EXHIBIT (10.7)
September 16, 1994
Gregory G. Landry
Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
Dear Mr. Landry:
Dairy Mart Convenience Stores, Inc. (the "Company")
considers it essential to the best interests of its stockholders
to foster the continuous employment of key management personnel.
Accordingly, the Board of Directors of the Company believes that
steps should be taken to reinforce and encourage the continued
attention and dedication of certain members of the Company's
senior management, yourself included, arising out of recent
changes in the Company's senior management and shifts in the
beneficial ownership of a significant number of shares of the
Company's outstanding voting stock.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in
the event your employment with the Company is terminated under
the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through the second
anniversary of the date hereof.
2. Effect of Termination. You shall be entitled to the
benefits provided in Section 3(iv) hereof upon the termination of
your employment with the Company during the term of this
Agreement, unless such termination is (A) a result of your death,
or (B) by you for other than Good Reason, or (C) by the Company
for Disability or for Cause.
(i) Disability. For purposes of this Agreement,
"Disability" shall mean permanent and total disability as such
term is defined under Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"). Any question as to the
existence of your Disability upon which you and the Company
cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such
selection, such selection shall be made by any adult member of
your immediate family or your legal
representative), and approved by the Company, said approval not
to be unreasonably withheld. The determination of such physician
made in writing to the Company and to you shall be final and
conclusive for all purposes of this Agreement.
(ii) Cause. For purposes of this Agreement, "Cause"
shall mean your willful breach of duty in the course of your
employment, or your habitual neglect of your employment duties.
For purposes of this Section 2(ii), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company
and its subsidiaries. Notwithstanding the foregoing, you shall
not be deemed to have been terminated for Cause unless and until
there shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Company's Board of
Directors (the "Board") at a meeting of the Board called and held
for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this Section
2(ii) and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to
terminate your employment for Good Reason. For the purpose of
this Agreement, "Good Reason" shall mean the occurrence, without
your express written consent, of any of the following
circumstances:
(A) the assignment to you of any duties
inconsistent with your status as Executive Vice
President and Chief Financial Officer of the Company,
your removal from that position, or a diminution in the
nature or status of your responsibilities from those in
effect immediately prior to the date hereof;
(B) a reduction by the Company in your annual
base salary, annual bonus or fringe benefits as in
effect on the date hereof or as the same may be
increased from time to time; or
(C) any failure by the Board to renominate you
for election as a director of the Company, except in
connection with your death or the termination of your
employment (x) by you for other than Good Reason or (y)
by the Company for Disability or for Cause.
Your continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination
of your employment by the Company and its subsidiaries or by you
shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 5 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Section 2(ii) or (iii) above
or for any reason (other than Disability), the date specified in
the Notice of Termination (which, in the case of a termination
pursuant to Section 2(ii) above shall not be less than thirty
(30) days, and in the case of a termination pursuant to Section
2(iii) above shall not be less than ninety (90) nor more than one
hundred twenty (120) days, respectively, from the date such
Notice of Termination is given).
3. Compensation Upon Termination or During Disability.
Upon termination of your employment or during a period of
Disability you shall be entitled to the following benefits,
provided that such period of Disability or Notice of Termination
occurs during the term of this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of your Disability,
you shall continue to receive an amount equal to your base salary
and bonus at the rate in effect at the commencement of any such
period through the Date of Termination for Disability.
Thereafter, your benefits shall be determined in accordance with
the insurance programs of the Company and its subsidiaries then
in effect.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary and bonus through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and shall pay any amounts to be paid to you
pursuant to any other compensation plans, programs or employment
agreements
then in effect, and the Company shall have no further obligations
to you under this Agreement.
(iii) If your employment shall be terminated by
reason of your death, your benefits shall be determined in
accordance with the programs of the Company then in effect.
(iv) If your employment by the Company shall be
terminated by (a) the Company other than for Cause, your death,
or Disability at any time during the term of this Agreement, or
(b) you for Good Reason at any time between the first anniversary
and the second anniversary of the date hereof, then you shall be
entitled to the benefits provided below:
(A) The Company shall pay you your full base
salary and annual bonus accrued through the Date of
Termination at the rate in effect at the time the
Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other
amounts to which you are entitled under any
compensation plan of the Company applicable to you, at
the time such payments are due. For purposes of this
Section 3(iv)(A) and the other provisions of this
Agreement, your annual bonus "in effect at the time the
Notice of Termination is given" shall mean the greater
of the amount of the annual bonus paid to you in
respect of any of the three years immediately prior to
the year in which the Notice of Termination is given.
(B) The Company shall pay you, on a date that is
no later than the fifth day following the Date of
Termination, as severance pay to you a severance
payment equal to 2 times the sum of (x) your full base
salary and (y) annual bonus, in each case in effect at
the time the Notice of Termination is given.
The payment to be made to you pursuant to this
Section 3(iv)(B) shall not be reduced by the amount of
any other payment or the value of any benefit received
or to be received by you in connection with your
termination of employment (whether payable pursuant to
the terms of this Agreement or any other agreement,
plan or arrangement with the Company or an affiliate,
predecessor or successor of the Company).
(C) In the event that any payment or benefit
received or to be received by you pursuant to the terms
of this Agreement (the "Contract Payments") or in
connection with your termination of employment pursuant
to any plan or arrangement or other agreement with the
Company (or any affiliate) ("Other Payments" and,
together with the Contract Payments, the "Payments")
would be subject to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Code, as determined as
provided below, the Company shall pay to you, at the
time specified in Section 3(iv)(D) below, an additional
amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of the Excise
Tax on Contract Payments and Other Payments and any
federal, state and local income tax and Excise Tax upon
the payment provided for by this Section 3(iv)(C), and
any interest, penalties or additions to tax payable by
you with respect thereto, shall be equal to the total
present value of the Contract Payments and Other
Payments at the time such Payments are to be made. For
purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amounts of
such Excise Tax, (1) the total amount of the Payments
shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, except to the extent that,
in the opinion of independent tax counsel selected by
the Company's independent auditors and reasonably
acceptable to you ("Tax Counsel"), a Payment (in whole
or in part) does not constitute a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code,
or such "excess parachute payments" (in whole or in
part) are not subject to the Excise Tax, (2) the amount
of the Payments that shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the
total amount of the Payments or (B) the amount of
"excess parachute payments" within the meaning of
Section 280G(b)(i) of the Code (after applying clause
(1) hereof), and (3) the value of any noncash benefits
or any deferred payment or benefit shall be determined
by Tax Counsel in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes
of determining the amount of the Gross-Up Payment, you
shall be deemed to pay federal income tax at the
highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which
the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rates of taxation
applicable to individuals as are in effect in the state
and locality of your residence in the calendar year in
which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes that can be
obtained from deduction of such state and local taxes,
taking into account any limitations applicable to
individuals subject to federal income tax at the
highest marginal rates.
(D) The Gross-Up Payments provided for in Section
3(iv)(C) hereof shall be made upon the earlier of (i)
the payment to you of any Contract Payment or Other
Payment or (ii) the imposition upon you or payment by
you of any Excise Tax.
(E) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding or the opinion of Tax Counsel that the
Excise Tax is less than the amount taken into account
under Section 3(iv)(C) hereof, you shall repay to the
Company within five days of your receipt of notice of
such final determination or opinion the portion of the
Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax
imposed on the Gross-Up Payment being repaid by you if
such repayment results in a reduction in Excise Tax or
a federal, state and local income tax deduction) plus
any interest received by you on the amount of such
repayment. If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding or the opinion of Tax Counsel that the
Excise Tax exceeds the amount taken into account
hereunder (including by reason of any payment the
existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such
excess within five days of the Company's receipt of
notice of such final determination or opinion.
(F) The Company shall also pay to you all legal
fees and expenses reasonably incurred by you in
connection with this Agreement (including all such fees
and expenses, if any, incurred in contesting or
disputing in good faith the nature of any such
termination for purposes of this Agreement or in
seeking to obtain or enforce any right or benefit
provided by this Agreement).
(G) On the Date of Termination, the Company shall
at its sole cost and expense transfer unrestricted
ownership and legal title to the automobile made
available by the Company for your use as of the Notice
of Termination.
(H) For the period of time from the Date of
Termination through the earlier of two years thereafter
or the date on which you and your dependents become
eligible for substantially equivalent coverage provided
by a subsequent employer, the Company shall provide you
and your eligible dependents with continued coverage
under all health, medical, dental and hospitalization
plans maintained by the Company during such time period
on the same terms and conditions applicable to
executive officers of the Company.
(I) Upon the Date of Termination all options to
purchase stock held by you that are not vested shall
immediately vest and become exercisable and all options
to purchase stock then held by you shall remain in
effect and be exercisable for 18 months after the Date
of Termination, notwithstanding any other provisions
that otherwise would be applicable.
(J) Upon the Date of Termination, the Company
shall assign and transfer to you, or your designee, all
of its right, title and interest in and to the life
insurance policies covering your life that were held by
the Company as of the Termination Date. From and after
the Termination Date, you shall, at your election,
assume and pay any and all premiums and other costs
associated with the continuation of such policies. The
Company shall execute and deliver any and all
appropriate instruments necessary to evidence the
foregoing assignment and transfer as promptly as
practicable after the Termination Date.
(K) You shall not be required to mitigate the
amount of any payment provided for in this Section 3 by
seeking other employment or otherwise, nor, except as
otherwise specifically provided herein, shall the
amount of any payment or benefit provided for in this
Section 3 be reduced by any compensation or benefit
earned by you as the result of employment by another
employer after the Date of Termination or otherwise.
4. Successors; Binding Agreement.
(i) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company is required to perform it. Failure of the Company to
obtain
such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of the Agreement and shall
entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled hereunder if you
had terminated your employment for Good Reason following a change
in control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatees or other designee or, it there is no such designee, to
your estate.
5. Notice. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the address set
forth on the first page of this Agreement with respect to the
Company and on the signature page with respect to you, provided
that all notices to the Company shall be directed to the
attention of the Chairman and President of the Company, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
6, Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No wavier
by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any conditions or provision
of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
Connecticut. All
references to sections of the Code shall be deemed also to refer
to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The
obligations of the Company under Section 3 shall survive the
expiration of the term of this Agreement.
7. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
8. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same
instrument.
9. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Judgement may be entered
on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
Dairy Mart Convenience Stores, Inc.
By: /s/ Charles Nirenberg
Name: Charles Nirenberg
Title: Chairman of the Board
Agreed to this 16th day of
September, 1994.
/s/ Gregory G. Landry
Address for notices:
86 Ethan Road