0000721675-95-000026.txt : 19950925
0000721675-95-000026.hdr.sgml : 19950925
ACCESSION NUMBER: 0000721675-95-000026
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 19950729
FILED AS OF DATE: 19950913
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DAIRY MART CONVENIENCE STORES INC
CENTRAL INDEX KEY: 0000721675
STANDARD INDUSTRIAL CLASSIFICATION: 5412
IRS NUMBER: 042497894
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-12497
FILM NUMBER: 95573437
BUSINESS ADDRESS:
STREET 1: ONE VISION DRIVE
CITY: ENFIELD
STATE: CT
ZIP: 06082
BUSINESS PHONE: 2037414444
10-Q
1
THIS DOCUMENT IS A COPY OF THE FORM 10-Q
FILED ON SEPTEMBER 12, 1995 PURSUANT TO A RULE 201
TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended July 29, 1995
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period From to
Commission File Number 0-12497
DAIRY MART CONVENIENCE STORES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2497894
(State or other Jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
ONE VISION DRIVE, ENFIELD, CT 06082
(Address of principal executive offices)
Registrant's telephone number, including area code (203) 741-4444
N/A
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Shares of Class A Common Stock outstanding July 29, 1995
- 2,796,682
Shares of Class B Common Stock outstanding July 29, 1995
- 2,783,765
PART I. FINANCIAL INFORMATION
Dairy Mart Convenience Stores, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
FOR THE SECOND FISCALFOR THE TWO FISCAL
QUARTER ENDED QUARTERS ENDED
July 29,July 30,July 29,July 30,
1995 1994 1995 1994
Net Sales of the Company,
Its Subsidiaries and Franchises.........$ 196,789$ 204,393$ 373,094$ 383,722
Revenues..................................$ 156,468$ 161,882$ 296,710$ 303,137
Cost of goods sold and expenses:
Cost of goods sold...................... 113,873 120,746 218,743 226,300
Selling, general and administrative
expenses.............................. 36,027 38,740 69,760 74,545
Interest expense........................ 2,262 2,400 4,623 4,589
Loss on disposition of
properties, net....................... 329 242 176 346
Nonrecurring charges.................... - 2,918 - 3,203
152,491 165,046 293,302 308,983
Income (loss) before income taxes
and cumulative effect of
accounting change.................. 3,977 (3,164) 3,408 (5,846)
(Provision) benefit from income taxes..... (1,740) 1,266 (1,500) 2,366
Income (loss) before cumulative
effect of accounting change........ 2,237 (1,898) 1,908 (3,480)
Cumulative effect of accounting change
(net of income tax benefit of $271).. - - - (389)
Net income (loss)....................$ 2,237$ (1,898)$ 1,908$ (3,869)
Weighted average shares outstanding 5,836 5,539 5,773 5,534
Earnings (loss) per share:
Before cumulative effect of
accounting change.....................$ 0.38$ (0.34)$ 0.33$ (0.63)
Cumulative effect of accounting change.. - - - (0.07)
Earnings (loss) per share.................$ 0.38$ (0.34)$ 0.33$ (0.70)
The accompanying notes are an integral part of these financial statements.
Dairy Mart Convenience Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
July 29, 1995January 28, 1995
ASSETS (Unaudited)
Current Assets:
Cash......................................................$ 16,384$ 4,512
Short-term investment..................................... 2,114 2,053
Accounts and notes receivable............................. 13,493 12,398
Inventory................................................. 21,339 26,044
Prepaid expenses and other current assets................. 2,744 1,945
Deferred income taxes..................................... 3,363 3,537
Total current assets................................... 59,437 50,489
Net Book Value of Property and Equipment Held For Sale ...... 12,213 23,378
Property and Equipment:
Land and improvements..................................... 9,816 9,180
Buildings and leaseholds.................................. 32,095 31,370
Equipment................................................. 64,791 59,358
106,702 99,908
Less - Accumulated depreciation........................... 33,704 30,345
Net property and equipment............................. 72,998 69,563
Property Under Capital Leases, net........................... 1,725 1,015
Other Assets:
Goodwill, net............................................. 10,480 10,647
Franchise and operating rights, net....................... 7,143 7,314
Notes receivable.......................................... 2,485 2,494
Other..................................................... 6,807 7,328
Total other assets..................................... 26,915 27,783
Total assets.................................................$ 173,288$ 172,228
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.........................$ 1,285$ 1,285
Current portion of capital lease obligations.............. 426 285
Accounts payable.......................................... 30,139 28,942
Accrued expenses.......................................... 14,954 17,214
Accrued interest.......................................... 2,996 3,052
Total current liabilities.............................. 49,800 50,778
Long-Term Debt, less current portion above................... 86,462 87,324
Capital Lease Obligations, less current portion above........ 1,902 1,374
Other Liabilities and Deferred Credits....................... 5,773 6,837
Deferred Income Taxes........................................ 4,549 3,098
Stockholders' Equity:
Class A Common Stock...................................... 33 33
Class B Common Stock...................................... 30 30
Paid-in capital in excess of par value.................... 27,657 27,580
Retained earnings......................................... 2,087 179
Treasury stock, at cost................................... (5,005) (5,005)
Total stockholders' equity............................. 24,802 22,817
Total liabilities and stockholder's equity...................$ 173,288$ 172,228
The accompanying notes are an integral part of these financial statements.
Dairy Mart Convenience Stores, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
FOR THE TWO FISCAL QUARTERS ENDED
July 29, 1995July 30, 1994
Cash flows from operating activities:
Net income (loss)...............................................$ 1,908$ (3,869)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cash flow effect of nonrecurring items........................ (2,080) 2,577
Cumulative effect of accounting change........................ - 389
Depreciation and amortization................................. 5,915 6,366
Change in deferred income taxes............................... 1,625 (2,691)
Loss on other disposition of properties, net.................. 176 346
Increase in accounts and notes receivable..................... (1,095) (1,035)
Decrease (increase) in inventory.............................. 4,705 (852)
Increase in accounts payable.................................. 1,197 2,998
(Decrease) increase in accrued interest....................... (56) 2,395
Increase in other current assets and liabilities, net......... (1,208) (1,003)
Decrease in other noncurrent liabilities
and deferred credits........................................ (835) (407)
Net cash provided by operating activities......................... 10,252 5,214
Cash flows from investing activities:
Increase in short-term investment............................... (61) (3,931)
Purchase of property and equipment.............................. (7,962) (6,198)
Proceeds from sale of property and equipment.................... 10,671 362
Proceeds from long-term notes receivable........................ 516 666
Increase in long-term notes receivable.......................... (507) (925)
Increase in intangibles and other assets, net................... (92) (454)
Net cash provided (used) by investing activities.................. 2,565 (10,480)
Cash flows from financing activities:
Issuance of senior subordinated notes, net of offering costs.... - 72,743
Repayment of term debt.......................................... - (22,000)
Retirement of subordinated debentures........................... - (27,944)
Decrease in revolving loan, net................................. - (12,100)
Additional long-term debt....................................... - 929
Repayment of other long-term debt and capital lease obligations. (1,022) (926)
Increases in common stock and paid-in capital................... 77 65
Net cash (used) provided by financing activities.................. (945) 10,767
Increase in cash.................................................. 11,872 5,501
Cash at beginning of fiscal year.................................. 4,512 6,632
Cash at end of second fiscal quarter..............................$ 16,384$ 12,133
The accompanying notes are an integral part of these financial statements.
Dairy Mart Convenience Stores, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 29, 1995
(Unaudited)
The unaudited consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures
normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations,
although the Company believes that the disclosures made are
adequate to make the information presented not misleading. The
information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the
results for the interim periods presented, and which are of a
normal, recurring nature. It is suggested that these financial
statements be read in conjunction with the financial statements and
the notes thereto included in the Company's Form 10-K, filed with
the Securities and Exchange Commission on May 15, 1995.
1. Accounting Policies
The financial statements included herein have been prepared in
accordance with the accounting policies described in Note 1 to the
January 28, 1995 audited consolidated financial statements included
in the Company's Form 10-K. Certain prior year amounts have been
reclassified to conform to the presentation used for the current
year.
2. Changes in Capital Accounts
An analysis of the capital stock accounts for the first two
fiscal quarters ended July 29, 1995 follows:
Common Stock
Class A SharesClass B Shares Paid-in-capital
issued at issued at in excess of
$.01 par value$.01 par value Amount par value
Balance January 28, 1995 3,290,4602,961,953$ 62,526 $ 27,579,716
Employee stock purchase plan 9,491 - 95 33,130
Stock options exercised 16,125 - 161 44,182
Exchange of Class B shares
for Class A shares 2,231 (2,231) - -
Balance July 29, 1995 3,318,307 2,959,722 $ 62,782 $ 27,657,028
As of July 29, 1995, there were 521,625 shares of Class A Common Stock and 175,957 shares of Class B
Common Stock held as treasury stock at an aggregate cost of $5,004,847, leaving 2,796,682 Class A shares and
2,783,765 Class B shares outstanding.
3. Earnings (Loss) Per Share
Earnings (loss) per share is based on the weighted average
number of shares outstanding, including the dilutive effect of
stock options, if appropriate, during each period.
4. Seasonality
The results of operations for the second fiscal quarter ended
July 29, 1995 are not necessarily indicative of results to be
expected for the full fiscal year. The convenience store industry
in the Company's marketing areas experiences a higher percentage of
revenues and profit margins during the summer months than during
the winter months. Historically, the Company has achieved more
favorable financial results in its second and third fiscal
quarters, as compared to its first and fourth fiscal quarters.
Dairy Mart Convenience Stores, Inc. and Subsidiaries
FISCAL QUARTER ENDED JULY 29, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues
Revenues for the current year first two fiscal quarters
decreased by $6.4 million from the prior year first two fiscal
quarters and revenues for the current year second fiscal quarter
decreased by $5.3 million from the prior fiscal year second fiscal
quarter. A summary of revenues by operating area for the
comparative second fiscal quarter and the first two fiscal quarters
is shown below:
FOR THE SECOND FISCALFOR THE TWO FISCAL
QUARTER ENDED QUARTERS ENDED
July 29, July 30, July 29, July 30,
(in millions) 1995 1994 1995 1994
Convenience store $ 90.4 $ 97.9 $169.4 $183.9
Gasoline 59.8 55.7 113.6 103.7
Manufacturing and distribution 5.7 7.6 12.5 14.3
Other .6 .6 1.2 1.2
Total $156.5 $161.8 $296.7 $303.1
Convenience store revenues decreased $14.5 million, or 7.9%,
in the current year first two fiscal quarters as compared to the
prior year first two fiscal quarters, while convenience store
revenues for the current year second fiscal quarter decreased by
$7.5 million as compared to the prior year second fiscal quarter.
These decreases are primarily due to the closing or sale of
approximately 100 underperforming stores combined with a 1.1%
decrease and a 1.4% decrease in comparable store sales for the two
fiscal quarters and second fiscal quarter, respectively. Although
such closures had a negative impact on revenues, they did have a
material favorable effect on the results from operations, since the
majority of stores closed or sold had been operating at a loss.
Gasoline revenues increased $9.9 million in the current year
first two fiscal quarters as compared to the prior year first two
fiscal quarters due to an increase in the average selling price of
gasoline of 9.0 cents per gallon combined with an increase in total
gasoline gallons sold of 600,000. The increase in gasoline gallons
sold was due primarily to further development of new stores having
a major gasoline presence and the remodeling and expansion of
gasoline facilities at certain existing locations offset by the
closure of certain low volume gasoline locations. Gasoline
revenues increased $4.1 million in the current year second fiscal
quarter as compared to the prior year second fiscal quarter due to
an increase in the average selling price of 11.9 cents per gallon
offset by a decrease in total gasoline gallons sold of 2.0 million
resulting from the closure of low volume gasoline locations
described above.
Manufacturing and distribution revenues decreased in the
current year first two fiscal quarters and the current year second
fiscal quarter as compared to the corresponding periods of the
prior fiscal year due to the divestiture of the Company's dairy
manufacturing and distribution operations, exclusive of ice cream
production, in the current year second fiscal quarter.
Gross Margins
Gross margins for the current year first two fiscal quarters
increased $1.2 million from the prior year first two fiscal
quarters and gross margins for the current year second fiscal
quarter increased $1.5 million from the prior year second fiscal
quarter. A summary of the gross margins by operating area for the
comparative second fiscal quarter and the first two fiscal quarters
is shown below:
FOR THE SECOND FISCALFOR THE TWO FISCAL
QUARTER ENDED QUARTERS ENDED
July 29, July 30, July 29, July 30,
(in millions) 1995 1994 1995 1994
Convenience store $ 34.8 $ 35.0 $ 64.4 $ 64.9
Gasoline 6.8 5.1 11.9 10.2
Manufacturing and distribution .4 .4 .5 .5
Other .6 .6 1.2 1.2
Total $ 42.6 $ 41.1 $ 78.0 $ 76.8
Convenience store gross margins decreased by $500,000 in the
current year first two fiscal quarters as compared to the prior
year first two fiscal quarters and while the convenience store
gross margins for the current year second fiscal quarter decreased
$200,000 as compared to the prior year second fiscal quarter.
These decreases were primarily due to the reduction in the average
number of stores described above, offset by improved product gross
margins and higher lottery commissions.
Gasoline gross margins increased by $1.7 million in the
current year first two fiscal quarters and in the current year
second fiscal quarter as compared to the corresponding periods of
the fiscal year. The increase for the current year first two
fiscal quarters is primarily due to an increase of 1.5 cents in
gross margin per gallon. The increase for the current year second
fiscal quarter is due to an increase of 3.5 cents in gross margin
per gallon, offset by the decrease in gasoline gallons sold as
described above.
Selling and General and Administrative Expenses
Selling expenses for the current year first two fiscal
quarters decreased $2.7 million from the prior year first two
fiscal quarters. General and administrative expenses for the
current year first two fiscal quarters decreased $2.0 million from
the prior year first two fiscal quarters. For the current year
second fiscal quarter alone, selling expenses decreased $1.2
million and general and administrative expenses decreased $1.5
million as compared to the corresponding period of the prior year.
A summary of selling expenses by operating area and general and
administrative expenses for the comparative second fiscal quarter
and the first two fiscal quarters is shown below:
FOR THE SECOND FISCALFOR THE TWO FISCAL
QUARTER ENDED QUARTERS ENDED
July 29, July 30, July 29, July 30,
(in millions) 1995 1994 1995 1994
Convenience store $ 25.3 $ 26.7 $ 49.0 $ 52.1
Gasoline 3.4 3.2 6.4 6.0
28.7 29.9 55.4 58.1
General and
administrative expenses 7.3 8.8 14.4 16.4
Total $ 36.0 $ 38.7 $ 69.8 $ 74.5
Convenience store selling expenses decreased $3.1 million in
the current year first two fiscal quarters as compared to the prior
year first two fiscal quarters and convenience store selling
expenses decreased $1.4 million for the current year second fiscal
quarter as compared to the prior year second fiscal quarter. These
decreases were due to the closure or sale of
underperforming stores as described above, partially offset by
higher labor and rent costs on a per store basis.
Gasoline selling expenses increased $400,000 in the current
year first two fiscal quarters as compared to the prior year first
two fiscal quarters and gasoline selling expenses increased
$200,000 in the current year second fiscal quarter as compared to
the prior year second fiscal quarter. These increases were
primarily due to the operation of new or remodeled expanded
facilities as described above, offset by decreased environmental
expenses associated with the remediation of gasoline locations
after considering expected reimbursements from various state
environmental trust funds.
General and administrative expenses decreased in the current
year first two fiscal quarters and the current year second fiscal
quarter as compared to the corresponding periods of the prior year
primarily due to a reduced level of administrative support staff.
Interest Expense and Taxes
Interest expense increased in the current year first two
fiscal quarters as compared to the prior year first two fiscal
quarters due to an increased level of borrowings associated with
the recapitalization of the Company's debt structure with the
issuance of $75.0 million of 10.25% Senior Subordinated Notes (the
"Notes") in March 1994 and to a lesser extent the overall increase
in current interest rates on variable rate borrowings.
The effective tax rate for the Company was a provision of 44%
for both the current year first two fiscal quarters and the current
year second fiscal quarter as compared to a benefit of 40% for the
corresponding periods of the prior fiscal year. The Company
provides for
income taxes at the effective rate expected to be incurred for the
entire fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates substantial operating cash flow since
most of its revenues are received in cash. The amount of cash
generated from operations in the current year first two fiscal
quarters significantly exceeded the current debt service
requirements of the Company's long-term debt and capital lease
obligations. Additional cash flow was generated in the current
fiscal year from the sale of certain assets, including the sale and
leaseback of 16 existing store properties. In addition, the
Company has a revolving line of credit available, although not
currently utilized, to address the timing of certain working
capital disbursements in the future. Management believes that the
cash flow from operations and the sale of certain underperforming
and non-operating assets will provide the Company with ample
liquidity and the capital necessary to achieve the anticipated
expansion in its retail operations (see Capital Expenditures).
Cash Provided by Operating Activities
During the current year first two fiscal quarters, net cash
generated by operations was $5.0 million higher than the prior year
first two fiscal quarters. This increase was primarily due to the
improved results of operations in the current year first two fiscal
quarters as compared to the prior year first two fiscal quarters
(see RESULTS OF OPERATIONS).
During the current year first two fiscal quarters, the
Company paid its trade payables in an average of 25 days, which
compares to 24 days for the fiscal year ended January 28, 1995 and
25 days for the prior year first two fiscal quarters. The cash
flow of the Company is also favorably impacted by the Company's use
of funds from the sale of money orders, pending weekly remittance
of such funds to the issuer of the money orders. As of July 29,
1995 and January 28, 1995, the amounts due the issuer were $5.1
million and $5.3 million, respectively. The Company's remittance
obligation to the issuer of the money orders is primarily secured
by an outstanding letter of credit in the amount of $6.5 million,
which letter of credit expires in October, 1995.
Cash Provided by Financing Activities
During the current year first two fiscal quarters, net cash
of $945,000 was used primarily to repay long-term debt and capital
lease obligations. During the prior year first two fiscal quarters,
net cash of $10.8 million was provided from the issuance of the
Notes and the subsequent repayment of the indebtedness under a bank
term loan and bank revolving loan and to redeem in full the
Company's 14.25% subordinated debentures.
During the current year first fiscal quarter, management
finalized an amendment of the Company's senior credit facility
temporarily reducing the total availability to $20.0 million with
$15.0 million available for the issuance of letters of credit. As
of July 29, 1995, the Company had no outstanding revolving credit
loans under the amended credit facility, but did have $12.8 million
of letters of credit outstanding thereunder. The Company may
utilize the amended credit facility as needed for working capital
and general corporate purposes.
Cash Used by Investing Activities
During the current year first two fiscal quarters, net cash
of $2.6 million was provided by investing activities primarily due
to the receipt of $10.6 million in proceeds from the sale of
certain assets as described above, offset by the use of $8.0
million to fund the Company's capital expenditures. Consistent
with the Company's overall objective to strengthen its investment
in retail operations, proceeds from the sale of assets and cash
generated from operations will be used to fund future capital
expenditures of the Company including the development of new stores
and the upgrading and remodeling of existing stores.
Capital Expenditures
The Company anticipates spending approximately $18 to $20
million for capital expenditures in the current fiscal year ending
February 3, 1996 by purchasing store and gasoline equipment for new
store locations, remodeling a limited number of its existing
stores, introducing certain branded fast food concepts in a number
of stores, and significantly upgrading certain gasoline locations
to provide credit card readers at the pump, to improve outdoor
lighting and to meet current environmental standards (see
Environmental Responsibility).
Environmental Responsibility
The Company accrues its estimate of all costs to be incurred
for
assessment and remediation with respect to releases of regulated
substances from existing and previously operated retail gasoline
facilities. As of July 29, 1995, the Company had recorded an
accrual of $2,284,000 for such costs, the majority of which are
anticipated to be spent over the next 3 to 5 years.
The Company is entitled to reimbursement of a portion of the
above costs from various state environmental trust funds based upon
compliance with the terms and conditions of such trust funds. As of
July 29, 1995, the Company has recorded a net state trust fund
reimbursement receivable of $1,146,000 (representing a gross
receivable of $1,309,000 less an allowance of $163,000). Although
there are no assurances as to the timing, the Company anticipates
receiving reimbursements from the state environmental trust funds
within one to four years from the payment of the reimbursable
assessment and remediation expenses.
In addition, the Company estimates that future capital
expenditure requirements to comply with federal and state
underground gasoline storage tank regulations will be approximately
$12.0 to $16.0 million in the aggregate through December 1998.
These costs could be reduced for low volume locations closed in
lieu of the capital cost of compliance.
The Company's estimate of costs to be incurred for
environmental assessment and remediation and for required
underground storage tank upgrading and other regulatory compliance
are based on factors and assumptions that could change due to
modifications of regulatory requirements or detection of
unanticipated environmental conditions.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are filed as part of this report
pursuant to Item 601 of Regulation S-K:
(a) Exhibits:
3.2 Amended and Restated Bylaws
10.1 1995 Stock Option and Incentive Annual Plan
10.2 Employment Agreement between the Company and
Robert B. Stein, Jr., dated June 8, 1995
10.3 Employment Agreement between the Company and
Gregory G. Landry, dated June 8, 1995
10.4 Employment Agreement between the Company and
Gary Payne, dated June 8, 1995
10.5 Employment Agreement between the Company and
Gregg Guy, dated June 8, 1995
27.1 Financial Data Schedule
(b) Reports on Form 8-K: None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DAIRY MART CONVENIENCE STORES, INC.
Date: September 12, 1995 By /s/ Gregory G. Landry
Gregory G. Landry
Executive Vice President
Chief Financial Officer
EX-3.(II)
2
AMENDED AND RESTATED BYLAWS
OF
DAIRY MART CONVENIENCE STORES, INC.
(A Delaware Corporation)
ARTICLE I
Offices
Section 1. Principal Office in Connecticut. The principal
office of DAIRY MART CONVENIENCE STORES, INC. (the "Corporation")
in the State of Connecticut shall be in the Town of Enfield, County
of Hartford.
Section 2. Registered Office in Delaware. The Corporation
shall have and maintain a registered office in the State of
Delaware as required by Delaware law.
Section 3. Other Offices. The Corporation may have a principal
or other office at such other place or places, either within or
without the State of Connecticut or Delaware, as the Board of
Directors may from time to time determine or as shall be necessary
or appropriate for the conduct of the business of the Corporation.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All annual and special meetings
of stockholders shall be held at such place or places, within or
without the State of Delaware, as may from time to time be called
and fixed solely by the Board of Directors in accordance with these
Bylaws, or as shall be specified in the respective notices or
waivers of notice thereof.
Section 2. Annual Meetings. Each annual meeting of
stockholders for the election of directors and the transaction of
other business shall be held on the second Thursday of June, in
each year, and shall be called solely by order of the Board of
Directors. If this date shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each
annual meeting the stockholders entitled to vote shall elect a
Board of Directors and may transact such other corporate business
as may be brought before the meeting.
If the election of directors shall not be held on the day
designated herein for the annual meeting, or at any adjournment
thereof, the Board of Directors shall cause a special meeting of
the stockholders for the election of directors to be held as soon
thereafter as may be convenient. At such special meeting the
stockholders may elect directors and transact other business with
the same force and effect as at an annual meeting of the
stockholders duly called and held.
Section 3. Special Meetings. A special meeting of the
stockholders (or of any class thereof entitled to vote at a special
meeting) for any purpose or purposes may be called at any time
solely by order of the Board of Directors. No stockholder, in its,
his, or her capacity as a stockholder, may call a special meeting
of the stockholders. The record date for any special meeting of
the stockholders shall be set solely by order of the Board of
Directors.
Section 4. Notice of Meetings. Except as otherwise expressly
required by law, notice of each meeting of stockholders, whether
annual or special, shall be given at least ten (10) days before the
date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivering a notice thereof to
him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the stock
ledger of the Corporation, unless he shall have filed with the
Secretary of the Corporation a written request that notices
intended for him be directed to another address, in which case such
notice shall be directed to him at the address designated in such
request. Every notice of a special meeting of the stockholders,
besides stating the time and place of the meeting, shall state
briefly the objects or purposes thereof. Notices of any meeting of
stockholders shall not be required to be given to any stockholder
who shall attend such meeting in person or by proxy; and, if any
stockholder shall, in person or by attorney thereunto authorized,
in writing or by telegraph, cable or wireless, waive notice of any
meeting of the stockholders, whether prior to or after such
meeting, notice thereof need not be given to him. Notice of any
adjourned meeting of the stockholders shall not be required to be
given, except as expressly required by law.
Section 5. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge
of the stock ledger to prepare and make, at least ten (10) days'
before every election of directors, a complete list of the
stockholders entitled to vote thereat, arranged in alphabetical
order, and showing the address of each stockholder and the number
of shares registered in his name. Such list shall be open for ten
(10) days' at the place where said election is to be held or at
some other specified place within the Town of Enfield, State of
Connecticut to the examination of any stockholder during ordinary
business hours and shall be produced and kept at the time and place
of the election during the whole time thereof and subject to the
inspection of any stockholder who may be present. The original or
duplicate stock ledger shall be the only evidence as to who are the
stockholders entitled to examine such list or the books of the
Corporation or to vote in person or by proxy at such election.
Section 6. Quorum. At each meeting of the stockholders, the
holders of record of (i) a majority of the voting power of the
issued and outstanding stock of all classes of the Corporation
entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, with
respect to those matters as to which all classes of stock vote
together, and (ii) one-third (1/3) of the issued and outstanding
stock of any class of stock of the Corporation entitled to vote at
such meeting, present in person or by proxy, shall constitute a
quorum for the transaction of business with respect to those
matters as to which such class is entitled (by law, the Certificate
of Incorporation or these Bylaws) to vote separately from all other
classes, except where otherwise provided by law, the Certificate of
Incorporation or these Bylaws. In the absence of a quorum, any
officer entitled to preside at, or act as Secretary of, such
meeting shall have the power to adjourn the meeting from time to
time until a quorum shall be constituted. At any such adjourned
meeting at which a quorum shall be present any business may be
transacted which might have been transacted at the meeting as
originally called, but only those stockholders entitled to vote at
the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
Section 7. Voting. Except as otherwise provided in the
Certificate of Incorporation, at every meeting of stockholders each
holder of record of the issued and outstanding stock of the
Corporation entitled to vote at such meeting shall be entitled to
one vote in person or by proxy for each such share of stock
entitled to vote held by such stockholder, but no proxy shall be
voted after three (3) years from its date unless the proxy provides
for a longer period, and, except where the transfer books of the
Corporation shall have been closed or a date shall have been fixed
as the record date for the determination of stockholders entitled
to vote, no share of stock shall be voted on at any election for
directors which shall have been transferred on the books of the
Corporation within twenty (20) days next preceding such election of
directors. Shares of its own capital stock belonging to the
Corporation directly or indirectly shall not be voted upon directly
or indirectly. At all meetings of the stockholders, a quorum being
present, all matters shall be decided by majority vote of the
shares of stock entitled to vote held by stockholders present in
person or by proxy, except as otherwise required by the laws of the
State of Delaware. Unless demanded by a stockholder of the
Corporation present in person or by proxy at any meeting of the
stockholders and entitled to vote thereat or so directed by the
Chairman of the meeting or required by the laws of the State of
Delaware, the vote thereat on any question need not be by ballot.
Unless otherwise provided in the Certificate of Incorporation, all
elections of directors shall be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or in his
name by his proxy, if there be such proxy, and shall state the
number of shares voted by him and the number of votes to which each
share is entitled.
Unless otherwise provided in the Certificate of Incorporation,
any action required or permitted to be taken at any annual or
special meeting of the stockholders of the Corporation may be taken
without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of the minimum number of shares of
outstanding stock that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. Such consent or consents shall be
delivered to the Corporation by delivery to its registered office
in Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made
to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Prompt
notice of the taking of corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders
who have not consented in writing.
Section 8. Advance Notice of Stockholder Business. At an
annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting.
To be properly brought before an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder of record. For business
to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal
executive offices of the Corporation, not less than sixty (60) days
nor more than ninety (90) days prior to the meeting; provided,
however, that if both (i) fewer than seventy (70) days Advance
Notice of the meeting is given to stockholders, and (ii) such
meeting is held more than thirty (30) days before or after the
corresponding date of the annual meeting held in the preceding
year, then such written notice shall be received not later than the
close of the tenth day following the day on which notice of the
meeting was mailed to stockholders. As used in this Section 8,
"Advance Notice" to the stockholders shall be deemed to have been
given on the date of any quarterly report of the Corporation,
letter to stockholders, press release or other communication to
stockholders disclosing the date of the next annual meeting and
provided that the annual meeting is in fact held on such date or
within thirty (30) days after such date. Any such Advance Notice
would be in addition to, but not in substitution for, the Notice of
Meeting provided for in Section 4 above.
A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual
meeting: (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of
stock of the Corporation of which the stockholder is the Beneficial
Owner (as that term is defined in the Certificate of Incorporation
of the Corporation), and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-
Laws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this
Section 8. The Chairman of the annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 8, and if he should so determine, he
shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
Notwithstanding the provisions of this Section 8, notice of
stockholder nominations of persons for election as directors shall
be as set forth in the Certificate of Incorporation.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, business and affairs
of the Corporation shall be managed by the Board of Directors.
Section 2. Number and Term of Office. The number of directors
shall be fixed from time to time by resolution of the Board of
Directors but shall not be less than three (3). Directors need not
be stockholders. Each director shall hold office until the annual
meeting of the stockholders next following his election and until
his successors shall have been elected and shall qualify, or until
his death, resignation or removal.
Section 3. Quorum and Manner of Acting. Unless otherwise
provided by law, the presence of one-third (1/3) of the whole Board
of Directors, and in any case not less than two (2) directors,
shall be necessary to constitute a quorum for the transaction of
business. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be
given. At all meetings of the directors, a quorum being present,
all matters shall be decided by the affirmative vote of a majority
of the directors present, except as otherwise required by the laws
of the State of Delaware, and except for the calling of any annual
or special meeting of the stockholders by the Board of Directors
which shall require the affirmative vote of a majority of the whole
Board of Directors.
Section 4. Place of Meetings, Books and Records. The Board of
Directors may hold its meetings and keep the books and records of
the Corporation, at such place or places within or without the
State of Delaware, as the Board may from time to time determine.
Section 5. Annual Meeting. As promptly as practicable after
each annual meeting of stockholders for the election of directors,
the Board of Directors shall meet for the purpose of organization,
the election of officers and the transaction of other business.
Notice of such meeting need not be given. Such meeting of the
Board of Directors may be held at any other time or place as shall
be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors or in a waiver of notice thereof
signed by all the directors.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors may be held at such time and place, within or without the
State of Delaware, as shall from time to time be determined by the
Board of Directors. After there has been such determination, and
notice thereof has been given to each member of the Board of
Directors, regular meetings may be held without further notice
being given.
Section 7. Special Meetings and Notice Thereof. Special
meetings of the Board of Directors shall be held whenever called by
the Chairman of the Board, the President or by a majority of the
directors. Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of
business, at least two (2) days before the date on which the
meeting is to be held, or shall be sent to him at such place by
telegraph, cable, radio or wireless, or be delivered personally or
by telephone, not later than the day before the day on which such
meeting is to be held. Each such notice shall state the time and
place of the meeting and the purpose thereof. In lieu of the notice
to be given as set forth above, a waiver thereof in writing, signed
by the director or directors entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto for purposes of this Section 7. No notice to or waiver by
any director with respect to any special meeting shall be required
if such director shall be present at said meeting.
Section 8. Resignation. Any director of the Corporation may
resign at any time by giving written notice thereof to the Chairman
of the Board, the President or the Secretary of the Corporation.
The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such
notice; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a
future date, a majority of the directors then in office including
those who have so resigned shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
Section 9. Vacancies. Vacancies and newly created
directorships resulting form any increase in the authorized number
of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director, unless otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware.
Section 10. Removal. As provided in the Certificate of
Incorporation, any director, or the entire Board of Directors of
the Corporation, may be removed at any time, with or without cause,
only by the affirmative vote by the holders of two-thirds (2/3) or
more of the voting shares of the class or classes of stock that
elected the director to be removed; provided, however, that such
vote shall be taken at a meeting of the shareholders called for the
purpose of removing directors and such vote may not be taken by the
written consent of shareholders in lieu of a meeting or otherwise
than at a meeting.
Section 11. Compensation of Directors. Directors, as such,
shall not receive any stated salary for their services, but, by
resolution of the Board, a specific sum fixed by the Board plus
experience may be allowed for attendance at each regular or special
meeting of the Board or any committee thereof; provided that
nothing herein contained shall be construed to preclude any
director from serving the Corporation or any subsidiary thereof in
any other capacity and receiving compensation therefor.
Section 12. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one
or more committees, each committee to consist of two or more
directors of the Corporation, which, to the extent provided in the
resolution or in these Bylaws, shall have and may exercise such
powers of the Board in the management of the business and affairs
of the Corporation (including the power to authorize the seal of
the Corporation to be affixed to all papers which may require it),
as the Board may by resolution determine and specify in the
respective resolutions appointing them, subject to such
restrictions as may be contained in the Certificate of Incorpor-
ation. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the
Board of Directors. The committees shall keep regular minutes of
their proceedings and report the same to the Board when required.
A majority of all the members of any such committee may fix its
rules of procedure, determine its action and fix the time and
place, whether within or without the State of Connecticut, of its
meetings and specify what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise by resolution
provide. The Board of Directors shall have power to change the
membership of any such committee at any time, to fill vacancies
thereon and to discharge any such committee, either with or without
cause, at any time. Each member of any such committee shall be paid
such fee, if any, as shall be fixed by the Board of Directors for
each meeting of such committee which he shall attend and, in
addition, such transportation and other expenses actually incurred
by him in going to the meeting of such committee and returning
therefrom as the Board of Directors shall approve.
Section 13. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if prior to
such action a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such
written consent is filed with the minutes or proceedings of the
Board or committee.
ARTICLE IV
Officers
Section 1. Number. The principal officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Treasurer and a Secretary. The Corporation may also
have, at the discretion of the Board of Directors, such other
officers as may be appointed in accordance with the provisions of
these Bylaws. One person may hold the offices and perform the
duties of any two or more of said offices, except the offices and
duties of President and Secretary.
Section 2. Election or Appointment and Term of Office. The
principal officers of the Corporation shall be chosen annually by
the Board of Directors at the annual meeting thereof. Each such
officer shall hold office until his successor shall have been duly
chosen and shall qualify, or until his death or until he shall
resign or shall have been removed in the manner hereinafter
provided.
Section 3. Subordinate Officers. In addition to the principal
officers enumerated in Section 1 of this Article IV, the
Corporation may have one or more Assistant Treasurers, one or more
Assistant Secretaries and such other officers, agents and employees
as the Board of Directors may deem necessary, each of whom shall
hold office for such period, have such authority, and perform such
duties as the Chairman of the Board, the President, or the Board of
Directors may from time to time determine. The Board of Directors
may delegate to any principal officer the power to appoint and to
remove any such subordinate officers, agents or employees.
Section 4. Removal. Any officer may be removed, either with or
without cause, at any time, by resolution adopted by the Board of
Directors at any regular meeting of the Board or at any special
meeting of the Board called for that purpose at which a quorum is
present.
Section 5. Resignations. Any officer may resign at any time by
giving written notice to the Chairman of the Board or to the Board
of Directors or to the President or to the Secretary. Any such
resignation shall take effect upon receipt of such notice or at any
later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary
to make it effective.
Section 6. Vacancies. A vacancy in any office may be filled
for the unexpired portion of the term in the manner prescribed in
these Bylaws for election or appointment to such office for such
term.
Section 7. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of stockholders and at all meetings
of the Board of Directors. He shall perform such other duties and
have such other powers as the Board of Directors may from time to
time prescribe.
Section 8. President. The President shall be the chief
executive officer of the Corporation and as such shall have general
supervision of the affairs of the Corporation, subject to the
control of the Board of Directors. He shall be ex officio a member
of all standing committees. In the absence of the Chairman of the
Board the President shall preside at all meetings of stockholders
and at all meetings of the Board of Directors. Subject to the
control and discretion of the Board of Directors, the President may
enter into any contract or execute and deliver any instrument in
the name and on behalf of the Corporation. In general, he shall
perform all duties incident to the office of President, as herein
defined, and all such other duties as from time to time may be
assigned to him by the Board of Directors.
Section 9. Vice Presidents. The Vice Presidents in the order
of their seniority, unless otherwise determined by the Board of
Directors, shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. They
shall perform such other duties and have such other powers as the
Chairman of the Board, the President or the Board of Directors may
from time to time prescribe.
Section 10. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the
Corporation and shall deposit all such funds in the name of the
Corporation in such banks or other depositories as shall be
selected by the Board of Directors. He shall exhibit at all
reasonable times his books of account and records to any of the
directors of the Corporation upon application during business hours
at the office of the Corporation where such books and records shall
be kept; when requested by the Board of Directors, he shall render
a statement of the condition of the finances of the Corporation at
any meeting of the Board or at the annual meeting of stockholders;
he shall receive, and give receipt for, moneys due and payable to
the Corporation from any source whatsoever; and in general, he
shall perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him
by the Chairman of the Board, the President or the Board of
Directors. The Treasurer shall give such bond, if any, for the
faithful discharge of his duties as the Board of Directors may
require.
Section 11. Secretary. The Secretary, if present, shall act as
secretary at all meetings of the Board of Directors and of the
stockholders and keep the minutes thereof in a book or books to be
provided for that purpose; he shall see that all notices required
to be given by the Corporation are duly given and served; he shall
have charge of the stock records of the Corporation; he shall see
that all reports, statements and other documents required by law
are properly kept and filed; and in general, he shall perform all
the duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Chairman
of the Board, the President or the Board of Directors.
Section 12. Salaries. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors, and the
salaries of any other officers may be fixed by the Chairman of the
Board or the President.
ARTICLE V
Shares and Their Transfer
Section 1. Certificate for Stock. Every stockholder of the
Corporation shall be entitled to a certificate or certificates, to
be in such form as the Board of Directors shall prescribe,
certifying the number of shares of the capital stock of the
Corporation owned by him.
Section 2. Stock Certificates. Any stock certificate which
certifies the number of shares owned by any holder of stock of the
Corporation shall be numbered in the order in which it shall be
issued and shall be signed by the Chairman of the Board or the
President or any Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of
the Corporation and shall have the seal of the Corporation affixed
thereto; provided, however, that, where any such certificate is
signed (1) by a transfer agent or an assistant transfer agent or
(2) by a transfer clerk acting on behalf of the Corporation and a
registrar, if the Board shall by resolution so authorize, the
signature of such Chairman of the Board, President, Vice President,
Treasurer, Secretary, Assistant Treasurer or Assistant Secretary
and the seal of the Corporation may be facsimiles thereof. In case
any officer or officers of the Corporation who shall have signed,
or whose facsimile signature or signatures shall have been used on,
any such certificate shall cease to be such officer or officers,
whether by reason of death, resignation or otherwise, before such
certificate shall have been delivered by the Corporation, such
certificate may nevertheless be adopted by the Corporation and be
issued and delivered as though the person or persons who signed
such certificate, or whose facsimile signature or signatures shall
have been affixed thereto, had not ceased to be such officer or
officers.
Section 3. Stock Ledger. A record shall be kept by the
Secretary, transfer agent or by any other officer, employee or
agent designated by the Board of Directors of the name of the
person, firm or corporation holding the stock represented by such
certificate, the number of shares represented by such certificate,
and the date thereof, and in case of cancellation, the date of
cancellation.
Section 4. Cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be cancelled, and no new
certificate or certificates shall be issued in exchanged for any
existing certificate until such existing certificate shall have
been so cancelled, except in cases provided for in Section 7 of
this Article V.
Section 5. Transfers of Stock. Transfers of shares of the
capital stock of the Corporation shall be made only on the books of
the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed
and filed with the Secretary of the Corporation or with a transfer
clerk or a transfer agent appointed as in Section 6 of this Article
V provided, and on surrender of the certificate or certificates for
such shares properly endorsed and the payment of all taxes thereon.
The person in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof for all purposes as
regards the Corporation; provided, however, that whenever any
transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary of the
Corporation, shall be so expressed in the entry of transfer.
Section 6. Regulations. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent
with the Certificate of Incorporation or these Bylaws, concerning
the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any
principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or
signatures of any of them.
Section 7. Lost, Stolen, Mutilated or Destroyed Certificates.
As a condition to the issue of a new certificate of stock in the
place of any certificate theretofore issued and alleged to have
been lost, stolen, mutilated or destroyed, the Board of Directors,
in its discretion, may require the owner of any such certificate,
or his legal representatives, to give the Corporation a bond in
such sum and in such form as it may direct to indemnify the
Corporation against any claim that may be made against it on
account of the alleged loss, theft, mutilation or destruction of
any such certificate or the issuance of such new certificate.
Proper evidence of such loss, theft, mutilation or destruction
shall be procured for the Board of Directors, if required. The
Board of Directors, in its discretion, may authorize the issuance
of such new certificate without any bond when in its judgment it is
proper to do so.
Section 8. Record Date. The Board may fix a date in advance of
not exceeding sixty (60) days' preceding, the date of any meeting
of stockholders (nor less than ten (10) days' before the date of
such meeting), or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect or a
date in connection with obtaining any written consent to corporate
action without a meeting, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, such
meeting, and any adjournment thereof, or to receive payment of any
dividend, or to receive any such allotment of rights, or to
exercise the rights in respect of any such change, conversion, or
exchange of capital stock or to give such written consent, as the
case may be, notwithstanding any transfer of any stock on the books
of the Corporation after any record date so fixed.
ARTICLE VI
Miscellaneous Provisions
Section 1. Corporate Seal. The Board of Directors shall
provide a corporate seal, which shall be in the form of a circle
and shall bear the name of the Corporation and words and figures
showing that it was incorporated in the State of Delaware. The
Secretary shall be the custodian of the seal. The Board of
Directors may authorize a duplicate seal to be kept and used by any
other officer.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall be as specified by the Board of Directors.
Section 3. Voting of Stocks Owned by the Corporation. The
Board of Directors may authorize any person in behalf of the
Corporation to attend, vote and grant proxies to be used at any
meeting of stockholders of any corporation (except this
Corporation) in which the Corporation may hold stock.
Section 4. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of
funds legally available therefor, at any regular or special meeting
declare dividends upon the capital stock of the Corporation as and
when they deem expedient. Before declaring any dividend there may
be set apart out of any funds of the Corporation available for
dividends such sum or sums as the directors from time to time in
their discretion may deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or
for such other purposes as the directors may deem conducive to the
interests of the Corporation.
ARTICLE VII
Amendments
Section 1. The Bylaws of the Corporation may be adopted,
altered, amended or repealed or new bylaws may be adopted by the
Board of Directors at any regular or special meeting upon the
affirmative vote of both sixty-seven (67%) percent of the Whole
Board of Directors and majority (but in any event not less than
four) of the Continuing Directors as defined in the Certificate of
Incorporation of the Corporation. The Bylaws of the Corporation may
also be adopted, altered, amended or repealed or new bylaws may be
adopted by the shareholders only upon the affirmative vote as to
all stock held (i) by the holders of not less than sixty-seven
(67%) percent of the Outstanding Voting Shares and (ii) by an
Independent Majority of Shareholders, as defined in the Certificate
of Incorporation of the Corporation. Such a vote may be taken at
any annual or special meeting of the shareholders if notice of such
alteration, amendment, repeal or adoption of the new bylaws shall
be contained in the notice of such annual or special meeting. No
change of the time or place of the meeting for the election of
directors shall be made within sixty (60) days' next before the day
on which such a meeting is to be held, and, in case of any change
of such time or place, notice thereof shall be given to each
stockholder in person or by letter mailed to his last known post-
office address at least twenty (20) days before the meeting is
held. Bylaws, whether made or altered by the stockholders or by the
Board of Directors, shall be subject to alteration or repeal by the
stockholders as in this Article VII above provided.
EX-10.1
3
DAIRY MART CONVENIENCE STORES, INC.
1995 STOCK OPTION AND INCENTIVE AWARD PLAN
Dairy Mart Convenience Stores, Inc. a Delaware corporation (the
"Company") sets forth herein the terms of this 1995 Stock Option
and Incentive Award Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company
by providing eligible individuals (as designated pursuant to
Section 4 below) with an opportunity to acquire or increase a
proprietary interest in the Company, which thereby will create a
stronger incentive to expend maximum effort for the growth and
success of the Company and its subsidiaries, and will encourage
such eligible individuals to remain in the employ or service of the
Company or its subsidiaries. Each stock option granted under the
Plan (an "Option") is intended to be an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the
Internal Revenue Code of 1986, or the corresponding provision of
any subsequently-enacted tax statute, as amended from time to time
(the "Code"), except (i) to the extent that any such Option would
exceed the limitations set forth in Section 7 below; and (ii) for
Options specifically designated at the time of grant as not being
Incentive Stock Options ("Non-Qualified Options"). Options granted
to eligible individuals may be accompanied by stock appreciation
rights ("SARs"), as defined in Section 11, below.
2. ADMINISTRATION
(a) Board. Subject to Sections 2(b) and (e), the Plan shall
be administered by the Board of Directors of the Company (the
"Board"), which shall have the full power and authority to take all
actions, and to make all determinations required or provided for
under the Plan or under any Option, SAR or incentive stock award
(collectively "Award") granted or Option Agreement (as defined in
Section 8 below) entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or
appropriate to the administration of the Plan or any Award granted
or Option Agreement entered into hereunder. The interpretation and
construction by the Board of any provision of the Plan or of any
Award granted or Option Agreement entered into hereunder shall be
final and conclusive.
(b) Committee. The Board may from time to time appoint a
committee (the "Committee") consisting of not less than two members
of the Board, none of whom shall be an officer or other salaried
employee of the Company or any of its subsidiaries, and each of
whom shall qualify in all respects as a "disinterested person" as
defined in Rule 16b-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") with respect to this Plan. The Board, in its sole
discretion, may provide that the role of the Committee shall be
limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate
to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as
the Board shall determine, consistent with the Certificate of
Incorporation and By-Laws of the Company and applicable law. The
Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's
Certificate of Incorporation and By-Laws, and with applicable law.
(c) No Liability. No member of the Board or of the Committee
shall be liable for any action or determination made in good faith
with respect to the Plan or any Award granted or Option Agreement
entered into hereunder.
(d) Delegation to the Committee. If the Plan or any Award
granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board,
such action may be taken by or such determination may be made by
the Committee if the power and authority to do so has been
delegated to the Committee by the Board as provided for in Section
2(b) above. Unless otherwise expressly determined by the Board, any
such action or determination by the Committee shall be final and
conclusive.
(e) Action by the Board. The Board may act under the Plan
with respect to any Award granted to or Option Agreement entered
into with an officer, director or shareholder of the Company who is
subject to Section 16 of the Exchange Act other than by, or in
accordance with the recommendations of, the Committee, constituted
as set forth in Section 2(b) above, only if all of the members of
the Board are "disinterested persons" as defined in Rule 16b-3 of
the Securities and Exchange Commission under the Exchange Act with
respect to this Plan.
3. STOCK SUBJECT TO PLAN
The stock that may be issued pursuant to Awards granted under
the Plan shall be shares of Class A Common Stock or Class B Common
Stock, par value $.01 per share, of the Company (the "Stock"),
which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant
to Awards granted under the Plan shall not exceed in the aggregate
650,000 shares. The foregoing numbers of shares are subject to
adjustment as provided in Section 19 below. If any Award expires,
terminates, or is terminated or canceled for any reason prior to
exercise (in the case of Options or SARs) in full, or if shares of
Stock are not
ultimately issued pursuant to an award for any reason, the shares
of Stock that were subject to the unexercised portion of such
Option or SAR, or the unissued shares that were subject to the
award, shall be available for future Awards granted under the Plan
and such number of shares shall be restored to the number of shares
available for issuance under Awards granted, except that such
shares shall not be so available whenever an Option has been
surrendered as a result of the exercise of the related SAR.
4. ELIGIBILITY
(a) Employees. Awards may be granted under the Plan to any
employee of the Company or any "subsidiary" (as such term is
defined in Section 424(f) the Code, "Subsidiary"), including any
such employee who is an officer or director of the Company or any
subsidiary, as the Board shall determine and designate from time to
time prior to expiration or termination of the Plan.
(b) Multiple Grants. An individual may hold more than one
Option or SAR, subject to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the
date of adoption by the Board (the "Effective Date"), subject to
approval of the Plan within one year of the Effective Date by the
holders of a majority of the voting power of the Class A and Class
B Common Stock of the Company, present in person or by proxy and
entitled to vote at a duly held meeting of the shareholders of the
Company at which a quorum is present; provided, however, that upon
approval of the Plan by the shareholders of the Company as set
forth above, all Awards granted under the Plan on or after the
Effective Date shall be fully effective as if the shareholders of
the Company had approved the Plan on the Effective Date. If the
shareholders fail to approve the Plan within one year of the
Effective Date, any Awards granted hereunder shall be null and void
and of no effect.
(b) Term. The Plan shall terminate on the date that is ten
years from the Effective Date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board
may, at any time and from time to time, prior to the date of
termination of the Plan, grant to such eligible individuals as the
Board may determine ("Optionees"), Options to purchase such number
of shares of the Stock on such terms and conditions as the Board
may determine, including any terms or conditions which may be
necessary to qualify such Options as "incentive stock options"
under Section 422 of the Code. The date on which the Board approves
the grant of an Option (or such later date as is specified by the
Board) shall be considered the date on which such Option is
granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than a Non-Qualified Option shall constitute
an Incentive Stock Option to the extent that the aggregate fair
market value (determined at the time the option is granted) of the
stock with respect to which Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee's employer corporation
and its parent and subsidiary corporations within the meaning of
Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the
order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements ("Option Agreements"), to be executed by the
Company and by the Optionee, in such form or forms as the Board
shall from time to time determine. Option Agreements covering
Options granted from time to time or at the same time need not
contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an
Option (the "Option Price") shall be fixed by the Board and stated
in each Option Agreement. The Option Price for Incentive Stock
Options shall be not less than the greater of par value or 100
percent of the fair market value of a share of the applicable class
of Stock on the date the Option is granted (as determined in good
faith by the Board); provided, however, that if the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by
reason of the provisions of Sections 422(b)(6) and 424(d) of the
Code (relating to stock ownership of more than ten percent), the
Option Price of an Option that is intended to be an Incentive Stock
Option for any such Optionee shall be not less than the greater of
par value or 110 percent of the fair market value of a share of the
applicable class of Stock on the date such Option is granted. The
Option Price for Non-Qualified Options may be set by the Board at
not less than 85 percent of the fair market value of the applicable
class of Stock on the Date of grant. If the applicable class of
Stock is listed on an established national or regional stock
exchange, is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System, or is publicly
traded on an established securities market, in determining the fair
market value of the applicable class of Stock, the Board shall use
the closing price of the applicable class of Stock on such exchange
or system or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading date
immediately before the Option is granted (or, if there is not such
closing price, then the Board shall use the mean between the high
and low prices on such date), or, if no sale of the applicable
class of Stock had been made on such day, on the next preceding day
on which any such sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall terminate
and all rights to purchase shares thereunder shall cease upon the
expiration of ten years from the date such Option is granted;
provided, however, that if the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the
provisions of Section 422(b)(6) and 424(d) of the Code (relating to
stock ownership of more than ten percent), an Option granted to
such Optionee that is intended to be an Incentive Stock Option
shall in no event be exercisable after the expiration of five years
from the date it is granted.
(b) Option Period and Limitations on Exercise. Each Option
granted to persons shall be exercisable, in whole or in part, at
any time and from time to time, over a period commencing on or
after the date of grant and ending upon the expiration or
termination of the Option, as the Board shall determine and set
forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and
conditions of the Plan, may in its sole discretion provide that an
Option may not be exercised in whole or in part for any period or
periods of time during which such Option is outstanding; provided,
however, that any such limitation on the exercise of an Option
contained in any Option Agreement may be rescinded, modified or
waived by the Board, in its sole discretion, at any time and from
time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option granted
to an Optionee under the Plan shall be exercisable in whole or in
part prior to the date the Plan is approved by the shareholders of
the Company as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable
hereunder may be exercised by delivery to the Company on any
business day, at its principal office, addressed to the attention
of the Committee, of written notice of exercise, which notice shall
specify the number of shares and class with respect to which the
Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum
number of shares available for purchase under the Option at the
time of exercise. Except as provided in the next following
sentence, payment in full of the Option Price of the shares for
which the Option is being exercised shall accompany the written
notice of exercise of the Option and shall be made either (i) in
cash; (ii) through the tender to the Company of shares of the
Company's Class A or Class B Common Stock, which shares shall be
valued, for purposes of determining the extent to which the Option
Price has been paid thereby, at their fair market value (determined
in the manner described in Section 9 above) on the date of
exercise; (iii) the delivery to the Company of a written statement
of an election to make a cashless exercise, in which case the
number of shares to be transferred to the holder pursuant to the
exercise of the Option shall be reduced by a number of shares
having a fair market value (determined in the manner described in
Section 9 above) equal to the exercise price of the Option or
portion thereof being exercised; or (iv) by a combination of the
methods described in (i) and (ii); provided, however, that the
Board may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions
on the use of shares of Stock to exercise Options as it deems
appropriate.
Unless the Board shall provide otherwise in an Option
Agreement, payment in full of the Option Price need not accompany
the written notice of exercise, provided the notice of exercise
directs that the Stock certificate or certificates for the shares
for which the Option is exercised be delivered to a licensed broker
acceptable to the Company as the agent for the individual
exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Company cash
(or cash equivalents acceptable to the Company) equal to the Option
Price for the shares of Stock purchased pursuant to the exercise of
the Option plus the amount (if any) of federal and other taxes
which the Company may, in its judgment, be required to withhold
with respect to the exercise of the Option. An attempt to exercise
any Option granted hereunder other than as set forth above shall be
invalid and of no effect. Promptly after the exercise of an Option
and Payment in full of the Option Price for the shares covered, the
individual shall be entitled to the issuance of a Stock certificate
or certificates evidencing his ownership of such shares. A separate
Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an
Incentive Stock Option, which certificate or certificates shall not
include any shares which were purchased pursuant to the exercise of
an Option which is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a
shareholder until the shares of Stock covered thereby are fully
paid and issued to him and, except as provided in Section 19 below,
no adjustment shall be made for dividends or other rights for which
the record date is prior to the date of such issuance.
(d) Notice of Restrictions on Transfer of Stock. The Option
Agreement to be delivered in connection with an Option grant
hereunder will contain language (i) in the event the Option is an
Incentive Stock Option, regarding the applicable holding periods
for the stock subject to the Option in order to qualify as an
Incentive Stock Option under the Code and (ii) that if an Option is
exercised prior to the date that is six months from the later of
(A) the date of grant of the Option or (B) the date of shareholder
approval of the Plan, and the individual exercising the Option is
a reporting person under Section 16(a) of the Exchange Act, then in
order to qualify for exemptive treatment under Section 16(a), the
holder may not transfer the stock received pursuant to the exercise
of such Option until the expiration of six months from the later of
the date specified in clause (A) above or the date specified in
clause (B) above.
11. STOCK APPRECIATION RIGHTS (SARs)
(a) In General. Subject to the terms and conditions of the
Plan, the Board may, in its sole and absolute discretion, grant to
an Optionee rights (SAR's) to surrender to the Company, in whole or
in part, either in tandem with an Option or alone and unrelated to
an Option, and to receive in exchange therefor payment by the
Company of an amount equal to the excess of the fair market value
of the shares of the applicable class of Stock (i) subject to such
Option if in tandem with an Option or (ii) set forth in the
agreement evidencing the SAR, or portion thereof, so surrendered
(determined in the manner described in Section 9 above as of the
date the SARs are exercised) over the Option Price of such shares
or the exercise price set forth in the SAR Agreement. Such payment
may be made, as determined by the Board in accordance with Section
11(d) and 11(e) below and set forth in the Option Agreement, either
in shares of Stock or in cash or in any combination thereof, if the
SAR is in tandem with an Option, or in cash if the SAR is not in
tandem with an Option. All SARs granted in tandem with an Option
shall be evidenced by provisions in the Option Agreement pertaining
to the related Option, which provisions shall comply with and be
subject to the terms and conditions set forth in this Section 11.
SARs not in tandem with Options will be evidenced by an SAR
Agreement which shall comply with and be subject to the terms and
conditions set forth in this Section 11.
(b) Grant. Each SAR granted in tandem with an Option shall
relate to a specific Option granted under the Plan and shall be
awarded to the Optionee concurrently with the grant of such Option
pursuant to Section 6 above. SARs not in tandem with an Option
shall be separately granted and evidenced by an SAR Agreement. The
number of SARs granted to an Optionee shall be equal to the number
of shares of Stock which such Optionee is entitled to purchase
pursuant to the related Option or as set forth in the SAR
Agreement. The number of SARs held by an Optionee shall be reduced
by (i) the number of SARs exercised for Stock or cash under the
provisions of the Option Agreement pertaining to the related Option
or the SAR Agreement, and (ii) the number of shares of Stock
purchased pursuant to the exercise of the related Option, if
applicable.
(c) Exercise. SARs that are exercisable hereunder and under
the Option Agreement may be exercised by delivering to the Company
on any business day, at its principal office, addressed to the
attention of the Committee, written notice of exercise, which
notice shall specify the number of SARs being exercised. The date
upon which such written notice is received by the Company shall be
the exercise date of the SARs. Except to the extent that SARs are
exercised for cash as provided in Section 11(e) below, the
individual exercising SARs shall receive, without payment therefor
to the Company, the number of shares of Stock determined under
Section 11(d) below. Promptly after the exercise of SARs, the
individual exercising the SARs shall be entitled to the issuance of
a Stock certificate or certificates evidencing ownership of such
shares. An individual holding or exercising SARs shall have none of
the rights of a shareholder with respect to any shares of Stock
covered by the SARs until shares of Stock are issued to him or her,
and, except as provided in Section 19 below, no adjustment shall be
made for dividends or other rights for which the record date is
prior to the date of such issuance.
(d) Number of Shares. The number of shares of Stock which
shall be issued pursuant to the exercise of SARs shall be
determined by dividing (i) the total number of SARs being
exercised, multiplied by the amount by which the fair market value
(determined in the manner described in Section 9 above) of a share
of the applicable class of Stock on the exercise date exceeds the
Option Price of the related Option, by (ii) the fair market value
(determined in the manner described in Section 9 above) of a share
of the applicable class of Stock on the exercise date of the SARs;
provided, however, that no fractional share shall be issued on
exercise of SARs, and that cash shall be paid by the Company to the
individual exercising SARs in lieu of any such fractional share.
(e) Exercise of SARs for Cash. All SARs granted not in tandem
with Options shall be settled in cash. The Board shall have sole
discretion to determine whether, and shall set forth in the Option
Agreement pertaining to the related Option the circumstances under
which, payment in respect of SARs in tandem with Options granted to
any Optionee shall be made in shares of Stock, or in cash, or in a
combination thereof. Promptly after the exercise of an SAR for
cash, the individual exercising the SAR shall receive in respect of
said SAR an amount of money equal to the difference between the
fair market value (determined in the manner described in Section 9
above) of a share of the applicable class of Stock on the exercise
date and the Option Price of the related Option.
(f) Limitations. SARs shall be exercisable at such times and
under such terms and conditions as the Board, in its sole and
absolute discretion, shall determine and set forth in the Option
Agreements pertaining to the related Options or the SAR Agreement;
provided, however, that an SAR granted in tandem with an Option may
be exercised only at such times and by such individuals as the
related Option under the Plan and the Option Agreement may be
exercised; and provided, further, that an SAR may be exercised only
at such times as the fair market value (determined in the manner
described in Section 9 above) of a share of the applicable class of
Stock on the exercise date exceeds the Option Price of the related
Option. Adjustments in the number, kind, or Option Price of shares
of Stock for which Options are granted pursuant to Section 19 below
shall also be made as necessary to the related SARs held by each
Optionee. Any amendment, suspension or termination of the Plan
pursuant to Section 18 below shall be deemed an amendment,
suspension or termination of SARs to the same extent.
12. TRANSFERABILITY OF OPTIONS OR SARS
During the lifetime of an Optionee to whom an Option is
granted, only such Optionee (or, in the event of legal incapacity
or incompetency, the Optionee's guardian or legal representative)
may exercise the Option or SAR. No Option or SAR shall be
assignable or transferable by the Optionee to whom it is granted,
other than by will or the laws of descent and distribution.
13. TERMINATION OF EMPLOYMENT
(a) Employees. Upon the termination of the employment of an
Optionee with the Company or a Subsidiary, other than by reason of
the death or "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, any Option or
SAR granted to an Optionee pursuant to the Plan shall terminate
three months after the date of such termination of employment,
unless earlier terminated pursuant to Section 10(a) above, and such
Optionee shall have no further right to purchase shares of Stock
pursuant to such Option; provided, however, that the Board may
provide, by inclusion of appropriate language in any Option
Agreement, that the Optionee may (subject to the general
limitations on exercise set forth in Section 10(b) and Section
11(f) above), in the event of termination of service or employment
of the Optionee with the Company or a Subsidiary, exercise an
Option or SAR, in whole or in part, at any time subsequent to such
termination of service or employment and prior to termination of
the Option pursuant to Section 10(a) above, either subject to or
without regard to any installment limitation on exercise imposed
pursuant to Section 10(b) above. Whether a leave of absence or
leave on military or government service shall constitute a
termination of service or employment for purposes of the Plan shall
be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment
with the Company or a Subsidiary shall not be deemed to occur if
the Optionee is immediately thereafter employed with or in the
service of the Company or any Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death of an Employee. If an Optionee dies while in the
employ or service of the Company or a Subsidiary or within the
period following the termination of employment or service during
which the Option or SAR is exercisable under Section 13 above or
Section 14(b) below, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right
(subject to the general limitations on exercise set forth in
Section 10(b) and Section 11(f) above), at any time within one year
after the date of such Optionee's death and prior to termination of
the Option pursuant to Section 10(a) above,to exercise any Option
or SAR held by such Optionee at the date of such Optionee's death,
whether or not such Option or SAR was exercisable immediately prior
to such Optionee's death; provided, however, that the Board may
provide by inclusion of appropriate language in any Option
Agreement that, in the event of the death of the Optionee, the
executors or administrators or legatees or distributees of such
Optionee's estate may exercise an Option or SAR (subject to the
general limitations on exercise set forth in Section 10(b) and
Section 11(f) above), in whole or in part, at any time subsequent
to such Optionee's death and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without
regard to any installment limitation or exercise imposed pursuant
to Section 10(b) above.
(b) Disability of an Employee. If an Optionee's employment or
service with the Company or a Subsidiary is terminated by reason of
the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, then such Optionee shall
have the right (subject to the general limitations on exercise set
forth in Section 10(b) or Section 11(f) above), at any time within
one year after such termination of service or employment and prior
to termination of the Option pursuant to Section 10(a) above, to
exercise, in whole or in part, any Option or SAR held by such
Optionee at the date of such termination of service or employment,
whether or not such Option or SAR was exercisable immediately prior
to such termination of service or employment; provided, however,
that the Board may provide, by inclusion of appropriate language in
any Option Agreement, that the Optionee may (subject to the general
limitations on exercise set forth in Section 10(b) and Section
11(f) above), in the event of the termination of service or
employment of the Optionee with the Company or a Subsidiary by
reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an
Option or SAR, in whole or in part, at any time subsequent to such
termination of service or employment and prior to termination of
the Option pursuant to Section 10(a) above, either subject to or
without regard to any installment limitation or exercise imposed
pursuant to Section 10(b) above. Whether a termination of service
or employment is to be considered by reason of "permanent and total
disability" for purposes of this Plan shall be determined by the
Board, which determination shall be final and conclusive.
15. INCENTIVE STOCK AWARDS
(a) Grant of Incentive Stock Awards. Subject to the pro-
visions of this Section 15, the Board may from time to time
determine those individuals eligible pursuant to Section 4 above to
whom incentive stock awards ("Incentive Stock Awards") shall be
granted and the amount and terms and conditions of such Incentive
Stock Awards.
(b) Terms and Conditions of Incentive Stock Awards. Each
grant of an Incentive Stock Award shall be evidenced by a written
agreement (an "Incentive Stock Award Agreement") which shall be in
such form as the Board shall from time to time approve, and which
shall comply with and be subject to the following terms and
conditions:
(1) Amount of Award. Each Incentive Stock Award
Agreement shall state the number and class of shares of Common
Stock covered by the agreement which become payable if the vesting
provisions and/or performance criteria specified in the Incentive
Stock Award Agreement are achieved (in the event the Board decides
to establish performance criteria).
(2) Performance Criteria. Each time the Board approves
the granting of Incentive Stock Awards, it may, but is not
obligated to, establish corporate performance goals to be attained
by the Company or individual recipients, or both, and the date or
dates ("earn-out dates") by which such goals must be achieved for
the participant to be entitled to payment of an Incentive Stock
Award. Such goals may be subject to subsequent modification by the
Board, as appropriate, based on changes in business conditions. To
the extent that a performance goal is either not achieved or is
exceeded by the applicable earn-out date or dates specified in the
Agreement, the amount of the Incentive Stock Award to be earned
shall be determined by the Board.
(3) Disability or Death. No Incentive Stock Award shall
be paid for any period after the termination of the individual's
employment; provided, however, that if an individual's employment
is terminated by Disability or death, then the Board shall
determine the extent to which any shares covered by an Incentive
Stock Award Agreement, which are not yet payable, shall become
payable.
(4) Form of Payment. The Board shall have the sole
discretion to determine the form in which payment of the Incentive
Stock Award shall be made (i.e., in cash, in shares, or in any
combination thereof). Instead of distributing the number of shares
covered by the Incentive Stock Award Agreement as of the applicable
earn-out date, the Board may distribute the cash equivalent
determined on the basis of the Fair Market Value of a share at such
earn-out date for all or a portion of such shares.
16. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock
pursuant to Options granted under the Plan shall constitute general
funds of the Company.
17. REQUIREMENTS OF LAW
(a) Violations of Law. The Company shall not be required to
sell or issue any shares of Stock under any Award if the sale or
issuance of such shares would constitute a violation by the
individual or the Company of any provisions of any law or
regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations.
Specifically in connection with the Securities Act of 1933 (as now
in effect or as hereafter amended), upon exercise of any Option or
SAR, unless a registration statement under such Act is in effect
with respect to the shares of Stock covered by such Option or SAR,
the Company shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the
holder of such Option or SAR may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in
this connection by the Board shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Securities
Act of 1933 (as now in effect or as hereafter amended). The Company
shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or SAR or the issuance of shares
pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option or SAR shall not be
exercisable unless and until the shares of Stock covered by such
Option or SAR are registered or are subject to an available
exemption from registration, the exercise of such Option or SAR
(under circumstances in which the laws of such jurisdiction apply)
shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this Plan is to
qualify for the exemption provided by Rule 16b-3 under the Exchange
Act. To the extent any provision of the Plan does not comply with
the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Board and
shall not affect the validity of the Plan. In the event Rule 16b-3
is revised or replaced, the Board, or the Committee acting on
behalf of the Board, may exercise discretion to modify this Plan in
any respect necessary to satisfy the requirements of the revised
exemption or its replacement.
18. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which
Options or SARs have not been granted. However, any amendment by
the Board shall require the approval by the holders of a majority
of the voting power of the Company's Class A and Class B Common
Stock, present in person or by proxy and entitled to vote at a duly
held meeting of the shareholders of the Company at which a quorum
is present and voting on the amendment, or by written consent in
accordance with applicable state law and the Certificate of
Incorporation and By-Laws of the Company, to the extent that such
shareholder approval is required by Rule 16b-3 of the Securities
and Exchange Commission, or is required by the Code in order to
preserve the status of Options as Incentive Stock Options. Except
as permitted under Section 19 hereof, no amendment, suspension or
termination of the Plan shall, without the consent of the holder of
the Option or SAR, alter or impair rights or obligations under any
Option or SAR theretofore granted under the Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of the class
for which an Option or SAR has been granted are increased or
decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration
by the Company, occurring after the effective date of the Plan, the
number and kinds of shares for the purchase of which Awards may be
granted under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of
shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest
of the holder of the Award immediately following such event shall,
to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options or SARs shall not
change the aggregate Option Price payable with respect to shares
subject to the unexercised portion of the Option or SAR outstanding
but shall include a corresponding proportionate adjustment in the
Option Price per share.
(b) Reorganization in Which the Company Is the Surviving
Corporation. Subject to Subsection (c) hereof, if the Company shall
be the surviving corporation in any reorganization, merger, or
consolidation of the Company with one or more other corporations,
any Award theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of
shares of the applicable class of Stock subject to such Award would
have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.
(c) Reorganization in Which the Company Is Not the Surviving
Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of the Company, or upon a merger, consolidation,
reorganization or other business combination of the Company with
one or more other entities in which the Company is not the
surviving entity, or upon a sale of all or substantially all of the
assets of the Company to another entity, or upon any transaction
(including, without limitation, a merger or reorganization in which
the Company is the surviving corporation) approved by the Board
which results in any person or entity (or persons or entities
acting as a group or otherwise in concert) owning 80 percent or
more of the combined voting power of all classes of stock of the
Company, the Plan and all Awards outstanding hereunder shall
terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan
and/or the assumption of the Awards theretofore granted, or for the
substitution for such Awards of new options or stock appreciation
rights covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares and exercise prices, in which event the Plan
and Awards theretofore granted shall continue in the manner and
under the terms so provided. In the event of any such termination
of the Plan, each individual holding an Award (subject to the
general limitations on exercise set forth in Section 10(b) and
Section 11(f) above and except as otherwise specifically provided
in the agreement relating to such Award), immediately prior to the
occurrence of such termination and during such period occurring
prior to such termination as the Board in its sole discretion shall
determine and designate, shall have the right to exercise such
Option or SAR in whole or in part, whether or not such Option or
SAR was otherwise exercisable at the time such termination occurs
and without regard to any installment limitation on exercise
imposed pursuant to Section 10(b) above. The Board shall send
written notice of an event that will result in such a termination
to all individuals who hold Options or SARs not later than the time
at which the Company gives notice thereof to its shareholders.
(d) Adjustments. Adjustments under this Section 19 related
to stock or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding, and
conclusive. No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in
each case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Company. The grant of an Award pursuant
to the Plan shall not affect or limit in any way the right or power
of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or
to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
20. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Award granted or agreement
entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ or service of the
Company or any Subsidiary, or to interfere in any way with the
right and authority of the Company or any Subsidiary either to
increase or decrease the compensation of any individual at any
time, or to terminate any employment or other relationship between
any individual and the Company or any Subsidiary.
21. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the
Plan to the shareholders of the Company for approval shall be
construed as creating any limitations upon the right and authority
of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally
to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the
granting of stock options or stock appreciation rights otherwise
than under the Plan.
EX-10.2
4
EMPLOYMENT AGREEMENT
Agreement made as of the 8th day of June, 1995, by and between
DAIRY MART CONVENIENCE STORES, INC., a Delaware corporation with
its principal offices at One Vision Drive, Enfield, Connecticut
06082 (the "Company"), and ROBERT B. STEIN, JR., with his residence
located at 161 Great Pond Road, South Glastonbury, CT 06073 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the
Employee as the President of the Company, and the Employee has
agreed to supply his services as the President and Chief Executive
Officer of the Company, upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following capitalized terms used herein shall have the respective
meanings set forth below. Other capitalized terms used herein are
defined elsewhere in this Agreement.
"Cause" shall mean (i) the Employee's willful breach of
duty in the course of his employment, or his habitual neglect of
his employment duties, (ii) an act of fraud or theft committed by
the Employee against the Company or (iii) the Employee having been
convicted by a court of competent jurisdiction of a felony. For
purposes of this Agreement, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interests of the
Company and its subsidiaries. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him 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 the Employee
and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board the Employee was guilty of conduct set forth above in this
definition and specifying the particulars thereof in detail.
"Date of Termination" shall mean (i) if the Employee's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Employee shall
not have returned to the full-time performance of his duties during
such thirty (30) day period), and (ii) if the Employee's employment
is terminated for Cause or Good Reason or for any other reason
(other than Disability or death), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall
not be less than thirty (30) days, and in the case of a termination
for Good Reason shall not be less than thirty (30) nor more than
ninety (90) days, respectively, from the date such Notice of
Termination is given).
"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 questions as to the
existence of the Employee's Disability upon which he and the
Company cannot agree shall be determined by a qualified independent
physician selected by the Employee (or, if he is unable to make
such selection, such selection shall be made by any adult member of
the Employee's immediate family or his 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 the Employee shall be final and conclusive for
all purposes of this Agreement.
"Good Reason" shall mean the occurrence, without the
Employee's express written consent, of any of the following
circumstances:
(i) the assignment to the Employee of any duties
inconsistent with his status as President and Chief Executive
Officer of the Company, his removal from that position, a
diminution in the nature or status of his responsibilities from
those in effect immediately prior to the date hereof or the
employment by the Company of an executive officer senior to
Employee;
(ii) a reduction by the Company in the Employee's Base
Salary (as defined in Paragraph 5 hereof) or fringe benefits as in
effect on the date hereof or as the same may be increased from time
to time during the Employment Term (as hereinafter defined in
Paragraph 3 hereof);
(iii) any failure by the Board to renominate the
Employee for election as a director of the Company, except in
connection with his death or the termination of this employment by
him for other than Good Reason or by the Company for his death,
Disability or for Cause; or
(iv) a change in the identity of a majority of the
directors of the Company holding office on the date hereof and
following such change the Employee is subject to, in the reasonable
opinion of the Employee, (x) unreasonable demands regarding his
business time and efforts to be expended on behalf of the Company,
(y) abusive treatment or (z) other material adverse changes in his
working environment and conditions from those in effect on the date
hereof.
"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 the
Employee's employment under the provision so indicated.
2. Employment. The Company shall employ the Employee, and
the Employee shall serve the Company, upon the terms and conditions
hereinafter set forth.
3. Term. The employment of the Employee by the Company
hereunder commenced as of June 1, 1995 and, unless sooner
terminated on an earlier date in accordance with the provisions
hereinafter provided, shall terminate on May 31, 1997; provided,
however, that commencing on June 1, 1996 and each June 1
thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than February 28
of such calendar year, either the Company or the Employee shall
have given notice to the other party that it or he does not wish to
extend the term of this Agreement. The period commencing on June
1, 1995 and ending on May 31, 1997 or such earlier or later date to
which the term of the Employee's employment hereunder may be
shortened or extended as provided in this Agreement is referred to
herein as the "Employment Term".
4. Duties. During the Employment Term, the Employee shall:
(i) Serve as President and Chief Executive Officer of
the Company, faithfully and to the best of his ability, subject to
the direction and supervision of the Board;
(ii) Serve as an officer and/or director of, and shall
perform such services on behalf of, any subsidiary or other
affiliate of the Company as may be designated by the Board, all
without further compensation other than that provided for in this
Agreement; and
(iii) Devote his full business time, energy and skill
to such employment and shall not, without prior written approval of
the Board, directly or indirectly, engage or participate in, or
become employed by, or become an officer or partner of, or render
advisory services to or provide other services in connection with,
any business activity other than that of the Company or any of its
subsidiaries or affiliates as provided above; provided, however,
that the Employee shall be permitted to (x) serve as a board member
of and render services to charitable organizations of his choice
and (y) personally invest in any corporation, partnership or other
entity, so long as any such investment does not require or involve
the active participation of the Employee in the management of the
business of any such corporation, partnership or other entity such
as to materially interfere with the execution of the Employee's
duties hereunder and does not otherwise violate any provision of
this Agreement.
5. Salary. During the term of this Agreement, the Company
shall pay to the Employee a salary for his services (the "Base
Salary") at a rate not less than $250,000 per year, payable in
accordance with the regular payroll practices of the Company. The
Base Salary shall be subject to annual review by the Board;
provided, however, that such salary may be increased, but not
decreased, in the sole discretion of the Board.
6. Cash Bonus Arrangements. In addition to the Base Salary
provided for in Paragraph 5 hereof, the Company shall pay the
Employee a cash bonus ("Special Bonus") in the amount of $125,000
if the Company's Income Before Income Taxes and Cumulative Effect
of Accounting Changes, prepared in accordance with generally
accepted accounting principles, for the six month fiscal period
ending July 29, 1995 is at least $2,610,000, such Special Bonus
payable no later than September 12, 1995. In addition, the Board,
or a duly authorized committee thereof, may pay to the Employee,
pursuant to an incentive compensation plan formally adopted by the
Board or a committee thereof or otherwise, bonus payments
("Discretionary Bonus") dependent upon the Employee's individual
performance and contribution for a given fiscal year, the Company's
financial performance for such fiscal year and/or such other
criteria as the Board, or such delegated committee thereof, shall
determine. The payment of any Discretionary Bonus to be made to
the Employee shall be in the sole discretion of the Board, or such
delegated committee thereof.
7. Expenses. It is contemplated that, in connection with
his employment hereunder, the Employee may be required to incur
reasonable and necessary travel, business entertainment and other
business expenses. The Company agrees to reimburse the Employee
for all reasonable and necessary travel, business entertainment and
other business expenses incurred or expended by him incident to the
performance of his duties hereunder, upon submission by the
Employee to the Company of vouchers or expense statements (i)
satisfactorily evidencing the incurrence of such expenses and (ii)
that would enable the Company to deduct such expenses from its
income under applicable tax laws.
8. Employee Benefits, Vacation.
(a) The Employee shall be fully vested and entitled to
participate in any and all life insurance, medical insurance,
disability insurance, pension, incentive and savings and other
employee benefit plans which are made available by the Company
during the Employment Term to executives of the Company of the
Employee's rank, to the extent that the Employee qualifies under
the eligibility provisions of such plans.
(b) The Employee shall be entitled to vacations (taken
consecutively or in segments), aggregating four (4) weeks for each
fiscal year of the Company during the Employment Term, to be taken
at times consistent with the effective discharge of the Employee's
duties. Unused vacation time shall not accumulate from year to
year and, in the event any such unused vacation time is remaining
at the end of the fiscal year, the Employee shall not be entitled
to be paid for any such remaining time.
9. Automobile. During the Employment Term, the Company
will, at the Company's sole cost and expense (including, without
limitation, insurance, gasoline and upkeep and repairs), provide
the Employee with an automobile for his use in accordance with past
practice.
10. Permanent Disability. In the event of the Disability of
the Employee during the Employment Term, the Company shall have the
right, following the sending of a Notice of Termination to the
Employee, to terminate his employment hereunder. Effective on the
Date of Termination, the Company shall be discharged and released
from any further obligations under the Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), other than (x) the obligation to continue to make
periodic payments to the Employee of his Base Salary then in effect
(reduced by any amounts received by the Employee pursuant to any
temporary disability plan or program maintained by the Company and
any federal or state disability plan or program) for the period, if
any, from the commencement of the period of Disability through and,
if necessary, after the Date of Termination until the time in
respect of which full payments to the Employee or his
representatives are commenced under the Company's permanent
disability plan or program or (y) pursuant to the next sentence, if
applicable. Notwithstanding the foregoing, if at the time the
Employee's employment hereunder is terminated in the event of
Disability the Company does not maintain a permanent disability
plan or program or if the Employee does not participate in a
permanent disability plan or program offered or sponsored by the
Company, then the Company shall pay to the Employee, within 30 days
after the Date of Termination, an amount equal to (i) 100% of the
annual Base Salary in effect at the time of the Notice of
Termination in accordance with the provisions of Paragraph 5 hereof
and (ii) an amount equal to the highest of the aggregate bonus
payments (including Discretionary Bonus and Special Bonus payments
pursuant to Paragraph 6 hereof) made to or earned by the Employee
in respect of the last three twelve month periods preceding the
Date of Termination. Notwithstanding the foregoing, the Employee
shall have the continuing obligations provided for in Paragraph
13(b) hereof, but shall be released from any obligations after the
Date of Termination pursuant to Paragraph 13(a) hereof. Disability
benefits, if any, due under applicable plans and programs of the
Company shall be determined under the provisions of such plans and
programs.
11. Death. In the event of the death of the Employee during
the Employment Term, the Base Salary to which the Employee is
entitled pursuant to Paragraph 5 hereof shall continue to be paid
through the date of death and the Company shall pay an additional
amount equal to the sum of (i) 100% of the annual Base Salary in
effect at the time of death in accordance with the provisions of
Paragraph 5 hereof and (ii) an amount equal to the highest of the
aggregate bonus payments (including Discretionary Bonus and Special
Bonus payments pursuant to Paragraph 6 hereof) made to or earned by
the Employee in respect of the last three twelve month periods
preceding the date of death. Such additional sum shall be paid
within 30 days after the date of death to the last beneficiary
designated by the Employee by written notice to the Company, or,
failing such designation, to his estate. The Employee shall have
the right to name, from time to time, any one person as beneficiary
hereunder, or with the consent of the Company to make other forms
of designation of beneficiary or beneficiaries. The Employee's
designated beneficiary or personal representative, as the case may
be, shall accept the payments provided for in this Paragraph 11 in
full discharge and release of the Company of and from any further
obligations under this Agreement. Any other benefits due under
applicable plans and programs of the Company shall be determined
under the provisions of such plans and programs.
12. Termination.
(a) If the Employee's employment hereunder is terminated
by the Company for Cause or by the Employee other than for Good
Reason, the Company shall pay the Employee his full Base Salary
through the Date of Termination and shall pay any additional
amounts to be paid to the Employee pursuant to any compensation
plans or programs then in effect and thereupon the Company shall
have no further obligations under this Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), but the Employee shall have the continuing obligations
provided for in Paragraph 13(b) hereof, but shall be released from
any obligations after the date of termination pursuant to Paragraph
13(a) hereof.
(b) If the Employee's employment by the Company shall be
terminated by (x) the Company other than for Cause, his death, or
Disability or (y) the Employee for Good Reason, then the Employee
shall be entitled to the benefits provided below:
(i) The Company shall pay the Employee his full
Base Salary and annual bonus in effect at the time the Notice of
Termination is given through the Date of Termination, no later than
the fifth day following the Date of Termination, plus all other
amounts to which he is entitled under any compensation plan of the
Company applicable to him, at the time such payments are due. For
purposes of this Paragraph 12(b)(i) and (ii) and the other
provisions of this Agreement, the Employee's "annual bonus in
effect at the time the Notice of Termination is given" shall mean
the highest of the aggregate bonus payments (including
Discretionary Bonus and Special Bonus payments pursuant to
Paragraph 6 hereof) made to or earned by the Employee in respect of
the last three twelve month periods preceding the date on which the
Notice of Termination is given.
(ii) The Company shall pay the Employee, on a date
that is no later than the fifth day following the Date of
Termination, as severance pay and in consideration of the
Employee's continued obligations provided for in Paragraph 13(a)
and (b) hereof, a payment equal to 2 times the sum of (x) his 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
the Employee pursuant to this Paragraph 12(b)(ii) shall not be
reduced by the amount of any other payment or the value of any
benefit received or to be received by him in connection with his
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).
(iii) In the event that any payment or benefit
received or to be received by the Employee pursuant to the terms of
this Agreement (the "Contract Payments") or to be received by the
Employee in connection with his 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
below, the Company shall pay to the Employee, at the time specified
in Paragraph 12(b)(iv) below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Employee, 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 Paragraph 12(b)(iii), and any
interest, 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. 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 the Employee ("Tax Counsel"), a Payment
(in whole or in part) does not constitute a "parachute payment"
within the meaning of Section 280(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)(1) 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, the
Employee 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 his 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.
(iv) The Gross-Up Payments provided for in Paragraph
12(b)(iii) hereof shall be made upon the earlier of (A) the payment
to the Employee of any Contract Payment or other Payment or (B) the
imposition upon him or payment by him of any Excise Tax.
(v) 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 Paragraph 12(b)(iii) hereof, the
Employee shall repay to the Company within five days of his 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 him if such repayment results in a reduction in Excise
Tax or a federal, state and local income tax deduction) plus any
interest received by him 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.
(vi) On the Date of Termination, 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 the Employee's use
as of the Notice of Termination, 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.
(vii) For the period of time from the Date of
Termination through the earlier of two years thereafter or the date
on which the Employee and his dependents become eligible for
substantially equivalent coverage provided by a subsequent
employer, the Company shall provide the Employee and his 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.
(viii) Upon the Date of Termination all options
to purchase stock and other rights to purchase or own stock
(including grants of stock) held by the Employee that are not
vested shall immediately vest and become exercisable and all
options to purchase stock and other rights to purchase or own stock
(including grants of stock) then held by him shall remain in effect
and, in the case of rights to purchase stock, be exercisable for 18
months after the Date of Termination, notwithstanding any other
provisions that otherwise would be applicable.
(ix) Upon the Date of Termination, the Company shall
assign and transfer to the Employee, or his designee, all of its
right, title and interest in the life insurance policies covering
the Employee's life that were held by the Company as of such date.
From and after the Date of Termination, the Employee 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 Termination Date.
(x) The Employee shall not be required to mitigate
the amount of any payment provided for in this Paragraph
12(b) by seeking other employment or otherwise, nor, except as
otherwise specifically provided herein, shall the amount of any
payment or benefit provided for in the Paragraph 12(b) be reduced
by any compensation or benefit earned by the Employee as the result
of employment by another employer after the Date of Termination or
otherwise.
The Employee shall accept the payments and other
benefits provided for in the Paragraph 12(b) in full discharge and
release of the Company of and from any further obligations under
this Agreement but the Employee shall have the continuing
obligations provided for in Paragraphs 13(a) and 13(b) hereof.
(c) In the event that the Company elects to terminate
the Employee's Employment Term hereunder pursuant to the proviso to
the first sentence of Paragraph 3 hereof, the Employee shall be
entitled to all of the payments and benefits provided for in
Paragraphs 12(b)(i)-(x) hereof, except that the payment and
consideration provided for in Paragraph 12(b)(ii) hereof to which
the Employee will be entitled will be equal to the sum of (x) his
full Base Salary in effect for the last fiscal year of the Company
completed during the Employment Term and (y) the highest of the
aggregate bonus payments (including Discretionary Bonus and Special
Bonus payments pursuant to Paragraph 6 hereof) made to or earned by
the Employee in respect of the last three twelve month periods
completed during the Employment Term. All references in Paragraph
12(b) to the date of the "Notice of Termination" or "Date of
Termination" shall for purposes of this Paragraph 12(c) be deemed
to be references to the last day of the Employment Term. The
Employee shall accept the payments and other benefits provided for
in this Paragraph 12(c) in full discharge and release of the
Company of and from any further obligations under this Agreement
but the Employee shall have the continuing obligations provided for
in Paragraphs 13(a) and 13(b) hereof.
13. Restrictive Covenants and Confidentiality: Injunctive
Relief.
(a) The Employee agrees, as a condition to the
performance by the Company of its obligation hereunder, that during
the Employment Term and, except if the Employee's employment is
terminated by the Company for Disability or for Cause or by the
Employee other than for Good Reason, during the further period of
one (1) year after the end of such Employment Term, the Employee
shall not, without the prior written approval of the Company,
directly or indirectly through any other person, firm or
corporation, (i) engage or participate or make any financial
investment in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in
connection with any business enterprise, whether for compensation
or otherwise, which is in competition with any of the business
operations or activities of the Company and its subsidiaries then
existing in all geographical places where the Company and its
subsidiaries does or did business during the Employment Term, or
(ii) solicit, raid, entice or induce any person who on the date of
termination of employment of the Employee is, or within the last
twelve (12) months of the Employee's employment by the Company was,
an employee of the Company or any of its subsidiaries, to become
employed by any person, firm or corporation, and the Employee shall
not approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by any other person,
or (iii) solicit any person or entity who on the Date of
Termination is a vendor of the Company to terminate its
relationship with the Company. Nothing herein contained, however,
shall restrict the Employee from making any investments in any
company, partnership or other entity, so long as such investment
does not require or involve the active participation of the
Employee in the management of any business or enterprise which is
in competition with any of the business operations or activities of
the Company.
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the
knowledge of the Company's and its subsidiary companies' business
methods, systems, plans and policies which he shall hereafter
establish, receive or obtain as an employee of the Company or its
subsidiary companies, are valuable and unique assets of the
respective businesses of the Company and its subsidiary companies,
the Employee agrees that, during and after the Employment Term he
shall not (otherwise than pursuant to his duties hereunder)
disclose, publish, or furnish to any person, firm or corporation
(other than to representatives of the Company and its affiliates in
furtherance of the performance of the Employee's services
hereunder) any confidential or proprietary information, systems,
programs, know how or trade secrets or any other knowledge,
information, documents or materials, the confidentiality of which
the Company and its affiliates take reasonable measures to protect,
acquired by the Employee during the term of this Agreement as a
result of the performance of his services hereunder.
(c) The Employee represents and acknowledges that, in
light of the payments to be made by the Company to the Employee
hereunder and for other good and valid reasons, the restrictions
stated in Paragraphs 13(a) and 13(b) on the activities in which he
may engage upon termination of his employment with the Company are
reasonable, the locations designated above are reasonable because
they are limited to the locations in which the Company and its
subsidiaries did business during the Employment Term, and the
period of time designated above is reasonable because it extends
only for 12 months following the termination of his employment with
the Company.
(d) The Employee acknowledges that the services to be
rendered by him are of a special, unique and extraordinary
character and, in connection with such services, he will have
access to confidential information vital to the Company's and its
subsidiary companies' businesses. By reason of this, the Employee
consents and agrees that if he violates any of the provisions of
Paragraphs 13(a) or 13(b) the Company and its subsidiary companies
would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Employee
from committing or continuing any such violation of this Agreement,
and the Employee shall not object to any such application.
14. Deductions and Withholding. The Employee agrees that the
Company shall withhold from any and all payments required to be
made to the Employee pursuant to this 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.
15. Attorneys' Fees. The Company shall pay to the Employee
all legal fees and expenses reasonably incurred by him 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).
16. Notices. All notices or other documents to be given
hereunder by either party hereto to the other shall be in writing
and delivered personally or sent postage prepaid by registered or
certified mail, return receipt requested. Notices shall be deemed
to have been received on the date of delivery, or if sent by
certified or registered mail, return receipt requested, shall be
deemed to be delivered on the third business day after the date of
mailing. The postal receipt specifying a mailing date shall be
sufficient proof of the date of notice. Notices shall be sent to
the following addresses until a notice of change of address by like
notice has been duly provided:
To the Employee: Robert B. Stein, Jr.
161 Great Pond Road
S. Glastonbury, CT 06073
To the Company: Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
Attn: Gregory G. Landry
17. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators, successors and legal
representatives of the Employee, and shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
Notwithstanding the foregoing, the obligations of the Employee may
not be delegated and, except as expressly provided in Paragraph 11
hereof relating to the designation of beneficiaries, the employee
may not assign, pledge, encumber, hypothecate or otherwise dispose
of this Agreement, or any of his rights hereunder, and any such
attempted delegation or disposition shall be null and void and
without effect. The provisions of Paragraphs 10, 11, 12 and 13
hereof shall survive termination of this Agreement. 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.
18. Complete Understanding: Amendment. This Agreement
constitutes the complete understanding between the parties with
respect to the employment of the Employee hereunder, and no
statement, representation, warranty or covenant has been made by
either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the
parties hereto. Waiver by either party hereto of any breach
hereunder by the other party shall not operate as a waiver of any
other breach, whether similar to or different from the breach
waived. This Agreement supersedes and renders null and void the
letter agreement, dated September 16, 1994, between the Company and
the Employee relating to severance payments and benefits.
19. Governing Law. This Agreement shall be governed by the
laws of the state of Connecticut.
20. Paragraph Headings. The paragraph headings contained in
this Agreement are for reference purposes only and shall not effect
in any way the meaning or interpretation of this Agreement.
21. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be
invalid and unenforceable, shall not be affected thereby, and each
provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto set their hands as of
the day and year first above written.
DAIRY MART CONVENIENCE STORES, INC.
By: /s/ Gregory G. Landry
Name: Gregory G. Landry
Title: Executive Vice President
Chief Financial Officer
Agreed to as of this 8th day
of June, 1995
Address for notices:
161 Great Pond Road
S. Glastonbury, CT 06073
EX-10.3
5
EMPLOYMENT AGREEMENT
Agreement made as of the 8th day of June, 1995, by and between
DAIRY MART CONVENIENCE STORES, INC., a Delaware corporation with
its principal offices at One Vision Drive, Enfield, Connecticut
06082 (the "Company"), and GREGORY G. LANDRY, with his residence
located at 86 Ethan Drive, Windsor, Connecticut 06095 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the
Employee in the capacities set forth herein, and the Employee has
agreed to supply his services in such capacities, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following capitalized terms used herein shall have the respective
meanings set forth below. Other capitalized terms used herein are
defined elsewhere in this Agreement.
"Cause" shall mean (i) the Employee's willful breach of
duty in the course of his employment, or his habitual neglect of
his employment duties, (ii) an act of fraud or theft committed by
the Employee against the Company or (iii) the Employee having been
convicted by a court of competent jurisdiction of a felony. For
purposes of this Agreement, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interests of the
Company and its subsidiaries. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him 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 the Employee
and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board the Employee was guilty of conduct set forth above in this
definition and specifying the particulars thereof in detail.
"Date of Termination" shall mean (i) if the Employee's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Employee shall
not have returned to the full-time performance of his duties during
such thirty (30) day period), and (ii) if the Employee's employment
is terminated for Cause or Good Reason or for any other reason
(other than Disability or death), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall
not be less than thirty (30) days, and in the case of a termination
for Good Reason shall not be less than thirty (30) nor more than
ninety (90) days, respectively, from the date such Notice of
Termination is given).
"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 questions as to the
existence of the Employee's Disability upon which he and the
Company cannot agree shall be determined by a qualified independent
physician selected by the Employee (or, if he is unable to make
such selection, such selection shall be made by any adult member of
the Employee's immediate family or his 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 the Employee shall be final and conclusive for
all purposes of this Agreement.
"Good Reason" shall mean the occurrence, without the
Employee's express written consent, of any of the following
circumstances:
(i) the assignment to the Employee of any duties
inconsistent with his status as Executive Vice President, Treasurer
and Chief Financial Officer of the Company, his removal from that
position, or a diminution in the nature or status of his
responsibilities from those in effect immediately prior to the date
hereof;
(ii) a reduction by the Company in the Employee's Base
Salary (as defined in Paragraph 5 hereof) or fringe benefits as in
effect on the date hereof or as the same may be increased from time
to time during the Employment Term (as hereinafter defined in
Paragraph 3 hereof);
(iii) any failure by the Board to renominate the
Employee for election as a director of the Company, except in
connection with his death or the termination of this employment by
him for other than Good Reason or by the Company for his death,
Disability or for Cause; or
(iv) a change in the executive officer to whom the
Employee reports on the date hereof and following such change the
Employee is subject to, in the reasonable opinion of the Employee,
(x) unreasonable demands regarding his business time and efforts to
be expended on behalf of the Company, (y) abusive treatment or (z)
other material adverse changes in his working environment and
conditions from those in effect on the date hereof.
"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 the
Employee's employment under the provision so indicated.
2. Employment. The Company shall employ the Employee, and
the Employee shall serve the Company, upon the terms and conditions
hereinafter set forth.
3. Term. The employment of the Employee by the Company
hereunder commenced as of June 1, 1995 and, unless sooner
terminated on an earlier date in accordance with the provisions
hereinafter provided, shall terminate on May 31, 1997; provided,
however, that commencing on June 1, 1996 and each June 1
thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than February 28
of such calendar year, either the Company or the Employee shall
have given notice to the other party that it or he does not wish to
extend the term of this Agreement. The period commencing on June
1, 1995 and ending on May 31, 1997 or such earlier or later date to
which the term of the Employee's employment hereunder may be
shortened or extended as provided in this Agreement is referred to
herein as the "Employment Term".
4. Duties. During the Employment Term, the Employee shall:
(i) Serve as Executive Vice President, Treasurer and
Chief Financial Officer of the Company, faithfully and to the best
of his ability, subject to the direction and supervision of the
Board;
(ii) Serve as an officer and/or director of, and shall
perform such services on behalf of, any subsidiary or other
affiliate of the Company as may be designated by the Board, all
without further compensation other than that provided for in this
Agreement; and
(iii) Devote his full business time, energy and skill
to such employment and shall not, without prior written approval of
the Board, directly or indirectly, engage or participate in, or
become employed by, or become an officer or partner of, or render
advisory services to or provide other services in connection with,
any business activity other than that of the Company or any of its
subsidiaries or affiliates as provided above; provided, however,
that the Employee shall be permitted to (x) serve as a board member
of and render services to charitable organizations of his choice
and (y) personally invest in any corporation, partnership or other
entity, so long as any such investment does not require or involve
the active participation of the Employee in the management of the
business of any such corporation, partnership or other entity such
as to materially interfere with the execution of the Employee's
duties hereunder and does not otherwise violate any provision of
this Agreement.
5. Salary. During the term of this Agreement, the Company
shall pay to the Employee a salary for his services (the "Base
Salary") at a rate not less than $210,000 per year, payable in
accordance with the regular payroll practices of the Company. The
Base Salary shall be subject to annual review by the Board;
provided, however, that such salary may be increased, but not
decreased, in the sole discretion of the Board.
6. Cash Bonus Arrangements. In addition to the Base Salary
provided for in Paragraph 5 hereof, the Company shall pay the
Employee a cash bonus ("Special Bonus") in the amount of $100,000
if the Company's Income Before Income Taxes and Cumulative Effect
of Accounting Changes, prepared in accordance with generally
accepted accounting principles, for the six month fiscal period
ending July 29, 1995 is at least $2,610,000, such Special Bonus
payable no later than September 12, 1995. In addition, the Board,
or a duly authorized committee thereof, may pay to the Employee,
pursuant to an incentive compensation plan formally adopted by the
Board or a committee thereof or otherwise, bonus payments
("Discretionary Bonus") dependent upon the Employee's individual
performance and contribution for a given fiscal year, the Company's
financial performance for such fiscal year and/or such other
criteria as the Board, or such designated committee thereof shall
determine. The payment of any Discretionary Bonus to be made to
the Employee shall be in the sole discretion of the Board, or such
designated committee thereof.
7. Expenses. It is contemplated that, in connection with
his employment hereunder, the Employee may be required to incur
reasonable and necessary travel, business entertainment and other
business expenses. The Company agrees to reimburse the Employee
for all reasonable and necessary travel, business entertainment and
other business expenses incurred or expended by him incident to the
performance of his duties hereunder, upon submission by the
Employee to the Company of vouchers or expense statements (i)
satisfactorily evidencing the incurrence of such expenses and (ii)
that would enable the Company to deduct such expenses from its
income under applicable tax laws.
8. Employee Benefits, Vacation.
(a) The Employee shall be fully vested and entitled to
participate in any and all life insurance, medical insurance,
disability insurance, pension, incentive and savings and other
employee benefit plans which are made available by the Company
during the Employment Term to executives of the Company of the
Employee's rank, to the extent that the Employee qualifies under
the eligibility provisions of such plans.
(b) The Employee shall be entitled to vacations (taken
consecutively or in segments), aggregating four (4) weeks for each
fiscal year of the Company during the Employment Term, to be taken
at times consistent with the effective discharge of the Employee's
duties. Unused vacation time shall not accumulate from year to
year and, in the event any such unused vacation time is remaining
at the end of the fiscal year, the Employee shall not be entitled
to be paid for any such remaining time.
9. Automobile. During the Employment Term, the Company
will, at the Company's sole cost and expense (including, without
limitation, insurance, gasoline and upkeep and repairs), provide
the Employee with an automobile for his use in accordance with past
practice.
10. Permanent Disability. In the event of the Disability of
the Employee during the Employment Term, the Company shall have the
right, following the sending of a Notice of Termination to the
Employee, to terminate his employment hereunder. Effective on the
Date of Termination, the Company shall be discharged and released
from any further obligations under the Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), other than (x) the obligation to continue to make
periodic payments to the Employee of his Base Salary then in effect
(reduced by any amounts received by the Employee pursuant to any
temporary disability plan or program maintained by the Company and
any federal or state disability plan or program) for the period, if
any, from the commencement of the period of Disability through and,
if necessary, after the Date of Termination until the time in
respect of which full payments to the Employee or his
representatives are commenced under the Company's permanent
disability plan or program or (y) pursuant to the next sentence, if
applicable. Notwithstanding the foregoing, if at the time the
Employee's employment hereunder is terminated in the event of
Disability the Company does not maintain a permanent disability
plan or program or if the Employee does not participate in a
permanent disability plan or program offered or sponsored by the
Company, then the Company shall pay to the Employee, within 30 days
after the Date of Termination, an amount equal to (i) 100% of the
annual Base Salary in effect at the time of the Notice of
Termination in accordance with the provisions of Paragraph 5 hereof
and (ii) an amount equal to the highest of the aggregate bonus
payments (including Discretionary Bonus and Special Bonus payments
pursuant to Paragraph 6 hereof) made to or earned by the Employee
in respect of the last three twelve month periods preceding the
Date of Termination. Notwithstanding the foregoing, the Employee
shall have the continuing obligations provided for in Paragraph
13(b) hereof, but shall be released from any obligations after the
Date of Termination pursuant to Paragraph 13(a) hereof. Disability
benefits, if any, due under applicable plans and programs of the
Company shall be determined under the provisions of such plans and
programs.
11. Death. In the event of the death of the Employee during
the Employment Term, the Base Salary to which the Employee is
entitled pursuant to Paragraph 5 hereof shall continue to be paid
through the date of death and the Company shall pay an additional
amount equal to the sum of (i) 100% of the annual Base Salary in
effect at the time of death in accordance with the provisions of
Paragraph 5 hereof and (ii) an amount equal to the highest of the
aggregate bonus payments (including Discretionary Bonus and Special
bonus payments pursuant to Paragraph 6 hereof) made to or earned by
the Employee in respect of the last three twelve month periods
preceding the date of death. Such additional sum shall be paid
within 30 days after the date of death to the last beneficiary
designated by the Employee by written notice to the Company, or,
failing such designation, to his estate. The Employee shall have
the right to name, from time to time, any one person as beneficiary
hereunder, or with the consent of the Company to make other forms
of designation of beneficiary or beneficiaries. The Employee's
designated beneficiary or personal representative, as the case may
be, shall accept the payments provided for in this Paragraph 11 in
full discharge and release of the Company of and from any further
obligations under this Agreement. Any other benefits due under
applicable plans and programs of the Company shall be determined
under the provisions of such plans and programs.
12. Termination.
(a) If the Employee's employment hereunder is terminated
by the Company for Cause or by the Employee other than for Good
Reason, the Company shall pay the Employee his full Base Salary
through the Date of Termination and shall pay any additional
amounts to be paid to the Employee pursuant to any compensation
plans or programs then in effect and thereupon the Company shall
have no further obligations under this Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), but the Employee shall have the continuing obligations
provided for in Paragraph 13(b) hereof, but shall be released from
any obligations after the date of termination pursuant to Paragraph
13(a) hereof.
(b) If the Employee's employment by the Company shall be
terminated by (x) the Company other than for Cause, his death, or
Disability or (y) the Employee for Good Reason, then the Employee
shall be entitled to the benefits provided below:
(i) The Company shall pay the Employee his full
Base Salary and annual bonus in effect at the time the Notice of
Termination is given through the Date of Termination, no later than
the fifth day following the Date of Termination, plus all other
amounts to which he is entitled under any compensation plan of the
Company applicable to him, at the time such payments are due. For
purposes of this Paragraph 12(b)(i) and (ii) and the other
provisions of this Agreement, the Employee's "annual bonus in
effect at the time the Notice of Termination is given" shall mean
the highest of the aggregate bonus payments (including
Discretionary Bonus and Special Bonus payments pursuant to
Paragraph 6 hereof) made to or earned by the Employee in respect of
the last three twelve month periods preceding the date on which the
Notice of Termination is given.
(ii) The Company shall pay the Employee, on a date
that is no later than the fifth day following the Date of
Termination, as severance pay and in consideration of the
Employee's continued obligations provided for in Paragraph 13(a)
and (b) hereof, a payment equal to 2 times the sum of (x) his 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
the Employee pursuant to this Paragraph 12(b)(ii) shall not be
reduced by the amount of any other payment or the value of any
benefit received or to be received by him in connection with his
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).
(iii) In the event that any payment or benefit
received or to be received by the Employee pursuant to the terms of
this Agreement (the "Contract Payments") or in connection with his
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 below, the Company shall
pay to the Employee, at the time specified in Paragraph 12(b)(iv)
below, an additional amount (the "Gross-Up Payment") such that the
net amount retained by the Employee, 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 Paragraph 12(b)(iii), and any interest, 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. 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 the
Employee ("Tax Counsel"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of Section
280(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)(1) 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, the Employee 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 his 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.
(iv) The Gross-Up Payments provided for in Paragraph
12(b)(iii) hereof shall be made upon the earlier of (A) the payment
to the Employee of any Contract Payment or other Payment or (B) the
imposition upon him or payment by him of any Excise Tax.
(v) 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 Paragraph 12(b)(iii) hereof, the
Employee shall repay to the Company within five days of his 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 him if such repayment results in a reduction in Excise
Tax or a federal, state and local income tax deduction) plus any
interest received by him 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.
(vi) On the Date of Termination, 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 the Employee's use
as of the Notice of Termination, 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.
(vii) For the period of time from the Date of
Termination through the earlier of two years thereafter or the date
on which the Employee and his dependents become eligible for
substantially equivalent coverage provided by a subsequent
employer, the Company shall provide the Employee and his 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.
(viii) Upon the Date of Termination all options
to purchase stock and other rights to purchase or own stock
(including grants of stock) held by the Employee that are not
vested shall immediately vest and become exercisable and all
options to purchase stock and other rights to purchase or own stock
(including grants of stock) then held by him shall remain in effect
and, in the case of rights to purchase stock, be exercisable for 18
months after the Date of Termination, notwithstanding any other
provisions that otherwise would be applicable.
(ix) Upon the Date of Termination, the Company shall
assign and transfer to the Employee, or his designee, all of its
right, title and interest in the life insurance policies covering
the Employee's life that were held by the Company as of such date.
From and after the Date of Termination, the Employee 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 Termination Date.
(x) The Employee shall not be required to mitigate
the amount of any payment provided for in this Paragraph
12(b) by seeking other employment or otherwise, nor, except as
otherwise specifically provided herein, shall the amount of any
payment or benefit provided for in the Paragraph 12(b) be reduced
by any compensation or benefit earned by the Employee as the result
of employment by another employer after the Date of Termination or
otherwise.
The Employee shall accept the payments and other
benefits provided for in the Paragraph 12(b) in full discharge and
release of the Company of and from any further obligations under
this Agreement but the Employee shall have the continuing
obligations provided for in Paragraphs 13(a) and 13(b) hereof.
(c) In the event that the Company elects to terminate
the Employee's Employment Term hereunder pursuant to the proviso to
the first sentence of Paragraph 3 hereof, the Employee shall be
entitled to all of the payments and benefits provided for in
Paragraphs 12(b)(i)-(x) hereof, except that the payment and
consideration provided for in Paragraph 12(b)(ii) hereof to which
the Employee will be entitled will be equal to the sum of (x) his
full Base Salary in effect for the last fiscal year of the Company
completed during the Employment Term and (y) the highest of the
aggregate bonus payments (including Discretionary Bonus and Special
Bonus payments pursuant to Paragraph 6 hereof) made to or earned by
the Employee in respect of the last three twelve month periods
completed during the Employment Term. All references in Paragraph
12(b) to the date of the "Notice of Termination" or "Date of
Termination" shall for purposes of this Paragraph 12(c) be deemed
to be references to the last day of the Employment Term. The
Employee shall accept the payments and other benefits provided for
in this Paragraph 12(c) in full discharge and release of the
Company of and from any further obligations under this Agreement
but the Employee shall have the continuing obligations provided for
in Paragraphs 13(a) and 13(b) hereof.
13. Restrictive Covenants and Confidentiality: Injunctive
Relief.
(a) The Employee agrees, as a condition to the
performance by the Company of its obligation hereunder, that during
the Employment Term and, except if the Employee's employment is
terminated by the Company for Disability or for Cause or by the
Employee other than for Good Reason, during the further period of
one (1) year after the end of such Employment Term, the Employee
shall not, without the prior written approval of the Company,
directly or indirectly through any other person, firm or
corporation, (i) engage or participate or make any financial
investment in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in
connection with any business enterprise, whether for compensation
or otherwise, which is in competition with any of the business
operations or activities of the Company and its subsidiaries then
existing in all geographical places where the Company and its
subsidiaries does or did business during the Employment Term, or
(ii) solicit, raid, entice or induce any person who on the date of
termination of employment of the Employee is, or within the last
twelve (12) months of the Employee's employment by the Company was,
an employee of the Company or any of its subsidiaries, to become
employed by any person, firm or corporation, and the Employee shall
not approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by any other person,
or (iii) solicit any person or entity who on the Date of
Termination is a vendor of the Company to terminate its
relationship with the Company. Nothing herein contained, however,
shall restrict the Employee from making any investments in any
company, partnership or other entity, so long as such investment
does not require or involve the active participation of the
Employee in the management of any business or enterprise which is
in competition with any of the business operations or activities of
the Company.
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the
knowledge of the Company's and its subsidiary companies' business
methods, systems, plans and policies which he shall hereafter
establish, receive or obtain as an employee of the Company or its
subsidiary companies, are valuable and unique assets of the
respective businesses of the Company and its subsidiary companies,
the Employee agrees that, during and after the Employment Term he
shall not (otherwise than pursuant to his duties hereunder)
disclose, publish, or furnish to any person, firm or corporation
(other than to representatives of the Company and its affiliates in
furtherance of the performance of the Employee's services
hereunder) any confidential or proprietary information, systems,
programs, know how or trade secrets or any other knowledge,
information, documents or materials, the confidentiality of which
the Company and its affiliates take reasonable measures to protect,
acquired by the Employee during the term of this Agreement as a
result of the performance of his services hereunder.
(c) The Employee represents and acknowledges that, in
light of the payments to be made by the Company to the Employee
hereunder and for other good and valid reasons, the restrictions
stated in Paragraphs 13(a) and 13(b) on the activities in which he
may engage upon termination of his employment with the Company are
reasonable, the locations designated above are reasonable because
they are limited to the locations in which the Company and its
subsidiaries did business during the Employment Term, and the
period of time designated above is reasonable because it extends
only for 12 months following the termination of his employment with
the Company.
(d) The Employee acknowledges that the services to be
rendered by him are of a special, unique and extraordinary
character and, in connection with such services, he will have
access to confidential information vital to the Company's and its
subsidiary companies' businesses. By reason of this, the Employee
consents and agrees that if he violates any of the provisions of
Paragraphs 13(a) or 13(b) the Company and its subsidiary companies
would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Employee
from committing or continuing any such violation of this Agreement,
and the Employee shall not object to any such application.
14. Deductions and Withholding. The Employee agrees that the
Company shall withhold from any and all payments required to be
made to the Employee pursuant to this 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.
15. Attorneys' Fees. The Company shall pay to the Employee
all legal fees and expenses reasonably incurred by him 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).
16. Notices. All notices or other documents to be given
hereunder by either party hereto to the other shall be in writing
and delivered personally or sent postage prepaid by registered or
certified mail, return receipt requested. Notices shall be deemed
to have been received on the date of delivery, or if sent by
certified or registered mail, return receipt requested, shall be
deemed to be delivered on the third business day after the date of
mailing. The postal receipt specifying a mailing date shall be
sufficient proof of the date of notice. Notices shall be sent to
the following addresses until a notice of change of address by like
notice has been duly provided:
To the Employee: Gregory G. Landry
86 Ethan Drive
Windsor, CT 06095
To the Company: Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
Attn: Robert B. Stein, Jr.
17. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators, successors and legal
representatives of the Employee, and shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
Notwithstanding the foregoing, the obligations of the Employee may
not be delegated and, except as expressly provided in Paragraph 11
hereof relating to the designation of beneficiaries, the employee
may not assign, pledge, encumber, hypothecate or otherwise dispose
of this Agreement, or any of his rights hereunder, and any such
attempted delegation or disposition shall be null and void and
without effect. The provisions of Paragraphs 10, 11, 12 and 13
hereof shall survive termination of this Agreement. 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.
18. Complete Understanding: Amendment. This Agreement
constitutes the complete understanding between the parties with
respect to the employment of the Employee hereunder, and no
statement, representation, warranty or covenant has been made by
either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the
parties hereto. Waiver by either party hereto of any breach
hereunder by the other party shall not operate as a waiver of any
other breach, whether similar to or different from the breach
waived. This Agreement supersedes and renders null and void the
letter agreement, dated September 16, 1994, between the Company and
the Employee relating to severance payments and benefits.
19. Governing Law. This Agreement shall be governed by the
laws of the state of Connecticut.
20. Paragraph Headings. The paragraph headings contained in
this Agreement are for reference purposes only and shall not effect
in any way the meaning or interpretation of this Agreement.
21. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be
invalid and unenforceable, shall not be affected thereby, and each
provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto set their hands as of
the day and year first above written.
DAIRY MART CONVENIENCE STORES, INC.
By: /s/Robert B. Stein, Jr.
Name: Robert B. Stein, Jr.
Title: President
Agreed to as of this 8th day
of June, 1995
Address for notices:
86 Ethan Road
Windsor, CT 06095
EX-10.4
6
EMPLOYMENT AGREEMENT
Agreement made as of the 8th day of June, 1995, by and between
DAIRY MART CONVENIENCE STORES, INC., a Delaware corporation with
its principal offices at One Vision Drive, Enfield, Connecticut
06082 (the "Company"), and GARY PAYNE, with his residence located
in Windsor, Connecticut (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the
Employee in the capacities set forth herein, and the Employee has
agreed to supply his services in such capacities, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following capitalized terms used herein shall have the respective
meanings set forth below. Other capitalized terms used herein are
defined elsewhere in this Agreement.
"Cause" shall mean (i) the Employee's willful breach of
duty in the course of his employment, or his habitual neglect of
his employment duties, (ii) an act of fraud or theft committed by
the Employee against the Company or (iii) the Employee having been
convicted by a court of competent jurisdiction of a felony. For
purposes of this Agreement, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interests of the
Company and its subsidiaries. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him 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 the Employee
and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board the Employee was guilty of conduct set forth above in this
definition and specifying the particulars thereof in detail.
"Date of Termination" shall mean (i) if the Employee's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Employee shall
not have returned to the full-time performance of his duties during
such thirty (30) day period), and (ii) if the Employee's employment
is terminated for Cause or Good Reason or for any other reason
(other than Disability or death), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall
not be less than thirty (30) days, and in the case of a termination
for Good Reason shall not be less than thirty (30) nor more than
ninety (90) days, respectively, from the date such Notice of
Termination is given).
"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 questions as to the
existence of the Employee's Disability upon which he and the
Company cannot agree shall be determined by a qualified independent
physician selected by the Employee (or, if he is unable to make
such selection, such selection shall be made by any adult member of
the Employee's immediate family or his 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 the Employee shall be final and conclusive for
all purposes of this Agreement.
"Good Reason" shall mean the occurrence, without the
Employee's express written consent, of any of the following
circumstances:
(i) the assignment to the Employee of any duties
inconsistent with his status as Vice President - Business
Development of the Company, his removal from that position, or a
diminution in the nature or status of his responsibilities from
those in effect immediately prior to the date hereof; or
(ii) a reduction by the Company in the Employee's Base
Salary (as defined in Paragraph 5 hereof) or fringe benefits as in
effect on the date hereof or as the same may be increased from time
to time during the Employment Term (as hereinafter defined in
Paragraph 3 hereof).
"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 the
Employee's employment under the provision so indicated.
2. Employment. The Company shall employ the Employee, and
the Employee shall serve the Company, upon the terms and conditions
hereinafter set forth.
3. Term. The employment of the Employee by the Company
hereunder commenced as of June 1, 1995 and, unless sooner
terminated on an earlier date in accordance with the provisions
hereinafter provided, shall terminate on May 31, 1997; provided,
however, that commencing on June 1, 1996 and each June 1
thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than February 28
of such calendar year, either the Company or the Employee shall
have given notice to the other party that it or he does not wish to
extend the term of this Agreement. The period commencing on June
1, 1995 and ending on May 31, 1997 or such earlier or later date to
which the term of the Employee's employment hereunder may be
shortened or extended as provided in this Agreement is referred to
herein as the "Employment Term".
4. Duties. During the Employment Term, the Employee shall:
(i) Serve as Vice President - Business Development of
the Company, faithfully and to the best of his ability, subject to
the direction and supervision of the Board;
(ii) Serve as an officer and/or director of, and shall
perform such services on behalf of, any subsidiary or other
affiliate of the Company as may be designated by the Board, all
without further compensation other than that provided for in this
Agreement; and
(iii) Devote his full business time, energy and skill
to such employment and shall not, without prior written approval of
the Board, directly or indirectly, engage or participate in, or
become employed by, or become an officer or partner of, or render
advisory services to or provide other services in connection with,
any business activity other than that of the Company or any of its
subsidiaries or affiliates as provided above; provided, however,
that the Employee shall be permitted to (x) serve as a board member
of and render services to charitable organizations of his choice
and (y) personally invest in any corporation, partnership or other
entity, so long as any such investment does not require or involve
the active participation of the Employee in the management of the
business of any such corporation, partnership or other entity such
as to materially interfere with the execution of the Employee's
duties hereunder and does not otherwise violate any provision of
this Agreement.
5. Salary. During the term of this Agreement, the Company
shall pay to the Employee a salary for his services (the "Base
Salary") at a rate not less than $100,000 per year, payable in
accordance with the regular payroll practices of the Company. The
Base Salary shall be subject to annual review by the Board;
provided, however, that such salary may be increased, but not
decreased, in the sole discretion of the Board.
6. Cash Bonus Arrangements. In addition to the Base Salary
provided for in Paragraph 5 hereof, the Board, or a duly authorized
committee thereof, may pay to the Employee, pursuant to an
incentive compensation plan formally adopted by the Board or a
committee thereof or otherwise, bonus payments dependent upon the
Employee's individual performance and contribution for a given
fiscal year, the Company's financial performance for such fiscal
year and/or such other criteria as the Board, or such designated
committee thereof, shall determine. The payment of any such
amounts to be made to the Employee shall be in the sole discretion
of the Board, or such designated committee thereof.
7. Expenses. It is contemplated that, in connection with
his employment hereunder, the Employee may be required to incur
reasonable and necessary travel, business entertainment and other
business expenses. The Company agrees to reimburse the Employee
for all reasonable and necessary travel, business entertainment and
other business expenses incurred or expended by him incident to the
performance of his duties hereunder, upon submission by the
Employee to the Company of vouchers or expense statements (i)
satisfactorily evidencing the incurrence of such expenses and (ii)
that would enable the Company to deduct such expenses from its
income under applicable tax laws.
8. Employee Benefits, Vacation.
(a) The Employee shall be fully vested and entitled to
participate in any and all life insurance, medical insurance,
disability insurance, pension, incentive and savings and other
employee benefit plans which are made available by the Company
during the Employment Term to executives of the Company of the
Employee's rank, to the extent that the Employee qualifies under
the eligibility provisions of such plans.
(b) The Employee shall be entitled to vacations (taken
consecutively or in segments), aggregating four (4) weeks for each
fiscal year of the Company during the Employment Term, to be taken
at times consistent with the effective discharge of the Employee's
duties. Unused vacation time shall not accumulate from year to
year and, in the event any such unused vacation time is remaining
at the end of the fiscal year, the Employee shall not be entitled
to be paid for any such remaining time.
9. Automobile. During the Employment Term, the Company
will, at the Company's sole cost and expense (including, without
limitation, insurance, gasoline and upkeep and repairs), provide
the Employee with an automobile for his use in accordance with past
practice.
10. Permanent Disability. In the event of the Disability of
the Employee during the Employment Term, the Company shall have the
right, following the sending of a Notice of Termination to the
Employee, to terminate his employment hereunder. Effective on the
Date of Termination, the Company shall be discharged and released
from any further obligations under the Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), other than (x) the obligation to continue to make
periodic payments to the Employee of his Base Salary then in effect
(reduced by any amounts received by the Employee pursuant to any
temporary disability plan or program maintained by the Company and
any federal or state disability plan or program) for the period, if
any, from the commencement of the period of Disability through and,
if necessary, after the Date of Termination until the time in
respect of which full payments to the Employee or his
representatives are commenced under the Company's permanent
disability plan or program or (y) pursuant to the next sentence, if
applicable. Notwithstanding the foregoing, if at the time the
Employee's employment hereunder is terminated in the event of
Disability the Company does not maintain a permanent disability
plan or program or if the Employee does not participate in a
permanent disability plan or program offered or sponsored by the
Company, then the Company shall pay to the Employee, within 30 days
after the Date of Termination, an amount equal to (i) 100% of the
annual Base Salary in effect at the time of the Notice of
Termination in accordance with the provisions of Paragraph 5 hereof
and (ii) an amount equal to the highest of the annual bonus
payments made to or earned by the Employee in respect of the three
fiscal years of the Company preceding the Date of Termination.
Notwithstanding the foregoing, the Employee shall have the
continuing obligations provided for in Paragraph 13(b) hereof, but
shall be released from any obligations after the Date of
Termination pursuant to Paragraph 13(a) hereof. Disability
benefits, if any, due under applicable plans and programs of the
Company shall be determined under the provisions of such plans and
programs.
11. Death. In the event of the death of the Employee during
the Employment Term, the Base Salary to which the Employee is
entitled pursuant to Paragraph 5 hereof shall continue to be paid
through the date of death and the Company shall pay an additional
amount equal to the sum of (i) 100% of the annual Base Salary in
effect at the time of death in accordance with the provisions of
Paragraph 5 hereof and (ii) an amount equal to the highest of the
annual bonus payments made to or earned by the Employee in respect
of the three fiscal years of the Company preceding the date of
death. Such additional sum shall be paid within 30 days after the
date of death to the last beneficiary designated by the Employee by
written notice to the Company, or, failing such designation, to his
estate. The Employee shall have the right to name, from time to
time, any one person as beneficiary hereunder, or with the consent
of the Company to make other forms of designation of beneficiary or
beneficiaries. The Employee's designated beneficiary or personal
representative, as the case may be, shall accept the payments
provided for in this Paragraph 11 in full discharge and release of
the Company of and from any further obligations under this
Agreement. Any other benefits due under applicable plans and
programs of the Company shall be determined under the provisions of
such plans and programs.
12. Termination.
(a) If the Employee's employment hereunder is terminated
by the Company for Cause or by the Employee other than for Good
Reason, the Company shall pay the Employee his full Base Salary
through the Date of Termination and shall pay any additional
amounts to be paid to the Employee pursuant to any compensation
plans or programs then in effect and thereupon the Company shall
have no further obligations under this Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), but the Employee shall have the continuing obligations
provided for in Paragraph 13(b) hereof, but shall be released from
any obligations after the date of termination pursuant to Paragraph
13(a) hereof.
(b) If the Employee's employment by the Company shall be
terminated by (x) the Company other than for Cause, his death, or
Disability or (y) the Employee for Good Reason, then the Employee
shall be entitled to the benefits provided below:
(i) The Company shall pay the Employee his full
Base Salary and annual bonus in effect at the time the Notice of
Termination is given through the Date of Termination, no later than
the fifth day following the Date of Termination, plus all other
amounts to which he is entitled under any compensation plan of the
Company applicable to him, at the time such payments are due. For
purposes of this Paragraph 12(b)(i) and the other provisions of
this Agreement, the Employee's "annual bonus in effect at the time
the Notice of Termination is given" shall mean the highest of the
annual bonus payments made to or earned by the Employee in respect
of the three fiscal years of the company preceding the year in
which the Notice of Termination is given.
(ii) The Company shall pay the Employee, on a date
that is no later than the fifth day following the Date of
Termination, as severance pay and in consideration of the
Employee's continued obligations provided for in Paragraph 13(a)
and (b) hereof, a payment equal to the sum of (x) his full Base
Salary and (y) annual bonus, in each case in effect at the time the
Notice of Termination is given. Except as provided in Paragraph
12(b)(iii) hereof, the payment to be made to the Employee pursuant
to this Paragraph 12(b)(ii) shall not be reduced by the amount of
any other payment or the value of any benefit received or to be
received by him in connection with his 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).
(iii) In the event that any payment or benefit
received or to be received by the Employee pursuant to the terms of
this Agreement (the "Contract Payments") would be subject to the
excise tax (the "Excise Tax") imposed by Section 4999 of the Code,
as determined below, the Contract Payments payable hereunder will
be reduced to an amount that will not be subject to the Excise Tax,
as determined below, such reductions in Contract Payments to be
made in such manner as designated by the Employee in his sole
discretion. In the event that the Contract Payments and any
payment or benefit received or to be received by the Employee in
connection with his 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 as
determined as provided below, the Company shall pay to the
Employee, at the time specified in Paragraph 12(b)(iv) below, an
additional amount (the "Gross-Up Payment") such that the net amount
retained by the Employee, 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 Paragraph 12(b)(iii), and any interest, 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. 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 the
Employee ("Tax Counsel"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of Section
280(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)(1) 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, the Employee 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 his 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.
(iv) The Gross-Up Payments provided for in Paragraph
12(b)(iii) hereof shall be made upon the earlier of (A) the payment
to the Employee of any Contract Payment or other Payment or (B) the
imposition upon him or payment by him of any Excise Tax.
(v) 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 Paragraph 12(b)(iii) hereof, the
Employee shall repay to the Company within five days of his 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 him if such repayment results in a reduction in Excise
Tax or a federal, state and local income tax deduction) plus any
interest received by him 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.
(vi) On the Date of Termination, 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 the Employee's use
as of the Notice of Termination, 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.
(vii) For the period of time from the Date of
Termination through the earlier of two years thereafter or the date
on which the Employee and his dependents become eligible for
substantially equivalent coverage provided by a subsequent
employer, the Company shall provide the Employee and his 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.
(viii) Upon the Date of Termination all options
to purchase stock and other rights to purchase or own stock
(including grants of stock) held by the Employee that are not
vested shall immediately vest and become exercisable and all
options to purchase stock and other rights to purchase or own stock
(including grants of stock) then held by him shall remain in effect
and, in the case of rights to purchase stock, be exercisable for 18
months after the Date of Termination, notwithstanding any other
provisions that otherwise would be applicable.
(ix) Upon the Date of Termination, the Company shall
assign and transfer to the Employee, or his designee, all of its
right, title and interest in the life insurance policies covering
the Employee's life that were held by the Company as of such date.
From and after the Date of Termination, the Employee 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 Termination Date.
(x) The Employee shall not be required to mitigate
the amount of any payment provided for in this Paragraph 12(b) by
seeking other employment or otherwise, nor, except as otherwise
specifically provided herein, shall the amount of any payment or
benefit provided for in the Paragraph 12(b) be reduced by any
compensation or benefit earned by the Employee as the result of
employment by another employer after the Date of Termination or
otherwise.
The Employee shall accept the payments and other
benefits provided for in the Paragraph 12(b) in full discharge and
release of the Company of and from any further obligations under
this Agreement but the Employee shall have the continuing
obligations provided for in Paragraphs 13(a) and 13(b) hereof.
(c) In the event that the Company elects to terminate
the Employee's Employment Term hereunder pursuant to the proviso to
the first sentence of Paragraph 3 hereof, the Employee shall be
entitled to all of the payments and benefits provided for in
Paragraphs 12(b)(i)-(x) hereof, except that the payment and
consideration provided for in Paragraph 12(b)(ii) hereof to which
the Employee will be entitled will be equal to one-half times the
sum of (x) his full Base Salary in effect for the last fiscal year
of the Company completed during the Employment Term and (y) the
highest of the annual bonus payments made to or earned by the
Employee in respect of the last three fiscal years of the Company
completed during the Employment Term. All references in Paragraph
12(b) to the date of the "Notice of Termination" or "Date of
Termination" shall for purposes of this Paragraph 12(c) be deemed
to be references to the last day of the Employment Term. The
Employee shall accept the payments and other benefits provided for
in this Paragraph 12(c) in full discharge and release of the
Company of and from any further obligations under this Agreement
but the Employee shall have the continuing obligations provided for
in Paragraphs 13(a) and 13(b) hereof.
13. Restrictive Covenants and Confidentiality: Injunctive
Relief.
(a) The Employee agrees, as a condition to the
performance by the Company of its obligation hereunder, that during
the Employment Term and, except if the Employee's employment is
terminated by the Company for Disability or for Cause or by the
Employee other than for Good Reason, during the further period of
one (1) year after the end of such Employment Term, the Employee
shall not, without the prior written approval of the Company,
directly or indirectly through any other person, firm or
corporation, (i) engage or participate or make any financial
investment in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in
connection with any business enterprise, whether for compensation
or otherwise, which is in competition with any of the business
operations or activities of the Company and its subsidiaries then
existing in all geographical places where the Company and its
subsidiaries does or did business during the Employment Term, or
(ii) solicit, raid, entice or induce any person who on the date of
termination of employment of the Employee is, or within the last
twelve (12) months of the Employee's employment by the Company was,
an employee of the Company or any of its subsidiaries, to become
employed by any person, firm or corporation, and the Employee shall
not approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by any other person,
or (iii) solicit any person or entity who on the Date of
Termination is a vendor of the Company to terminate its
relationship with the Company. Nothing herein contained, however,
shall restrict the Employee from making any investments in any
company, partnership or other entity, so long as such investment
does not require or involve the active participation of the
Employee in the management of any business or enterprise which is
in competition with any of the business operations or activities of
the Company.
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the
knowledge of the Company's and its subsidiary companies' business
methods, systems, plans and policies which he shall hereafter
establish, receive or obtain as an employee of the Company or its
subsidiary companies, are valuable and unique assets of the
respective businesses of the Company and its subsidiary companies,
the Employee agrees that, during and after the Employment Term he
shall not (otherwise than pursuant to his duties hereunder)
disclose, publish, or furnish to any person, firm or corporation
(other than to representatives of the Company and its affiliates in
furtherance of the performance of the Employee's services
hereunder) any confidential or proprietary information, systems,
programs, know how or trade secrets or any other knowledge,
information, documents or materials, the confidentiality of which
the Company and its affiliates take reasonable measures to protect,
acquired by the Employee during the term of this Agreement as a
result of the performance of his services hereunder.
(c) The Employee represents and acknowledges that, in
light of the payments to be made by the Company to the Employee
hereunder and for other good and valid reasons, the restrictions
stated in Paragraphs 13(a) and 13(b) on the activities in which he
may engage upon termination of his employment with the Company are
reasonable, the locations designated above are reasonable because
they are limited to the locations in which the Company and its
subsidiaries did business during the Employment Term, and the
period of time designated above is reasonable because it extends
only for 12 months following the termination of his employment with
the Company.
(d) The Employee acknowledges that the services to be
rendered by him are of a special, unique and extraordinary
character and, in connection with such services, he will have
access to confidential information vital to the Company's and its
subsidiary companies' businesses. By reason of this, the Employee
consents and agrees that if he violates any of the provisions of
Paragraphs 13(a) or 13(b) the Company and its subsidiary companies
would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Employee
from committing or continuing any such violation of this Agreement,
and the Employee shall not object to any such application.
14. Deductions and Withholding. The Employee agrees that the
Company shall withhold from any and all payments required to be
made to the Employee pursuant to this 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.
15. Attorneys' Fees. The Company shall pay to the Employee
all legal fees and expenses reasonably incurred by him 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).
16. Notices. All notices or other documents to be given
hereunder by either party hereto to the other shall be in writing
and delivered personally or sent postage prepaid by registered or
certified mail, return receipt requested. Notices shall be deemed
to have been received on the date of delivery, or if sent by
certified or registered mail, return receipt requested, shall be
deemed to be delivered on the third business day after the date of
mailing. The postal receipt specifying a mailing date shall be
sufficient proof of the date of notice. Notices shall be sent to
the following addresses until a notice of change of address by like
notice has been duly provided:
To the Employee: Gary Payne
To the Company: Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
Attn: Robert B. Stein, Jr.
17. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators, successors and legal
representatives of the Employee, and shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
Notwithstanding the foregoing, the obligations of the Employee may
not be delegated and, except as expressly provided in Paragraph 11
hereof relating to the designation of beneficiaries, the employee
may not assign, pledge, encumber, hypothecate or otherwise dispose
of this Agreement, or any of his rights hereunder, and any such
attempted delegation or disposition shall be null and void and
without effect. The provisions of Paragraphs 10, 11, 12 and 13
hereof shall survive termination of this
Agreement. 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.
18. Complete Understanding: Amendment. This Agreement
constitutes the complete understanding between the parties with
respect to the employment of the Employee hereunder, and no
statement, representation, warranty or covenant has been made by
either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the
parties hereto. Waiver by either party hereto of any breach
hereunder by the other party shall not operate as a waiver of any
other breach, whether similar to or different from the breach
waived.
19. Governing Law. This Agreement shall be governed by the
laws of the state of Connecticut.
20. Paragraph Headings. The paragraph headings contained in
this Agreement are for reference purposes only and shall not effect
in any way the meaning or interpretation of this Agreement.
21. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be
invalid and unenforceable, shall not be affected thereby, and each
provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto set their hands as of
the day and year first above written.
DAIRY MART CONVENIENCE STORES, INC.
By: /s/ Robert B. Stein, Jr.
Name: Robert B. Stein, Jr.
Title: President
Agreed to as of this 8th day
of June, 1995
Address for notices:
EX-10.5
7
EMPLOYMENT AGREEMENT
Agreement made as of the 8th day of June, 1995, by and between
DAIRY MART CONVENIENCE STORES, INC., a Delaware corporation with
its principal offices at One Vision Drive, Enfield, Connecticut
06082 (the "Company"), and GREGG GUY, with his residence located in
Simsbury, Connecticut (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the
Employee in the capacities set forth herein, and the Employee has
agreed to supply his services in such capacities, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following capitalized terms used herein shall have the respective
meanings set forth below. Other capitalized terms used herein are
defined elsewhere in this Agreement.
"Cause" shall mean (i) the Employee's willful breach of
duty in the course of his employment, or his habitual neglect of
his employment duties, (ii) an act of fraud or theft committed by
the Employee against the Company or (iii) the Employee having been
convicted by a court of competent jurisdiction of a felony. For
purposes of this Agreement, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interests of the
Company and its subsidiaries. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him 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 the Employee
and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board the Employee was guilty of conduct set forth above in this
definition and specifying the particulars thereof in detail.
"Date of Termination" shall mean (i) if the Employee's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Employee shall
not have returned to the full-time performance of his duties during
such thirty (30) day period), and (ii) if the Employee's employment
is terminated for Cause or Good Reason or for any other reason
(other than Disability or death), the date specified in the Notice
of Termination (which, in the case of a termination for Cause shall
not be less than thirty (30) days, and in the case of a termination
for Good Reason shall not be less than thirty (30) nor more than
ninety (90) days, respectively, from the date such Notice of
Termination is given).
"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 questions as to the
existence of the Employee's Disability upon which he and the
Company cannot agree shall be determined by a qualified independent
physician selected by the Employee (or, if he is unable to make
such selection, such selection shall be made by any adult member of
the Employee's immediate family or his 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 the Employee shall be final and conclusive for
all purposes of this Agreement.
"Good Reason" shall mean the occurrence, without the
Employee's express written consent, of any of the following
circumstances:
(i) the assignment to the Employee of any duties
inconsistent with his status as Executive Vice President -
Operations and Marketing of the Company, his removal from that
position, or a diminution in the nature or status of his
responsibilities from those in effect immediately prior to the date
hereof; or
(ii) a reduction by the Company in the Employee's Base
Salary (as defined in Paragraph 5 hereof) or fringe benefits as in
effect on the date hereof or as the same may be increased from time
to time during the Employment Term (as hereinafter defined in
Paragraph 3 hereof).
"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 the
Employee's employment under the provision so indicated.
2. Employment. The Company shall employ the Employee, and
the Employee shall serve the Company, upon the terms and conditions
hereinafter set forth.
3. Term. The employment of the Employee by the Company
hereunder commenced as of June 1, 1995 and, unless sooner
terminated on an earlier date in accordance with the provisions
hereinafter provided, shall terminate on May 31, 1997; provided,
however, that commencing on June 1, 1996 and each June 1
thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than February 28
of such calendar year, either the Company or the Employee shall
have given notice to the other party that it or he does not wish to
extend the term of this Agreement. The period commencing on June
1, 1995 and ending on May 31, 1997 or such earlier or later date to
which the term of the Employee's employment hereunder may be
shortened or extended as provided in this Agreement is referred to
herein as the "Employment Term".
4. Duties. During the Employment Term, the Employee shall:
(i) Serve as Executive Vice President - Operations and
Marketing of the Company, faithfully and to the best of his
ability, subject to the direction and supervision of the Board;
(ii) Serve as an officer and/or director of, and shall
perform such services on behalf of, any subsidiary or other
affiliate of the Company as may be designated by the Board, all
without further compensation other than that provided for in this
Agreement; and
(iii) Devote his full business time, energy and skill
to such employment and shall not, without prior written approval of
the Board, directly or indirectly, engage or participate in, or
become employed by, or become an officer or partner of, or render
advisory services to or provide other services in connection with,
any business activity other than that of the Company or any of its
subsidiaries or affiliates as provided above; provided, however,
that the Employee shall be permitted to (x) serve as a board member
of and render services to charitable organizations of his choice
and (y) personally invest in any corporation, partnership or other
entity, so long as any such investment does not require or involve
the active participation of the Employee in the management of the
business of any such corporation, partnership or other entity such
as to materially interfere with the execution of the Employee's
duties hereunder and does not otherwise violate any provision of
this Agreement.
5. Salary. During the term of this Agreement, the Company
shall pay to the Employee a salary for his services (the "Base
Salary") at a rate not less than $150,000 per year, payable in
accordance with the regular payroll practices of the Company. The
Base Salary shall be subject to annual review by the Board;
provided, however, that such salary may be increased, but not
decreased, in the sole discretion of the Board.
6. Cash Bonus Arrangements. In addition to the Base Salary
provided for in Paragraph 5 hereof, the Board, or a duly authorized
committee thereof, may pay to the Employee, pursuant to an
incentive compensation plan formally adopted by the Board or a
committee thereof or otherwise, bonus payments dependent upon the
Employee's individual performance and contribution for a given
fiscal year, the Company's financial performance for such fiscal
year and/or such other criteria as the Board, or such designated
committee thereof, shall determine. The payment of any such
amounts to be made to the Employee shall be in the sole discretion
of the Board, or such designated committee thereof.
7. Expenses. It is contemplated that, in connection with
his employment hereunder, the Employee may be required to incur
reasonable and necessary travel, business entertainment and other
business expenses. The Company agrees to reimburse the Employee
for all reasonable and necessary travel, business entertainment and
other business expenses incurred or expended by him incident to the
performance of his duties hereunder, upon submission by the
Employee to the Company of vouchers or expense statements (i)
satisfactorily evidencing the incurrence of such expenses and (ii)
that would enable the Company to deduct such expenses from its
income under applicable tax laws.
8. Employee Benefits, Vacation.
(a) The Employee shall be fully vested and entitled to
participate in any and all life insurance, medical insurance,
disability insurance, pension, incentive and savings and other
employee benefit plans which are made available by the Company
during the Employment Term to executives of the Company of the
Employee's rank, to the extent that the Employee qualifies under
the eligibility provisions of such plans.
(b) The Employee shall be entitled to vacations (taken
consecutively or in segments), aggregating four (4) weeks for each
fiscal year of the Company during the Employment Term, to be taken
at times consistent with the effective discharge of the Employee's
duties. Unused vacation time shall not accumulate from year to
year and, in the event any such unused vacation time is remaining
at the end of the fiscal year, the Employee shall not be entitled
to be paid for any such remaining time.
9. Automobile. During the Employment Term, the Company
will, at the Company's sole cost and expense (including, without
limitation, insurance, gasoline and upkeep and repairs), provide
the Employee with an automobile for his use in accordance with past
practice.
10. Permanent Disability. In the event of the Disability of
the Employee during the Employment Term, the Company shall have the
right, following the sending of a Notice of Termination to the
Employee, to terminate his employment hereunder. Effective on the
Date of Termination, the Company shall be discharged and released
from any further obligations under the Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), other than (x) the obligation to continue to make
periodic payments to the Employee of his Base Salary then in effect
(reduced by any amounts received by the Employee pursuant to any
temporary disability plan or program maintained by the Company and
any federal or state disability plan or program) for the period, if
any, from the commencement of the period of Disability through and,
if necessary, after the Date of Termination until the time in
respect of which full payments to the Employee or his
representatives are commenced under the Company's permanent
disability plan or program or (y) pursuant to the next sentence, if
applicable. Notwithstanding the foregoing, if at the time the
Employee's employment hereunder is terminated in the event of
Disability the Company does not maintain a permanent disability
plan or program or if the Employee does not participate in a
permanent disability plan or program offered or sponsored by the
Company, then the Company shall pay to the Employee, within 30 days
after the Date of Termination, an amount equal to (i) 100% of the
annual Base Salary in effect at the time of the Notice of
Termination in accordance with the provisions of Paragraph 5 hereof
and (ii) an amount equal to the highest of the annual bonus
payments made to or earned by the Employee in respect of the three
fiscal years of the Company preceding the Date of Termination.
Notwithstanding the foregoing, the Employee shall have the
continuing obligations provided for in Paragraph 13(b) hereof, but
shall be released from any obligations after the Date of
Termination pursuant to Paragraph 13(a) hereof. Disability
benefits, if any, due under applicable plans and programs of the
Company shall be determined under the provisions of such plans and
programs.
11. Death. In the event of the death of the Employee during
the Employment Term, the Base Salary to which the Employee is
entitled pursuant to Paragraph 5 hereof shall continue to be paid
through the date of death and the Company shall pay an additional
amount equal to the sum of (i) 100% of the annual Base Salary in
effect at the time of death in accordance with the provisions of
Paragraph 5 hereof and (ii) an amount equal to the highest of the
annual bonus payments made to or earned by the Employee in respect
of the three fiscal years of the Company preceding the date of
death. Such additional sum shall be paid within 30 days after the
date of death to the last beneficiary designated by the Employee by
written notice to the Company, or, failing such designation, to his
estate. The Employee shall have the right to name, from time to
time, any one person as beneficiary hereunder, or with the consent
of the Company to make other forms of designation of beneficiary or
beneficiaries. The Employee's designated beneficiary or personal
representative, as the case may be, shall accept the payments
provided for in this Paragraph 11 in full discharge and release of
the Company of and from any further obligations under this
Agreement. Any other benefits due under applicable plans and
programs of the Company shall be determined under the provisions of
such plans and programs.
12. Termination.
(a) If the Employee's employment hereunder is terminated
by the Company for Cause or by the Employee other than for Good
Reason, the Company shall pay the Employee his full Base Salary
through the Date of Termination and shall pay any additional
amounts to be paid to the Employee pursuant to any compensation
plans or programs then in effect and thereupon the Company shall
have no further obligations under this Agreement (including, but
not limited to, any obligation to pay any bonus in respect of the
fiscal year in which termination occurs, or any fiscal year
thereafter), but the Employee shall have the continuing obligations
provided for in Paragraph 13(b) hereof, but shall be released from
any obligations after the date of termination pursuant to Paragraph
13(a) hereof.
(b) If the Employee's employment by the Company shall be
terminated by (x) the Company other than for Cause, his death,
or Disability or (y) the Employee for Good Reason, then the
Employee shall be entitled to the benefits provided below:
(i) The Company shall pay the Employee his full
Base Salary and annual bonus in effect at the time the Notice of
Termination is given through the Date of Termination, no later than
the fifth day following the Date of Termination, plus all other
amounts to which he is entitled under any compensation plan of the
Company applicable to him, at the time such payments are due. For
purposes of this Paragraph 12(b)(i) and the other provisions of
this Agreement, the Employee's "annual bonus in effect at the time
the Notice of Termination is given" shall mean the highest of the
annual bonus payments made to or earned by the Employee in respect
of the three fiscal years of the company preceding the year in
which the Notice of Termination is given.
(ii) The Company shall pay the Employee, on a date
that is no later than the fifth day following the Date of
Termination, as severance pay and in consideration of the
Employee's continued obligations provided for in Paragraph 13(a)
and (b) hereof, a payment equal to 1 1/2 times the sum of (x) his
full Base Salary and (y) annual bonus, in each case in effect at
the time the Notice of Termination is given. Except as provided in
Paragraph 12(b)(iii) hereof, the payment to be made to the Employee
pursuant to this Paragraph 12(b)(ii) shall not be reduced by the
amount of any other payment or the value of any benefit received or
to be received by him in connection with his 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).
(iii) In the event that any payment or benefit
received or to be received by the Employee pursuant to the terms of
this Agreement (the "Contract Payments") would be subject to the
excise tax (the "Excise Tax") imposed by Section 4999 of the Code,
as determined below, the Contract Payments payable hereunder will
be reduced to an amount that will not be subject to the Excise Tax,
as determined below, such reductions in Contract Payments to be
made in such manner as designated by the Employee in his sole
discretion. In the event that the Contract Payments and any
payment or benefit received or to be received by the Employee in
connection with his 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 as
determined as provided below, the Company shall pay to the
Employee, at the time specified in Paragraph 12(b)(iv) below, an
additional amount (the "Gross-Up Payment") such that the net amount
retained by the Employee, 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 Paragraph 12(b)(iii), and any interest, 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. 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 the
Employee ("Tax Counsel"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of Section
280(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)(1) 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, the Employee 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 his 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.
(iv) The Gross-Up Payments provided for in Paragraph
12(b)(iii) hereof shall be made upon the earlier of (A) the payment
to the Employee of any Contract Payment or other Payment or (B) the
imposition upon him or payment by him of any Excise Tax.
(v) 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 Paragraph 12(b)(iii) hereof, the
Employee shall repay to the Company within five days of his 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 him if such repayment results in a reduction in Excise
Tax or a federal, state and local income tax deduction) plus any
interest received by him 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.
(vi) On the Date of Termination, 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 the Employee's use
as of the Notice of Termination, 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.
(vii) For the period of time from the Date of
Termination through the earlier of two years thereafter or the date
on which the Employee and his dependents become eligible for
substantially equivalent coverage provided by a subsequent
employer, the Company shall provide the Employee and his 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.
(viii) Upon the Date of Termination all options
to purchase stock and other rights to purchase or own stock
(including grants of stock) held by the Employee that are not
vested shall immediately vest and become exercisable and all
options to purchase stock and other rights to purchase or own stock
(including grants of stock) then held by him shall remain in effect
and, in the case of rights to purchase stock, be exercisable for 18
months after the Date of Termination, notwithstanding any other
provisions that otherwise would be applicable.
(ix) Upon the Date of Termination, the Company shall
assign and transfer to the Employee, or his designee, all of its
right, title and interest in the life insurance policies covering
the Employee's life that were held by the Company as of such date.
From and after the Date of Termination, the Employee 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 Termination Date.
(x) The Employee shall not be required to mitigate
the amount of any payment provided for in this Paragraph 12(b) by
seeking other employment or otherwise, nor, except as otherwise
specifically provided herein, shall the amount of any payment or
benefit provided for in the Paragraph 12(b) be reduced by any
compensation or benefit earned by the Employee as the result
of employment by another employer after the Date of Termination or
otherwise.
The Employee shall accept the payments and other
benefits provided for in the Paragraph 12(b) in full discharge and
release of the Company of and from any further obligations under
this Agreement but the Employee shall have the continuing
obligations provided for in Paragraphs 13(a) and 13(b) hereof.
(c) In the event that the Company elects to terminate
the Employee's Employment Term hereunder pursuant to the proviso to
the first sentence of Paragraph 3 hereof, the Employee shall be
entitled to all of the payments and benefits provided for in
Paragraphs 12(b)(i)-(x) hereof, except that the payment and
consideration provided for in Paragraph 12(b)(ii) hereof to which
the Employee will be entitled will be equal to one-half times the
sum of (x) his full Base Salary in effect for the last fiscal year
of the Company completed during the Employment Term and (y) the
highest of the annual bonus payments made to or earned by the
Employee in respect of the last three fiscal years of the Company
completed during the Employment Term. All references in Paragraph
12(b) to the date of the "Notice of Termination" or "Date of
Termination" shall for purposes of this Paragraph 12(c) be deemed
to be references to the last day of the Employment Term. The
Employee shall accept the payments and other benefits provided for
in this Paragraph 12(c) in full discharge and release of the
Company of and from any further obligations under this Agreement
but the Employee shall have the continuing obligations provided for
in Paragraphs 13(a) and 13(b) hereof.
13. Restrictive Covenants and Confidentiality: Injunctive
Relief.
(a) The Employee agrees, as a condition to the
performance by the Company of its obligation hereunder, that during
the Employment Term and, except if the Employee's employment is
terminated by the Company for Disability or for Cause or by the
Employee other than for Good Reason, during the further period of
one (1) year after the end of such Employment Term, the Employee
shall not, without the prior written approval of the Company,
directly or indirectly through any other person, firm or
corporation, (i) engage or participate or make any financial
investment in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in
connection with any business enterprise, whether for compensation
or otherwise, which is in competition with any of the business
operations or activities of the Company and its subsidiaries then
existing in all geographical places where the Company and its
subsidiaries does or did business during the Employment Term, or
(ii) solicit, raid, entice or induce any person who on the date of
termination of employment of the Employee is, or within the last
twelve (12) months of the Employee's employment by the Company was,
an employee of the Company or any of its subsidiaries, to become
employed by any person, firm or corporation, and the Employee shall
not approach any such employee for such purpose or authorize or
knowingly approve the taking of such actions by any other person,
or (iii) solicit any person or entity who on the Date of
Termination is a vendor of the Company to terminate its
relationship with the Company. Nothing herein contained, however,
shall restrict the Employee from making any investments in any
company, partnership or other entity, so long as such investment
does not require or involve the active participation of the
Employee in the management of any business or enterprise which is
in competition with any of the business operations or activities of
the Company.
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the
knowledge of the Company's and its subsidiary companies' business
methods, systems, plans and policies which he shall hereafter
establish, receive or obtain as an employee of the Company or its
subsidiary companies, are valuable and unique assets of the
respective businesses of the Company and its subsidiary companies,
the Employee agrees that, during and after the Employment Term he
shall not (otherwise than pursuant to his duties hereunder)
disclose, publish, or furnish to any person, firm or corporation
(other than to representatives of the Company and its affiliates in
furtherance of the performance of the Employee's services
hereunder) any confidential or proprietary information, systems,
programs, know how or trade secrets or any other knowledge,
information, documents or materials, the confidentiality of which
the Company and its affiliates take reasonable measures to protect,
acquired by the Employee during the term of this Agreement as a
result of the performance of his services hereunder.
(c) The Employee represents and acknowledges that, in
light of the payments to be made by the Company to the Employee
hereunder and for other good and valid reasons, the restrictions
stated in Paragraphs 13(a) and 13(b) on the activities in which he
may engage upon termination of his employment with the Company are
reasonable, the locations designated above are reasonable because
they are limited to the locations in which the Company and its
subsidiaries did business during the Employment Term, and the
period of time designated above is reasonable because it extends
only for 12 months following the termination of his employment with
the Company.
(d) The Employee acknowledges that the services to be
rendered by him are of a special, unique and extraordinary
character and, in connection with such services, he will have
access to confidential information vital to the Company's and its
subsidiary companies' businesses. By reason of this, the Employee
consents and agrees that if he violates any of the provisions of
Paragraphs 13(a) or 13(b) the Company and its subsidiary companies
would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to apply to any court of
competent jurisdiction for an injunction restraining the Employee
from committing or continuing any such violation of this Agreement,
and the Employee shall not object to any such application.
14. Deductions and Withholding. The Employee agrees that the
Company shall withhold from any and all payments required to be
made to the Employee pursuant to this 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.
15. Attorneys' Fees. The Company shall pay to the Employee
all legal fees and expenses reasonably incurred by him 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).
16. Notices. All notices or other documents to be given
hereunder by either party hereto to the other shall be in writing
and delivered personally or sent postage prepaid by registered or
certified mail, return receipt requested. Notices shall be deemed
to have been received on the date of delivery, or if sent by
certified or registered mail, return receipt requested, shall be
deemed to be delivered on the third business day after the date of
mailing. The postal receipt specifying a mailing date shall be
sufficient proof of the date of notice. Notices shall be sent to
the following addresses until a notice of change of address by like
notice has been duly provided:
To the Employee: Gregg Guy
To the Company: Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
Attn: Robert B. Stein, Jr.
17. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators, successors and legal
representatives of the Employee, and shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
Notwithstanding the foregoing, the obligations of the Employee may
not be delegated and, except as expressly provided in Paragraph 11
hereof relating to the designation of beneficiaries, the employee
may not assign, pledge, encumber, hypothecate or otherwise dispose
of this Agreement, or any of his rights hereunder, and any such
attempted delegation or disposition shall be null and void and
without effect. The provisions of Paragraphs 10, 11, 12 and 13
hereof shall survive termination of this Agreement. 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.
18. Complete Understanding: Amendment. This Agreement
constitutes the complete understanding between the parties with
respect to the employment of the Employee hereunder, and no
statement, representation, warranty or covenant has been made by
either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the
parties hereto. Waiver by either party hereto of any breach
hereunder by the other party shall not operate as a waiver of any
other breach, whether similar to or different from the breach
waived.
19. Governing Law. This Agreement shall be governed by the
laws of the state of Connecticut.
20. Paragraph Headings. The paragraph headings contained in
this Agreement are for reference purposes only and shall not effect
in any way the meaning or interpretation of this Agreement.
21. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be
invalid and unenforceable, shall not be affected thereby, and each
provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto set their hands as of
the day and year first above written.
DAIRY MART CONVENIENCE STORES, INC.
By: /s/ Robert B. Stein, Jr.
Name: Robert B. Stein, Jr.
Title: President
Agreed to as of this 8th day
of June, 1995
Address for notices:
EX-27.1
8
5
1,000
6-MOS
FEB-03-1996
JAN-29-1995
JUL-29-1995
16,384
2,114
17,909
1,931
21,339
59,437
106,702
33,704
173,288
49,800
88,364
63
0
0
24,739
173,288
373,094
296,710
218,743
288,503
0
238
4,623
3,408
(1,500)
1,908
0
0
0
1,908
0.33
0.33