Exhibit 10.2
Letter dated October 30, 1995 to Mitchell J. Kupperman from
Dairy Mart Convenience Stores, Inc., Robert B. Stein, Jr. and
Gregory G. Landry.
DAIRY MART CONVENIENCE STORES, INC.
ROBERT B. STEIN, JR.
GREGORY G. LANDRY
c/o Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, Connecticut 06082
October 30, 1995
Mr. Mitchell J. Kupperman
c/o First Merchants Group, Inc.
Devonshire Place, Suite 106
48 Holy Family Road
Holyoke, MA
RE: Termination of Employment, Severance and Related Matters
Dear Mitch:
This letter agreement sets forth the terms and conditions
pursuant to which, among other things, you (hereinafter sometimes
referred to as "Kupperman") shall terminate your employment and
directorship with Dairy Mart Convenience Stores, Inc., a Delaware
corporation (the "Company"), the Company shall compensate you in
connection with the termination of your employment with the
Company, and you, on the one hand, and the Company, Robert B.
Stein, Jr. ("Stein") and Gregory G. Landry ("Landry"), on the other
hand, shall grant mutual releases. Intending to be legally bound,
the parties hereby agree as follows:
1. Termination. At the closing (the "Closing") of the
transactions contemplated under that certain Agreement, dated as of
October 30, 1995, among the Company, Charles Nirenberg, FCN
Properties Corporation and The Nirenberg Family Charitable
Foundation, Inc. (the "Nirenberg Settlement Agreement"), Kupperman
shall deliver to the Company his written resignation from his
positions as an officer, employee and director of the Company and
its subsidiaries (the "Kupperman Resignation"). Kupperman's
resignation as an officer, employee and director of the Company and
its subsidiaries shall become effective immediately upon delivery
of the Kupperman Resignation to the Company at the Closing, without
any further act being required by either the Company or Kupperman.
For purposes of this Agreement, the effective date of the
termination of Kupperman's employment with the Company is
hereinafter referred to as the "Termination Date."
Mr. Mitchell J. Kupperman
October 30, 1995
Page 2
2. Consideration.
For and in consideration of Kupperman's agreement to terminate
his employment with the Company, the Company shall make the
payments provided for or referred to in Section 3 below and shall
deliver or otherwise make available to Kupperman the benefits or
other consideration referred to in Sections 4 and 5 below.
3. Payments.
3.1 Amount and Timing of Payments. The Company shall
make the following payments to Kupperman:
(i) Upon the execution and delivery by
Kupperman of this letter agreement, the Company shall make a cash
payment to Kupperman of $131,500.
(ii) At the Closing, the Company shall make a
cash payment to Kupperman of $683,000.
(iii) At the Closing, the Company shall make an
additional cash payment to Kupperman if required pursuant to
Section 6 hereof.
3.2 Payment Mechanics. All payments that the Company is
required to make pursuant to Section 3.1 above shall be made by
certified check or by wire transfer thereof in immediately
available funds to an account designated by Kupperman.
4. Stock Options.
4.1 Grant of Class A Stock Option. At the Closing, the
Company shall issue to Kupperman a stock option (the "Class A Stock
Option") exercisable for 10,000 shares (the "Class A Option
Shares") of Class A Common Stock of the Company, at an exercise
price of $2.875. The Class A Stock Option shall be fully vested and
be immediately exercisable for all of the Class A Option Shares and
shall be exercisable for a period of 18 months from the Termination
Date. At the Closing, the Company and Kupperman shall execute and
deliver a stock option agreement, in form and substance similar to
the form customarily used by the Company for such purposes,
evidencing the issuance of the Class A Stock Option and the terms
thereof.
4.2 Payment in Respect of Class B Stock Option. At the
Closing, the Company shall pay Kupperman $15,000 in respect of its
determination not to issue to Kupperman any option in replacement
of Kupperman's previously outstanding stock option (the "Class B
Stock Option") exercisable for 3,750 shares (the "Class B Option
Shares") of Class B Common Stock
Mr. Mitchell J. Kupperman
October 30, 1995
Page 3
of the Company. Such payment pursuant to this Section 4.2 shall be
made, at the Closing, by certified check or by wire transfer
thereof in immediately available funds to an account designated by
Kupperman.
4.3 Agreement Concerning Option Profits Agreement. The
parties hereby acknowledge that Kupperman, Stein and Landry are
parties to that certain Agreement Regarding Obligation to Pay
Amount of Option Profits, dated March 12, 1992, by and among HNB
Investment Corp. ("HNB"), Frank Colaccino, Kupperman, Stein and
Landry (the "Option Profits Agreement"). Each of the Company, Stein
and Landry hereby agrees that, in the event that (i) Landry or
Stein effects an amendment or modification to, or in any way
supersedes in whole or in part, his obligations under the Options
Profits Agreement so as to decrease, release, terminate or
otherwise eliminate such obligations, or (ii) Landry or Stein
reaches any kind of agreement with HNB that improves his position
under the Option Profits Agreement in any way, then
(a) concurrently with any such decrease, reduction, termination or
other elimination of the obligations of Landry or Stein, the
obligations of Kupperman under the Option Profits Agreement shall
be decreased, reduced, terminated or otherwise eliminated to the
same extent as the obligations of Landry or Stein, as the case may
be, and/or (b) concurrently with any such improvement in the
position of Landry or Stein, the position of Kupperman under the
Option Profits Agreement shall be improved to the same extent as
the position of Landry or Stein is improved. Each of the Company,
Stein and/or Landry, as the case may be, shall notify Kupperman
promptly of the commencement of any discussions with HNB in
connection with the taking, or any proposal to take, any of the
actions described above in this Section 4.3.
5. Additional Benefits.
5.1 Benefits. In addition to the payments contemplated
under Section 3 hereof and the stock option benefits contemplated
under Section 4 hereof, Kupperman shall be entitled to the
following benefits in connection with the termination of his
employment with the Company:
(i) 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
(including, without limitation, payment or reimbursement by the
Company of any sales or other similar taxes due and owing as a
result of such transfer), to the automobile made available by the
Company for Kupperman's use as of the date hereof.
(ii) From the Termination Date through the
earlier of two years thereafter or the date on which Kupperman and
his dependents become eligible for substantially equivalent
coverage provided by a subsequent employer, the Company shall
provide Kupperman and his eligible dependents with continued
coverage under all health, medical, dental and
Mr. Mitchell J. Kupperman
October 30, 1995
Page 4
hospitalization plans maintained by the Company during such time
period on the same terms and conditions applicable to executive
officers of the Company.
(iii) On the Termination Date, all options to
purchase stock or other rights to purchase or own stock (including
grants of stock) held by Kupperman that are not vested shall
immediately vest and become exercisable in full (without any
further action by the Company or Kupperman being required therefor)
and all options to purchase stock and other rights to purchase or
own stock (including grants of stock) then held by Kupperman shall
remain in effect and be exercisable until the last business day of
the 18th month following the Termination Date.
(iv) At the Closing, the Company will assign
and transfer to Kupperman, or his designee, all of the Company's
right, title and interest in the life insurance policies covering
Kupperman's life that were held by the Company as of the
Termination Date. From and after the Closing, Kupperman shall, at
his 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 Closing.
(v) From and after the Termination Date,
Kupperman shall continue his participation in, and shall retain all
of his rights (including, without limitation, his right to receive
benefits and his right to make elections or other decisions or
determinations) under, all of the other employee benefit plans,
practices and policies of the Company (the "Other Employee Benefit
Arrangements") to the extent that such plans, practices and
policies as in effect on the date hereof contemplate or provide, by
their own respective terms, that (i) participating employees may
continue their participation thereunder after the termination of
their employment with the Company or (ii) participating employees
may or shall receive benefits thereunder after such termination.
Notwithstanding any term of the Other Employee Benefit Arrangements
to the contrary, on the Termination Date Kupperman shall become
vested on all benefits, if any, to which he would otherwise be
entitled under the Other Employee Benefit Arrangements. The
determination of the amount of benefits, if any, to which Kupperman
is entitled under the Other Employee Benefit Arrangements shall be
made as of either the date hereof or the Termination Date,
whichever results in the highest benefit to Kupperman.
5.2 Mitigation. Subject to the provisions of Section
5.1(ii) hereof, Kupperman shall not be required to mitigate any of
the benefits provided in this letter agreement by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this letter agreement be reduced by any
compensation or benefit earned by Kupperman as the result of
employment by another employer after the Termination Date or
otherwise.
Mr. Mitchell J. Kupperman
October 30, 1995
Page 5
6. Gross-Up Payments. The Company hereby acknowledges that
(i) the payments or benefits previously and currently being
received by Kupperman in connection with his employment with the
Company, (ii) the payments or benefits to be received by Kupperman
pursuant to the terms of this letter agreement in connection with
the termination of his employment (the payments and benefits
referred to in the foregoing clauses (i) and (ii) being hereinafter
referred to as the "Contract Payments"), and (iii) the payments or
benefits to be received by Kupperman 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") may be subject to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Company hereby agrees that
it shall pay to Kupperman, at the Closing, an additional amount
(the "Closing Gross-Up Payment"), such amount being paid by the
Company to Kupperman to ensure that the net amount retained by
Kupperman, after reduction of the Excise Tax on Contract Payments
and Other Payments and any federal, state and local income tax and
Excise Tax upon such additional amount provided for in this Section
6, and any interest and penalties or additions to tax payable by
him 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, if and to the extent required by, and all
as more particularly set forth in, and in accordance with the terms
and provisions of, Section 12(b)(iii) and (v) of that certain
Employment Agreement dated as of June 8, 1995 by and between the
Company and Gregory G. Landry (the "Landry Employment Agreement"),
which terms and provisions are hereby incorporated by reference
herein and shall have the same effect as if set forth in full
herein. For purposes of this Section 6 (including the provisions of
Section 12(b)(iii) of the Landry Employment Agreement which are
incorporated by reference above in this Section 6 to the same
extent as if fully set forth herein); the parties hereto hereby
acknowledge and agree that the Hartford, Connecticut office of
Arthur Andersen LLP shall be deemed to be acceptable as the
Company's independent auditors.
7. Condition Precedent. It shall be a condition precedent to
the obligation of each of Kupperman and the Company to consummate
the transactions contemplated under this letter agreement that the
Closing, and all of the transactions to be performed at the Closing
under the Nirenberg Settlement Agreement, shall have been
consummated.
8. Releases. Provided the Closing occurs:
(a) Kupperman, on behalf of himself and his affiliates,
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, sums of money,
accounts, covenants, contracts, controversies, agreements,
promises, judgments, demands, liability, claims and damages
whatsoever, in law or equity, that Kupperman and/or his affiliates
ever had, now has,
Mr. Mitchell J. Kupperman
October 30, 1995
Page 6
or hereafter can, shall or may have, for, upon or by reason of his
former employment with, service as a director of, or direct or
indirect holding of equity securities in the Company, including,
without limitation, 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, disability, other employee fringe benefits, benefit
plans, medical plans, or attorneys' fees; provided, however, that
notwithstanding the foregoing, Kupperman 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) any rights he may
have pursuant to the Company's Other Employee Benefit Arrangements,
(iii) his ability to seek and obtain indemnification by the Company
pursuant to this Agreement and the Company's Restated Certificate
of Incorporation and Amended and Restated By-laws, each as in
effect on the date hereof, (iv) all claims relating to the
performance of the Company's obligations under this Agreement, and
(v) his ability to assert claims for contribution or other
appropriate relief against the Company or one or more of its
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) Kupperman hereby agrees to waive all claims against each
of Stein and Landry in their capacity as direct or indirect general
partners of DM Associates Limited Partnership ("DM Associates"),
New DM Management Associates I ("New DM Management I"), New DM
Management Associates II ("New DM Management II"), 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 Kupperman ever had, now
has, or hereafter can, shall or may have, for, upon or by reason of
any event or thing whatsoever occurring on or prior to the
Termination Date and relating to his interest in DM Associates, New
DM Management I and New DM Management II; provided, however, that
notwithstanding the foregoing, Kupperman reserves and shall not be
deemed to have released any rights he may have 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 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
Kupperman and his affiliates and their respective former, current
and future officers, directors, employees, stockholders, agents,
attorneys and other representatives and hereby releases and
discharges Kupperman, 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
Mr. Mitchell J. Kupperman
October 30, 1995
Page 7
the Company ever had now has, or hereafter can, shall or may have,
for upon or by reason of Kupperman's former employment with,
service as an officer and director of, direct or indirect holding
of equity securities in, or in any other capacity relating to the
Company (including as direct or indirect general partner of DM
Associates, New DM Management I and New DM Management I, including
any claims in connection with the transactions relating to the
dissolution of DM Management Associates and DM Associates, the
reconstitution of DM Associates and the replacement of DM
Management Associates as the general partner of DM Associates by
New DM Management I and New DM Management II, and any claims in
connection with any action taken by Charles Nirenberg, Kupperman,
New DM Management I and DM Associates 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 Kupperman's obligations
under this Agreement and (ii) subject to Kupperman's reservation of
rights pursuant to Section 8(a) hereof and rights pursuant to
Section 9 hereof, claims made prior to or after the date of this
letter 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 DM Management I and New DM Management II, each
hereby agrees to waive all claims against Kupperman, in his
capacity as general partner of New DM Management I and New DM
Management II, and as indirect general partner of DM Associates,
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 either both
of them ever had, now has, or hereafter can, shall or may have,
for, upon or by reason of any event or thing whatsoever occurring
on or prior to the Termination Date and relating to Kupperman's
interests in DM Associates, New DM Management I and New DM
Management II, including, without limitation, any claims in
connection with the transactions relating to the dissolution of DM
Management Associates and DM Associates, the reconstitution of DM
Associates and the replacement of DM Management Associates as the
general partner of DM Associates by New DM Management I and New DM
Management II and any claims in connection with any action taken by
Charles Nirenberg and Kupperman, for and on behalf of New DM
Management I and DM Associates, to effect a change in the
composition of the Board of Directors of the Company; 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
against Kupperman pursuant to the respective partnership agreements
of DM Associates, New DM Management I or New DM Management II, each
as in effect on the date hereof, 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,
Mr. Mitchell J. Kupperman
October 30, 1995
Page 8
or to cause New DM Management I or New DM Management II or DM
Associates to assert, any claims against Kupperman 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 Kupperman harmless from and against any
costs, expenses (including, without limitation, reasonable legal
fees and expenses), 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, (ii) his service as a director, officer 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
and (iii) the transactions relating to the dissolution of DM
Management Associates and DM Associates, the reconstitution of DM
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 Charles Nirenberg, Kupperman
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 Kupperman 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 Kupperman in respect thereof; provided, that if
Kupperman is advised by counsel that there may 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 Kupperman and the Company and/or such other
indemnified persons, then Kupperman shall be entitled to retain one
firm of legal counsel on his behalf of the Company's expense.
Kupperman 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 Kupperman reasonably
cooperating with the Company with respect to any matter for which
indemnification is available. Kupperman;s rights to obtain
indemnification from the Company under this Section 9 shall be in
addition to, and not in lieu of, any right that Kupperman may have
to obtain indemnification from the Company under the Company's
Restated Certificate of Incorporation and Amended and Restated By-
laws, each as in effect on the date hereof, under any other
agreement entered into by Kupperman with the Company, or under any
other applicable provision of law.
10. Deductions and Withholding. Kupperman agrees that the
Company shall withhold from any and all payments required to be
made to Kupperman pursuant to this letter agreement, all federal,
state, local and/or other taxes which the Company determines are
required to be withheld in accordance with applicable statutes
and/or regulations from time to time in effect.
Mr. Mitchell J. Kupperman
October 30, 1995
Page 9
11. Miscellaneous. This letter agreement supersedes in its
entirety that certain Severance Agreement, dated as of September
16, 1994, between the Company and Kupperman, shall be governed by
the internal substantive laws of the Commonwealth of Massachusetts
and shall inure to the benefit of, and be binding upon, the heirs,
personal representatives, executors, administrators, successors and
permitted assigns of the parties hereto. This letter agreement
shall be enforceable by Kupperman's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Kupperman should die while
any amount or benefit would still be payable or available to
Kupperman under this letter agreement if Kupperman had continued to
live, any such amount or benefit shall be paid or made available
in accordance with the terms of this letter agreement to
Kupperman's devisees, legatees or other designees or, if there is
no such designee, to Kupperman's estate. The Company shall 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 letter agreement in the same manner and to the same
extent as required of the Company. The rights and obligations of
any party under this letter agreement may only be assigned with the
prior written consent of each of the other parties hereto. This
letter agreement may only be modified or amended pursuant to a
written instrument signed by all of the parties hereto.
If the foregoing accurately reflects our understanding, please
so acknowledge by countersigning this letter agreement in the space
provided for your signature below, whereupon this letter agreement
shall become our legally binding agreement.
Very truly yours,
/s/Robert B. Stein, Jr.
------------------------------
Robert B. Stein, Jr.
/s/Gregory G. Landry
------------------------------
Gregory G. Landry
Mr. Mitchell J. Kupperman
October 30, 1995
Page 10
DAIRY MART CONVENIENCE
STORES, INC.
By /s/Robert B. Stein, Jr.
----------------------------
Robert B. Stein, Jr.
Its President/CEO
Accepted and Agreed to as of this 30th day of October, 1995:
/s/ Mitchell J. Kupperman
- ---------------------------
Mitchell J. Kupperman