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National Convenience Stores Inc/DE – ‘10-K/A’ for 6/30/95

As of: Thursday, 10/5/95 · For: 6/30/95 · Accession #: 950129-95-1298 · File #: 1-07936

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/05/95  Nat’l Convenience Stores Inc/DE   10-K/A      6/30/95    1:77K                                    Bowne - Houston/FA

Amendment to Annual Report — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      National Convenience Stores Inc. 10-K/A               27    138K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Chapter 11 Bankruptcy Reorganization Circle K Tender Offer Directors and Executive Officers of the Registrant Executive Compensation Profit Sharing Plan Security Ownership of Certain Beneficial Owners and Management
1	1st Page - Filing Submission
2	Item 1. Business
"	Item 10. Directors and Executive Officers of the Registrant
"	Item 11. Executive Compensation
"	Item 12. Security Ownership of Certain Beneficial Owners and Management
"	Item 13. Certain Relationships and Related Transactions
9	Chapter 11 Bankruptcy Reorganization
"	Circle K Tender Offer
21	Profit Sharing Plan

10-K/A 1st Page of 27 TOC ↑Top Previous Next ↓Bottom Just 1st
===============================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________

FORM 10-K/A
___________________

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to___

Commission File Number 1-7936

NATIONAL CONVENIENCE STORES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

[Download Table]

DELAWARE 74-1361734
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

100 WAUGH DRIVE
HOUSTON, TEXAS 77007-5814
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (713) 863-2200

Securities registered pursuant to Section 12(b) of the Act:

[Download Table]

Name of Each Exchange
Title of Each Class on Which Registered
------------------------------------- -----------------------------

Common Stock, $.01 par value New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class
---------------------------------
Warrants to Purchase Common Stock

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___

At August 31, 1995, 6,090,096 shares of the registrant's common stock, par
value $.01 per share (the "Common Stock"), were outstanding and the aggregate
market value (based on the closing price quoted on the New York Stock Exchange)
of the voting stock of the Company, excluding shares held by affiliates, was
approximately $116,698,000.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No ____

===============================================================================

10-K/A 2nd Page of 27 TOC 1st Previous Next ↓Bottom Just 2nd
NATURE OF AMENDMENTS
PART I

Item 1. Business

A new second paragraph is added under the caption "Circle K Tender Offer" to
describe an initiative by a stockholder to amend the Registrant's By-Laws to
increase the number of directors and to elect a candidate to fill the newly
created vacancy as well as the positions arising in the ordinary course of
business due to term expirations, all at the next annual meeting of
stockholders.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this item is supplied herewith.

Item 11. Executive Compensation

The information required by this item is supplied herewith.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is supplied herewith.

Item 13. Certain Relationships and Related Transactions

The information required by this item is supplied herewith.

-2-

10-K/A 3rd Page of 27 TOC 1st Previous Next ↓Bottom Just 3rd
PART I

ITEM 1. BUSINESS

GENERAL

National Convenience Stores Incorporated (the "Company" or "NCS") is the
largest operator of convenience stores in the state of Texas and one of the
twenty largest in the United States. At June 30, 1995, the Company operated
661 specialty convenience stores exclusively in four cities in the state of
Texas under the name Stop N Go. Eighty-two percent of the Company's stores are
located in the Houston and San Antonio areas where the Company is the largest
convenience store operator. NCS was originally organized as a Texas
corporation in 1959 and was reincorporated in Delaware in 1979.

As more fully described below under "Chapter 11 Bankruptcy Reorganization," the
Company filed for voluntary Chapter 11 bankruptcy reorganization on December 9,
1991 and emerged from such on March 9, 1993 as a result of the confirmation of
the Company's Revised Fourth Amended and Restated Joint Plan of Reorganization
(the "Plan of Reorganization"). For accounting purposes, the inception date for
the reorganized company is deemed to be March 1, 1993. As used in this Form
10-K, the term, "Reorganized Company," refers to NCS and its subsidiaries for
the periods subsequent to February 28, 1993; the term "Predecessor Company"
refers to NCS and its subsidiaries for the periods prior to March 1, 1993.

In the fourth quarter of fiscal 1994, the Company divested its 80 operating
convenience stores in the states of California and Georgia and acquired 88
stores in the Houston and Dallas/Fort Worth areas. With the consummation of
this transaction, the Company achieved its goal of geographically consolidating
its operations within the state of Texas.

On September 7, 1995, The Circle K Corporation ("Circle K") commenced an
unsolicited cash tender offer to purchase all the Company's outstanding common
stock (and associated rights to purchase preferred stock) and warrants to
purchase common stock at $20.00 per share and $2.25 per warrant, respectively
(the "Circle K Offer"). The Circle K Offer expires on October 4, 1995, unless
extended. On September 18, 1995, the Company's Board of Directors unanimously
determined to reject the Circle K Offer and recommended that NCS
securityholders not tender any of their securities. See Item 1. "Business -
Circle K Tender Offer" for additional information, including an additional
acquisition proposal at a price substantially higher than the Circle K Offer.

10-K/A 4th Page of 27 TOC 1st Previous Next ↓Bottom Just 4th
The following table sets forth the distribution of the Company's stores by
market as of June 30, 1995:

[Enlarge/Download Table]

Stores
% Selling
Stores of Total Gasoline
------ -------- --------

Houston/Gulf Coast . . . . . . . . . . . . . . . . . . . . . . . . 396 59.9% 347
San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 21.7 137
Dallas/Fort Worth . . . . . . . . . . . . . . . . . . . . . . . . . 94 14.2 91
Austin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 4.2 25
--- ----- ---
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661 100.0% 600
=== ===== ===

STORE OPERATIONS

The Company's convenience stores are extended-hour retail facilities,
emphasizing convenience to the customer. All the stores are open every day of
the year and 532 operate 24 hours a day. Typically, the Company's stores are
located in residential areas, on main thoroughfares, in small shopping centers
or on other sites selected for easy accessibility and customer convenience.
The stores' exteriors are of a similar design and color, making them easily
recognizable. The Company emphasizes high-quality products, personal and
courteous service, and clean and modern stores. The stores attract lunch-time
customers, early and late shoppers, weekend and holiday shoppers and customers
who need only a few items at any time and desire rapid service. Thirty-five of
the stores are also targeted to attract the fast-food take-out customer via
easily recognized national brand name "eatery" fast-food offerings.

The Company's stores offer a diverse range of over 3,000 high-traffic consumer
items including take-out foods, traditional fast-foods, fountain beverages,
alcoholic beverages, tobacco products, soft drinks, candy, snacks, groceries,
health and beauty aids, magazines and newspapers, automotive products, seasonal
and promotional items, and school supplies. The Company sells lottery and
lotto tickets in substantially all of its stores. Substantially all of the
Company's stores sell money orders. Approximately 91% of the Company's stores
are equipped with self-serve gasoline-dispensing facilities and approximately
45% are equipped with automated teller machines ("ATMs"). The Company has
entered into an agreement with NationsBank of Texas, N.A. ("NationsBank") which
provides for the installation, by NationsBank, of ATMs in all of the Company's
stores. This is expected to generate over 21 million customer visits per year
and $22.5 million in operating income from ATM transaction fees over the term
of the six year contract ($16.5 million of which is guaranteed pursuant to the
agreement), without giving effect to incremental profits from increased
gasoline and merchandise sales. The Company's existing automated teller
machine agreement generates approximately $500,000 per year in store profits.
NCS and NationsBank intend to engage in an extensive marketing campaign to
promote the new strategic alliance.

The Company has entered into an agreement whereby, commencing in the second
quarter of fiscal 1996, all Stop N Go gasoline stores will begin accepting the
Wright Express(TM) Universal Fleet Card (the "Fleet Card"), thereby enabling
NCS to attract national fleets to its gasoline stores. Wright Express(TM), a
subsidiary of Ideon Group, Inc. (formerly SafeCard Services Inc.), is the
leading provider of information processing, financial and information
management services to commercial car, van and truck fleets throughout the
United States. The Fleet Card is the most widely accepted electronic universal
fleet management card in the United States. The Company believes that the
number and convenience of its gasoline stores and the Company's competitive
pricing, when coupled with Wright Express'(TM) leadership in fleet management
and control services, should enable Stop N Go to increase its gasoline volume
and market share in the Texas cities served.

10-K/A 5th Page of 27 TOC 1st Previous Next ↓Bottom Just 5th
The following table sets forth certain statistical information regarding the
Company's sales for the periods indicated:

[Enlarge/Download Table]

Year Ended June 30,
---------------------------------------------------- -
Combined
1995 1994 1993(1)
--------- ---------- ------------

Sales (millions) . . . . . . . . . . . . . $906.0 $880.4 $878.9
Percentage of sales contributed by:
Gasoline. . . . . . . . . . . . . . . . 44.4% 41.8% 42.4%
Alcoholic beverages . . . . . . . . . . 13.4% 13.2% 13.9%
Tobacco products . . . . . . . . . . . 13.3% 14.2% 15.2%
Other categories not individually
contributing more than 10% . . . . . 28.9% 30.8% 28.5%
------- ------- -------
100.0% 100.0% 100.0%
====== ======= =======

(1) Reflects the combining of the four months ended June 30, 1993
(Reorganized Company) and the eight months ended February 28, 1993
(Predecessor Company).
---------------------------

The Company is continuing with its Neighborstore(R) merchandising strategy,
whereby each store's product mix is linked directly to its local demographics
and customer purchasing patterns. In certain instances, the stores' product
display and general appearance have been changed to match the demographics. The
Company currently operates 37 national brand name fast food "eateries" (smaller
scale versions of the branded food kiosks found in shopping malls and airports)
in 35 of its stores. Brands represented in these stores include Taco Bell(R),
Kentucky Fried Chicken(R), Burger King(R), Pizza Hut(R) and Dunkin Donuts(R).
The national brand name fast-food items are prepared in-store with identical
ingredients, packaging, procedures and quality standards as are used in the
branded partners' own free-standing restaurants.

In addition, the Company has a program for the continual updating of its older
stores. Consistent with the Neighborstore(R) merchandising strategy, the
program is flexible in both layout and product mix.

The Company recognizes that its future operations will be dependent in part on
the continual remodeling and upgrading of its store base. A store replacement
program will also eventually be required in order for the Company's stores to
continue to be geographically located near its target customers' residences and
workplaces.

The Company estimates that it serves, on average, approximately 700,000
customers per day. The Company's operations are benefited by warm, dry weather
since a large part of the Company's product mix is concentrated in items that
are consumed during periods when leisure-time activities are more prevalent.
The Company typically experiences higher sales and gross profits during the
summer months than during the winter months.

As is the norm in the convenience store industry, prices on most items are
somewhat higher than in supermarkets and certain other retail outlets; however,
the value placed by the customer on easy accessibility and convenience has
historically enabled the Company to receive premium prices for its products.
The Company does price-promote certain items in various key merchandise
categories to aid in building customer traffic. Most of the items sold are
nationally or locally advertised brands, which includes the Company's own
private label cigarette. Substantially all sales are for cash or check,
although the Company also accepts credit cards (VISA, MasterCard, American
Express(R) Card and Discover(R) Card) and debit cards.

10-K/A 6th Page of 27 TOC 1st Previous Next ↓Bottom Just 6th
During the fourth quarter of fiscal 1994, the Company began the implementation
of a program to enhance and redefine the Company's focus on customer service
and employee effectiveness ("Project Breakthrough"). An integral component of
the program involves the upgrading of equipment and technology through the
installation of integrated state-of-the-art sales and inventory management
systems. These systems will significantly automate store operations by
capturing data on point-of-sale and scanning equipment. The Company initiated
the program in its 94 Dallas/Fort Worth stores during fiscal 1995 and has made
approximately $10.6 million of capital improvements in connection with these
stores, approximately two-thirds of which expenditures were financed through
operating lease transactions. Additionally, the Company has expended
approximately $5.1 million in consulting and other related expenses in
connection with the program, of which $2.0 million and $3.1 million were
incurred in fiscal 1994 and 1995, respectively. An additional $4.1 million has
been expended for software development costs required for the overall program's
implementation, of which $0.8 million and $3.3 million were incurred in fiscal
1994 and 1995, respectively. The costs associated with the program which have
not been financed through operating lease transactions have been and will be
funded by cash generated from operations as well as cash on hand. The Company
expects to begin the next phase of the program's implementation into 171 stores
in San Antonio and Austin during the third quarter of fiscal 1996 and in
connection therewith, expects to expend approximately $15.3 million,
approximately $11.0 million of which will be financed through operating lease
transactions.

The Company purchases a substantial portion of its groceries, candy, tobacco
and health and beauty aids through wholesale grocers. Soft drinks, beer, wine,
bakery and dairy products are usually purchased from local suppliers. The
Company also operates a kitchen facility in Houston where it prepares and
packages sandwiches, salads, snacks and other prepackaged foods for
distribution to its stores via one of its major suppliers.

The Company's inventories of gasoline turn over approximately every seven days.
The Company purchases substantially all of its gasoline supplies from an
independent petroleum refiner which provides the benefits of (i) a competitive
purchase price, due to the volume of gasoline purchased, (ii) a reliable
distribution system within the Company's geographic market area, and (iii)
consistent with the Company's strategic vision, the development of a long-term
relationship with a key vendor. While the Company believes that alternative
supplies of its petroleum products in the required volumes are readily
available in the event of a disruption in its current supply, over the
short-term, the Company would likely lose some of its current price advantage
until a new contract could be negotiated with another supplier. The Company
does not engage in speculative gasoline trading transactions or otherwise
assume unusual market risks with respect thereto. See Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Risks and Uncertainties" for additional discussion of certain market risks.

REGULATORY MATTERS

Federal, state or local laws regulate the hours of operation and the sale of
certain products, typically including alcoholic beverages, gasoline, tobacco
products and lottery and lotto tickets. The most significant of such
regulations limits or governs the sale of alcoholic beverages and the storage
and sale of gasoline. See Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Risks and Uncertainties."

Sale of Alcoholic Beverages - State and local regulatory agencies have the
authority to approve, revoke, suspend or deny applications for and renewals of
permits and licenses relating to the sale of alcoholic beverages and to impose
various restrictions and sanctions. In many states and in Texas, retailers of
alcoholic beverages have been held responsible for damages caused by
intoxicated individuals who purchased alcoholic beverages from them. While the
potential exposure to the Company as a seller of alcoholic beverages is
substantial, the Company has adopted procedures to minimize such exposure and
to-date, Management believes liability for such

10-K/A 7th Page of 27 TOC 1st Previous Next ↓Bottom Just 7th
sales has not had a material adverse effect on the Company's financial position
or results of operations.

Storage and Sale of Gasoline - The operation and ownership of underground
gasoline storage tanks ("USTs") are subject to federal, state and local laws
and regulations. The Environmental Protection Agency ("EPA") has issued
regulations that establish requirements for (i) maintaining leak detection
methods and equipment, (ii) upgrading USTs, (iii) taking corrective action in
response to releases, (iv) UST removal to prevent future releases, (v) keeping
appropriate records, and (vi) maintaining evidence of financial responsibility
for taking corrective action and compensating third parties for bodily injury
and property damage resulting from releases. These regulations also empower
states to develop, administer and enforce their own regulatory programs,
incorporating requirements which are at least as stringent as the federal
standards. In order to ensure compliance with the federal and state
environmental laws, the Company has developed a comprehensive gasoline storage
and dispensing plan. During fiscal 1993, the Company refined the plan such
that its primary focus is on upgrading gasoline dispensing equipment in
accordance with upcoming deadlines imposed by regulatory authorities and on
providing for the cleanup of existing and future contaminated sites. The
gasoline plan generally covers all properties owned and leased by the Company.
Management believes that its existing gasoline storage and dispensing
procedures and planned capital expenditures will keep the Company in compliance
with all federal and state environmental regulations.

Environmental Capital Commitments - The Company has adopted approved tank
system release detection methods on all owned or operated USTs and currently
utilizes the Statistical Inventory Reconciliation Method for the release
detection on its USTs located in Texas. This method involves statistical
analysis of gasoline inventory changes to detect UST releases.

All of the Company's USTs in Texas have been upgraded with the required
spill/overfill prevention equipment. By December 22, 1998, the Company's USTs
must be upgraded with corrosion protection equipment under applicable federal
regulations. The Company estimates that 63% of its USTs are currently in
compliance with such regulations, either through the installation of fiberglass
or steel fiberglass tanks or by adding cathodic protection to existing steel
tanks. In addition, the EPA has required that by January 1, 1996, UST
operators must install flow governors which restrict dispensing volumes per
minute. Management of the Company believes that the Company's long-range
capital budget contains sufficient funds necessary to make the required
equipment upgrades prior to the 1996 and 1998 deadlines.

In addition to the foregoing, the EPA has ranked the air quality in major
cities in the United States based on the level of ozone measured. Houston and
Dallas/Fort Worth are two areas in which the Company currently conducts
operations which are considered to be ozone non-attainment areas. The Houston
market is classified in the severe ozone non-attainment category while the
Dallas/Fort Worth area is classified in the moderate ozone non-attainment
category. Under rules promulgated by the EPA and the state of Texas, gasoline
dispensing facilities in the two areas were required to have Stage II Vapor
Recovery Equipment by November 15, 1994 on all units except those that have not
dispensed more than 10,000 gallons in any one month since January 1991. In
addition, the Clean Air Act mandated that UST operators in the non-attainment
areas adopt a "two point" fuel delivery unloading system which has been
installed in all of the Company's USTs which require the system (approximately
73% of the Company's USTs).

During fiscal 1995 and 1994, the Company spent $4.8 million and $6.6 million,
respectively, on environmental capital equipment, including $4.5 million and
$6.1 million, respectively, on Stage II Vapor Recovery Equipment. In order to
ultimately comply with the aforementioned regulations by the mandated
deadlines, the Company estimates it will be required to spend approximately
$6.0 million on additional equipment and installation through fiscal 1999.
Management believes that it has allocated sufficient resources in its long-term
capital budget to comply with the

10-K/A 8th Page of 27 TOC 1st Previous Next ↓Bottom Just 8th
improvements required by the state of Texas and EPA regulations to be completed
by the end of 1999.

Environmental Remediation Contingency - The Company's environmental remediation
exposure is related to the cleanup of contaminated soil and ground water caused
by releases from underground gasoline storage tanks and underground piping
systems and claims for third party damages relating to such releases. The
Company spent $1.2 million in fiscal 1995 on environmental remediation
activities as compared to $1.3 million in fiscal 1994 and $1.3 million in
fiscal 1993. The Company estimates that it will incur approximately $5.7
million for environmental remediation expenditures through 1999. At June 30,
1995 and 1994, the accrued environmental liability totalled $19.6 million and
$20.8 million, respectively. The actual cost of remediating contaminated
sites, removing tanks and settling third party damage claims may be
substantially lower or higher than that accrued due to the difficulty in
estimating such costs and due to potential changes in the status of regulations
and state reimbursement programs. The Company does not believe that any such
amount below or in excess of that accrued can be reasonably estimated.

The state of Texas and other states in which the Company previously operated
have established trust funds for the reimbursement of costs related to certain
remediation activities. The Company has filed or expects to file claims
aggregating approximately $3.0 million with the states to recover a portion of
the funds which it has expended or expects to expend on remediation activities.
The Company believes the claims it has filed or expects to file will be paid,
although collection may occur over a period of several years.

The Company is required by state regulations to maintain evidence of financial
responsibility for taking corrective action on remediation activities. In
order to be in compliance with these requirements, the Company has successfully
established that it is self-insured with the Texas Natural Resource
Conservation Commission.

EMPLOYEES

As of June 30, 1995, the Company had approximately 4,800 employees, of whom
approximately 209 are executive and supervisory personnel, approximately 4,100
are full-time store employees, and the balance are full-time staff personnel
and part-time store employees. The Company experiences the high rate of
turnover of store employees prevalent in the convenience store industry. The
Company is not a party to any collective bargaining agreement and believes its
relations with its employees to be satisfactory.

COMPETITION

The convenience store industry is highly competitive, and the Company competes
with other convenience stores, local and national grocery store chains,
gasoline service stations, drug stores, fast food operations, vending machines,
discount stores and other types of retail outlets. The Company is the largest
operator, or among the largest operators, of convenience stores in its major
market areas. Each of the Company's stores competes primarily in its
surrounding neighborhood, and the ability of each store to compete is largely
dependent on location, access, signage, store size, population growth,
demographics and product mix.

The Company also encounters competition from gasoline service stations which
have installed facilities for the sale of other consumer items. These gasoline
service stations have become a significant competitor within the convenience
store industry.

Although competition from gasoline retailers has increased in recent years, the
Company's traditional convenience store competitors have significantly
curtailed their new store construction programs in, or withdrawn from, some of
the Company's major market areas as a result of poor

10-K/A 9th Page of 27 TOC 1st Previous Next ↓Bottom Just 9th
operating performance. Nevertheless, the Company cannot predict the extent to
which its major competitors may further reduce or expand their operations in
cities where the Company operates.

CHAPTER 11 BANKRUPTCY REORGANIZATION

On December 9, 1991, the Company and substantially all of its wholly-owned
active subsidiaries (the "Debtor Group") filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of Texas, Houston Division (the "Bankruptcy Court"). The filing was
precipitated by the loss of vendor credit which had become critical to the
Company's financing needs as a result of poor operating results.

On February 25, 1993, the Bankruptcy Court confirmed the Plan of
Reorganization, and the reorganization became effective March 9, 1993 (the
"Effective Date"). The Plan of Reorganization was designed to repay all
priority creditors in full on the Effective Date or thereafter (as provided in
the Plan of Reorganization) and to repay secured creditors in full over time
with interest. Pursuant to the Plan of Reorganization, allowed unsecured
claims totalling approximately $137.5 million were cancelled in exchange for
$9.3 million of cash, $1.0 million of new indebtedness and 5.91 million shares
of newly issued Common Stock of the Reorganized Company. All existing shares
of the Predecessor Company's Series E Preferred Stock and common stock were
exchanged for a total of 90,000 shares of the Reorganized Company's Common
Stock. In addition, warrants to purchase up to an additional 1.35 million
shares of the Reorganized Company's Common Stock at $17.75 per share were
distributed to the holders of the Predecessor Company's publicly-held
subordinated debentures, the Series E Preferred Stock and the Predecessor
Company's common stock. All alleged seniority rights arising under the
indentures relating to the publicly-held subordinated debentures were deemed
satisfied and cancelled as of the Effective Date.

On September 6, 1995, the Bankruptcy Court signed an Order Providing for
Closing Chapter 11 Cases. This Order closed the Chapter 11 cases of the Debtor
Group in the Bankruptcy Court.

See Item 3. "Legal Proceedings -- Reorganization Proceedings Under Chapter 11"
for further discussion with respect to the Company's Chapter 11 bankruptcy
filing, Plan of Reorganization and settlement of claims.

CIRCLE K TENDER OFFER

On August 8, 1995, the Company received an unsolicited acquisition proposal
from Circle K whereby Circle K offered to buy all of the Company's Common Stock
for $17.00 cash per share. On August 11, 1995, Circle K proposed an amendment
to the Company's by-laws to increase the number of directors from eight to
seventeen and to repeal any by-law amendments adopted since January 1, 1994.
The Company also received from Circle K a notice of the nomination of nine
Circle K officers, directors or affiliates to fill the vacancies created by the
proposed by-law amendment.

On August 11, 1995, the Company also received from Bedford Falls Investors,
L.P. ("Bedford"), a stockholder of the Company, a proposal regarding its
intention to nominate four persons for election as directors at the Company's
1995 Annual Meeting, to propose, in effect, an amendment to the By-Laws to
increase the number of directors to be elected at such meeting to five and to
nominate a person for election to fill the resulting directorship.

The Company's Board of Directors retained Merrill Lynch to advise it with
respect to the proposal and on August 31, 1995, the Company announced that
its Board had unanimously rejected Circle K's unsolicited proposal. Such
conclusion was based, in part, upon the opinion of Merrill Lynch that the
Circle K proposal was inadequate from a financial point of view. The Board of
Directors also adopted a Stockholder Rights Plan (the "Rights Plan") designed
to protect the Company from unfair or coercive takeover tactics and to assure
that all of the Company's stockholders receive fair treatment in the event of
any takeover proposal. The Board also authorized, in concept, certain
agreements and the amendment of certain employment contracts and benefit plans
of the Company. See Item 5. "Market for Registrant's Common Equity and Related
Stockholder Matters" for further discussion with respect to the Rights Plan.

10-K/A 10th Page of 27 TOC 1st Previous Next ↓Bottom Just 10th
On September 7, 1995, Circle K commenced a tender offer for all outstanding
shares of the Company's common stock (and associated rights to purchase
preferred stock) and all outstanding stock purchase warrants at $20.00 and
$2.25 in cash, respectively. The tender offer is conditioned on the tender
of a minimum number of outstanding shares and warrants, as well as certain
other conditions.

On September 18, 1995, the Company's Board of Directors unanimously determined
to reject Circle K's tender offer and recommended that NCS securityholders not
tender any of their securities pursuant to the offer. The Board based its
decision in part upon the opinion of the Company's financial advisor, Merrill
Lynch & Co., that the consideration offered to NCS securityholders in the
Circle K offer was inadequate to NCS securityholders from a financial point of
view.

At the same meeting, the Board reviewed and discussed an unsolicited proposal
received after the close of business on September 14, 1995 from another party
to acquire the Company at a significantly higher price than the Circle K Offer.
The Board determined not to accept this proposal. However, given all of the
information available, including the unsolicited proposal, the Board has
instructed management and Merrill Lynch to explore the Company's strategic
alternatives, including the possible sale of the Company to a third party. The
Board intends to invite interested parties, including Circle K and the other
party, to participate in this process.

10-K/A 11th Page of 27 TOC 1st Previous Next ↓Bottom Just 11th
EXECUTIVE OFFICERS OF REGISTRANT

The following table sets forth the names, ages and certain additional
information regarding the Company's executive officers:

[Enlarge/Download Table]

Name and Position Age Business Experience
----------------------------------------- --- --------------------------------------------------------

V.H. Van Horn (1) 57 Director, President and Chief Executive Officer since
Director, President and February 1975; employee of the Company since March
Chief Executive Officer 1966. Director of Southdown, Inc. (cement and concrete
manufacturing).

A.J. Gallerano (1) 53 Senior Vice President, General Counsel and Secretary
Senior Vice President, General since September 1989; Vice President, General Counsel
Counsel and Secretary and Secretary from October 1979 to August 1989.

Arnold Van Zanten (1) 53 Senior Vice President - Administration since May 1992;
Senior Vice President- Vice President - Systems from April 1989 to April 1992.
Administration

C.R. Wortham, Jr. (1) 56 Senior Vice President - Real Estate and Gasoline since
Senior Vice President - Real Estate August 1989; Vice President - Real Estate and Gasoline
and Gasoline from July 1988 to July 1989; Vice President - Real
Estate from June 1985 to June 1988.

Brian Fontana (1) 37 Vice President - Chief Financial Officer since December
Vice President - Chief 1993; Vice President and Treasurer from August 1993 to
Financial Officer November 1993; Treasurer from February 1992 to July
1993; Assistant Treasurer from April 1990 to February
1992.

Douglas B. Binford (1) 51 Vice President - Marketing since November 1994. Senior
Vice President - Marketing Vice President of Sales and Merchandising for Red Food
Stores Incorporated (grocery store chain) from July
1989 through October 1994.

Janice E. Bryant (1) 44 Vice President - Controller since February 1995. Vice
Vice President - Controller President and Controller of Continental Airlines, Inc.
from August 1993 through January 1995. Controller and
various positions with Continental Airlines Holdings,
Inc. (formerly Texas Air Corporation; airline holding
company) from October 1981 through July 1993.

___________________

(1) Mr. Van Horn and the Company have entered into a contract pursuant to
which Mr. Van Horn will serve as President and Chief Executive Officer until at
least June 2000. All other officers serve pursuant to three year contracts
that expire in August 1998, except Ms. Bryant and Mr. Binford, who serve
pursuant to one year contracts that expire in August 1996. All of the
executive officers, except Messrs. Fontana and Binford and Ms. Bryant,

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were executive officers of the Company as of December 9, 1991 when the Company
and substantially all of its wholly-owned active subsidiaries filed petitions
for voluntary reorganization under Chapter 11 of the United States Bankruptcy
Code.

10-K/A 13th Page of 27 TOC 1st Previous Next ↓Bottom Just 13th
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Article X of the Company's Restated Certificate of Incorporation provides that
the directors of the Company shall be divided into three classes, and further,
that the number of directors shall be fixed by, and in the manner provided in,
the By-Laws. The By-Laws of the Company provide for eight authorized directors.
The Class I directors were reelected at the 1993 Annual Stockholders Meeting
for a three year term to serve through the 1996 Annual Stockholders Meeting,
and the Class II directors were reelected at the 1994 Annual Stockholders
Meeting for a three year term to serve through the 1997 Annual Stockholders
Meeting. Class III directors will be elected at the Company's 1995 Annual
Stockholders Meeting. Mr. Luellen became a Class III director in 1993 after
nomination by certain creditors specified in the Plan of Reorganization, and
Mr. Sosa became a Class III director after nomination by a committee consisting
of Mr. Stobaugh and Mr. Luellen which was created pursuant to the Plan of
Reorganization. As of September 18, 1995, the 1995 Annual Stockholders Meeting
and the record date therefor were postponed to undetermined dates. The
following table sets forth information concerning each director, including his
name, age, positions with the Company, class and year of his initially
becoming a director.

[Enlarge/Download Table]

Positions with Director Class of
Name Age the Company Since Director
----------------------------- --- ------------------------------------- --------------- --------

V. H. Van Horn 57 Director; President and Chief 1975 I
Executive Officer
Dunbar N. Chambers, Jr. 60 Director; Member of Compensation 1964 II
Committee
Charles J. Luellen 65 Director; Member of Compensation and 1993 III
Nominating Committees
Raymond W. Oeland, Jr. 60 Director; Member of Audit Committee 1959 I
Lionel Sosa 56 Director; Member of Audit Committee 1993 III
Richard C. Steadman 63 Director; Chairman of the Board of 1969 III
Directors; Member of Compensation
Committee
Robert B. Stobaugh, DBA 67 Director; Member of Audit and 1973 II
Nominating Committees
William Key Wilde 62 Director; Member of Compensation 1959 III
Committee

Mr. Van Horn has, for more than the past five years, served as President and
Chief Executive Officer of the Company. Mr. Van Horn also serves as a director
of Southdown, Inc., Houston, Texas, a cement and ready-mixed concrete company.

Mr. Chambers has, for more than the past five years, been Chairman of the Board
of Directors of Chambco, Inc., which, through its subsidiaries and related
investments, engages in real estate investment, development and management,
ranching and other investments.

Mr. Luellen served, until his retirement in 1992, as President and Chief
Operating Officer of Ashland Oil, Inc., Ashland, Kentucky. Mr. Luellen also
serves as a director of Tosco Corp., a refining corporation.

Mr. Oeland has, for more than the past five years, been a private investor.

10-K/A 14th Page of 27 TOC 1st Previous Next ↓Bottom Just 14th
Mr. Sosa has, since January 1994, served as Chairman of D'Arcy, Masius, Benton
& Bowles, Inc., an advertising firm located in San Antonio, Texas. Prior to
January 1994, Mr. Sosa served as Chairman and Chief Executive Officer of Sosa,
Bromley, Aguilar & Associates, San Antonio, Texas for more than five years.
Mr. Sosa also serves as a director of Bank of America, Texas, a subsidiary of
Bank of America National Trust and Savings Association, N.A.

Mr. Steadman serves as Chairman of the Company's Board of Directors. For more
than the past five years, Mr. Steadman has been a private investor. Mr.
Steadman also serves as a director of Storage Technology Corporation,
Louisville, Colorado, a manufacturer of storage devices for mainframe
computers.

Mr. Stobaugh has been a Professor of Business Administration at the Harvard
University Graduate School of Business Administration for more than the past
five years. Mr. Stobaugh is also a director of Ashland Oil, Inc., Ashland,
Kentucky, as well as a Director of American International Petroleum
Corporation, New York, New York.

Mr. Wilde has, for more than the past five years, been a partner in the law
firm of Bracewell & Patterson, L.L.P., Houston, Texas.

Certain information with respect to the Company's executive officers is set
forth in Item 1. "Business -- Executive Officers of the Registrant," and is
incorporated by reference herein.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Under the securities laws of the United States, the Company's directors,
executive officers and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange, Inc.
Specific due dates for these reports have been established and the Company is
required to disclose any failure to file by these dates during its fiscal year.
During the fiscal year ended June 30, 1995, Mr. Steadman was late filing the
Form 4 reporting (i) the acquisition of 79 shares of the Company's Common Stock
as a creditor under the Company's bankruptcy, and (ii) the acquisition of 4,800
Warrants to purchase the Company's Common Stock. Mr. Stobaugh was late filing
the Form 4 reporting the acquisition of 82 shares of Common Stock as a creditor
under the Company's bankruptcy. All other filings were satisfied on a timely
basis during the 1995 fiscal year. In making these disclosures, the Company
has relied solely on written statements of its directors and executive officers
and copies of the reports that they have filed with the Commission.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning all compensation for
services rendered in all capacities to the Company during the fiscal years
indicated for the chief executive officer and the four other most highly
compensated executive officers of the Company who were serving as such on June
30, 1995 (the "named executive officers").

10-K/A 15th Page of 27 TOC 1st Previous Next ↓Bottom Just 15th

[Enlarge/Download Table]

Long-Term
Annual Compensation Compensation
---------------------------------- ------------
Name and Fiscal Other Annual All Other
Principal Position Year Salary Bonus Compensation Options(2) Compensation(3)
------------------ ---- --------- -------- ------------ ------------- ---------------

V.H. Van Horn . . . . . 1995 $418,461 $504,000 (1) 0 $75,600
President and Chief 1994 400,000 133,000 (1) 0 20,578
Executive Officer 1993 400,000 200,000 (1) 150,000 0

A.J. Gallerano . . . . 1995 $190,400 $194,922 (1) 0 $29,238
Senior Vice President, 1994 182,000 67,760 (1) 0 5,759
General Counsel and 1993 182,000 103,980 (1) 60,000 0
Secretary

C.R. Wortham, Jr. . . . 1995 $183,077 $187,425 (1) 0 $28,114
Senior Vice President - 1994 175,000 81,500 (1) 0 7,500
Real Estate and Gasoline 1993 172,405 99,750 (1) 60,000 0

Arnold Van Zanten . . . 1995 $162,154 $166,005 (1) 0 $24,901
Senior Vice President - 1994 155,000 102,900 (1) 0 11,685
Administration 1993 155,000 88,350 (1) 60,000 0

Brian Fontana . . . . . 1995 $130,769 $111,563 (1) 0 $16,734
Vice President - Chief 1994 115,519 86,200 (1) 0 10,763
Financial Officer 1993 89,234 16,200 (1) 30,000 0

__________

(1) The officers receive certain perquisites such as car allowances and
insurance benefits; however, the value of such perquisites did not exceed the
lesser of $50,000 or 10% of the officer's salary and bonus.

(2) All options granted during fiscal 1993 were granted pursuant to the
Company's 1993 Non-Qualified Option Plan, which was implemented pursuant to
the Plan of Reorganization.

(3) The amounts presented as All Other Compensation include the amounts the
Company contributed or accrued for the accounts of the executive officers in
connection with (i) the defined contribution feature of the Company's
Officers' Retirement Plan (see "Officers' Retirement Plan"), and (ii) the
Company's 401(k) Profit Sharing Plan (see "Profit Sharing Plan").

OTHER COMPENSATION -- 1993 OPTION PLAN

The Company maintains the National Convenience Stores Incorporated
1993 Non-Qualified Stock Option Plan (the "Option Plan"). The Option Plan
provides for the issuance of options to purchase up to a maximum of 900,000
shares of Common Stock to directors, management employees (including officers)
and other key employees of the Company. The Plan is administered by the Board
of Directors. Pursuant to the Company's Plan of Reorganization and the Option
Plan, options covering a total of 865,000 shares of Common Stock had been
granted to employees and directors of the Company as of June 30, 1995, each of
which grants was subject to a three-year vesting schedule. Any such options not
already vested will vest upon a change of control (as defined in the Option
Plan) of the Company. No options were granted to any of the named executive
officers during fiscal 1995.

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AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR-END OPTION VALUES

The following table sets forth certain information concerning the exercise in
fiscal 1995 of options to purchase Common Stock by the named executive officers
and the unexercised options to purchase Common Stock held by such individuals
at June 30, 1995.

[Enlarge/Download Table]

Number of Value of Unexercised
Shares Number of Unexercised Options at
Acquired Options at June 30, 1995 June 30, 1995 (2)
on Value ------------------- -----------------
Name Exercise(1) Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------

V. H. Van Horn . . 0 $0 100,000/50,000 $212,500/$106,250

A. J. Gallerano . . 0 $0 40,000/20,000 $85,000/$42,500

C. R. Wortham, Jr. 0 $0 40,000/20,000 $85,000/$42,500

Arnold Van Zanten . 0 $0 40,000/20,000 $85,000/$42,500

Brian Fontana . . . 0 $0 20,000/10,000 $42,500/$21,250
----------

(1) Exercise price for each option is $10.50.

(2) The value of options at June 30, 1995 has been calculated based on the
closing price of the Company's Common Stock on The New York Stock Exchange
on June 30, 1995 as reported in The Wall Street Journal ($12-5/8) less the
relevant exercise price per share, multiplied by the relevant number of
shares. On October 2, 1995 the closing price of the Common Stock was $23-3/4
per share.

DEFINED BENEFIT PLAN -- OFFICERS' RETIREMENT PLAN

The Company maintains an Officers' Retirement Plan which was amended and
restated effective August 31, 1995. Participation in the Officers' Retirement
Plan is limited to management personnel who have a significant impact upon the
formulation of the Company's policies and its profitability. Pension benefits
under the Officers' Retirement Plan are determined primarily by the average of
the highest three of the last five years compensation and credited years of
service, up to a maximum of 30 years. The following table shows estimated
annual pension benefits payable upon retirement in specified compensation and
years of service classifications, assuming retirement at age 65.

[Enlarge/Download Table]

Average Earnings Years of Service
---------------- ---------------------------------------------------------------------
5 10 15 20 25 30
- -- -- -- -- --

$ 200,000 . . . . . $ 20,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $120,000
400,000 . . . . . 40,000 80,000 120,000 160,000 200,000 240,000
600,000 . . . . . 60,000 120,000 180,000 240,000 300,000 360,000
800,000 . . . . . 80,000 160,000 240,000 320,000 400,000 480,000
1,000,000 . . . . . 100,000 200,000 300,000 400,000 500,000 600,000
1,200,000 . . . . . 120,000 240,000 360,000 480,000 600,000 720,000

The compensation covered by the Officers' Retirement Plan is the officer's
salary plus any bonuses as reported in the Summary Compensation Table. The
estimated credited years of service for each of the named executive officers are
as follows: Mr. Van Horn: 30 years; Mr. Gallerano: 16

10-K/A 17th Page of 27 TOC 1st Previous Next ↓Bottom Just 17th
years; Mr. Wortham: 17 years; Mr. Van Zanten: 14 years; and Mr. Fontana: 5
years. The basis on which pension benefits are computed at a participant's
retirement at age 65 is joint-life annuity amounts for married participants and
single-life annuity amounts for single participants. The pension benefits
shown in the table are not subject to any reduction for Social Security or
other offset amounts. The Officers' Retirement Plan permits participants to
elect, in advance, to receive a lump sum distribution, or three equal annual
installments, at retirement in lieu of the pension benefits otherwise payable
over a period of time to such participant.

Prior to the amendment on August 31, 1995, the Officers' Retirement Plan
included a defined contribution feature pursuant to which the Company
committed, through June 30, 1995, to contribute an annual amount for the
benefit of each participant equal to 15% of such participant's annual bonus, if
any (the "Company 15% Bonus Contribution"). For the year ended June 30, 1995,
the amounts which the Company contributed for the named executive officers were
as follows: Mr. Van Horn -- $75,600; Mr. Gallerano -- $29,238; Mr. Wortham --
$28,114; Mr. Van Zanten -- $24,901; and Mr. Fontana -- $16,734.

Prior to the Officers' Retirement Plan being amended effective August 31, 1995,
a participant in the Officers' Retirement Plan became fully vested in his
pension benefit upon the later to occur of (i) December 15, 1998, or (ii) the
participant attaining five years of credited service. Effective August 31, 1995,
the Officers' Retirement Plan was amended to provide that participants become
fully vested in their pension benefits after five years of credited service. A
participant becomes fully vested in the Company 15% Bonus Contribution upon the
participant remaining an employee for three years after such contribution is
credited to the participant. In addition, upon the occurrence of a Change in
Control (as defined below) a participant shall become fully vested in his
pension benefit and the Company 15% Bonus Contribution. The definition of the
term "Change in Control" was amended effective August 31, 1995 to include
additional events; and, as so amended, means the occurrence with respect to the
Company of any of the following events:

(i) a report on Schedule 13D is filed with the Securities and
Exchange Commission (the "SEC") pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than the Company
(or one of its subsidiaries) or any employee benefit plan sponsored by
the Company (or one of its subsidiaries), is the beneficial owner (as
such term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of 20 percent or more of the outstanding
shares of common stock of the Company or the combined voting power of
the then-outstanding securities of the Company;

(ii) a report is filed by the Company disclosing a response to
either Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Exchange Act, or to Item 1 of Form 8-K promulgated under the
Exchange Act, or to any similar reporting requirement subsequently
promulgated by the SEC;

(iii) any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than the Company
(or one of its subsidiaries) or any employee benefit plan sponsored by
the Company (or one of its subsidiaries), shall purchase securities
pursuant to a tender offer or exchange offer to acquire any common
stock of the Company (or securities convertible into common stock) for
cash, securities or any other consideration, provided that after
consummation of the offer, the person, entity or group in question is
the beneficial owner (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 20
percent or more of the combined voting power of the then-outstanding
securities of the Company (as determined under paragraph (d) of Rule
13d-3 promulgated under the Exchange Act, in the case of rights to
acquire common stock);

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(iv) the stockholders of the Company shall approve:

(A) any merger, consolidation, or reorganization of the
Company:

(1) in which the Company is not the continuing or
surviving corporation,

(2) pursuant to which shares of common stock of the
Company would be converted into cash, securities or other
property,

(3) with a corporation which prior to such merger,
consolidation, or reorganization owned 20 percent or more of
the combined voting power of the then-outstanding securities
of the Company, or

(4) in which the Company will not survive as an
independent, publicly-owned corporation;

(B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of the Company; or

(v) the stockholders of the Company shall approve a merger,
consolidation, reorganization, recapitalization, exchange offer,
purchase of assets or other transaction after the consummation of
which any person, entity or group (as defined in accordance with
Section 13(d) or 14(d) of the Exchange Act) would own beneficially in
excess of 50% of the outstanding shares of common stock of the Company
or in excess of 50% of the combined voting power of the
then-outstanding securities of the Company;

(vi) the Company's common stock ceases to be listed on the New
York Stock Exchange;

(vii) the existence of a Distribution Date as defined in the
Rights Agreement of the Company dated August 31, 1995; or

(viii) during any period of two consecutive years, the
individuals who at the beginning of such period constituted the Board
of Directors of the Company cease for any reason to constitute a
majority of the Board of Directors of the Company, unless the election
or nomination for election by the Company's stockholders of each new
director during any such two-year period was approved by the vote of
two-thirds of the directors then still in office who were directors at
the beginning of such two-year period.

To fund the benefits payable under the Officers' Retirement Plan, the Company
has established an irrevocable trust for the benefit of the officers
participating in such plan. Immediately prior to a Change in Control (as
defined above), the Company is required to contribute to the irrevocable trust
an amount sufficient to pay all benefits under the Officers' Retirement Plan
calculated as of the day prior to the Change in Control.

COMPENSATION OF DIRECTORS

The Company pays each outside director of the Company an annual fee of $36,300.
An additional fee of $42,350 is paid to the Chairman of the Board. Fees payable
to directors serving less than the entire fiscal year are prorated. The Company
also reimburses travel and related expenses incurred by directors in attending
meetings of the Board. No director receives additional

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compensation for serving on committees of the Board or for attending meetings
of the Board or such committees.

The Company maintains a Directors' Retirement Plan, which was amended and
restated effective August 31, 1995. Prior to the amendment, non-employee
directors were generally entitled to be paid an annual retirement benefit equal
to two-thirds of the annual fee paid by the Company to its directors for
serving on the Company's Board. The August 31, 1995 amendment increased the
retirement benefit for non-employee directors to 100% of the current amount of
the Company's directors' annual fees and eliminated a provision that, in
general, had prevented directors from collecting retirement benefits prior to
attaining 70 years of age. Benefits under the Directors' Retirement Plan
commence on the director's retirement from service on the Board, and continue,
in general, for a period of time equal to the period of time he served as a
director of the Company. To fund the benefits payable under the Directors'
Retirement Plan, the Company has established an irrevocable trust for the
benefit of the non-employee directors participating in such plan. Immediately
prior to a Change in Control (as defined in the Officers' Retirement Plan, as
described above), the Company is required to contribute to the irrevocable
trust an amount sufficient to pay all benefits under the Directors' Retirement
Plan calculated as of the day prior to the Change in Control. The definition of
the term "Change in Control" was amended by the August 31, 1995 amendments to
include additional Change in Control events.

The Option Plan provided that each outside director of the Company who was
serving as such on the date 180 days after confirmation of the Company's Plan
of Reorganization was to receive options covering 15,000 shares of Common Stock
at an exercise price of $10.50 per share, and such options were granted to such
persons on August 25, 1993. Two-thirds of such options were vested and
exercisable as of August 25, 1995, and the remainder will vest and become
exercisable on August 25, 1996 or upon an earlier change of control (as defined
in the Option Plan) of the Company.

Effective August 31, 1995, the Company entered into a Director Agreement with
each non-employee director of the Company. Each Director Agreement, in general,
provides that in the event any payment or distribution by the Company or any of
its affiliates to or for the benefit of the director is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company will pay to the director an additional payment or
payments in an amount sufficient to make such director whole for any such tax
and for any excise and other tax imposed on any such additional payment or
payments.

The directors and executive officers of the Company have entered into
indemnification agreements whereby the Company has agreed to indemnify such
persons and advance expenses as provided in such agreements to the fullest
extent permitted by applicable law.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS

The Company has entered into an Agreement Amending and Restating Employment
Agreement (the "Employment Agreements") with each of the individuals named
in the Summary Compensation Table.

The Company's Employment Agreement with Mr. Van Horn relates to his service as
President and Chief Executive Officer of the Company, and provides that the
Company will pay Mr. Van Horn a minimum salary of $420,000 annually. Mr. Van
Horn's Employment Agreement provides for an annual bonus opportunity of not
less than $200,000, the amount of which is based on percentages of Mr. Van
Horn's annual salary if the Company satisfies certain corresponding earnings
levels as determined by the Board for each fiscal year. Additionally, pursuant
to his Employment Agreement, Mr. Van Horn is entitled to reimbursement of
expenses and to participate in any other bonus plan, profit sharing plan,
stock option plan, vacation, retirement benefit, medical

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and dental benefits, individual or group life insurance plans and other plans,
programs, arrangements and policies as are or may be normally and customarily
provided by the Company.

Mr. Van Horn's Employment Agreement expires on June 30, 2000. The Employment
Agreement may also be terminated by the Company or by Mr. Van Horn on
30 days' written notice. If the Company terminates Mr. Van Horn's Employment
Agreement with "Cause" (as defined below in this paragraph) before or after a
Change in Control, or if Mr. Van Horn terminates his Employment Agreement
without "Good Reason" (as defined below in this paragraph) or without "Good
Reason-Change in Control" (as defined below), the Company will be required to
pay Mr. Van Horn in cash in one lump sum within 30 days of the termination date
the amount of annual salary earned through such termination date plus all other
benefits earned through such date, excluding any bonus. If Mr. Van Horn
terminates his Employment Agreement with Good Reason before a Change in Control
or if the Company terminates his Employment Agreement without Cause before a
Change in Control, or if Mr. Van Horn terminates his Employment Agreement with
Good Reason-Change in Control, the Company will be required to (i) pay Mr. Van
Horn cash within 30 days of the termination date equal to the aggregate amount
of the salary and other benefits earned through the termination date, and (ii)
continue to pay Mr. Van Horn through June 30, 2000 (A) an annual salary of the
greater of $420,000 or Mr. Van Horn's salary on his termination date, and (B)
an annual bonus equal to the greater of either (a) the average bonus earned by
Mr. Van Horn for the two entire annual periods ended on June 30 immediately
preceding Mr. Van Horn's termination date or (b) the average bonus earned by
Mr. Van Horn for the two fiscal years of the Company immediately preceding the
fiscal year in which a Change in Control occurs. If there is a Change in
Control, the Company will be required to pay Mr. Van Horn, in addition to the
amounts described above, an amount of bonus calculated in accordance with the
Employment Agreement in cash within 30 days of a Change in Control. The term
"Cause" as defined in Mr. Van Horn's Employment Agreement means Mr. Van Horn's
gross or willful neglect of his duties which is not cured within 30 days after
notice from the Company. The term "Good Reason" as defined in Mr. Van Horn's
Employment Agreement means the Company breaches any material provision of his
Employment Agreement which is not cured within 30 days after notice from Mr.
Van Horn, or the Company removes Mr. Van Horn from his position as President
and Chief Executive Officer, or otherwise relieves him of his responsibilities
for any reason, but does not include any breach that occurs after the
occurrence of a Change in Control.

The Company has entered into Employment Agreements with each of the executive
officers named in the Summary Compensation Table other than Mr. Van Horn (the
"Executives"). Pursuant to such Employment Agreements, the Company employs Mr.
Gallerano as Senior Vice President, General Counsel and Secretary at an annual
salary commencing July 1, 1995 of $200,000, Mr. Wortham as Senior Vice
President-Real Estate and Gasoline at an annual salary commencing July 1, 1995
of $183,750, Mr. Van Zanten as Senior Vice President-Administration at an
annual salary commencing July 1, 1995 of $170,000, and Mr. Fontana as Vice
President-Chief Financial Officer at an annual salary commencing July 1, 1995
of $150,000.

The Employment Agreements for the Executives provide for a bonus to be paid to
each Executive based on certain percentages of each Executive's annual salary
if the Company satisfies certain corresponding earnings levels as determined by
the Board for each fiscal year. Additionally, pursuant to the Employment
Agreements, each Executive is entitled to reimbursement of expenses and to
participate in any other bonus plan, profit sharing plan, stock option plan,
vacation, retirement benefit, medical and dental benefits, individual or group
life insurance plans and other plans, programs, arrangements and policies
as are or may be normally and customarily provided by the Company.

The Employment Agreements for the Executives each expire on August 31, 1998,
but may also be terminated by the Company or by the Executive on 30 days'
written notice. If the Company terminates an Employment Agreement with Cause,
as defined below, or if an Executive terminates

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an Employment Agreement without Good Reason or Good Reason-Change in Control,
each as defined below, the Company will be required to pay the Executive in
cash within 30 days of the termination date the amount of annual salary earned
through such termination date plus all other benefits earned through such date.
If an Executive terminates his Employment Agreement with Good Reason or if the
Company terminates his Employment Agreement without Cause, before a Change in
Control, the Company will be required to pay the Executive cash within 30 days
of the termination date equal to the aggregate of the full amount of all salary
that otherwise would have been paid to the Executive for the remaining term of
the Employment Agreement, plus all other benefits earned through the
termination date. If an Executive terminates his Employment Agreement with Good
Reason-Change in Control, or if the Company terminates his Employment
Agreement without Cause on or after the occurrence of a Change in Control, the
Company will be required to pay the Executive the amounts described in the
preceding sentence as well as a bonus calculated as provided in the Employment
Agreements.

As used above, the term "Cause" means willful misconduct by the Executive,
gross neglect by the Executive of his duties which continues for more than
30 days after notice from the Company, the commission by the Executive of a
felony or the commission by the Executive of an act not in good faith, which
is directly detrimental to the Company and exposes the Company to material
liability. As used herein, the term "Change in Control" shall have the same
meaning as defined under "Officers' Retirement Plan." The term "Good Reason"
means a breach of any material provision of an Employment Agreement which is
not cured within 30 days after the Executive gives written notice thereof to
the Company but does not include any breach that occurs after a Change in
Control. The term "Good Reason-Change in Control" means a determination,
after the occurrence of a Change in Control, by Mr. Van Horn or an Executive,
as the case may be, that any one or more specified events has occurred,
including among other things, any change in the Executive's responsibilities
and any reduction in the Executive's compensation or benefits.

The Employment Agreements provide that neither Mr. Van Horn nor the Executives
will be liable for any damages resulting from their respective actions if they
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the Company. The Employment Agreements for
Mr. Van Horn and the Executives also provide that if and to the extent that
any payment or distribution by the Company or any of its affiliates to or for
the benefit of such officer would be subject to any excise tax imposed under
Section 4999 of the Code, such officer will receive an additional payment or
payments in an amount sufficient to make such officer whole for any such tax
and for any excise and other tax imposed on any such payment or payments.

Mr. Binford and Ms. Bryant have one year employment agreements in
substantially the same form as the Employment Agreements with the Executives
referred to above.

PROFIT SHARING PLAN

The Company has a Section 401(k) profit sharing plan available to all
employees eligible under the Code. During 1995, the Company made matching
contributions at a level equal to 100% of employees' before-tax contributions,
up to 3% of salary. The executive officers did not participate in the plan
during fiscal 1995.

EMPLOYEE STOCK OWNERSHIP PLAN

In 1985 the Company established an Employee Stock Ownership Plan (the "ESOP").
Pursuant to the Plan of Reorganization, the ESOP Trustee received 9,706 shares
of Common Stock and 16,179 Warrants. The Company intends to terminate the ESOP
and has filed for a ruling from the Internal Revenue Service regarding the tax
consequences of the proposed termination. The Company has not yet received
such a ruling.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee during the year ended June 30, 1995
were Messrs. Chambers, Luellen, Steadman and Wilde, none of whom is an
employee of the Company. Mr. Wilde is a member of Bracewell & Patterson, L.L.P.,
Houston, Texas, a law firm retained by the Company from time to time. During
fiscal 1995, the full Board (with Mr. Van Horn, who serves as President and
Chief Executive Officer of the Company, abstaining from voting on compensation
decisions) performed the functions normally delegated to the Compensation
Committee.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of September 1, 1995, by
(i) all directors, (ii) each of the named executive officers and (iii) all
executive officers and directors of the Company as a group. Pursuant to the
Company's Revised Fourth Amended and Restated Joint Plan of Reorganization,
which was confirmed by order of the United States Bankruptcy Court for the
Southern District of Texas (Houston Division) entered on February 25, 1993, and
which became effective on March 9, 1993, a number of shares of Common Stock
beneficially owned by certain of the Company's creditors were issued to
Boatmen's Trust Company ("Boatmen's"), as agent for the beneficial owners of
such shares pending the determination of the number of shares properly
allocable to each such creditor (such shares issued to Boatmen's as agent for
such creditors being herein called the "Creditors' Shares"). As of September
1, 1995, Boatmen's held 373,588 of the Creditor's Shares, constituting
approximately 6.1% of the Company's outstanding Common Stock. All information
below with respect to beneficial ownership has been furnished to the Company by
the respective directors and executive officers.

[Download Table]

Amount and
Nature of
Beneficial Percent of
Name Ownership (1) Class
---- --------- -----

V.H. Van Horn 105,318 (2) 1.7
Dunbar N. Chambers, Jr. 10,139 (3) *
Charles J. Luellen 10,000 (4) *
Raymond W. Oeland, Jr. 10,000 (4) *
Lionel Sosa 10,000 (4) *
Richard C. Steadman 61,622 (5) 1.0
Robert B. Stobaugh, DBA 10,722 (4) *
William Key Wilde 13,061 (6) *
A. J. Gallerano 40,342 (7) *
C. R. Wortham, Jr. 40,086 (8) *
Arnold Van Zanten 40,117 (9) *
Brian Fontana 20,002 (10) *
All directors and executive officers
as a group (14 persons) 381,409 5.9

* Less than one percent.
_______________

(1) Except as otherwise indicated, all such shares of Common Stock are owned
with sole voting power and sole investment power. Information with respect to
beneficial ownership is based on information furnished to the Company by the
individuals named or included in the group, and includes shares of Common
Stock that such persons have or within 60 days after September 1, 1995 will
have, the right to acquire pursuant to stock options or otherwise.

(2) Includes (i) 64 shares of Common Stock held by Merrill Lynch Trust Company
as trustee under the Company's ESOP (the "ESOP Trustee"), (ii) 1,292 shares of
Common Stock held by Merrill Lynch Trust Company as trustee under the
Company's Profit Sharing Plan (the "Profit Sharing Trustee") for Mr. Van Horn's
account and as to which he has sole voting power, (iii) seven shares of Common
Stock owned by Mr. Van Horn's family members, as to which beneficial ownership
is disclaimed, (iv) an aggregate of 833 Warrants exercisable to acquire one
share of Common Stock each at an exercise price of $17.75 per Warrant, of

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which 107 Warrants are held by the ESOP Trustee, 507 Warrants are held by the
Profit Sharing Trustee and 14 Warrants are held by members of Mr. Van Horn's
family, as to which beneficial ownership is disclaimed, and (v) exercisable
options to acquire 100,000 shares of Common Stock at an exercise price of
$10.50 per share.

(3) Includes six Warrants and exercisable options to acquire 10,000 shares
of Common Stock at an exercise price of $10.50 per share.

(4) Includes exercisable options to acquire 10,000 shares of Common Stock
at an exercise price of $10.50 per share.

(5) Includes (i) 168 shares of Common Stock and 281 Warrants held by
Mr. Steadman's wife, as to which beneficial ownership is disclaimed, (ii)
30,308 Warrants held by Mr. Steadman, (iii) 10,009 shares of Common Stock and
16 Warrants held by Oystercatcher Development, which is wholly owned by Mr.
Steadman and his wife, and (iv) exercisable options to acquire 10,000 shares of
Common Stock at an exercise price of $10.50 per share.

(6) Includes 1,147 shares of Common Stock and 1,914 Warrants held by
Graystone Investments, a partnership in which Mr. Wilde is a partner, and
exercisable options to acquire 10,000 shares of Common Stock at an exercise
price of $10.50 per share.

(7) Includes (i) 33 shares of Common Stock held by the ESOP Trustee, (ii)
183 shares of Common Stock held by the Profit Sharing Plan Trustee, (iii) an
aggregate of 120 Warrants, of which 55 Warrants are held by the ESOP Trustee
and 55 Warrants are held by the Profit Sharing Trustee, and (iv) exercisable
options to acquire 40,000 shares of Common Stock at an exercise price of $10.50
per share.

(8) Includes (i) 27 shares of Common Stock held by the ESOP Trustee,
(ii) 11 shares of Common Stock held by the Profit Sharing Trustee, (iii) an
aggregate of 48 Warrants, of which 44 Warrants are held by the ESOP Trustee and
four Warrants are held by the Profit Sharing Trustee, and (iv) exercisable
options to acquire 40,000 shares of Common Stock at an exercise price of $10.50
per share.

(9) Includes (i) seven shares of Common Stock held by the ESOP Trustee,
(ii) 54 shares of Common Stock held by the Profit Sharing Trustee, (iii) an
aggregate of 41 Warrants, of which 11 Warrants are held by the ESOP Trustee and
five Warrants are held by the Profit Sharing Trustee, and (iv) exercisable
options to acquire 40,000 shares of Common Stock at an exercise price of $10.50
per share.

(10) Includes (i) one share of Common Stock held by the ESOP Trustee, (ii) one
Warrant held by the ESOP Trustee, and (iii) exercisable options to acquire
20,000 shares of Common Stock at an exercise price of $10.50 per share.

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The following table sets forth information concerning the ownership of Common
Stock by each person known to the Company to be the beneficial owner of more
than five percent of the Common Stock, based on public filings made with the
Securities and Exchange Commission as of September 1, 1995 and certain
information supplied to the Company by the persons listed below.

[Download Table]

Amount and Nature
Name and Address of Beneficial Ownership Percent of
of Beneficial Owner of Common Stock (1) Class
------------------- --------------------- ----------

Merrill Lynch & Co., Inc.
Merrill Lynch Phoenix Fund, Inc.
250 Vesey Street
New York, New York 10281 351,215 (2) 5.7

Quaker Capital Management Corporation
The Arrott Building
401 Wood Street, Suite 1300
Pittsburgh, Pennsylvania 15222-1824 355,762 (3) 5.8

_____________________________________

(1) Based upon its review of the facts and circumstances, the Company believes
that neither of these positions is subject to the limitations set forth in
Article V of the Company's Restated Certificate of Incorporation.

(2) Includes 261,215 shares of Common Stock and 90,000 Warrants held by Merrill
Lynch Phoenix Fund, Inc. (the "Phoenix Fund"), a registered investment company.
An indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc., acts as the
general partner of Fund Asset Management, L.P., 800 Scudders Mill Road,
Plainsboro, New Jersey, the investment advisor to the Phoenix Fund ("FAM").
Voting and dispositive power with respect to such securities are shared, and
the Phoenix Fund, its general partner, FAM and Merrill Lynch & Co., Inc. and
its subsidiary, through which the general partner is owned, disclaim
beneficial ownership of such securities.

(3) Includes 7,500 shares of Common Stock for which Quaker Capital Management
Corporation ("Quaker") has sole voting power and dispositive power. Also
includes 348,262 shares of the Company's Common Stock owned by various
investment advisory clients of Quaker and over which Quaker has discretionary
authority and shared voting and dispositive power. Quaker disclaims beneficial
ownership of the 348,262 shares which are owned by its clients.

For certain information with respect to the Circle K Offer, see Item 1.
"Business-Circle K Tender Offer."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Wilde, a director of the Company, is a partner of Bracewell & Patterson,
L.L.P., Houston, Texas, a law firm retained by the Company from time to
time.

During fiscal 1994, the Company made two three-year unsecured loans in the
aggregate amount of $300,000 (the "Prior Loans") with interest payable at 8
1/2% annually to the President and Chief Executive Officer of the Company. On
August 31, 1995, the Company and the President and Chief Executive Officer
entered into a Promissory Note (the "Note") in renewal, replacement and

10-K/A 26th Page of 27 TOC 1st Previous Next ↓Bottom Just 26th
rearrangement of the Prior Loans. The Note was in the principal amount of
$194,717.70 (the balance of the Prior Loans as a result of payments by Mr. Van
Horn) and bore interest at 9% annually. Accrued interest was payable monthly
beginning October 1, 1995 until August 31, 1996, when all then unpaid principal
and accrued interest would have been due and payable. Mr. Van Horn paid the
Note in full on September 25, 1995.

10-K/A Last Page of 27 TOC 1st Previous Next ↓Bottom Just 27th
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

NATIONAL CONVENIENCE STORES
INCORPORATED

By: /s/ A. J. GALLERANO
___________________________________
A. J. Gallerano
Senior Vice President,
General Counsel and Secretary

October 5, 1995

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-K/A’ Filing	Date	First	Last	Other Filings

	6/30/00	20
	12/22/98	7
	12/15/98	17
	8/31/98	20
	8/31/96	26
	8/25/96	19
	1/1/96	7
Filed on:	10/5/95	27		SC 14D1/A
	10/4/95	3
	10/2/95	16
	10/1/95	26
	9/25/95	26
	9/18/95	3	13	10-K/A
	9/14/95	10
	9/7/95	3	10	SC 14D1
	9/6/95	9
	9/1/95	23	25	8-A12B
	8/31/95	1	25	8-K
	8/25/95	19
	8/11/95	9		8-K
	8/8/95	9		8-K
	7/1/95	20
For Period End:	6/30/95	1	22	10-K
	11/15/94	7
	6/30/94	8		10-K, 10-K/A
	1/1/94	9
	8/25/93	19
	6/30/93	5		10-K/A
	3/9/93	3	23
	3/1/93	3
	2/28/93	3	5
	2/25/93	9	23
				List all Filings

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Filing Submission 0000950129-95-001298 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

National Convenience Stores Inc/DE – ‘10-K/A’ for 6/30/95

As of: Thursday, 10/5/95 · For: 6/30/95 · Accession #: 950129-95-1298 · File #: 1-07936

Previous ‘10-K’: ‘10-K’ on 9/21/95 for 6/30/95 · Latest ‘10-K’: This Filing

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