-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P+n5cpUDU/4vyk+NTUMlNEJDX5A0tBaLCdgB9MPzb11fQA9A/GMdtkA9ZjWB/jet CV2KGMcTsLe5IMD6h5hOLg== 0000950152-97-008117.txt : 19971117 0000950152-97-008117.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950152-97-008117 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971211 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAIRY MART CONVENIENCE STORES INC CENTRAL INDEX KEY: 0000721675 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CONVENIENCE STORES [5412] IRS NUMBER: 042497894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-11627 FILM NUMBER: 97721739 BUSINESS ADDRESS: STREET 1: ONE VISION DR CITY: ENFIELD STATE: CT ZIP: 06082 BUSINESS PHONE: 2037414444 DEF 14A 1 DAIRY MART CONVENIENCE STORES, INC. FORM DEF 14A 1 ================================================================================ SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a 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 sec.240.14a-11(c) or sec.240.14a-12
DAIRY MART CONVENIENCE STORES, INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (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: ....... (2) Aggregate number of securities to which transaction applies: .......... (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ............ (4) Proposed maximum aggregate value of transaction: ...................... (5) Total fee paid: ....................................................... [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ............................................... (2) Form, Schedule or Registration Statement No.: ......................... (3) Filing Party: ......................................................... (4) Date Filed: ........................................................... ================================================================================ 2 DAIRY MART CONVENIENCE STORES, INC. Dear Dairy Mart Shareholder: You are cordially invited to attend the 1997 Annual Meeting of Shareholders of Dairy Mart Convenience Stores, Inc. (the "Company") to be held at 10:00 a.m. (eastern time) on Thursday, December 11, 1997, at the Renaissance Hotel, 24 Public Square, Cleveland, Ohio. At the Annual Meeting, seven persons will be elected to the Board of Directors. The Board of Directors recommends election of each of the named nominees. Such other business will be transacted as may properly come before the Annual Meeting. We hope that you will be able to attend the Annual Meeting. Whether you plan to attend the Annual Meeting or not, it is important that your shares are represented. Therefore, we request that you sign, date and return the enclosed proxy card, even if you plan to attend the Annual Meeting. We look forward to seeing you at the Annual Meeting. Sincerely yours, Dairy Mart Convenience Stores, Inc. Robert B. Stein, Jr., Chairman of the Board, President and Chief Executive Officer November 14, 1997 3 DAIRY MART CONVENIENCE STORES, INC. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 11, 1997 NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of DAIRY MART CONVENIENCE STORES, INC. will be held on Thursday, December 11, 1997, at 10:00 a.m. (eastern time) at the Renaissance Hotel, 24 Public Square, Cleveland, Ohio for the following purposes: (1) To elect seven members to the Board of Directors; and (2) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. Only shareholders of record as shown by the transfer books of the Company at the close of business on November 12, 1997, are entitled to notice of, and to vote at, the Annual Meeting. By Order of the Board of Directors Dairy Mart Convenience Stores, Inc. Gregory G. Landry, Executive Vice President and Chief Financial Officer November 14, 1997 ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY AT THEIR EARLIEST CONVENIENCE. SHAREHOLDERS WHO EXECUTE A PROXY MAY NEVERTHELESS ATTEND THE MEETING AND VOTE THEIR SHARES IN PERSON. 4 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS OF DAIRY MART CONVENIENCE STORES, INC. SOLICITATION OF PROXIES The accompanying proxy is solicited by the Board of Directors of DAIRY MART CONVENIENCE STORES, INC., 210 Broadway East, Cuyahoga Falls, Ohio 44222 (the "Company"), for use at the Annual Meeting of Shareholders to be held on Thursday, December 11, 1997, and at any and all adjournments or postponements thereof. The cost of preparing, assembling and mailing this Proxy Statement and the material enclosed herewith is being borne by the Company. Directors, officers and some employees of the Company may solicit proxies personally or by telephone, without additional compensation. This Proxy Statement and the accompanying proxy are being mailed to shareholders on or about November 14, 1997. Shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), or Class B Common Stock, par value $.01 per share ("Class B Common Stock," and together with the Class A Common Stock, "Common Stock"), of the Company represented by properly executed proxies will be voted as directed on the proxy. Properly executed proxies containing no voting directions to the contrary will be voted for the election of the nominees named below. A proxy may be revoked at any time before it is voted at the Annual Meeting by notifying the Chief Financial Officer of the Company in writing at the address set forth above, by submitting a properly executed proxy bearing a later date, or by revoking the proxy at the Annual Meeting. Attendance at the Annual Meeting will not by itself operate to revoke a proxy. OUTSTANDING STOCK AND VOTING RIGHTS The Board of Directors has fixed the close of business on November 12, 1997, as the record date for the determination of shareholders entitled to notice of this Annual Meeting, and only shareholders of record on that date will be entitled to vote at the meeting. As of October 24, 1997, 3,096,369 shares of Class A Common Stock were issued and outstanding and 1,528,049 shares of Class B Common Stock were issued and outstanding. Except with respect to the election of Directors, holders of both classes of Common Stock vote or consent as a single class on all matters, with each share of Class B Common Stock having one vote per share and each share of Class A Common Stock having one-tenth of a vote per share. With respect to the election of Directors, holders of Class A Common Stock are entitled to elect 25% of the Directors (rounded up to the nearest whole number) to be elected by the holders of Common Stock, so long as the number of outstanding shares of Class A Common Stock is at least 10% of the total number of outstanding shares of both classes of Common Stock. The holders of the Class B Common Stock have the right to elect the remaining Directors to be elected by the holders of Common Stock, so long as the number of outstanding shares of Class B Common Stock is at least 12.5% of the total number of outstanding shares of both classes of Common Stock. 5 PRINCIPAL SHAREHOLDERS The following table sets forth certain information concerning beneficial ownership of the Common Stock by each shareholder known by the Company to be the beneficial owner of 5% or more of either class of Common Stock as of October 24, 1997. In preparing the table, the Company has relied on information filed by certain of such persons with the Securities and Exchange Commission and, in some cases, other information provided to the Company by such persons.
AMOUNT AND NATURE OF PERCENT OF TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS - ----------------- ------------------------------------------ -------------------- ---------- Class B DM Associates Limited Partnership 638,743(1) 41.8% Common Stock 210 Broadway East Cuyahoga Falls, Ohio New DM Management Associates I 638,743(1) 41.8% 210 Broadway East Cuyahoga Falls, Ohio Robert B. Stein, Jr. 638,743(1) 41.8% 210 Broadway East Cuyahoga Falls, Ohio Gregory G. Landry 638,743(1) 41.8% 210 Broadway East Cuyahoga Falls, Ohio James Wilen and Wilen Management 111,925(2) 7.3% Corporation 2360 West Joppa Road Lutherville, Maryland - ---------------------------------------------------------------------------------------------------- Class A James Wilen and Wilen Management 275,125(2) 8.9% Common Stock Corporation 2360 West Joppa Road Lutherville, Maryland Heartland Advisors, Inc. 790 North Milwaukee Street 172,500(3) 5.6% Milwaukee, Wisconsin The IDS Mutual Fund Group 374,665(4) 10.8% IDS Tower 10 Minneapolis, Minnesota OKGBD & Co. 360,001(5) 10.4% c/o Bankers Trust P.O. Box 704 Church Street Station New York, New York Triumph-Connecticut Limited Partnership 765,000(6) 19.8% 60 State Street, 21st Floor Boston, Massachusetts
- --------------- Notes to Table (1) DM Associates Limited Partnership ("DM Associates") is the owner of record of 638,743 shares of Class B Common Stock of the Company, representing approximately 41.8% of the issued and outstanding shares of Class B Common Stock, and 34.8% of the total voting power of both classes of the Common Stock. The general partner of DM Associates 2 6 is New DM Management Associates I ("DM Management I"), which is a general partnership. The general partners of DM Management I are Robert B. Stein, Jr. and Gregory G. Landry, each of whom owns 50% of the partnership interests of DM Management I. As the sole general partner of DM Associates and by virtue of the provisions of the limited partnership agreement of DM Associates, DM Management I has the power to vote and dispose of such 638,743 shares owned by DM Associates, subject to the consent of the limited partners of DM Associates being required for any sale of more than 360,000 shares. In addition, the partnership agreement of DM Associates provides that, prior to voting the 638,743 shares, DM Management I shall consult with a certain limited partner as to the voting of such shares. If, after consultation with the limited partner, DM Management I votes the shares in a manner with which the limited partner disagrees, the limited partner shall have the right to dissolve DM Associates. The partnership agreement of DM Management I provides that a majority of the partnership interests of DM Management I determine how to vote the shares of Class B Common Stock owned by DM Associates. As the managing general partner of DM Management I, Mr. Stein has sole indirect dispositive power with respect to the 638,743 shares owned by DM Associates. As general partners of DM Management I, Mr. Stein and Mr. Landry share voting power with respect to the 638,743 shares. The number of shares set forth in the table above does not include shares of Class A Common Stock that either of Messrs. Stein and Landry may beneficially own other than in their capacity as general partners of DM Associates I. See "ITEM 1 -- ELECTION OF DIRECTORS -- Information Concerning Nominees and Certain Executive Officers." (2) Two Schedules 13G were filed with the SEC by Wilen Management Corporation ("Wilen") and James Wilen, in his capacity as President and sole owner of Wilen, to report Wilen's beneficial ownership, as an investment advisor to various clients, of shares of Class A and Class B Common Stock. The total of Class A and Class B Common Stock of 387,050 Shares, represents approximately 8.4% of the total number of issued and outstanding shares of both classes of Common Stock and approximately 7.6% of the total voting power of both classes of Common Stock. (3) Heartland Advisors, Inc. reported on a Schedule 13G filed with the SEC its beneficial ownership, as an investment advisor, of 172,500 shares of Class A Common Stock. The 172,500 shares represent approximately 3.7% of the total number of issued and outstanding shares of both classes of the Common Stock and approximately .9% of the total voting power of both classes of Common Stock. (4) The IDS Mutual Fund Group, through nominees, holds currently exercisable Warrants to purchase an aggregate of 374,665 shares of Class A Common Stock. If the 374,665 shares underlying the Warrants were issued, they would represent approximately 7.5% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 2.0% of the total voting power of both classes of Common Stock. (5) OKGBD & Co. and its affiliates hold currently exercisable Warrants to purchase an aggregate of 360,001 shares of Class A Common Stock. If the 360,001 shares underlying the Warrants were issued, they would represent approximately 7.2% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 1.9% of the total voting power of both classes of Common Stock. (6) Triumph-Connecticut Limited Partnership ("Triumph"), Triumph's general partner, Triumph-Connecticut Capital Advisors, Limited Partnership ("TCCALP"), and TCCALP's general partners, Triumph Capital Group, Inc., Frederick W. McCarthy, Frederick S. Moseley, IV, E. Mark Norman, Thomas W. Janes, John M. Chapman and Richard J. Williams, reported on a Schedule 13D filed with the SEC their shared beneficial ownership of currently exercisable Warrants to purchase an aggregate of 765,000 shares of Class A Common Stock. If the 765,000 shares underlying the Warrants were issued, they would represent approximately 14.2% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 4.0% of the total voting power of both classes of Common Stock. 3 7 ITEM 1 -- ELECTION OF DIRECTORS NOMINEES FOR ELECTION AS DIRECTORS Seven Directors have been nominated for election at the Annual Meeting, to hold office until the next Annual Meeting and until the election and qualification of their successors. Pursuant to the Company's Certificate of Incorporation, two of the Directors are to be elected by the holders of Class A shares (the "Class A Directors") and five of the Directors are to be elected by the holders of Class B shares (the "Class B Directors"). The Board of Directors has nominated Thomas W. Janes and Truby G. Proctor, Jr. as Class A Directors and Frank W. Barrett, J. Kermit Birchfield, Jr., John W. Everets, Jr., Gregory G. Landry and Robert B. Stein, Jr. as Class B Directors. All of the nominees are currently serving on the Board. It is intended that proxies of the respective classes of shares will be voted in favor of all of these persons. INFORMATION CONCERNING NOMINEES AND CERTAIN EXECUTIVE OFFICERS The following table sets forth certain information concerning the ownership of the Common Stock and other matters with respect to the nominees, the executive officers listed in the Summary Compensation Table and all Directors and executive officers as a group, as of October 24, 1997.
SHARES (AND PERCENTAGE) OF COMMON STOCK BENEFICIALLY OWNED AS OF OCTOBER 24, 1997 ---------------------------------------------------------------------- PERCENT OF TOTAL DIRECTOR CLASS B CLASS A VOTING NAME (AND AGE) SINCE COMMON STOCK COMMON STOCK POWER - ------------------------------ -------- ------------ ------------ -------- NOMINEES FOR CLASS B DIRECTOR Frank W. Barrett (57)......... 1983 1,250(*) 10,375(*)(1) (*) J. Kermit Birchfield, Jr.(57)..................... 1996 2,000(*) 9,375(*)(2) (*) John W. Everets, Jr.(51)...... 1994 10,000(*) 7,875(*)(3) (*) Gregory G. Landry(39)......... 1991 638,743(41.8%) 90,874(2.9%)(5)(4) 35.1% Robert B. Stein, Jr.(39)...... 1992 638,743(41.8%) 141,675(4.4%)(4)(6) 35.3% NOMINEES FOR CLASS A DIRECTOR Thomas W. Janes(41)........... 1995 0 769,375(19.9%)(7)(8) 4.0% Truby G. Proctor, Jr.(61)..... 1996 13,000(*) 4,375(*)(9) (*) NAMED EXECUTIVE OFFICERS Scott A. Stein(38)............ N/A 0 10,750(*)(10) (*) Gregory Wozniak(50)........... N/A 0 19,075(*) (*) Gregg O. Guy (49)............. N/A 0 56,899(1.8%)(11) (*) ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (14 PERSONS) N/A 664,993(43.5%)(10) 1,139,228(27.3%)(12) 40.1%
- --------------- (*) Owns less than 1% of the issued and outstanding class of Common Stock or of the total voting power. (1) Includes currently exercisable non-qualified stock options granted to Mr. Barrett to purchase 10,375 shares of Class A Common Stock. (2) Includes currently exercisable non-qualified stock options granted to Mr. Birchfield to purchase 4,375 shares of Class A Common Stock. 4 8 (3) Includes currently exercisable non-qualified stock options granted to Mr. Everets to purchase 7,875 shares of Class A Common Stock. (4) Messrs. Stein and Landry are the general partners of DM Management I (described in footnote 1 to the table under the heading "Principal Shareholders" above). The shares of Class B Common Stock set forth in this table for Messrs. Stein and Landry include the shares beneficially owned by them in their capacity as general partners of DM Management I. (5) Includes currently exercisable incentive stock options granted to Mr. Landry to purchase 84,624 shares of Class A Common Stock. (6) Includes currently exercisable incentive stock options granted to Mr. Stein to purchase 117,500 shares of Class A Common Stock. (7) The shares of Class A Common Stock set forth in this table for Mr. Janes include the shares set forth for Triumph in the Principal Shareholders table above. Mr. Janes' pecuniary interest in the 765,000 shares is based upon his status as general partner of TCCALP, general partner of Triumph, the entity holding the shares, and is not discernable. Mr. Janes disclaims beneficial ownership of all shares other than those attributable to him as a general partner of TCCALP. (8) Includes currently exercisable non-qualified stock options granted to Mr. Janes to purchase 4,375 shares of Class A Common Stock. (9) Includes currently exercisable non-qualified stock options granted to Mr. Proctor to purchase 4,375 shares of Class A Common Stock. (10) Includes currently exercisable incentive stock options granted to Mr. Stein to purchase 10,750 shares of Class A Common Stock. (11) Includes currently exercisable incentive stock options granted to Mr. Guy to purchase 47,500 shares of Class A Common Stock. (12) Includes currently exercisable stock options granted to all Directors and executive officers of the Company to purchase 305,874 shares of Class A Common Stock and currently exercisable Warrants to purchase 765,000 shares of Class A Common Stock. The following sets forth certain information concerning the Company's nominees for election to the Board of Directors at the Annual Meeting. INFORMATION AS TO NOMINEES FOR ELECTION AS CLASS B DIRECTORS FRANK W. BARRETT Mr. Barrett is Executive Vice President of Springfield Institution for Savings. He previously served as Senior Vice President for Bank of Ireland First Holdings, Inc. from September 1990 to December 1993, as Senior Vice President for Connecticut National Bank from May 1990 to September 1990, and as Senior Vice President for Shawmut Bank, N.A. from January 1988 to May 1990. J. KERMIT BIRCHFIELD Mr. Birchfield is Chairman of the Board of Displaytech, Inc., a manufacturer of high resolution fertile liquid crystal. From June 1990 to November 1994 he served as Senior Vice President and General Counsel of M/A-COM, Inc., a telecommunications company. Mr. Birchfield is a member of the Board of Directors for HSPC, Inc., a publicly held company that provides financing for the purchase of health care equipment, Intermountain Gas Company, Inc., an Idaho public utility company, and MFS, Inc., a wholly-owned subsidiary of Sun Life of Canada, a registered mutual funds company. 5 9 JOHN W. EVERETS, JR. Mr. Everets has been Chairman of the Board and Chief Executive Officer of HSPC, Inc., a publicly held company that provides financing for health care equipment, since July 1993 and has been a director of HSPC, Inc. since 1993. He was Chairman of the Board of T.O. Richardson Co., Inc., a financial services company, from January 1990 until July 1993. Mr. Everets is also a director of Eastern Company, a publicly held manufacturing company and Crown Northcorp, a publicly held company that holds real estate. GREGORY G. LANDRY Mr. Landry has served as Chief Financial Officer since August 1990 and was named Executive Vice President of the Company in April 1992. Mr. Landry joined the Company in October 1985 and served in various financial positions, including Treasurer. He is a certified public accountant and a member of the American Institute of Public Accountants. ROBERT B. STEIN, JR. Mr. Robert B. Stein, Jr. was elected President of the Company in September 1994, Chief Executive Officer in June 1995 and Chairman of the Board of Directors in December 1995. He joined the Company in 1983 and served in various positions including Treasurer, General Manager of the Midwest Region, and Executive Vice President-Operations and Marketing. INFORMATION AS TO NOMINEES FOR ELECTION AS CLASS A DIRECTORS THOMAS W. JANES Mr. Janes has been a Managing Director since 1990 of Triumph Capital Group, Inc., a firm engaged in investment banking and investment management. He is also a general partner of Triumph-Connecticut Capital Advisors, Limited Partnership, the general partner of Triumph-Connecticut Limited Partnership, and a limited partner of Triumph-California Advisors, L.P., the general partner of Triumph-California Limited Partnership. TRUBY G. PROCTOR, JR. Mr. Proctor is Chairman and Chief Executive Officer of Lee-Moore Oil Company, located in Sanford, North Carolina, a privately held North Carolina based oil jobber. From August 1987 to July 1994, Mr. Proctor served as Chairman and Chief Executive Officer of The Pantry Inc., a privately held 460 store convenience chain headquartered in North Carolina. Mr. Proctor is a director of Yadkin Valley Bank. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The following executive officers and Directors of the Company did not timely file with the SEC, on certain occasions, their reports on Forms 3, 4 or 5 to report changes in their beneficial ownership of the Common Stock: Robert J. Pietrick (one report due upon becoming an executive officer and one report for one transaction); Michael L. Poole (one report due upon becoming an executive officer and one report for one transaction); Frank W. Barrett (one report for one transaction); J. Kermit Birchfield, Jr. (one report for one transaction); John W. Everets, Jr. (one report for one transaction); Thomas W. Janes (one report for one transaction); Truby G. Proctor, Jr. (one report for one transaction); Robert B. Stein (one report for one transaction); Alice Guiney (one report for one transaction) and Dennis J. Tewell (one report for one transaction). 6 10 THE BOARD OF DIRECTORS AND ITS COMMITTEES During the 1997 fiscal year, the Board of Directors of the Company held seven meetings. None of the directors attended fewer than 75% of the total number of meetings of the Board of Directors and committees of which they were members. The Board of Directors has established an Audit Committee, a Compensation and Stock Option Committee and a Nominations Committee. The Audit Committee currently consists of Messrs. Barrett, Everets, and Proctor and is responsible for recommending the appointment of independent accountants and for reviewing the reports and expenses of the audits conducted by the Company's independent accountants. The Compensation and Stock Option Committee currently consists of Messrs. Barrett, Birchfield, and Everets, and is responsible for recommending the compensation to be paid to the Company's executive officers and for administering the Company's stock option plans. The Nominations Committee currently consists of Messrs. Birchfield, Everets and Janes, and is responsible for receiving and recommending to the Board of Directors the nominees for persons to serve as Directors of the Company. During the 1997 fiscal year there were two meetings of the Compensation and Stock Option Committee, two meetings of the Audit Committee, and one meeting of the Nominations Committee. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee of the Company's Board of Directors during the last fiscal year were Messrs. Barrett, Everets and Birchfield. None of these individuals was at any time during fiscal 1997, or at any other time, an officer or employee of the Company. No executive officer of the Company serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company's Board of Directors or Compensation Committee. SHAREHOLDER NOMINATIONS OF DIRECTORS In addition to the right of the Board of Directors of the Company to make nominations of persons for election as Directors, nominations may be made at a meeting of shareholders by any shareholder of the Company entitled to vote for the election of Directors at the meeting who complies with certain notice procedures set forth in the Company's Certificate of Incorporation. Such nominations, other than those made by or at the direction of the Board of Directors, must be made pursuant to timely notice in writing to the Secretary of the Company. To be timely, a shareholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Company not less than 14 days nor more than 60 days prior to the meeting of shareholders called for the election of Directors; provided, however, that if fewer than 21 days' notice of the date of the meeting is given to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which notice of the meeting was mailed to shareholders. A shareholder's notice must set forth as to each person whom the shareholder proposes to nominate for election or re-election as a Director: (i) the name, age, business address, and, if known, residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of stock of the Company that are beneficially owned by such person, and (iv) any other information reasonably requested by the Company. All such shareholder nominations may be made only at a meeting of shareholders called for the election of Directors at which such shareholder is present in person or by proxy. 7 11 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS EXECUTIVE OFFICERS' COMPENSATION The following table provides certain information for the Company's past three fiscal years regarding the cash and other compensation paid to, earned by, or awarded to those persons who, during the last fiscal year, served as the Company's Chief Executive Officer or in a similar capacity and were the four most highly compensated executive officers whose total annual salary and bonus exceeded $100,000. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS (b) ANNUAL COMPENSATION(a) ---------------------- ------------------------------------------------ RESTRICTED SECURITIES ALL OTHER ANNUAL STOCK UNDERLYING OTHER NAME AND PRINCIPAL FISCAL COMPENSATION($) AWARDS($) OPTIONS($) COMPENSATION POSITION YEAR SALARY($) BONUS($) (c) (d) (e) ($) (f) - ---------------------------------- ------ ---------- -------- --------------- --------- ---------- ------------ Robert B. Stein, Jr. 1997 $282,700 $ 22,500 $ 1,412 $ -- $ -- $ 9,435 President, Chief 1996 254,808 162,500 -- 230,000 95,555 9,533 Executive Officer and Chairman of 1995 199,808 35,000 -- -- 96,945 11,588 the Board Gregory G. Landry, 1997 226,346 18,900 47,795 -- -- 8,670 Executive Vice President 1996 214,038 131,500 -- 115,000 55,332 8,670 and Chief Financial Officer 1995 179,041 35,000 -- -- 70,543 9,118 Gregory Wozniak, 1997 116,541 14,900 58,345 -- -- 485 Former Vice President- 1996 112,122 16,500 -- 57,500 6,250 528 Corporate Counsel (g) 1995 108,754 15,000 20,033 -- 2,500 592 Scott A. Stein, 1997 113,077 9,000 774 -- -- 1,216 Vice President -- Management 1996 100,098 15,000 926 57,500 5,000 173 Information Systems 1995 92,311 10,000 291 -- 14,000 -- Gregg O. Guy, 1997 166,346 18,500 108,479 -- -- 505 Former Executive Vice 1996 152,885 22,500 37,554 86,250 -- 645 President -- Operations (h) 1995 131,860 20,000 -- -- 50,000 1,263
- --------------- (a) Annual compensation does not include non-cash compensation that in the aggregate does not exceed the lesser of $50,000 or 10% of the total annual salary and bonus of each named executive officer. (b) The Company did not grant any stock appreciation rights or make any long-term incentive plan payments during fiscal 1997, 1996 or 1995. (c) Other annual compensation for the following named executive officers includes the following amounts paid on behalf of, or received by, each officer (i) $46,488 in relocation expense for Mr. Landry in fiscal 1997, (ii) $108,277 and 28,801 in relocation expense for Mr. Guy in fiscal 1997 and 1996, respectively, (iii) $57,554 in relocation expense for Mr. Wozniak in fiscal 1997, and (iv) an $11,250 gain related to an exercised stock option to purchase 6,000 shares of Common Stock and $5,771 for automobile expenses for Mr. Wozniak in fiscal 1995. (d) In January 1996, the Company awarded restricted stock to certain executive officers under the Company's 1995 Stock Option and Incentive Award Plan. Robert B. Stein, Jr., Gregory G. Landry, Gregory Wozniak, Gregg O. Guy and Scott A. Stein were awarded 40,000, 20,000, 10,000, 15,000 and 10,000 shares of Class A Common Stock, respectively. The restricted shares will vest equally over a three-year period following the grant date, if the closing price of the Company's Class A Common Stock as reported on the American Stock Exchange achieves price targets, in each case for a consecutive ten-day period, of $9.00, $11.00, and $13.00, respectively, during the first, second and third years from the date of the grant. Dividends will not be paid on unvested restricted stock awards. These named executive officers have not received any other restricted stock awards. The restricted stock awards to Mr. Guy and Mr. Wozniak have been or will be repurchased by the Company in accordance with the terms of the awards for a nominal cash payment. (e) The Company did not grant options to purchase shares of the Company's common stock in fiscal year 1997 to any of the named executive officers. (f) Includes amounts contributed for the benefit of the Company's executive officers to the Company's qualified profit sharing plan and premiums paid by the Company for split-dollar and life insurance for the benefit of certain executive officers during the applicable years. Company contributions to the qualified profit-sharing plan for each of the 1997, 1996, and 1995 fiscal years, respectively, included $555, $645 and $1,984 for Robert B. Stein, Jr.; $0, $0 and $448 for Gregory G. Landry; $505, $645 and $1,263, for Gregg O. Guy; $485, $528 8 12 and $592 for Gregory Wozniak; and $1,216, $173 and $0 for Scott A. Stein. Premiums paid on split-dollar and life insurance for each of the 1997, 1996 and 1995 fiscal years, respectively, included $8,880, $8,888 and $9,604 for Robert B. Stein, Jr. and $8,670, $8,670, and $8,670 for Gregory G. Landry. (g) Mr. Wozniak's employment with the Company was terminated as of September 19, 1997. The Company made severance payments to Mr. Wozniak pursuant to a Settlement Agreement in the amount of one year's salary, and entered into a consulting arrangement with Mr. Wozniak pursuant to which Mr. Wozniak was paid $30,000. (h) Mr. Guy's employment with the Company was terminated as of May 16, 1997. Mr. Guy had an employment agreement with the Company pursuant to which the Company paid to Mr. Guy $318,750 in severance costs. OPTION GRANTS IN LAST FISCAL YEAR The Company did not grant options in fiscal year 1997 to any of the executive officers listed in the Summary Compensation Table above. FISCAL YEAR-END OPTION VALUES The table below sets forth information regarding unexercised stock options held as of February 1, 1997, by the persons listed in the Summary Compensation Table above, none of whom exercised options during the Company's fiscal year:
NUMBER OF VALUE OF SHARES UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY NUMBER OF OPTIONS AT OPTIONS AT SHARES ACQUIRED FY-END (#) FY-END(#)(1) ON EXERCISE OF VALUE EXERCISABLE(E)/ EXERCISABLE(E)/ NAME OPTIONS REALIZED UNEXERCISABLE(U) UNEXERCISABLE(U) - ------------------------------- --------------- -------- ----------------- ---------------- Robert B. Stein, Jr............ 12,500 $ 21,875 94,236(E) $260,100(E) 85,764(U) 192,634(U) Gregory G. Landry.............. -- -- 75,417(E) 213,125(E) 50,458(U) 113,901(U) Gregory Wozniak................ -- -- 15,813(E) 45,901(E) 6,938(U) 16,524(U) Scott A. Stein................. -- -- 9,000(E) 25,055(E) 11,000(U) 28,855(U) Gregg O. Guy................... -- -- 33,375(E) 98,078(E) 16,625(U) 47,828(U)
- --------------- (1) Values are calculated for options "in the money" by subtracting the exercise price per share from the closing price per share of the applicable class of the Company's Class A and Class B Common Stock on February 1, 1997, which amounts were each $5.75 per share. Certain of the executive officers have options to purchase shares of Common Stock at exercise prices greater than the fair market value of the applicable class of Common Stock as of February 1, 1997. Such options are not "in the money" and therefore, their value is not disclosed above. DIRECTORS' COMPENSATION Messrs. Barrett, Birchfield, Everets, Janes and Proctor received Directors' fees of $19,000, $19,000, $19,000, $18,000, and $19,000, respectively, for the fiscal year ended February 1, 1997. The annual fee for outside Directors for the 1998 fiscal year is $12,000, plus $1,000 for each regular or special meeting of the Board attended. The remaining Directors, who are employees of the Company, receive no Directors' fees. In addition to 9 13 the foregoing fees, on February 1, 1997, Messrs. Barrett, Birchfield, Everets, Janes, and Proctor each received an option to purchase 3,500 shares of Class A Common Stock at $5.75 per share, pursuant to the Company's 1995 Stock Option Plan for Outside Directors. EMPLOYMENT AGREEMENTS In June 1995, the Company entered into employment agreements (the "Employment Agreements") with Messrs. Stein and Landry. The Employment Agreements are initially for two-year terms, but such terms are automatically extended each year for an additional year unless the Company or the employee gives notice before February 28 of each year that it or he does not desire to have the term extended. Under the Employment Agreements, Messrs. Stein and Landry receive annual salaries that may be increased, but may not be decreased. In addition, the Employment Agreements provide that the Board of Directors, or a committee thereof, may award each employee annual bonuses if performance criteria to be determined by the Board are met. Under the Employment Agreements, if the employee's employment is terminated for any reason, other than by the Company without cause or by the employee for good reason, or as a result of death or disability, then the employee will receive his salary and bonus through the date of termination. If the employee dies or is disabled, he will also receive any additional benefits that are provided under the Company's death and disability programs in effect at the time of death or disability. In addition, if an employee is disabled and there is no disability program in effect or if an employee dies, then the employee's beneficiary will receive 100% of the employee's annual salary plus an amount equal to the highest of the aggregate bonus payments earned by the employee for any of the last three 12-month periods prior to the date of termination. The Employment Agreements provide that if the employee's termination is by the Company without cause or by the employee for good reason, and not as a result of the employee's death or disability, the employee will receive his full salary and bonus through the date of termination. The amount of the employee's bonus will be the highest of the aggregate bonus payments earned by the employee for any of the last three 12-month periods prior to the date of termination. The Agreements also provide that after such termination, each of Messrs. Stein and Landry will also receive a severance payment equal to two times the sum of his full base salary and annual bonus. If any payment in connection with the termination of the employee's employment under the Employment Agreement would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the Company will pay the employee an additional payment equal to the amount of any excise tax the employee incurs as a result of his receipt of the additional payment. 10 14 COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW The Compensation and Stock Option Committee of the Board of Directors (the "Committee") is composed entirely of outside Directors. The Committee, which consists of Messrs. Everets, Chairman, Mr. Barrett and Mr. Birchfield, is responsible for establishing and administering the Company's executive compensation policies and the Company's stock option and other employee equity plans. This report addresses the compensation policies for the fiscal year 1997 for executive officers and, in particular, for Mr. Stein in his capacity as President and Chief Executive Officer. GENERAL COMPENSATION POLICY The objectives of the Company's executive compensation program are to: - Provide a competitive compensation package that will attract and retain superior talent and reward performance; - Support the achievement of desired Company performance; and - Align the interests of executives with the long-term interests of shareholders through award opportunities that can result in ownership of shares of the Company's Common Stock, thereby encouraging the achievement of superior results over an extended period. EXECUTIVE OFFICER COMPENSATION PROGRAM The Company's executive officer compensation program is comprised of: (i) base salary, which is set on an annual basis; (ii) annual incentive bonuses, which are based on the achievement of predetermined financial objectives of the Company and individual objectives; (iii) discretionary bonuses, which are granted under special circumstances; and (iv) long-term incentive compensation in the form of periodic stock option and restricted stock grants, with the objective of aligning the executive officers' long-term interests with those of the shareholders and encouraging the achievement of superior results over an extended period. The Committee performs annual reviews of executive compensation, during which the Committee reviews executive compensation packages of the Company compared with available information on other national and regional convenience store chains, including some, but not all, of the companies included in the Peer Group Index (defined below). In considering compensation of the Company's executives, one of the factors the Committee takes into account is the anticipated tax treatment to the Company of various components of compensation. The Company does not believe Section 162(m) of the Internal Revenue Code of 1986, as amended, which generally disallows a tax deduction for certain compensation in excess of $1 million to any of the executive officers appearing in the Summary Compensation Table above, will have an effect on the Company. The Committee has considered the requirements of Section 162(m) of the Code and its related regulations. It is the Company's present policy to take reasonable measures to preserve the full deductibility of substantially all executive compensation, to the extent consistent with its other compensation objectives. 11 15 BASE SALARY The Committee reviews base salary levels for the Company's executive officers on an annual basis. In determining salaries, the Committee takes into consideration individual experience and performance, and comparable compensation data available on other national and regional convenience store chains. The Company seeks to set base salaries to be competitive with compensation paid by comparable companies to persons with similar experience. ANNUAL INCENTIVE BONUSES The Committee determines the amount of annual cash bonuses based on achievement of predetermined financial, operational and strategic objectives. Giving greatest weight to the attainment of financial targets, specifically pre-tax earnings and cash flow, the Company also awards bonuses based on various operational and strategic objectives geared to specific management groups (i.e., financial, management, information systems, construction, and marketing), and for Mr. Stein, individually. LONG-TERM INCENTIVE COMPENSATION Long-term incentive compensation, in the form of stock options and restricted stock grants, allows the executive officers to share in any appreciation in the value of the Company's Common Stock. The Committee believes that an enhanced market value for the Company's shares of Common Stock should be a primary objective of senior management, and that stock option and restricted stock grant participation align executive officers' interests with those of the shareholders. The amounts of the awards are designed to reward past performance and create incentives to meet long-term objectives. In determining the amount of each grant, the Committee takes into account the number of shares held by the executive prior to the grant. CHIEF EXECUTIVE OFFICER COMPENSATION Mr. Stein, who holds the position of President, Chief Executive Officer and Chairman of the Board, was paid a base salary of $282,700 during fiscal year 1997. The Committee believes that Mr. Stein managed the Company well in fiscal 1997 in a challenging business climate and took the steps necessary to position the Company appropriately to meet its long-term strategic objectives. However, in determining the bonus segment of overall compensation, the Committee also took into consideration the results of operations of the Company and therefore Mr. Stein's bonus was lower than the previous year's, resulting in lower overall compensation. THE COMPENSATION AND STOCK OPTION COMMITTEE: John W. Everets, Chairman Frank W. Barrett J. Kermit Birchfield, Jr. 12 16 PERFORMANCE GRAPH Until September 29, 1996, the Company's Common Stock was traded on Nasdaq National Market under the symbols DMCVA and DMCVB. On September 30, 1996, the Company's Common Stock was listed on the American Stock Exchange under the symbol DMCA and DMCB, and trading of Common Stock on the Nasdaq National Market was discontinued. The two graphs that follow compare the yearly percentage change in cumulative shareholder return on the Class A Common Stock over the past five years with the returns on both the NASDAQ Stock Market and the American Stock Exchange. The first graph compares the performance of the Class A Common Stock over the past five years with (i) the cumulative total return on the Nasdaq Stock Market Index (U.S. Companies) and (ii) a peer group index consisting of Nasdaq Stocks Standard Industry Codes 5400-5499 (food stores) ("Peer Group Index"). The two Nasdaq indices are included in accordance with the Commission's rules, which require that any indices included in last year's proxy statement be shown in the Performance Graph. The two Nasdaq indices will not be included in future proxy statements. The second graph compares the performance of the Class A Common Stock with (i) the cumulative total return on the American Stock Exchange Stock Market (the "AMEX") and (ii) a peer group index consisting of AMEX Stocks Standard Industry Codes 5400-5499 (food stores) ("Peer Group Index"). The figures presented on the following graphs assume the reinvestment of all dividends into shares of Class A Common Stock on the dividend payment date and assume that $100 was invested in Class A Common Stock and in the Market Index (U.S. Companies) and Peer Group Index for the NASDAQ and American Stock Exchange Stock Markets respectively on January 31, 1992, and held through February 1, 1997 (the end of the Company's most recent fiscal year). 13 17 COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR DAIRY MART CONVENIENCE STORES, INC.
NASDAQ STOCKS DAIRY MART NASDAQ STOCK (SIC 5400-5499 US MEASUREMENT PERIOD CONVENIENCE MARKET (US COMPANIES) FOOD (FISCAL YEAR COVERED) STORES, INC. COMPANIES) STORES 01/31/92 100 100 100 02/28/92 107.717 102.266 95.829 04/01/92 110.093 97.154 97.432 05/01/92 121.386 93.182 82.791 06/01/92 116.472 94.998 80.638 07/01/92 96.716 91.68 77.576 07/31/92 97.677 93.994 74.98 09/01/92 94.238 91.562 73.589 10/01/92 84.763 93.666 80.97 10/30/92 84.763 98.231 79.602 12/01/92 86.609 106.24 73.003 12/31/92 83.931 109.952 69.928 01/29/93 84.854 113.082 67.161 03/01/93 73.578 108.674 63.633 04/01/93 71.731 111.414 65.205 04/30/93 68.448 107.234 65.385 06/01/93 70.322 114.256 70.318 07/01/93 71.827 114.059 67.823 07/30/93 82.211 114.3 69.532 09/01/93 81.309 120.622 72.498 10/01/93 81.198 123.739 71.716 11/01/93 86.439 127.207 78.704 12/01/93 78.722 124.285 74.719 12/31/93 85.6 126.218 77.943 01/28/94 92.435 129.377 74.163 03/01/94 92.434 128.148 69.135 03/31/94 92.434 120.913 63.276 04/29/94 87.33 119.345 66.132 06/01/94 73.629 119.742 63.892 07/01/94 61.648 115.359 69.52 08/01/94 59.068 118.207 68.046 09/01/94 53.064 123.957 69.483 09/30/94 43.647 124.804 68.056 11/01/94 43.66 126.34 68.814 12/01/94 51.337 121.506 65.893 12/30/94 56.486 123.38 63.669 01/27/95 53.059 124.686 61.841 03/01/95 54.718 130.314 64.058 03/31/95 54.898 134.505 62.824 05/01/95 58.948 138.275 64.888 06/01/95 68.345 142.971 68.92 06/30/95 73.472 153.851 71.377 08/01/95 67.076 163.451 74.07 09/01/95 88.863 168.333 75.465 09/29/95 80.311 172.382 74.937 11/01/95 82.012 172.24 79.283 12/01/95 93.128 174.757 76.776 12/29/95 76.05 174.485 76.042 02/02/96 80.309 177.183 72.145 03/01/96 84.716 179.58 74.762 04/01/96 79.685 183.529 81.56 05/01/96 82.1 199.318 87.562 05/31/96 79.485 206.856 84.914 07/01/96 83.006 199.632 89.3 08/01/96 75.259 183.077 89.329 08/30/96 80.671 190.019 91.067 10/01/96 74.281 203.58 95.761 11/01/96 67.02 202.256 94.981 11/29/96 67.02 214.8 93.75 12/31/96 60.622 214.608 93.586 01/31/97 78.541 229.861 92.549
14 18 COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR DAIRY MART CONVENIENCE STORES, INC.
AMEX STOCKS (SIC DAIRY MART 5400-5499 US MEASUREMENT PERIOD CONVENIENCE AMEX STOCK MARKET COMPANIES FOOD (FISCAL YEAR COVERED) STORES, INC. (US COMPANIES) STORES 01/31/92 100 100 100 02/28/92 107.717 101.718 105.611 04/01/92 110.093 96.025 97.428 05/01/92 121.386 95.053 91.834 06/01/92 116.472 94.683 88.978 07/01/92 96.716 92.186 89.291 07/31/92 97.677 93.175 86.454 09/01/92 94.238 91.001 85.456 10/01/92 84.763 90.582 77.65 10/30/92 84.763 93.42 78.074 12/01/92 86.609 99.713 92.48 12/31/92 83.931 101.39 95.64 01/29/93 84.854 105.088 96.389 03/01/93 73.578 102.439 95.673 04/01/93 71.731 105.653 111.683 04/30/93 68.448 103.926 112.205 06/01/93 70.322 108.07 117.018 07/01/93 71.827 108.424 113.475 07/30/93 82.211 109.991 116.876 09/01/93 81.309 116.023 107.329 10/01/93 81.198 117.916 105.201 11/01/93 86.439 121.423 109.189 12/01/93 78.722 116.489 104.264 12/31/93 85.6 119.192 113.999 01/28/94 92.435 120.01 108.999 03/01/94 92.434 117.956 118.467 03/31/94 92.434 110.818 105.239 04/29/94 87.33 109.665 107.253 06/01/94 73.629 109.603 99.337 07/01/94 61.648 106.565 97.425 08/01/94 59.068 110.489 95.901 09/01/94 53.064 113.286 105.367 09/30/94 43.647 115.272 105.172 11/01/94 43.66 113.669 108.17 12/01/94 51.337 108.75 105.318 12/30/94 56.486 111.147 102.999 01/27/95 53.059 114.234 107.368 03/01/95 54.718 117.876 115.116 03/31/95 54.898 119.483 113.421 05/01/95 58.948 122.872 126.341 06/01/95 68.345 125.235 135.691 06/30/95 73.472 128.8 135.095 08/01/95 67.076 135.439 146.915 09/01/95 88.863 139.378 152.21 09/29/95 80.311 141.838 150.806 11/01/95 82.012 136.603 154.667 12/01/95 93.128 140.396 161.349 12/29/95 76.05 143.001 152.711 02/02/96 80.309 142.768 159.263 03/01/96 84.716 145.724 161.167 04/01/96 79.685 147.082 158.994 05/01/96 82.1 153.007 159.212 05/31/96 79.485 156.971 169.476 07/01/96 83.006 149.041 175.2 08/01/96 75.259 137.874 167.625 08/30/96 80.671 140.702 165.828 10/01/96 74.281 143.613 168.451 11/01/96 67.02 142.908 168.071 11/29/96 67.02 147.516 166.271 12/31/96 60.622 145.288 169.32 01/31/97 78.541 148.668 163.738
15 19 CERTAIN TRANSACTIONS STOCK OWNED BY DM ASSOCIATES DM Associates Limited Partnership ("DM Associates") is the owner of record of 638,743 shares of Class B Common Stock of the Company, representing approximately 41.8% of the issued and outstanding shares of Class B Common Stock, and 34.8% of the total voting power of both classes of Common Stock. The general partner of DM Associates is New DM Management Associates I ("DM Management I") which is a general partnership. The general partners of DM Management I are Robert B. Stein, Jr., a Director and the Chairman of the Board, Chief Executive Officer and President of the Company, and Gregory G. Landry, a Director and the Executive Vice President and Chief Financial Officer of the Company. In March 1992, DM Associates financed part of the purchase of its 1,858,743 shares of Class B Common Stock by obtaining a $7,100,000 loan (the "Limited Partnership Loan") from the Connecticut Development Authority ("CDA"). The Limited Partnership Loan was secured by DM Associates' collateral pledge of 1,220,000 shares of the Class B Common Stock then owned by DM Associates. In September 1994, FCN Properties Corporation, a corporation owned and controlled by Charles Nirenberg, a former shareholder, Director and executive officer of the Company, purchased all of the CDA's right, title and interest in and to the Limited Partnership Loan. In December 1995, FCN Properties Corporation sold the Limited Partnership Loan to the Company. The note evidencing the Limited Partnership Loan became due and payable in full on July 31, 1997. DM Associates failed to pay the note and as such in accordance with the terms or the Limited Partnership Loan, the Company took possession and title to the 1,220,000 shares of Class B stock, without waiving any deficiency. At the same time, the Company made demand upon DM Associates for all assets other than the nonrecourse assets (defined below). Upon the Company taking title to and possession of the 1,220,000 shares of stock, such shares became treasury shares. DM Associates continues to hold 638,743 shares of Class B stock, which, together with any proceeds therefrom, are defined as nonrecourse assets under the documents evidencing the Limited Partnership Loan. REQUIRED VOTES OF SHAREHOLDERS Under Delaware law and pursuant to the Company's Bylaws, the presence in person or by proxy of the holders of a majority of the voting power of both classes of Common Stock entitled to vote at the Annual Meeting is necessary for a quorum to transact business for matters as to which both classes of Common Stock vote together. With respect to matters as to which each class of Common Stock is entitled to vote separately, including the election of Directors by the respective classes, the presence in person or by proxy of the holders of one-third of the shares of Common Stock of the applicable class is necessary for a quorum to transact such business. In order for the nominees to be elected as Directors by the shareholders of their respective classes of Common Stock, the affirmative vote of a plurality of the Common Stock of the applicable class present in person or by proxy is necessary. The Company intends to appoint an independent person to act as an inspector of elections at the Annual Meeting who will be responsible for counting the votes. SHAREHOLDER PROPOSALS If a shareholder desires to present a proposal for inclusion in next year's Proxy Statement relating to the 1998 Annual Meeting of the Shareholders of the Company, such shareholder must submit such proposal in writing to: Dairy Mart Convenience Stores, Inc., 210 Broadway East, Cuyahoga Falls, Ohio 44222, Attention: Gregory G. Landry, Executive Vice President and Chief Financial Officer, within a reasonable time prior to next year's Annual Meeting, which is currently planned for June 1998. 16 20 GENERAL The Company's Annual Report to Shareholders, mailed to shareholders in June 1997, contains financial statements for the fiscal year ended February 1, 1997, as well as other information concerning the operations of the Company. The Company is not aware of any matters other than those set forth in this Proxy Statement or referred to in the accompanying Notice of Annual Meeting of Shareholders, which will be presented at the Annual Meeting. However, if any other matters should properly come before the meeting, it is intended that proxies will be voted thereon in accordance with the judgment of the person or persons voting such proxies. 17 21 CLASS A PROXY DAIRY MART CONVENIENCE STORES, INC. ANNUAL MEETING OF SHAREHOLDERS DECEMBER 11, 1997 THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Robert B. Stein, Jr., Gregory G. Landry and Frank W. Barrett, and each or any of them, with full power of substitution, the proxies of the undersigned to vote all of the shares of Class A Common Stock of Dairy Mart Convenience Stores, Inc. ("Dairy Mart") which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Dairy Mart to be held at the Renaissance Hotel, 24 Public Square, Cleveland, Ohio on the 11th day of December, 1997 at 10:00 a.m. (eastern time), and at any adjournment or postponement thereof, with all the powers the undersigned would possess if personally present upon: (TO BE SIGNED ON REVERSE SIDE) 22 PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL MEETING OF SHAREHOLDERS DAIRY MART CONVENIENCE STORES, INC. CLASS A PROXY DECEMBER 11, 1997 PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED ____ | | PLEASE MARK YOUR | | X | VOTES AS IN THIS | |____| EXAMPLE. |_____ FOR WITHHELD ____ ____ 1. Election of | | | | NOMINEES: 2. In their discretion such other matters as may properly come Directors | | | | Thomas W. Janes before the meeting. |____| |____| Truby G. Proctor, Jr. For, except vote withheld from the UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES following nominees (To withhold REPRESENTED BY THIS PROXY SHALL BE VOTED FOR THE ELECTION OF authority for any individual nominee THE NOMINEES AS DIRECTORS AND IN THE DISCRETION OF THE PROXIES write that nominee's name in the space AS TO OTHER MATTERS. provided below.) _____________________________
SIGNATURE(S)________________________________________________ DATE:_____________ 23 CLASS B PROXY DAIRY MART CONVENIENCE STORES, INC. ANNUAL MEETING OF SHAREHOLDERS DECEMBER 11, 1997 THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Robert B. Stein, Jr., Gregory G. Landry and Frank W. Barrett, and each or any of them, with full power of substitution, the proxies of the undersigned to vote all of the shares of Class B Common Stock of Dairy Mart Convenience Stores, Inc. ("Dairy Mart") which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Dairy Mart to be held at the Renaissance Hotel, 24 Public Square, Cleveland, Ohio on the 11th day of December, 1997 at 10:00 a.m. (eastern time), and at any adjournment or postponement thereof, with all the powers the undersigned would possess if personally present upon: (TO BE SIGNED ON REVERSE SIDE) 24 PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL MEETING OF SHAREHOLDERS DAIRY MART CONVENIENCE STORES, INC. CLASS B PROXY DECEMBER 11, 1997 PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED ____ | | PLEASE MARK YOUR | | X | VOTES AS IN THIS | |____| EXAMPLE. |_____ FOR WITHHELD ____ ____ 1. Election of | | | | NOMINEES: 2. In their discretion such other matters as may properly come Directors | | | | Frank W. Barrett before the meeting. |____| |____| J. Kermit Birchfield, Jr. John W. Everets, Jr. For, except vote withheld from the Gregory G. Landry UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES following nominees (To withhold Robert B. Stein, Jr. REPRESENTED BY THIS PROXY SHALL BE VOTED FOR THE ELECTION OF authority for any individual nominee THE NOMINEES AS DIRECTORS AND IN THE DISCRETION OF THE PROXIES write that nominee's name in the space AS TO OTHER MATTERS. provided below.) _________________________
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