Exhibit 10.1
Agreement dated as of October 30, 1995 among Dairy Mart
Convenience Stores, Inc., Charles Nirenberg, FCN Properties
Corporation and The Nirenberg Family Charitable Foundation, Inc.
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AGREEMENT
THIS AGREEMENT is made as of the 30th day of October,
1995, by and among Dairy Mart Convenience Stores, Inc., a Delaware
corporation (the "Company"), Charles Nirenberg ("Nirenberg"), FCN
Properties Corporation, a Connecticut corporation ("FCN"), and The
Nirenberg Family Charitable Foundation, Inc., a Connecticut
corporation (the "Foundation").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties wish to provide for the purchase by
the Company from Nirenberg, FCN and the Foundation of all of their
direct interests in DM Associates Limited Partnership, a
Connecticut limited partnership ("DM Associates"), and its general
partners and to set forth their agreement as to certain other
matters, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements hereinafter set forth, the parties, intending to
be legally bound, hereby agree as follows:
1. Sale of DM Associates Interests; Payment of Purchase
Price. (a) At the Closing referred to in Section 2 hereof,
subject to the terms and conditions set forth herein, Nirenberg,
FCN and the Foundation shall assign, sell, transfer and convey to
the Company, and the Company shall purchase and accept, the
following: (i) right, title and interest in and to Nirenberg's
general partner interests in New DM Management Associates I, a
Connecticut general partnership ("New DM Management I"), and New DM
Management Associates II, a Connecticut general partnership ("New
DM Management II"); (ii) right, title and interest in and to the
limited partner interests of Nirenberg and the Foundation in
DM Associates; (iii) FCN's
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right, title and interest in and ownership of the 9% Secured
Promissory Note, dated March 12, 1992 (the "CDA Note"), in the
principal amount of $7,100,000 made by DM Associates in favor of
the Connecticut Development Authority (the "CDA") and subsequently
assigned by the CDA to FCN on or about September 30, 1994, and
FCN's right, title and interest in 1,220,000 shares of the Class B
common stock, par value $.01 per share, of the Company pledged by
DM Associates as security for the payment of the CDA Note pursuant
to a Stock Pledge Agreement, dated March 12, 1992 (the "CDA Pledge
Agreement"), between DM Associates and CDA, and subsequently
assigned by CDA to FCN on or about September 30, 1994, and all of
FCN's rights pursuant to the CDA Pledge Agreement and any other
agreement executed by DM Associates in favor of the CDA in
connection with the CDA Note and/or the loan evidenced thereby; and
(iv) all right, title and interest of Nirenberg, FCN and the
Foundation pursuant to the agreements, instruments and letters
dated January 25, 1995 and entered into by such parties with the
Company and/or the other limited partners of DM Associates and the
other general partners of New DM Management I and New DM
Management II in connection with the reconstitution of
DM Associates and its general partners. The interests to be
transferred to the Company pursuant to this Section 1(a)
hereinafter are collectively referred to as the "DM Associates
Interests".
(b) As full payment for the DM Associates
Interests, the Company shall pay to Nirenberg, FCN and the
Foundation at the Closing an aggregate cash payment of $10,000,000
by wire transfer of immediately available federal funds as follows:
(a) $3,500,000 plus accrued and unpaid interest to an account
designated by the CDA in full payment of FCN's
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promissory note, dated on or about September 30, 1994, to the CDA
(the "FCN Note") and (b) the balance to one or more accounts
designated by Nirenberg.
2. Closing. (a) The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of
Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153
on the date which is no later than November 29, 1995 or such
earlier date as shall be the day before the last date on which the
1995 annual meeting of stockholders of the Company may be held
pursuant to the Company's Restated Certificate of Incorporation,
Amended and Restated By-laws and Delaware law without any required
change in the September 29, 1995 record date currently in effect
with respect to such meeting and on which all of the conditions to
Closing specified herein have been satisfied or at such other place
and on such other date as shall be mutually agreeable to the
parties hereto.
(b) At the Closing, Nirenberg, FCN and the
Foundation shall deliver to the Company:
(i) instruments of transfer duly executed by
Nirenberg, FCN and the Foundation related to the transfer
of the DM Associates Interests to the Company in form and
substance reasonably acceptable to the Company and its
counsel;
(ii) duly executed instruments in form and
substance reasonably acceptable to the Company and its
counsel necessary to dismiss with prejudice and without
cost or expense to any opposing party claims against the
defendants in the lawsuit entitled Charles Nirenberg and
Mitchell J. Kupperman vs. Stein, et al., C.A. No. 14462
pending in the Delaware Chancery Court;
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(iii) all books and records of DM Associates
and its general partners in his or their possession;
(iv) control over the bank, stock and other
accounts of DM Associates and its general partners; and
(v) any proxies or other instruments
reasonably requested by the Company pursuant to Section
10(b) hereof.
(c) At the Closing, the Company shall:
(i) make the payments in the amounts and
manner referred to in this Agreement; and
(ii) make payments in the amounts and manner
set forth in, and otherwise comply fully with the terms
of, that certain letter agreement dated as of the date
hereof from the Company to Mitchell Kupperman relating to
Mr. Kupperman's severance arrangements with the Company.
3. Conditions. (a) The obligation of the Company to
purchase and pay for the DM Associates Interests at the Closing and
consummate the other transactions contemplated hereby are subject
to the satisfaction as of the Closing of the following conditions:
(i) The representations and warranties of
Nirenberg, FCN and the Foundation contained herein shall
be true and correct in all material respects at and as of
the Closing as though then made and Nirenberg, FCN and
the Foundation shall have complied with all of their
agreements herein set forth and Nirenberg shall have
executed and delivered to the Company a certificate to
such effect;
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(ii) The Company shall have obtained the
requisite consents of the holders of its Senior
Subordinated Notes due 2004 (the "Debentures") and its
bank lenders to the transactions contemplated hereby;
(iii) The Company shall have obtained
financing on terms and conditions acceptable to the
Company in amounts sufficient to fund the purchase price
set forth in Section 1 hereof;
(iv) The Company shall have obtained waivers
from the Company's bank lenders and the holders of the
Debentures of any defaults or events of default then
existing or alleged to be in existence under the
Company's bank loan agreements or the indenture pursuant
to which the Debentures were issued; and
(v) There shall have been obtained all
required waivers, consents and releases of the partners
of DM Associates and New DM Management I and New DM
Management II and CDA shall have acknowledged in writing
that it has no further interests in any of the
DM Associates Interests.
(b) The obligation of Nirenberg, FCN and the
Foundation to sell the DM Associates Interests at the Closing and
consummate the other transactions contemplated hereby are subject
to:
(i) The representations and warranties of the
Company contained herein being true and correct in all
material respects at and as of the Closing as though then
made and the Company having complied with all of its
agreements
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herein set forth and a duly authorized officer of the
Company shall have executed and delivered to Nirenberg a
certificate to such effect;
(ii) The Company shall have delivered a
solvency opinion to Nirenberg, at the Company's sole cost
and expense, in form and substance reasonably acceptable
to Nirenberg, from Houlihan, Lokey, Howard & Zukin or
another independent valuation firm reasonably acceptable
to the Company and Nirenberg;
(iii) The Company shall have obtained waivers
from the Company's bank lenders and the holders of the
Debentures of any defaults or events of default then
existing or alleged to be in existence under the
Company's bank loan agreements or the indenture pursuant
to which the Debentures were issued;
(iv) The Company shall have obtained the
requisite consents of the holders of its Debentures and
its bank lenders to the transactions contemplated hereby;
and
(v) Their shall have been obtained all
required waivers, consents and releases of the partners
of DM Associates and New DM Management I and New DM
Management II.
(c) Any condition specified in this Section 3 may
be waived if consented to in writing by the Company in the case of
the conditions specified in Section 3(a) or by Nirenberg, FCN or
the Foundation in the case of the conditions specified in Section
3(b).
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4. Termination. (a) This Agreement shall be
terminated and the transactions contemplated hereby shall be
abandoned automatically and without further action on the part of
any party hereto, if (i) the purchase and sale of the DM Associates
Interests shall not have been consummated on or prior to
November 29, 1995 or such earlier date as shall be the day before
the last day on which the 1995 annual meeting of stockholders of
the Company may be held pursuant to the Company's Restated
Certificate of Incorporation, Amended and Restated By-laws or
Delaware law without any required change in the September 29, 1995
record date or (ii) any governmental entity shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action
shall have become final and nonappealable. The date on which this
Agreement shall have been terminated pursuant to this Section 4(a)
is herein referred to as the "Agreement Termination Date".
(b) In the event of the termination of this
Agreement pursuant to this Section 4, no party hereto (or, in the
case of the Company, any of its directors or officers) shall have
any liability or further obligation to the other party to this
Agreement, except that nothing herein will relieve any party from
liability for any breach of this Agreement.
5. Resignation. Simultaneously with the execution of
this Agreement, (i) Nirenberg and Mitchell J. Kupperman are each
executing and delivering to Stanford N. Goldman, Jr., an Assistant
Secretary of the Company, his resignation as a director of the
Company and as a director of any subsidiaries or affiliates of the
Company which he serves as a director, effective upon the Closing
and (ii) Robert B. Stein, Jr. ("Stein") and Gregory G. Landry
("Landry") are each executing and delivering to Mr. Goldman his
resignation as a director of the Company and as a
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director of any subsidiaries or affiliates of the Company which he
serves as a director, effective upon the termination of this
Agreement for any reason pursuant to Section 4(a). If the Closing
does not occur on or before the Agreement Termination Date, then
the resignations of Messrs. Nirenberg and Kupperman shall be null
and void. If the Closing does occur, then the resignations of
Messrs. Stein and Landry shall be null and void.
6. Non-Competition; Non-Solicitation. Provided that
the Closing occurs, in consideration of the payment referred to in
Section 6(e) below: (a) Nirenberg agrees and covenants that for
the period of time commencing on the date of the Closing and ending
on the fifth anniversary of such date (the "Non-Compete Period") he
will not, directly or indirectly: (i) for his own account or as an
employee, officer, director, partner, joint venturer, shareholder,
investor, consultant or otherwise (except as an investor in a
corporation whose stock is publicly traded and in which Nirenberg
holds less than 5% of the outstanding voting shares), engage in the
business of owning, managing or operating convenience stores in
Massachusetts, Connecticut, Hudson Valley in New York State, Rhode
Island, Ohio, Southern and Middle Michigan, Kentucky, Southern
Indiana, Western Pennsylvania, Tennessee or North Carolina (the
"Covered Areas"), such geographical areas constituting places in
which the Company conducts business as of the date hereof;
(ii) solicit the employment of any current employee of the Company
or any employee who first enters the employ of the Company during
such period; provided, that such prohibition shall not apply to any
employee who has left the employ of the Company; (iii) induce or
encourage any current employee of the Company or any employee who
first enters the employ of the Company during such period to leave
the employ of the Company; or (iv) interfere in a material manner
with any material business relationship in any Covered
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Area between the Company and any third party, including any
shareholder or any creditor of the Company.
(b) The Company and Nirenberg acknowledge and agree
that the provisions of Section 6(a) hereof are reasonable because
the scope thereof encompasses only the business of the Company as
conducted on the date hereof and they are limited to the locations
in which the Company does business as of the date hereof.
(c) Notwithstanding anything contained in this
Section 6 to the contrary, if the period of time or the
geographical areas specified in Section 6(a) hereof is determined
to be unreasonable in any proceeding before any court or agency
legally empowered to enforce the provisions of this Section 6, then
the period of time and area of the restriction shall be reduced so
that this Agreement may be enforced in such area and during such
period of time as shall be determined to be reasonable; provided,
however, that such reduction shall not extend to any period of time
or jurisdiction where such reduction is unnecessary to make the
period of time or the geographical area specified in Section 6(a)
enforceable therein.
(d) Nirenberg agrees that during the Non-Compete
Period the Company shall be entitled to make use of Nirenberg's
name and likeness in its advertising and marketing materials,
subject to Nirenberg's prior review and consent.
(e) As compensation for the matters referred to in
this Section 6, the Company shall pay to Nirenberg at the Closing
a non-refundable sum of $2,300,000 by wire transfer of federal
funds to an account or accounts designated by Nirenberg.
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7. Non-Disclosure. Nirenberg shall not, directly or
indirectly, at any time use or disclose to any person, firm or
corporation any trade secrets, confidential or proprietary
information of the Company that is not publicly available.
8. Release and Waiver. Provided that the Closing
occurs: (a) Nirenberg, on behalf of himself and his affiliates,
including, without limitation, FCN and the Foundation, hereby
agrees to waive all claims against the Company, its subsidiaries
and their respective former, current and future officers,
directors, employees, stockholders, agents, attorneys, and other
representatives (collectively, "Affiliates") and hereby releases
and discharges the Company and its Affiliates from any and all
actions, causes of action, suits, debts, dues, sums of money,
accounts, covenants, contracts, controversies, agreements,
promises, judgments, demands, liability, claims and damages
whatsoever, in law or equity, that Nirenberg and/or his affiliates
ever had, now has, or hereafter can, shall or may have, for, upon
or by reason of his former employment with, service as an officer
and director of, or direct or indirect holding of equity securities
of the Company, including, without limitation, by virtue of the FCN
Note or the agreements executed in connection therewith, or in any
other capacity relating to the Company, and the termination of the
foregoing relationships, including, but not limited to, any claims
arising under any federal, state or local law or ordinance, tort,
employment contract (express or implied), public policy, or any
other obligation, including, without limitation, any claims arising
under Title VII of the Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act, as amended, and all claims
for wrongful discharge, workers' compensation, wages, monetary or
equitable relief, vacation, compensation in lieu of vacation,
disability, other employee fringe benefits, benefit plans, medical
plans, or attorneys' fees; provided, however,
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that notwithstanding the foregoing, Nirenberg reserves and shall
not be deemed to have released (i) any rights he may have pursuant
to the Company's 401(k) and profit sharing plans, (ii) his ability
to seek and obtain indemnification by the Company to the extent he
is entitled to be indemnified by the Company pursuant to this
Agreement and the Company's Restated Certificate of Incorporation
and Amended and Restated By-laws as in effect on the date hereof,
(iii) all claims relating to the performance of the Company's
obligations under this Agreement, and (iv) his ability to assert
claims for contribution or other appropriate relief against the
Company or one or more Affiliates in any action in which he is a
defendant commenced by any third party, including but not limited
to one or more stockholders of the Company seeking to act on behalf
of the Company.
(b) Nirenberg hereby agrees to waive all claims
against DM Associates, New DM Management I, New DM Management II,
each of the partners of such partnerships and any attorneys of the
foregoing and hereby releases and discharges them from any and all
actions, causes of action, suits, debts, dues, sums of money,
accounts, covenants, contracts, controversies, agreements,
promises, judgments, demands, liability, claims and damages
whatsoever, in law or equity, that Nirenberg ever had, now has, or
hereafter can, shall or may have, for, upon or by reason of his
interests in DM Associates, New DM Management I and New DM
Management II and the termination of such interests; provided,
however, that notwithstanding the foregoing, Nirenberg reserves and
shall not be deemed to have released his ability to seek and obtain
indemnification and/or contribution or other appropriate relief
from DM Associates, New DM Management I or New DM Management II or
any of the partners of
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such partnerships pursuant to such partnerships' respective
partnership agreements as in effect on the date hereof or pursuant
to applicable law.
(c) The Company hereby agrees to waive all claims
against Nirenberg and his affiliates and their respective former,
current and future officers, directors, employees, stockholders,
agents, attorneys and other representatives and hereby releases and
discharges Nirenberg, his affiliates and such other persons from
any and all actions, causes of action, suits, debts, dues, sums of
money, accounts, covenants, contracts, controversies, agreements,
promises, judgments, demands, liability, claims and damages
whatsoever, in law or equity, that the Company ever had, now has,
or hereafter can, shall or may have, for, upon or by reason of
Nirenberg's former employment with, service as an officer and
director of, or direct or indirect holding of equity securities in,
or in any other capacity relating to the Company (including as a
direct or indirect general partner of DM Associates, New DM
Management I or New DM Management II and the transactions relating
to the dissolution and/or reconstitution of DM Associates and
DM Management Associates and the replacement of DM Management
Associates as general partner of DM Associates by New DM
Management I and New DM Management II and any action taken by
Nirenberg or any of the foregoing entities to effect a change in
the composition of the Board of Directors of the Company),
including, but not limited to, any claims arising under any
federal, state or local law or ordinance, tort, employment contract
(express or implied), public policy, or any other obligation, other
than (i) those relating to the performance of Nirenberg's
obligations under this Agreement and (ii) subject to Nirenberg's
reservation of rights in Section 8(a) hereof and rights pursuant to
Section 9 hereof,
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claims made prior to or after the date of this Agreement by one or
more stockholders of the Company seeking to act on behalf of the
Company.
(d) Stein and Landry, in their individual
capacities and as general partners of New DM Management I and New
DM Management II, each hereby agrees to waive all claims against
Nirenberg in his capacity as general partner of New DM Management I
and New DM Management II and as an indirect general partner of
DM Associates and hereby releases and discharges him in such
capacities from any and all actions, causes of action, suits,
debts, dues, sums of money, accounts, covenants, contracts,
controversies, agreements, promises, judgments, demands, liability,
claims and damages whatsoever, in law or equity, that he ever had,
now has, or hereafter can, shall or may have; provided, however,
that notwithstanding the foregoing, each of Stein and Landry
reserves and shall not be deemed to have released his ability to
seek and obtain contribution or other appropriate relief from
Nirenberg pursuant to the respective partnership agreements of DM
Associates, New DM Management I or New DM Management II or pursuant
to applicable law. Consistent with the foregoing, Stein and Landry
each hereby agrees that he will not vote or take action
individually or with respect to his general partner interests in
New DM Management I or New DM Management II to assert, or to cause
New DM Management I or New DM Management II or DM Associates to
assert any claim against Nirenberg in the capacities specified and
with respect to the matters released in this Section 8(d).
9. Indemnification. Provided the Closing occurs, the
Company agrees to the fullest extent permitted under Delaware law
to indemnify and hold Nirenberg harmless from and against any
costs, expenses (including, without limitation, reasonable legal
fees and expenses),
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judgments, fines, penalties and amounts paid in settlement
(collectively "Costs") which he may incur or to which he may become
subject by reason of (i) the transactions contemplated hereby, and
(ii) his service as an officer, director and/or employee of the
Company (to the fullest extent permitted under Section 145 of the
Delaware General Corporation Law), including, without limitation,
Costs in connection with the Kahn litigation, (iii) the
transactions relating to the reconstitution of DM Associates and
the dissolution and replacement of DM Management Associates as the
general partner of DM Associates by New DM Management I and New DM
Management II and (iv) private causes of action by reason of the
actions taken by Nirenberg and/or any of the foregoing entities to
effect a change in the composition of the Board of Directors of the
Company. Upon its receipt of any notice from Nirenberg with
respect to any matter for which indemnification is available, the
Company shall have the right to assume the defense thereof with
counsel of its choice and thereafter the Company shall not be
responsible for any legal fees incurred by Nirenberg in respect
thereof; provided, that if Nirenberg is advised by counsel that
there may be defenses available to him that differ from those
available to the Company or other indemnified parties or otherwise
that the potential exists for a conflict between Nirenberg and the
Company and/or such other indemnified persons, then Nirenberg shall
be entitled to retain one firm of legal counsel on his behalf at
the Company's expense. Nirenberg shall not compromise or settle
any action for which indemnification may be available without the
Company's prior written consent, which shall not be unreasonably
withheld. Such indemnification shall be conditional on Nirenberg
reasonably cooperating with the Company with respect to any matter
for which indemnification is available.
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10. Certain Additional Agreements. (a) The Company
shall reimburse Nirenberg and FCN for their previously unreimbursed
fees and expenses incurred in connection with their activities
relating to the Company following January 25, 1995, including the
negotiation and execution of this Agreement and the transactions
contemplated hereby; provided, that the Company shall not be
required to reimburse Nirenberg and FCN for any amounts in excess
of an aggregate of $850,000. As promptly as practical following
the execution of this Agreement, the Company will cause a wire
transfer of $500,000 to be made to an account or accounts
designated by Nirenberg as a non-refundable reimbursement of a
portion of such fees and expenses. The balance of $350,000 shall
be reimbursed to Nirenberg if the Closing occurs and upon the
Company's receipt of appropriate documentation therefor.
(b) So long as this Agreement is in effect,
Nirenberg will take no action before the Delaware Chancery Court to
make effective the written consent, dated September 29, 1995,
executed by New DM Management I on behalf of DM Associates and
agrees that if the Closing occurs Nirenberg shall withdraw such
written consent such that it shall be deemed to be null and void ab
initio. Nirenberg further agrees that so long as this Agreement is
in effect, neither he nor his affiliates will (i) vote or purport
to take action by consent with respect to any of the Company's
capital stock, (ii) conduct any discussions with any creditor of
the Company or any representative thereof or (iii) object before
the Delaware Chancery Court to any action proposed by the Company
in connection with the financing of the cash purchase price
provided in Section 1 hereof. Immediately prior to the Closing
Nirenberg will, to the extent requested by Stein and Landry as
general partners of New DM Management I, take action as a general
partner of New DM Management I (as of the September 29, 1995 record
date for the 1995
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annual meeting of stockholders) to cause the shares of Class B
common stock of the Company held by DM Associates and over which
New DM Management I has voting control to be voted in favor of the
election of the slate of persons nominated by the Board of
Directors of the Company for election as directors of the Company
and in accordance with the recommendation of the Board of Directors
with respect to the other matters to be considered at the 1995
annual meeting of stockholders of the Company.
(c) The parties hereto agree that the Company's
1995 annual meeting of stockholders will be convened on October 31,
1995 solely for the purpose of adjourning such meeting to
November 30, 1995 with the previously-determined record date of
September 29, 1995 unchanged, all in accordance with the procedures
made available pursuant to Section 222(c) of the Delaware General
Corporation Law. To the extent required, Nirenberg will affirm his
consent to such adjournment before the Delaware Chancery Court.
Notwithstanding the foregoing, the annual meeting will be held on
such earlier date as may be necessary pursuant to the Company's
Restated Certificate of Incorporation, Restated By-laws or Delaware
law in order to preserve the record date of September 29, 1995.
(d) The Company's Board of Directors has voted to
increase its size effective with the execution of this Agreement to
nine and has elected M. Howard Jacobson and Thomas O'Brien to fill
such vacancies. Messrs. Jacobson and O'Brien has each delivered to
Stanford N. Goldman, Jr., an Assistant Secretary of the Company,
his resignation as a director to be effective upon the Closing. If
the Closing for whatever reason does not occur on or before the
Agreement Termination Date, then such resignations by their terms
shall be null and void and without force or effect.
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(e) Nirenberg, FCN and the Foundation each hereby
acknowledges that as promptly as practicable following the
execution of this Agreement the Company will fund a "rabbi trust"
in respect of amounts aggregating $2,488,000 that may in the future
be due and owing by the Company to Stein and Landry pursuant to
employment agreements between the Company and such individuals.
Nirenberg will not oppose such funding and will take all reasonable
action consistent with his agreements in this Section 10(e) before
the Delaware Chancery Court.
(f) The Company, Stein and Landry shall not take
any action (x) that would impair, impede, prevent or otherwise
frustrate the ability of Nirenberg to vote the shares of Class B
Common Stock presently held by DM Associates over which New DM
Management I exercises voting control at the 1995 annual meeting of
stockholders to be reconvened on November 30, 1995 or such earlier
date as is required pursuant to Section 10(c) hereof in a manner
determined by Nirenberg in his sole discretion in the event the
Closing does not occur on or prior to the Agreement Termination
Date, including, without limitation, by taking action to dissolve
DM Associates or either of its general partners or (y) to change
the record date for the 1995 annual meeting of stockholders.
(g) Simultaneously with the execution of this
Agreement, Nirenberg will be elected the Chairman of the Board of
Directors of the Company and will be entitled to the use of his
office at the Company's headquarters through the Closing, after
which, if the same shall occur, he shall vacate such office.
(h) Following the date of this Agreement and until
the Closing, the Company will not issue any voting securities other
than pursuant to (x) options granted on or
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prior to the date hereof pursuant to the Company's stock option
plans, (y) the securities issued to finance the payments to be made
to Nirenberg, FCN and the Foundation hereunder or (z) shares issued
pursuant to the Company's employee stock purchase plan. Landry and
Stein each hereby agrees that from and after the date hereof until
the earlier of the Closing or the Agreement Termination Date, he
will not exercise any Company stock options.
(i) If after the date hereof and prior to the
Closing the Company files a voluntary petition seeking protection
under the federal bankruptcy laws, then the Company's directors,
other than Messrs. Nirenberg, Kupperman, Jacobson and O'Brien,
shall resign as directors of the Company, effective with the filing
of such voluntary petition.
(j) At the Closing, the Company shall at its sole
cost and expense transfer unrestricted ownership and legal title,
free and clear of any liens or other encumbrances, to the
automobile made available by the Company for Nirenberg's use as of
the date hereof, including, without limitation, payment or
reimbursement by the Company of any sales or other similar taxes
due and owning as a result of such transfer.
(k) If the Closing occurs, Nirenberg agrees that
for a period commencing at the Closing and ending at the
termination of the Non-Compete Period, neither he nor any of his
affiliates (as defined in Rule 12b-2 promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
will, unless specifically invited in writing by the Company,
directly or indirectly, in any manner:
(i) acquire, offer or propose to acquire,
solicit an offer to sell or agree to acquire, directly or
indirectly, alone or in concert with others, by purchase
or otherwise, any direct or indirect beneficial interest
in any voting
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securities or direct or indirect rights, warrants or
options to acquire, or securities convertible into or
exchangeable for, any voting securities of the Company;
(ii) make, or in any way participate in,
directly or indirectly, alone or in concert with others,
any "solicitation" of "proxies" to vote (as such terms
are used in the proxy rules of the Securities and
Exchange Commission promulgated pursuant to Section 14 of
the Exchange Act) or seek to advise or influence in any
manner whatsoever any person or entity with respect to
the voting of any voting securities of the Company;
(iii) form, join or any way participate in a
"group" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any voting securities of the
Company;
(iv) acquire, offer to acquire or agree to
acquire, directly or indirectly, alone or in concert with
others, by purchase, exchange or otherwise, (A) any of
the assets, tangible or intangible, of the Company or any
of its affiliates or (B) direct or indirect rights,
warrants or options to acquire any assets of the Company
or any of its affiliates, except for such assets as are
then being offered for sale by the Company, or any of its
affiliates;
(v) arrange, or in any way participate,
directly or indirectly, in any financing for the purchase
of any voting securities or securities convertible or
exchangeable into or exercisable for any voting
securities or assets of the Company, or any of its
affiliates, except for such assets as are then being
offered for sale by the Company or any of its affiliates;
20
(vi) otherwise act, alone or in concert with
others, to seek to propose to the Company or any of its
stockholders any merger, business combination,
restructuring, recapitalization or other transaction to
or with the Company or otherwise seek, alone or in
concert with others, to control, change or influence the
management, board of directors or policies of the Company
or nominate any person as a director who is not nominated
by the then incumbent directors, or propose any matter to
be voted upon by the stockholders of the Company;
(vii) make any public announcement relating to
a request or proposal to amend, waive or terminate any
provision of this Section 10(k); or
(viii) take any action that might result in
the Company having to make a public announcement
regarding any of the matters referred to in clauses
(i) through (vii) of this Section 10(k), or announce an
intention to do, or enter into any arrangement or
understanding or discussions with others to do, any of
the actions restricted or prohibited under such clauses
(i) through (vii).
11. Equitable Relief. The Company, Stein, Landry and
Nirenberg each hereby expressly covenants and agrees that the other
will suffer irreparable damage in the event any of the provisions
of Sections 1, 2, 6, 7 or 10 hereof are not performed or are
otherwise breached and that such other party shall be entitled as
a matter of right (without the need to prove actual damages) to an
injunction or injunctions and other relief to prevent a breach or
violation by such other party and to secure the enforcement of such
provisions. Resort to such equitable relief,
21
however, shall not constitute a waiver of any other rights or
remedies which the party seeking such relief may have.
12. Representations and Warranties. (a) Nirenberg, FCN
and the Foundation represent and warrant to the Company as follows:
(i) they have the full legal right, power and authority to enter
into and perform all of their obligations under this Agreement and
to perform the actions to be performed by them pursuant to this
Agreement; (ii) the execution and delivery of this Agreement by
them and the performance of their obligations hereunder will not
violate any other agreement to which they are a party (other than
in respect of the agreements with the CDA referred to in Sections
1 and 2 hereof and the transfer of their interests in New DM
Management I, New DM Management II and DM Associates); (iii) no
consent of any third party is required for the execution and
performance of this Agreement by them, other than consents that may
be required from DM Associates, New DM Management I, as the general
partner of DM Associates, and from the other partners of
DM Associates, New DM Management I and New DM Management II or from
the holders of the Debentures or the Company's bank lenders;
(iv) this Agreement has been duly executed and delivered by them
and constitutes their legal, valid and binding agreement,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors'
rights and remedies generally and to general principles of equity;
and (v) upon consummation of the transactions contemplated hereby,
the Company shall have acquired good and valid title to the
DM Associates Interests, free and clear of any lien, encumbrance,
or other right of any third party.
22
(b) The Company represents and warrants to
Nirenberg, FCN and the Foundation as follows: (i) the Company has
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby;
(ii) the execution, delivery and performance of this Agreement has
been duly authorized and approved by all required corporate action
on the part of the Company, including approval by its Board of
Directors; (iii) this Agreement has been duly executed and
delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or
hereafter in effect, affecting creditors' rights and remedies
generally and to general principles of equity; (iv) the execution
and delivery of this Agreement by the Company and the performance
of its obligations hereunder will not constitute a breach under
(with or without notice or the passage of time or both) or violate
the Company's Restated Certificate of Incorporation or by-laws, any
agreement to which the Company is a party (except for the indenture
pursuant to which its Senior Subordinated Notes due 2004 were
issued and its agreements with its bank lenders), or any law,
regulation, rule or ordinance to which the Company is subject;
(v) except for the consent of the holders of its Senior
Subordinated Notes due 2004 and its bank lenders, no consent of any
third party is required for the execution and performance of this
Agreement by the Company; and (vi) after giving effect to the
transactions contemplated hereby, the Company will be Solvent. For
purposes hereof, the term "Solvent" means, with reference to the
Company and its consolidated subsidiaries, that the value of the
properties and interests in property of the Company (both at fair
value and present fair saleable value) is, on the date of
determination, greater than the aggregate amount of the
liabilities,
23
including, without limitation, contingent and unliquidated
liabilities, of the Company as of such date and that, as of such
date, the Company is able to pay all liabilities of the Company as
such liabilities mature and the Company does not have unreasonably
small capital. In calculating the amount of contingent or
unliquidated liabilities of the Company at any date, such
liabilities shall be calculated at the amount that, after
accounting for all of the facts and circumstances existing at such
date, reflects the amount that may reasonably be expected to become
an actual or matured liability.
13. Notice. All notices, requests and other
communications to any party hereunder shall be given or made in
writing and mailed (by registered or certified mail or by overnight
courier) or delivered by hand as follows:
(a) if to the Company, to it at:
One Vision Drive
Enfield, CT 06082
Attention: Gregory G. Landry
with a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attention: Dennis J. Block, Esq.
(b) if to Nirenberg, FCN and the Foundation
to Nirenberg at:
c/o First Merchants Group
Devonshire Place
Suite 106
48 Holy Family Road
Holyoke, MA 01040
24
with a copy to:
Bingham, Dana & Gould
150 Federal Street
Boston, MA 02110-1726
Attention: Daniel L. Goldberg, Esq.
or such address as such party may hereafter specify for the purpose
of notice to the other party hereto. Each such notice, request or
other communication shall be effective when, if delivered by hand,
received by the party to which it is addressed or, if mailed in the
manner described above, on the third business day after the date of
mailing.
14. Successors and Assigns. The rights and obligations
of the Company under this Agreement shall inure to the benefit and
be binding upon its successors and assigns and any entity to which
its assets and business may be transferred by operation of law or
otherwise. The Company may assign its rights to acquire some or
all of the DM Associates Interests to one or more of its designees;
provided, that no such assignment shall relieve the Company of its
obligations hereunder. This Agreement is personal to Nirenberg and
Nirenberg shall not, without the written consent of the Company,
assign his rights or obligations hereunder, except that this
Agreement will be binding upon Nirenberg's estate and legal
representatives upon his death and his beneficiaries thereafter
will have the benefits hereof.
15. Governing Law. This Agreement shall be construed in
accordance with and governed by the substantive laws of the State
of Connecticut, without regard to the choice of law rules thereof.
16. Press Release. Nirenberg and the Company shall
agree on the text of a press release announcing the execution of
this Agreement.
25
17. Complete Understanding. This Agreement supersedes
any prior contracts, understandings, discussions and agreements
among the parties and constitutes the complete
understanding between them with respect to the subject matter
hereof. No statement, representation, warranty or covenant has
been made by any party with respect hereto except as expressly set
forth therein.
18. Modification; Waiver. (a) This Agreement may be
amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company on
the one hand and Nirenberg, FCN and the Foundation on the other or
in the case of a waiver, by the party against whom the waiver is to
be effective.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided
shall be cumulative and shall not be exclusive of any rights or
remedies provided by law or at equity.
19. Headings. The section headings in this Agreement
are for convenience of reference only and shall not control or
affect the meaning or construction of this Agreement.
20. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when
each party hereto shall have received counterparts hereof signed by
the other party hereto.
26
21. Further Assurances. The parties hereto shall, at
the request of any other party, execute and deliver any further
instruments or documents and take all such further action as such
party reasonably may request in order to consummate and make
effective the foregoing provisions of this Agreement, including,
without limitation, the taking of any action following the Closing
necessary to substitute a new managing general partner of New DM
Management I and New DM Management II as designated by the
remaining partners of such partnerships, the waiver on behalf of
New DM Management I of any rights of first refusal in favor of New
DM Management I to the transfer of the limited partner interests in
DM Associates contemplated hereby or the rendering inapplicable to
the transactions contemplated hereby of any special approval
requirements pursuant to the Company's Restated Certificate of
Incorporation.
27
IN WITNESS WHEREOF, the Company, FCN and the Foundation
have caused this Agreement to be duly executed in their names by
one of their respective officers duly authorized to enter into and
execute this Agreement, and Nirenberg has manually signed his name
hereto, as of the date first written above.
/s/Charles Nirenberg
---------------------------------
CHARLES NIRENBERG
FCN PROPERTIES CORPORATION
By: /s/Charles Nirenberg
------------------------------
Name: Charles Nirenberg
Title: President
THE NIRENBERG FAMILY CHARITABLE
FOUNDATION, INC.
By: /s/Charles Nirenberg
------------------------------
Name: Charles Nirenberg
Title: President
DAIRY MART CONVENIENCE
STORES, INC.
By: /s/Robert B. Stein, Jr.
------------------------------
Name: Robert B. Stein, Jr.
Title: President and Chief
Executive Officer
28
The undersigned each acknowledges their agreement to the
provisions of Sections 8, 10(f), 10(h), 10(i) and 11 of the
attached Agreement.
/s/Robert B. Stein, Jr.
---------------------------------
Robert B. Stein, Jr.
/s/Gregory G. Landry
---------------------------------
Gregory G. Landry