SHARES DO THE DIRECTORS AND OFFICERS OF UNI-MART BENEFICIALLY OWN,
AND HOW DO THEY PLAN TO VOTE THEIR SHARES?
A: Directors and executive officers, who, as of January 2, 2003, had
beneficial ownership (or had the right to acquire beneficial ownership
within sixty days following January 2, 2003) of approximately 32.3% of our
outstanding common stock, are expected to vote, or direct the voting of
their shares, in favor of the election of the nominees for Director and the
ratification of the appointment of our independent auditors.
Q: DO THE DIRECTORS AND OFFICERS OF UNI-MART HAVE AN INTEREST IN THE MATTERS
TO BE VOTED ON?
A: As three of the candidates in the election of Directors, such Directors
have an interest in their election.
Q: WHO WILL COUNT THE VOTES?
A: Mellon Investor Services LLC, Uni-Mart's transfer agent, will count the
votes.
Q: WHAT IS THE EFFECT IF I FAIL TO GIVE INSTRUCTIONS TO MY BROKER?
A: If your shares are held by a nominee recordholder and you sign but do not
give instructions on the voting instruction card, your nominee recordholder
may not have authority to vote your shares on all proposals. If a bank,
broker or other nominee holding shares on behalf of a stockholder does not
receive voting instructions from the stockholder by a specified date before
the Annual Meeting and does not have discretionary authority to vote the
shares on one or more proposals, the shares will not be voted for those
proposals. This is called a broker non-vote. Generally, banks, brokers and
other nominees have discretionary authority to vote shares on matters that
are deemed routine. All of the proposals submitted to the stockholders at
this Annual Meeting are considered routine matters. Therefore, brokers,
banks and other nominees will have discretion to vote on all the proposals,
without instructions from the stockholder.
Q: WHAT IS THE EFFECT IF I ABSTAIN OR WITHHOLD MY VOTE?
A: Withheld votes will have no effect on the outcome of the election of
directors. With respect to the appointment of Deloitte & Touche LLP as the
independent auditor, an abstention will have the same effect as a "no"
vote.
Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All stockholders are invited to attend the Annual Meeting. If you plan to
attend the Annual Meeting, please bring the admission ticket attached to
your proxy card. If you are a stockholder whose shares are not registered
in your own name and you plan to attend the Annual Meeting, please bring a
copy of the voting form sent to you by your broker or other evidence of
stock ownership.
Q: ARE THERE ANY EXPENSES ASSOCIATED WITH COLLECTING THE STOCKHOLDER VOTES?
A: We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and other materials to our stockholders. We do not anticipate hiring
an agency to solicit votes from stockholders at this time. Officers and
other employees of Uni-Mart may solicit proxies in person or by telephone
but will receive no special compensation for doing so.
A copy of the Company's 2002 Annual Report, which includes financial
statements for the fiscal year ended September 30, 2002, is enclosed but does
not constitute a part of this Proxy Statement.
3
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors is composed of three classes of Directors. Class II
and Class III Directors are presently serving until the Annual Meetings of
Stockholders in 2004 and 2005, respectively, and until their successors have
been elected and qualified. The Directors comprising Class I will be elected at
the Annual Meeting and will serve until the Annual Meeting of Stockholders in
2006 and until their successors have been elected and qualified. Each class of
Directors is composed of three Directors.
The persons named on the enclosed proxy card as proxies (the "Proxies")
intend to vote, unless instructed otherwise, for election of the nominees named
below. All nominees have consented to be named and to serve if elected. If for
any reason any of the nominees becomes unable or is unwilling to serve, at the
time of the Annual Meeting the Proxies 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 will be elected by a plurality of
the votes of the shares present at the Annual Meeting and entitled to vote on
the election of Directors.
The following sets forth information as to each nominee for election as a
Director at the Annual Meeting, each Director continuing in office and the
Company's executive officers, 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 as Class I Directors at the Annual Meeting with terms
expiring in 2006:
NAME AGE POSITION
---- --- --------
Henry D. Sahakian (5) 66 Chairman of the Board and
Chief Executive Officer
Herbert C. Graves (1)(2)(5) 76 Director
Gerold C. Shea (5) 63 Director
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ABOVE
NOMINEES.
Class II Directors whose present terms continue until 2004:
NAME AGE POSITION
---- --- --------
Stephen B. Krumholz (1)(3)(4)(5) 53 Director
Jack G. Najarian (1)(2) 47 Director
Anthony S. Regensburg 74 Director
Class III Directors whose present terms continue until 2005:
NAME AGE POSITION
---- --- --------
M. Michael Arjmand (3)(4) 55 Director
Frank R. Orloski, Sr. (2) 70 Director
Daniel D. Sahakian 70 Director
4
Other Executive Officers:
NAME AGE POSITION
---- --- --------
Ara M. Kervandjian 36 Executive Vice President of Strategy
and Corporate Development
N. Gregory Petrick 47 Executive Vice President and Chief
Financial Officer
---------------
(1) Member of the Ad Hoc Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Stock Option Committee.
(5) Member of the Strategic Planning Committee.
BIOGRAPHICAL INFORMATION: DIRECTORS AND EXECUTIVE OFFICERS
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 again in 1997. He is Daniel D. Sahakian's brother and Ara M.
Kervandjian's father-in-law.
M. Michael Arjmand is the founder and, until his retirement in 2001, the
former Chief Executive Officer of Centre Analytical Laboratories, Inc., a
contract research company located in State College, Pennsylvania, and served as
Chairman of the Board of that firm from 1986 until 2001. Mr. Arjmand became a
Director of the Company in April 1998.
Herbert C. Graves has served since 1998 as Chairman Emeritus of Standard
Steel Division of Freedom Forge Corp., a steel manufacturer located in
Lewistown, Pennsylvania. From 1989 to 1998, he served as Chairman of the Board
and Chief Executive Officer of that firm. Mr. Graves also served as that
company's President from 1989 to 1994. Mr. Graves became a Director of the
Company in June 1998.
Ara M. Kervandjian joined the Company in October 2001 as Executive Vice
President of Strategy and Corporate Development. From 2000 to 2001, he served as
Senior Vice President of Conestoga Enterprises, Inc., a regional
telecommunications firm based in Birdsboro, Pennsylvania. From 1995 to 2000, he
was President and Chief Executive Officer of TeleBeam Incorporated, a
telecommunications firm located in State College, Pennsylvania. He is Henry D.
Sahakian's son-in-law.
Stephen B. Krumholz has been employed since 1998 as Executive Vice
President of Freebie, Inc., an electronic database marketing company based in
Dallas, Texas. Mr. Krumholz was employed from 1972 to 1998 by 7-Eleven, Inc.,
headquartered in Dallas, Texas, and served as that company's Executive Vice
President and Chief Operating Officer from 1993 to 1998. 7-Eleven operates or
franchises 5,700 7-Eleven and other convenience stores in the United States and
Canada and is affiliated with another 15,000 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 7-Eleven. Mr. Krumholz became a
Director of the Company in June 1998.
Jack G. Najarian has served since April 2001 as Chairman of the Board and
Chief Executive Officer of Weatherly International PLC, a UK investment banking
firm. Mr. Najarian served as Chairman of the Board and Chief Executive Officer
of Weatherly Securities, Inc., a subsidiary of Weatherly International PLC, from
April 2001 to October 2002 and served as that company's Managing Director of
Investment Banking and Corporate
5
Finance from October 1999 to April 2001. Mr. Najarian was the Chairman and
Co-Founder of Griffin Securities, Inc., a New York investment banking firm, from
1996 to 1999. Mr. Najarian became a Director of the Company in October 1999.
Frank R. Orloski, Sr. is the founder and, until April 2000, served as
President of Orloski Service Station, Inc., a chain of 43 convenience stores
located in northeastern Pennsylvania. The Company acquired the assets of this
business in April 2000. Mr. Orloski served as President of that firm since 1970.
Mr. Orloski became a Director of the Company in October 2000.
N. Gregory Petrick joined the Company in July 1978. He was named as
Executive Vice President in October 2000 and served as the Company's Senior Vice
President and Chief Financial Officer since September 1999. From 1988 to 1999,
Mr. Petrick served as the Company's Vice President, Finance.
Anthony S. Regensburg has been employed since 1989 as a consultant with AR
Consulting Group, a consulting firm based in Camden, Maine, and specializing in
convenience store distribution focusing on cigarette wholesaling and retailing.
Mr. Regensburg was employed from 1978 to 1989 in various executive positions
with Coremark, a tobacco wholesaler, and as an executive with other tobacco
firms from 1954 to 1978. Mr. Regensburg became a Director of the Company in
October 1999.
Daniel D. Sahakian has served for the past 22 years as President and Chief
Executive Officer of HFL Corporation, a commercial real estate company. Mr.
Sahakian served as President of Unico Corporation from 1988 to June 2002 at
which time the company merged with HFL Corporation. HFL Corporation is
controlled by the families of him and Henry D. Sahakian. Mr. Sahakian became a
Director of the Company in October 1981. He is Henry D. Sahakian's brother.
Gerold C. Shea has served as 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. ("Sun"), 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 became a Director of the Company in June 1998.
For information with respect to the share ownership of the Company's
Directors and Executive Officers, see "Principal Stockholders."
The Board of Directors met seven times during the last fiscal year. In
fiscal year 2002, the Board of Directors had an Ad Hoc Committee, an Audit
Committee, a Compensation Committee, a Stock Option Committee, and a Strategic
Planning Committee. The Ad Hoc Committee was formed in fiscal year 2002 to
review operating and financial strategies for the enhancement of stockholder
value. The Ad Hoc Committee met five times during the last fiscal year. The
Audit Committee assists the Board in fulfilling its responsibility for the
safeguarding of assets and oversight of the quality and integrity of the
accounting, auditing and reporting practices of the Company. The Audit Committee
met three times during the last fiscal year. The Compensation Committee
periodically reviews, implements and administers the compensation policies and
programs for, and the 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 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 Committee meets periodically to review and make recommendations
regarding the Company's strategic plan. The Strategic Planning Committee met one
time during the last fiscal year. Each incumbent Director attended at least 75%
of the total number of meetings of the
6
Board of Directors and meetings of Board Committees on which such Director
served except Anthony S. Regensburg.
COMPENSATION OF DIRECTORS. During the 2002 fiscal year, each Director who
was not an employee of the Company received a retainer of $7,500, of which
approximately $5,000 was paid in shares of Common Stock (1,960 shares per
non-employee Director). Pursuant to the Company's 1996 Equity Compensation Plan,
all non-employee Directors also receive annual nonqualified stock option grants
for 2,000 shares of common stock plus 500 shares for each full year the Director
has served as a member of the board, up to a maximum of 4,000 shares per grant,
on the date of each annual meeting. In addition, newly appointed or elected
non-employee Directors receive an initial stock option grant for 5,000 shares.
Accordingly, during the 2002 fiscal year, each non-employee Director received
grants of stock options to purchase 4,000 shares of the Company's Common Stock
(3,500 for Messrs. Najarian and Regensburg and 3,000 for Mr. Orloski) at an
exercise price of $2.55 for serving as a Director during fiscal year 2002. Each
non-employee Director also received $1,000 for each board or committee meeting
attended. Committee chairmen received $2,000 for each meeting they chaired.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the total annual
compensation paid or accrued by the Company to or for its Chief Executive
Officer and other executive officers who were employed by the Company during
fiscal year 2002 (the "named executive officers") for the periods listed below:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL
----------------------------- OPTIONS/SARS OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (# OF SHARES) PAYOUTS ($) COMP. ($)
--------------------------- ---- ---------- --------- ------------- ----------- ---------------
Henry D. Sahakian, 2002 333,400 0 50,000 0 60,447(a)(b)(c)
Chairman of the Board and 2001 333,400 8,895 45,000 0 60,251(a)(b)(c)
Chief Executive Officer 2000 333,400 0 40,000 0 58,914(a)(b)(c)
Ara M. Kervandjian, 2002 122,596 0 125,000 0 0
Executive Vice President, Strategy
and Corporate Development (d)
N. Gregory Petrick, 2002 130,000 0 25,000 0 9,896(a)(b)(c)
Executive Vice President and 2001 125,000 3,335 22,500 0 12,999(a)(b)(c)
Chief Financial Officer 2000 110,000 2,200 20,000 0 5,163(b)(c)
---------------
(a) Includes premiums paid by the Company on split-dollar insurance policies on
the lives of Henry D. Sahakian and N. Gregory Petrick in the amounts of
$55,705 and $6,200, respectively, for the fiscal year ended September 30,
2002, premiums on the lives of Henry D. Sahakian and N. Gregory Petrick in
the amounts of $53,590 and $6,200, respectively, for the fiscal year ended
September 30, 2001, and premiums on the life of Henry D. Sahakian in the
amount of $53,790 for the fiscal year ended September 30, 2000.
(b) Includes Company contributions to the Company's Deferred Compensation Plan
for Messrs. Sahakian and Petrick in the amounts of $1,250 and $1,250 and
earnings of $620 and $620, respectively, for the fiscal year ended September
30, 2002, contributions in the amounts of $5,000 and $5,000, respectively,
for the fiscal year ended September 30, 2001, and contributions in the
amounts of $5,000 and $3,750, respectively, for the fiscal year ended
September 30, 2000.
(c) Includes Company contributions to the Company's Retirement Savings and
Incentive Plan (the "Savings Plan") for Messrs. Sahakian and Petrick in the
amounts of $2,872 and $1,826, respectively, for the fiscal year ended
September 30, 2002, contributions in the amounts of $1,661 and $1,799,
respectively, for the fiscal year ended September 30, 2001 and contributions
in the amounts of $124 and $1,413, respectively, for the fiscal year ended
September 30, 2000.
(d) Mr. Kervandjian was named Executive Vice President, Strategy and Corporate
Development on October 1, 2001.
8
GRANTS OF STOCK OPTIONS. The following table sets forth incentive stock
options granted to the Company's named executive officers during the fiscal year
ended September 30, 2002:
OPTIONS/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
OPTIONS/SARS PRICE APPRECIATION
OPTIONS/ GRANTED TO EXERCISE FOR OPTION TERMS
SARS EMPLOYEES IN PRICE EXPIRATION ------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
---- ----------- ------------ --------- ---------- ------- --------
Henry D. Sahakian........... 50,000 10.8% $1.54 9-17-07 14,760 40,640
Ara M. Kervandjian.......... 100,000 21.6% $2.10 10-08-11 25,522 177,107
25,000 5.4% $1.40 9-17-12 23,881 61,777
N. Gregory Petrick.......... 25,000 5.4% $1.40 9-17-12 23,881 61,777
STOCK OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUES. The
following table sets forth information concerning stock options exercised during
the 2002 fiscal year and the value of stock options held at the end of the
fiscal year ended September 30, 2002 by each of the Company's named executive
officers:
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES VALUE --------------- ---------------
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- ---------------
Henry D. Sahakian......................... 0 0 79,667/93,333 1,375/0
Ara M. Kervandjian........................ 0 0 0/125,000 0/750
N. Gregory Petrick........................ 0 0 48,333/46,667 825/750
All options held by the named individuals were fully exercisable at
September 30, 2002 except options granted during fiscal year 2002, two-thirds of
the options granted during fiscal year 2001, and one-third of the options
granted during fiscal year 2000. The Company does not currently grant any
long-term incentives, other than stock options, to its executives or other
employees. Similarly, the Company does not sponsor any defined benefit or
actuarial plans at this time.
9
EMPLOYMENT AGREEMENTS. The Company has entered into a change-in-control
agreement with each of Messrs. H. Sahakian, Kervandjian and Petrick, 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.
TRANSACTION SUCCESS BONUS PLAN. In connection with the Company's evaluation
of strategic alternatives, including the possible sale of a significant number
of convenience stores or the sale of all or substantially all of the Company's
outstanding common stock or assets, the Company adopted a "Transaction Success
Bonus Plan" (the "Bonus Plan") to create certain financial incentives for each
of Messrs. H. Sahakian, Kervandjian and Petrick. Pursuant to the Bonus Plan, if
the proceeds from such a transaction meet certain financial thresholds, Messrs.
Sahakian, Kervandjian and Petrick will share a "bonus pool" ranging from
$500,000 to $1,000,000 (depending upon the amount of the proceeds and the nature
of the transaction). The bonus pool will be allocated 50% to Mr. Sahakian and
25% each to Messrs. Kervandjian and Petrick.
10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors during fiscal year 2002 were Messrs. Arjmand, Krumholz and Daniel D.
Sahakian. Mr. Sahakian resigned from the Compensation Committee effective
September 30, 2002.
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 five 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 2002 was $30,500.
The Company leases its corporate headquarters, certain storage facilities,
nine of its store locations, store equipment and one other location from HFL
Corporation, which is beneficially controlled by the families of Henry D.
Sahakian and Daniel D. Sahakian. The leases for the corporate headquarters were
entered into in January 2001 for a term of 10 years and provide for an annual
rent of $306,100 with 2% annual increases in years two through five. The lease
for the storage facilities was entered into in 1999 for a term of five years,
subject to a 4% annual increase, and provides for an aggregate rent of $96,800.
The aggregate rent paid to HFL Corporation for the corporate headquarters,
parking and storage facilities was $398,100 for fiscal year 2002. The nine
leases of store locations and store equipment from HFL Corporation were entered
into from October 1992 to January 2002, are for terms of three to twelve years
with renewal options and provide for annual rents aggregating $859,400. The
aggregate rent paid under these leases to HFL Corporation during fiscal year
2002 was $761,500.
During fiscal year 2002, the Company received from HFL Corporation $11,200
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.
11
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 (collectively, the "Committees") both
are comprised entirely of non-employee 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
interest of the stockholders through stock options that are designed to provide
additional compensation only when all stockholders benefit through share price
appreciation. The Company and the Committees are strongly committed to
maximizing shareholder value through consistent growth and profitability.
The Company's overall compensation program for its executive officers is
currently comprised of the following three elements:
A. Base Salary;
B. Bonus Plan(s); and
C. Stock Option Plan.
BASE SALARY AND BENEFITS
The Committee reviews the base salary and welfare and retirement 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 2002, the Committee reviewed 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 to the officers is competitive with that generally offered
by comparable convenience store operators and other similarly sized businesses
taking into account the Company's financial circumstances.
BONUSES
For the fiscal year ended September 30, 2002, no bonuses were awarded to
the executive officers based upon the terms of the Annual Bonus Plan, as
administered by the Committee. During this year, the Plan was designed to reward
the executive officers only if actual Company earnings exceeded a specified
level after the bonuses were taken into account, i.e., a bonus could be paid
only to the extent that the bonus would "be paid for" after taking the amount of
the bonus into account in determining the amount of profits that had to be
achieved. Since the Company was not profitable, no bonuses were earned under the
Plan by any executive officer. However, the Company and the Committee believe
that an annual bonus plan is a beneficial compensation device for the Company.
The Committee has always followed a philosophy that such a plan must relate
executive compensation directly to Company performance so that any bonuses paid
will provide a financial reward only for the achievement of substantial business
results. A new bonus program for the 2002-2003 fiscal year is in the process of
being devised by the Committee but any such program will require continued
improvement in the Company's profitability in order for any payments to be made.
12
During the last fiscal year, in connection with the consideration by the
Board of Directors of the Company of strategic alternatives in order to enhance
stockholder value, the Committee approved a Transaction Success Bonus Plan (the
"Plan") for three executive officers of the Company, Messrs. Sahakian,
Kervandjian and Petrick. The Plan creates a potential cash bonus pool to be
allocated among the participants if the Company completes a successful
transaction as defined in the Plan. The bonus pool will be allocated 50% to Mr.
Sahakian and 25% each to Messrs. Kervandjian and Petrick.
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 potential for
additional stock ownership. In addition, the Committee takes into account the
number of shares subject to option and the potential long-term benefit to the
executives 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 options have been extended to many other
individuals employed by the Company. In addition, in light of the Company's
financial results in recent years, the Committee has granted more options and
held base salaries down to further align the economic interests of and impact on
the executives with those of the Company's stockholders.
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 conformance
with the policies described above. Mr. Sahakian was paid a base salary for the
fiscal year ending September 30, 2002 of $333,400. As in fiscal years 2001 and
2002, Mr. Sahakian requested, and the Committee agreed to, no increase for
fiscal 2003. 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
Stephen B. Krumholz, Chairman Stephen B. Krumholz, Chairman
M. Michael Arjmand M. Michael Arjmand
Daniel D. Sahakian
13
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: 7-Eleven, Inc., Casey's General
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, 1997, and reinvestment of all dividends.
[LINE GRAPH]
9/30/97 9/30/98 9/30/99 9/30/00 9/30/01 9/30/02
------- ------- ------- ------- ------- -------
Uni-Marts, Inc..................... 100 58 23 37 43 27
S & P 500.......................... 100 109 139 158 116 92
Peer Group......................... 100 106 88 101 82 75
14
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee consists of the following members of the Company's
Board of Directors: Herbert C. Graves, Chairman, Jack G. Najarian and Frank R.
Orloski, Sr. Each of the members of the Audit Committee is independent as
defined in Section 121(A) of the American Stock Exchange listing standards. The
Audit Committee operates pursuant to a written charter adopted by the Board of
Directors.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
The Audit Committee has discussed the matters required to be discussed by
SAS 61 (Communication with Audit Committees) with Deloitte & Touche LLP, the
Company's independent auditors.
The Audit Committee has received written disclosures and the letter from
Deloitte & Touche LLP required by Independence Standards Board Standard No. 1
(which relates to the accountant's independence from the Company and its related
entities) and has discussed with Deloitte & Touche LLP their independence from
the Company and its related entities.
Based on the review and discussions referenced above, the Audit Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2002.
AUDIT COMMITTEE
Herbert C. Graves, Chairman
Jack G. Najarian
Frank R. Orloski, Sr.
15
CERTAIN TRANSACTIONS
The Company made consulting fee and expense reimbursement payments of
$79,300 in fiscal year 2002 to Interconnect Enterprises, a petroleum industry
consulting firm owned by Gerold C. Shea.
In fiscal year 2002, the Company leased an office location from Frank R.
Orloski, Sr. for $30,000. The lease was entered into in May 2000 and has a term
of five years.
The Company made lease payments to a family limited partnership, a rental
company and an individual for the lease of four store locations and store
equipment in fiscal year 2002 in the amount of $35,400. Ara M. Kervandjian, an
executive officer of the Company, is a general partner with nominal ownership in
the limited partnership and a general partner and material owner in the rental
company. One store location is owned by Hrach Kervandjian, father of Ara M.
Kervandjian. The leases were entered into from April 2002 to September 2002 with
terms of four to twelve years and provide for annual rents of $167,700 with
renewal options and annual increases not to exceed 2% per year.
Additional transactions with management and others are described under
"Compensation Committee Interlocks and Insider Participation." In management's
opinion, the Interconnect Enterprises and lease transactions 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 2, 2003, 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 named executive officers
and (iii) all of the Directors and executive officers as a group. As of such
date, there were 7,137,768 shares of Common Stock outstanding.
COMMON STOCK
BENEFICIAL OWNERSHIP (1)
-------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (2) SHARES PERCENTAGE
---------------------------------------- --------- ----------
Henry D. Sahakian........................................... 1,056,647(3) 14.6%
M. Michael Arjmand.......................................... 100,785(4) 1.4
Herbert C. Graves........................................... 45,785(5) 0.6
Ara M. Kervandjian.......................................... 109,309(6) 1.5
Stephen B. Krumholz......................................... 31,960(7) 0.4
Jack G. Najarian............................................ 24,840(8) 0.3
Frank R. Orloski, Sr........................................ 27,135(9) 0.4
N. Gregory Petrick.......................................... 53,395(10) 0.7
Anthony S. Regensburg....................................... 24,840(11) 0.3
Daniel D. Sahakian.......................................... 1,184,758(12) 16.5
Gerold C. Shea.............................................. 33,285(13) 0.5
All Directors and Executive Officers as a Group (11
persons).................................................. 2,413,839 32.3
16
COMMON STOCK
BENEFICIAL OWNERSHIP (1)
-------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (2) SHARES PERCENTAGE
---------------------------------------- --------- ----------
Linda Ordoukhanian, 1580 Massachusetts Avenue, #6D,
Cambridge, MA 02138....................................... 838,468(14) 11.7
HP Limited Partnership, 80 Fairhaven Road, Cumberland, RI
02864..................................................... 701,000 9.8
Dimensional Fund Advisors, Inc., 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401............................. 477,100 6.7
---------------
(1) Includes options to purchase Common Stock granted pursuant to the Company's
Equity Compensation Plan and 1996 Equity Compensation Plan exercisable
within 60 days.
(2) Except as noted, addresses of all beneficial owners listed are in care of
the Company at 477 East Beaver Avenue, State College, PA 16801.
(3) Includes 35,500 shares owned by Henry D. Sahakian's wife, 70,623 shares
held in the Savings Plan, 278,900 shares held by HFL Corporation, 5,000
shares held in his Individual Retirement Account, 5,000 shares held as
custodian for his grandson and options to purchase 79,667 shares of Common
Stock. Henry D. Sahakian is one of two trustees for a trust for the benefit
of Daniel D. Sahakian's son. Henry D. Sahakian disclaims beneficial
ownership of, and the beneficial ownership in the table above does not
include, the stock held by this trust. The beneficial ownership in the
table above also does not include 59,309 shares held by his daughter and
son-in-law for which he disclaims beneficial ownership.
(4) Includes options to purchase 20,000 shares of Common Stock.
(5) Includes 15,000 shares held by the Graves Family Partnership and options to
purchase 20,000 shares of Common Stock.
(6) Includes 6,800 shares held in an SEP account and options to purchase 50,000
shares of Common Stock.
(7) Includes options to purchase 20,000 shares of Common Stock.
(8) Includes options to purchase 15,000 shares of Common Stock.
(9) Includes options to purchase 11,500 shares of Common Stock.
(10) Includes 4,932 shares held in the Savings Plan and options to purchase
48,333 shares of Common Stock.
(11) Includes options to purchase 15,000 shares of Common Stock.
(12) Includes 322,325 shares held by Daniel D. Sahakian's wife, 278,900 shares
held by HFL Corporation, 137,815 shares held as a trustee for two trusts,
and options to purchase 31,000 shares of Common Stock.
(13) Includes options to purchase 20,000 shares of Common Stock.
(14) According to Amendment No. 1 to Schedule 13D filed on February 12, 2002,
Armineh Ordoukhanian Petrossian, Elsa Ordoukhanian, Linda Ordoukhanian and
Nancy Ordoukhanian reported having formed a "group" as that term is used in
Section 13(d)(3) of the Exchange Act and that each of Armineh Ordoukhanian
Petrossian, Elsa Ordoukhanian and Nancy Ordoukhanian had granted a proxy to
vote the shares of the Company's common stock owned by them to Linda
Ordoukhanian. Consequently, both the group and Linda Ordoukhanian may be
deemed to be the beneficial owner of an aggregate of 838,468 shares of the
Company's common stock owned by members of the group.
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, in the case of the Company's Directors and
executive officers, written representations that no other reports were required
during or with respect to the fiscal year ended September 30, 2002, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten-percent stockholders were complied with, except Messrs. H. Sahakian,
Kervandjian and Petrick inadvertently failed to timely file Forms 4 to report
the receipt of stock options granted to each of them on September 18, 2002.
PROPOSAL 2
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, 2002.
The Company intends to utilize the services of Deloitte & Touche LLP for the
fiscal year ending September 30, 2003. 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 Proxies intend to vote, unless instructed otherwise,
for the ratification of the appointment of the firm of Deloitte & Touche LLP.
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees.................................................. $191,500
Financial Information System Design and Implementation...... $ 0
All Other Fees.............................................. $ 45,000
The Audit Committee has considered whether the provision of non-audit
services by the auditors is compatible with maintaining the independence of the
Company's auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF THE ABOVE-NAMED INDEPENDENT AUDITORS.
18
STOCKHOLDER PROPOSALS
Stockholders intending to submit proposals to be included in the Company's
next Proxy Statement must send their proposal to the Secretary of the Company at
477 East Beaver Avenue, State College, Pennsylvania, 16801-5690, not later than
September 30, 2003. Such proposals must relate to matters appropriate for
stockholder action and be consistent with regulations of the Securities and
Exchange Commission.
Stockholders intending to present proposals at the next annual meeting of
the Company and not intending to have such proposals included in the Company's
next Proxy Statement must send their proposal to the Secretary of the Company at
477 East Beaver Avenue, State College, Pennsylvania, 16801-5690, not later than
December 15, 2003. If notification of a stockholder proposal is not received by
such date, the Proxies may vote, in their discretion, any and all of the proxies
received in this solicitation against such proposal.
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/ Mary Ann Miller
Mary Ann Miller
Secretary
State College, Pennsylvania
January 28, 2003
19
Please mark
your vote as indicated
in this example [ ]
1. ELECTION OF CLASS I DIRECTORS
01 Henry D. Sahakian FOR ALL NOMINEES WITHHOLD AUTHORITY
02 Herbert C. Graves LISTED TO LEFT TO VOTE FOR
03 Gerold C. Shea (except as marked to ALL NOMINEES
the contrary below) LISTED TO THE LEFT
[ ] [ ]
(Instruction: To withhold authority to vote for any nominee, write that
nominee's name on the line below.)
-----------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF FOR AGAINST ABSTAIN
DELOITTE & TOUCHE LLP AS THE COMPANY'S [ ] [ ] [ ]
INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2003.
Dated: ____________________________, 2003
________________________________________
Signature
________________________________________
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.
FOLD AND DETACH HERE
UNI-MARTS, INC.
PROXY
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders on February 27, 2003 and any adjournment thereof.
This proxy when properly executed will be voted as specified on the reverse
side hereof. If no specific direction is given, it will be voted "FOR" (1) the
election of all nominees for directors and (2) the ratification of the
appointment of the independent auditors.
The undersigned, revoking any contrary proxy previously given, appoints Henry
D. Sahakian and N. Gregory Petrick, 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 27, 2003, at 10:00AM, and any adjournment
thereof, as set forth on the reverse hereof. The undersigned confers
discretionary authority by this proxy as to matters which may properly come
before the meeting or any postponement or adjournment of the Annual Meeting of
Stockholders and which are not known to the Board of Directors of Uni-Marts,
Inc. a reasonable time before this solicitation of proxies.
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE)
FOLD AND DETACH HERE
[UNI-MARTS, INC. logo]
ADMISSION TICKET
2003 ANNUAL MEETING OF STOCKHOLDERS
Thursday, February 27, 2003
10:00 AM
Comfort Suites
132 Village Drive, State College, PA 16803
THIS TICKET, OR OTHER EVIDENCE OF STOCK OWNERSHIP, MUST BE
PRESENTED TO ENTER THE MEETING.
ADMITS STOCKHOLDER(S) OR THEIR DULY APPOINTED PROXY(IES)