-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SDVIqxmy3/tlDbK3l2AwpkTsufwQd8VzMJpQO9wcLsCYmB4Oy5OGhffXGQdpcHpw KrXBoF4EVRS/cAYylzj4jQ== 0000922632-95-000030.txt : 19951122 0000922632-95-000030.hdr.sgml : 19951122 ACCESSION NUMBER: 0000922632-95-000030 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951030 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951121 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAIRY MART CONVENIENCE STORES INC CENTRAL INDEX KEY: 0000721675 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CONVENIENCE STORES [5412] IRS NUMBER: 042497894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12497 FILM NUMBER: 95595338 BUSINESS ADDRESS: STREET 1: ONE VISION DRIVE CITY: ENFIELD STATE: CT ZIP: 06082 BUSINESS PHONE: 2037414444 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A Amendment No. 1 CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 30, 1995 DAIRY MART CONVENIENCE STORES, INC. (Exact name of registrant as specified in its charter) Delaware 0-12497 04-2497894 (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) Number) Identification Number) One Vision Drive, Enfield, Connecticut 06082 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (203) 741-4444 N/A (Former name or former address, if changed since last report.) 2 The purpose of this Form 8-K/A Amendment No. 1 is to amend the previously filed Form 8-K of Dairy Mart Convenience Stores, Inc. filed with the Securities and Exchange Commission on October 31, 1995 by amending Items 5 and 7 thereof. Such Items are set forth in full in this Form 8-K/A Amendment No. 1. 3 Item 5. Other Events On October 30, 1995, Charles Nirenberg, a director and shareholder of the Company, and two of his affiliates, FCN Properties Corporation ("FCN") and The Nirenberg Foundation, Inc. (the "Foundation"), entered into an Agreement (the "Agreement") with the Company and Mr. Robert B. Stein, Jr., a director and the President and Chief Executive Officer of the Company, and Mr. Gregory G. Landry, a director and the Executive Vice President and Chief Financial Officer of the Company, for purposes of settling the dispute between Mr. Nirenberg and the Company's management with respect to control of the Company. Mr. Stein, Mr. Landry, Mr. Nirenberg and Mitchell J. Kupperman, a director and the Executive Vice President - Human Resources of the Company, are partners of (i) New DM Management Associates I ("DM Management I"), and (ii) New DM Management Associates II ("DM Management II"). Frank Colaccino is also a partner of DM Management II. DM Management I and DM Management II are the general partners of DM Associates Limited Partnership ("DM Associates"), a limited partnership that owns a majority of the outstanding shares of the Class B Common Stock of the Company. Mr. Nirenberg and Mr. Kupperman have the right, by virtue of holding a majority of the partnership interests of DM Management I, to vote 50% of the total voting power of the Common Stock of the Company and a majority of the voting power of the Class B Common Stock, pursuant to the partnership agreements of DM Associates and DM Management I. Mr. Nirenberg has nominated five directors to be elected at the Company's annual meeting of the stockholders, originally scheduled to be held on October 31, 1995. Mr. Nirenberg, together with Mr. Kupperman, would have been able, by virtue of holding a majority of the partnership interests of DM Management I, to elect his nominees at the Company's annual meeting. Mr. Nirenberg's nominees, if elected, would have constituted a majority of the Company's seven member Board of Directors. Pursuant to the Agreement, the Company has agreed (i) to purchase from Mr. Nirenberg and the Foundation all of their respective limited partner interests in DM Associates, (ii) to purchase from Mr. Nirenberg all of his general partner interests in DM Management I and DM Management II, (iii) to purchase from FCN all of its right, title and interest in and ownership of a 9% Secured Promissory Note, dated March 12, 1992 (the "CDA Note"), in the principal amount of $7,100,000 originally made by DM Associates in favor of the Connecticut Development Authority (the "CDA") and subsequently assigned by the CDA to FCN on or about September 30, 1994, and all of FCN's right, title and interest in 1,220,000 shares of Class B Common Stock pledged by DM Associates as security for the payment of the CDA Note, and all of FCN's right, title and interest in all of the agreements (including security agreements and documents) executed by DM Associates in connection with the CDA Note and/or the loan evidenced thereby, and (iv) to purchase from Nirenberg, FCN and the Foundation all of their 4 respective right, title and interest in and to the letter agreements entered into by Nirenberg, FCN and/or the Foundation with the Company, the other limited partners of DM Associates and/or the other general partners of DM Management I and DM Management II in connection with the reconstitution of DM Associates and its general partners. The aggregate cash consideration to be paid by the Company to Mr. Nirenberg, FCN and the Foundation pursuant to the Agreement is $13,150,000. Of such aggregate cash consideration, $10,000,000 represents the purchase price payable by the Company for the respective interests of Mr. Nirenberg, FCN and the Foundation referred to in the paragraph above. In addition, the Company has agreed to pay to Mr. Nirenberg the sum of $2,300,000 in consideration of Mr. Nirenberg's agreement not to compete against the Company and Mr. Nirenberg's agreement to allow the Company to use Mr. Nirenberg's name and likeness in its advertising and marketing materials, subject to Mr. Nirenberg's prior review and consent. The Company has also agreed to reimburse Mr. Nirenberg and FCN for up to $850,000 of previously unreimbursed fees and expenses incurred by Mr. Nirenberg and FCN from and after January 25, 1995 in connection with their activities relating to the Company. The closing of the transactions contemplated under the Agreement (the "Closing") is subject to the satisfaction of several conditions precedent, including, among others, that (i) the Company obtains financing on terms acceptable to the Company, (ii) the Company obtains all required consents and waivers from its bank lenders and from the holders of its Senior Subordinated Notes due 2004 (the "Senior Notes") in connection with the transactions contemplated by the Agreement, and (iii) all required waivers, consents and releases of the partners of DM Associates, DM Management I, DM Management II and the CDA are obtained. The Agreement provides that the Closing must occur on or prior to November 29, 1995. If the Closing does not occur on or prior to November 29, 1995, the Agreement will terminate and neither the Company nor Mr. Nirenberg, FCN and the Foundation will have any obligation to consummate the transactions contemplated under the Agreement. In light of the Agreement, the Company adjourned its 1995 Annual Meeting of Stockholders (the "Annual Meeting"), originally scheduled for October 31, 1995, to November 30, 1995. Such adjournment was necessary in order to give the Company sufficient time to be in a position to seek to consummate the transactions contemplated under the Agreement. In connection with the execution and delivery of the Agreement by the parties thereto, Mr. Nirenberg has been reappointed as Chairman of the Board of Directors of the Company (the "Board"), the Board has been expanded from seven to nine directors, and two of Mr. Nirenberg's nominees, Thomas O'Brien and Howard Jacobson, have been temporarily elected to the Board. The Agreement requires that Messrs. Nirenberg, Kupperman, O'Brien, Jacobson, Landry and Stein tender their respective resignations from their positions as directors of the Company, and that all of such resignations be held in escrow by Stanford N. Goldman, Jr., an Assistant Secretary of the Company. The resignations of each of Messrs. Nirenberg, 5 Kupperman, O'Brien and Jacobson will be released from escrow and become effective only if the transactions contemplated under the Agreement are consummated. The resignations of each of Messrs. Stein and Landry will be released from escrow and become effective only if the transactions contemplated under the Agreement are not consummated on or prior to November 29, 1995. Pursuant to the Agreement, Mr. Nirenberg has agreed, among other things, that, so long as the Agreement is in effect, neither he nor his affiliates will vote or purport to take action by written consent with respect to any of the Company's capital stock. In the event that the Closing occurs on or prior to November 29, 1995, the Agreement requires that, to the extent requested by Messrs. Landry and Stein immediately prior to the Closing in their capacities as general partners of DM Management I, Mr. Nirenberg will cause the shares of Class B Common Stock held by DM Associates over which New DM Management I exercises voting control to be voted in favor of the election of the slate of persons nominated by the Board for election as directors of the Company and in accordance with the recommendation of the Board with respect to the other matters to be considered at the Annual Meeting. The Agreement also provides that the Company and Messrs. Stein and Landry will not take any action (including any action to dissolve DM Associates or any of its general partners) that (i) would impair, impede or frustrate the ability of Mr. Nirenberg to vote at the Annual Meeting the shares of Class B Common Stock held by DM Associates over which New DM Management I exercises voting control in a manner determined by Mr. Nirenberg in his sole discretion in the event that the Closing does not occur on or prior to November 29, 1995, and (ii) would change the record date for the Annual Meeting. In addition, the Agreement provides that, from October 30, 1995 until the Closing, the Company will not issue any voting securities, except pursuant to the Company's employee stock purchase plan or pursuant to stock options granted prior to October 30, 1995 under the Company's stock option plans, and except for securities issued by the Company in order to finance the payments to be made to Mr. Nirenberg, FCN and the Foundation under the Agreement. The Company does not know at this time whether the conditions set forth in the Agreement will be satisfied so that the transactions contemplated by the Agreement can be consummated. Item 7. Exhibits The following exhibits are filed as part of this report on Form 8-K pursuant to Item 601 of Regulation S-K: 6 Exhibit 10.1 - Agreement dated as of October 30, 1995 among Dairy Mart Convenience Stores, Inc., Charles Nirenberg, FCN Properties Corporation and The Nirenberg Family Charitable Foundation, Inc. Exhibit 10.2 - Letter dated October 30, 1995 to Mitchell J. Kupperman from Dairy Mart Convenience Stores, Inc., Robert B. Stein, Jr. and Gregory G. Landry. 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Dairy Mart Convenience Stores, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DAIRY MART CONVENIENCE Date: November 20, 1995 STORES, INC. By: /s/ Gregory G. Landry --------------------------- Gregory G. Landry Its Executive Vice President and Chief Financial Officer 1 EX-10.1 2 Exhibit 10.1 Agreement dated as of October 30, 1995 among Dairy Mart Convenience Stores, Inc., Charles Nirenberg, FCN Properties Corporation and The Nirenberg Family Charitable Foundation, Inc. 1 AGREEMENT THIS AGREEMENT is made as of the 30th day of October, 1995, by and among Dairy Mart Convenience Stores, Inc., a Delaware corporation (the "Company"), Charles Nirenberg ("Nirenberg"), FCN Properties Corporation, a Connecticut corporation ("FCN"), and The Nirenberg Family Charitable Foundation, Inc., a Connecticut corporation (the "Foundation"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties wish to provide for the purchase by the Company from Nirenberg, FCN and the Foundation of all of their direct interests in DM Associates Limited Partnership, a Connecticut limited partnership ("DM Associates"), and its general partners and to set forth their agreement as to certain other matters, all upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing and the mutual agreements hereinafter set forth, the parties, intending to be legally bound, hereby agree as follows: 1. Sale of DM Associates Interests; Payment of Purchase Price. (a) At the Closing referred to in Section 2 hereof, subject to the terms and conditions set forth herein, Nirenberg, FCN and the Foundation shall assign, sell, transfer and convey to the Company, and the Company shall purchase and accept, the following: (i) right, title and interest in and to Nirenberg's general partner interests in New DM Management Associates I, a Connecticut general partnership ("New DM Management I"), and New DM Management Associates II, a Connecticut general partnership ("New DM Management II"); (ii) right, title and interest in and to the limited partner interests of Nirenberg and the Foundation in DM Associates; (iii) FCN's 2 right, title and interest in and ownership of the 9% Secured Promissory Note, dated March 12, 1992 (the "CDA Note"), in the principal amount of $7,100,000 made by DM Associates in favor of the Connecticut Development Authority (the "CDA") and subsequently assigned by the CDA to FCN on or about September 30, 1994, and FCN's right, title and interest in 1,220,000 shares of the Class B common stock, par value $.01 per share, of the Company pledged by DM Associates as security for the payment of the CDA Note pursuant to a Stock Pledge Agreement, dated March 12, 1992 (the "CDA Pledge Agreement"), between DM Associates and CDA, and subsequently assigned by CDA to FCN on or about September 30, 1994, and all of FCN's rights pursuant to the CDA Pledge Agreement and any other agreement executed by DM Associates in favor of the CDA in connection with the CDA Note and/or the loan evidenced thereby; and (iv) all right, title and interest of Nirenberg, FCN and the Foundation pursuant to the agreements, instruments and letters dated January 25, 1995 and entered into by such parties with the Company and/or the other limited partners of DM Associates and the other general partners of New DM Management I and New DM Management II in connection with the reconstitution of DM Associates and its general partners. The interests to be transferred to the Company pursuant to this Section 1(a) hereinafter are collectively referred to as the "DM Associates Interests". (b) As full payment for the DM Associates Interests, the Company shall pay to Nirenberg, FCN and the Foundation at the Closing an aggregate cash payment of $10,000,000 by wire transfer of immediately available federal funds as follows: (a) $3,500,000 plus accrued and unpaid interest to an account designated by the CDA in full payment of FCN's 3 promissory note, dated on or about September 30, 1994, to the CDA (the "FCN Note") and (b) the balance to one or more accounts designated by Nirenberg. 2. Closing. (a) The closing (the "Closing") of the transactions contemplated hereby shall take place at the offices of Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153 on the date which is no later than November 29, 1995 or such earlier date as shall be the day before the last date on which the 1995 annual meeting of stockholders of the Company may be held pursuant to the Company's Restated Certificate of Incorporation, Amended and Restated By-laws and Delaware law without any required change in the September 29, 1995 record date currently in effect with respect to such meeting and on which all of the conditions to Closing specified herein have been satisfied or at such other place and on such other date as shall be mutually agreeable to the parties hereto. (b) At the Closing, Nirenberg, FCN and the Foundation shall deliver to the Company: (i) instruments of transfer duly executed by Nirenberg, FCN and the Foundation related to the transfer of the DM Associates Interests to the Company in form and substance reasonably acceptable to the Company and its counsel; (ii) duly executed instruments in form and substance reasonably acceptable to the Company and its counsel necessary to dismiss with prejudice and without cost or expense to any opposing party claims against the defendants in the lawsuit entitled Charles Nirenberg and Mitchell J. Kupperman vs. Stein, et al., C.A. No. 14462 pending in the Delaware Chancery Court; 4 (iii) all books and records of DM Associates and its general partners in his or their possession; (iv) control over the bank, stock and other accounts of DM Associates and its general partners; and (v) any proxies or other instruments reasonably requested by the Company pursuant to Section 10(b) hereof. (c) At the Closing, the Company shall: (i) make the payments in the amounts and manner referred to in this Agreement; and (ii) make payments in the amounts and manner set forth in, and otherwise comply fully with the terms of, that certain letter agreement dated as of the date hereof from the Company to Mitchell Kupperman relating to Mr. Kupperman's severance arrangements with the Company. 3. Conditions. (a) The obligation of the Company to purchase and pay for the DM Associates Interests at the Closing and consummate the other transactions contemplated hereby are subject to the satisfaction as of the Closing of the following conditions: (i) The representations and warranties of Nirenberg, FCN and the Foundation contained herein shall be true and correct in all material respects at and as of the Closing as though then made and Nirenberg, FCN and the Foundation shall have complied with all of their agreements herein set forth and Nirenberg shall have executed and delivered to the Company a certificate to such effect; 5 (ii) The Company shall have obtained the requisite consents of the holders of its Senior Subordinated Notes due 2004 (the "Debentures") and its bank lenders to the transactions contemplated hereby; (iii) The Company shall have obtained financing on terms and conditions acceptable to the Company in amounts sufficient to fund the purchase price set forth in Section 1 hereof; (iv) The Company shall have obtained waivers from the Company's bank lenders and the holders of the Debentures of any defaults or events of default then existing or alleged to be in existence under the Company's bank loan agreements or the indenture pursuant to which the Debentures were issued; and (v) There shall have been obtained all required waivers, consents and releases of the partners of DM Associates and New DM Management I and New DM Management II and CDA shall have acknowledged in writing that it has no further interests in any of the DM Associates Interests. (b) The obligation of Nirenberg, FCN and the Foundation to sell the DM Associates Interests at the Closing and consummate the other transactions contemplated hereby are subject to: (i) The representations and warranties of the Company contained herein being true and correct in all material respects at and as of the Closing as though then made and the Company having complied with all of its agreements 6 herein set forth and a duly authorized officer of the Company shall have executed and delivered to Nirenberg a certificate to such effect; (ii) The Company shall have delivered a solvency opinion to Nirenberg, at the Company's sole cost and expense, in form and substance reasonably acceptable to Nirenberg, from Houlihan, Lokey, Howard & Zukin or another independent valuation firm reasonably acceptable to the Company and Nirenberg; (iii) The Company shall have obtained waivers from the Company's bank lenders and the holders of the Debentures of any defaults or events of default then existing or alleged to be in existence under the Company's bank loan agreements or the indenture pursuant to which the Debentures were issued; (iv) The Company shall have obtained the requisite consents of the holders of its Debentures and its bank lenders to the transactions contemplated hereby; and (v) Their shall have been obtained all required waivers, consents and releases of the partners of DM Associates and New DM Management I and New DM Management II. (c) Any condition specified in this Section 3 may be waived if consented to in writing by the Company in the case of the conditions specified in Section 3(a) or by Nirenberg, FCN or the Foundation in the case of the conditions specified in Section 3(b). 7 4. Termination. (a) This Agreement shall be terminated and the transactions contemplated hereby shall be abandoned automatically and without further action on the part of any party hereto, if (i) the purchase and sale of the DM Associates Interests shall not have been consummated on or prior to November 29, 1995 or such earlier date as shall be the day before the last day on which the 1995 annual meeting of stockholders of the Company may be held pursuant to the Company's Restated Certificate of Incorporation, Amended and Restated By-laws or Delaware law without any required change in the September 29, 1995 record date or (ii) any governmental entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated hereby and such order, decree, ruling or other action shall have become final and nonappealable. The date on which this Agreement shall have been terminated pursuant to this Section 4(a) is herein referred to as the "Agreement Termination Date". (b) In the event of the termination of this Agreement pursuant to this Section 4, no party hereto (or, in the case of the Company, any of its directors or officers) shall have any liability or further obligation to the other party to this Agreement, except that nothing herein will relieve any party from liability for any breach of this Agreement. 5. Resignation. Simultaneously with the execution of this Agreement, (i) Nirenberg and Mitchell J. Kupperman are each executing and delivering to Stanford N. Goldman, Jr., an Assistant Secretary of the Company, his resignation as a director of the Company and as a director of any subsidiaries or affiliates of the Company which he serves as a director, effective upon the Closing and (ii) Robert B. Stein, Jr. ("Stein") and Gregory G. Landry ("Landry") are each executing and delivering to Mr. Goldman his resignation as a director of the Company and as a 8 director of any subsidiaries or affiliates of the Company which he serves as a director, effective upon the termination of this Agreement for any reason pursuant to Section 4(a). If the Closing does not occur on or before the Agreement Termination Date, then the resignations of Messrs. Nirenberg and Kupperman shall be null and void. If the Closing does occur, then the resignations of Messrs. Stein and Landry shall be null and void. 6. Non-Competition; Non-Solicitation. Provided that the Closing occurs, in consideration of the payment referred to in Section 6(e) below: (a) Nirenberg agrees and covenants that for the period of time commencing on the date of the Closing and ending on the fifth anniversary of such date (the "Non-Compete Period") he will not, directly or indirectly: (i) for his own account or as an employee, officer, director, partner, joint venturer, shareholder, investor, consultant or otherwise (except as an investor in a corporation whose stock is publicly traded and in which Nirenberg holds less than 5% of the outstanding voting shares), engage in the business of owning, managing or operating convenience stores in Massachusetts, Connecticut, Hudson Valley in New York State, Rhode Island, Ohio, Southern and Middle Michigan, Kentucky, Southern Indiana, Western Pennsylvania, Tennessee or North Carolina (the "Covered Areas"), such geographical areas constituting places in which the Company conducts business as of the date hereof; (ii) solicit the employment of any current employee of the Company or any employee who first enters the employ of the Company during such period; provided, that such prohibition shall not apply to any employee who has left the employ of the Company; (iii) induce or encourage any current employee of the Company or any employee who first enters the employ of the Company during such period to leave the employ of the Company; or (iv) interfere in a material manner with any material business relationship in any Covered 9 Area between the Company and any third party, including any shareholder or any creditor of the Company. (b) The Company and Nirenberg acknowledge and agree that the provisions of Section 6(a) hereof are reasonable because the scope thereof encompasses only the business of the Company as conducted on the date hereof and they are limited to the locations in which the Company does business as of the date hereof. (c) Notwithstanding anything contained in this Section 6 to the contrary, if the period of time or the geographical areas specified in Section 6(a) hereof is determined to be unreasonable in any proceeding before any court or agency legally empowered to enforce the provisions of this Section 6, then the period of time and area of the restriction shall be reduced so that this Agreement may be enforced in such area and during such period of time as shall be determined to be reasonable; provided, however, that such reduction shall not extend to any period of time or jurisdiction where such reduction is unnecessary to make the period of time or the geographical area specified in Section 6(a) enforceable therein. (d) Nirenberg agrees that during the Non-Compete Period the Company shall be entitled to make use of Nirenberg's name and likeness in its advertising and marketing materials, subject to Nirenberg's prior review and consent. (e) As compensation for the matters referred to in this Section 6, the Company shall pay to Nirenberg at the Closing a non-refundable sum of $2,300,000 by wire transfer of federal funds to an account or accounts designated by Nirenberg. 10 7. Non-Disclosure. Nirenberg shall not, directly or indirectly, at any time use or disclose to any person, firm or corporation any trade secrets, confidential or proprietary information of the Company that is not publicly available. 8. Release and Waiver. Provided that the Closing occurs: (a) Nirenberg, on behalf of himself and his affiliates, including, without limitation, FCN and the Foundation, hereby agrees to waive all claims against the Company, its subsidiaries and their respective former, current and future officers, directors, employees, stockholders, agents, attorneys, and other representatives (collectively, "Affiliates") and hereby releases and discharges the Company and its Affiliates from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that Nirenberg and/or his affiliates ever had, now has, or hereafter can, shall or may have, for, upon or by reason of his former employment with, service as an officer and director of, or direct or indirect holding of equity securities of the Company, including, without limitation, by virtue of the FCN Note or the agreements executed in connection therewith, or in any other capacity relating to the Company, and the termination of the foregoing relationships, including, but not limited to, any claims arising under any federal, state or local law or ordinance, tort, employment contract (express or implied), public policy, or any other obligation, including, without limitation, any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, and all claims for wrongful discharge, workers' compensation, wages, monetary or equitable relief, vacation, compensation in lieu of vacation, disability, other employee fringe benefits, benefit plans, medical plans, or attorneys' fees; provided, however, 11 that notwithstanding the foregoing, Nirenberg reserves and shall not be deemed to have released (i) any rights he may have pursuant to the Company's 401(k) and profit sharing plans, (ii) his ability to seek and obtain indemnification by the Company to the extent he is entitled to be indemnified by the Company pursuant to this Agreement and the Company's Restated Certificate of Incorporation and Amended and Restated By-laws as in effect on the date hereof, (iii) all claims relating to the performance of the Company's obligations under this Agreement, and (iv) his ability to assert claims for contribution or other appropriate relief against the Company or one or more Affiliates in any action in which he is a defendant commenced by any third party, including but not limited to one or more stockholders of the Company seeking to act on behalf of the Company. (b) Nirenberg hereby agrees to waive all claims against DM Associates, New DM Management I, New DM Management II, each of the partners of such partnerships and any attorneys of the foregoing and hereby releases and discharges them from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that Nirenberg ever had, now has, or hereafter can, shall or may have, for, upon or by reason of his interests in DM Associates, New DM Management I and New DM Management II and the termination of such interests; provided, however, that notwithstanding the foregoing, Nirenberg reserves and shall not be deemed to have released his ability to seek and obtain indemnification and/or contribution or other appropriate relief from DM Associates, New DM Management I or New DM Management II or any of the partners of 12 such partnerships pursuant to such partnerships' respective partnership agreements as in effect on the date hereof or pursuant to applicable law. (c) The Company hereby agrees to waive all claims against Nirenberg and his affiliates and their respective former, current and future officers, directors, employees, stockholders, agents, attorneys and other representatives and hereby releases and discharges Nirenberg, his affiliates and such other persons from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that the Company ever had, now has, or hereafter can, shall or may have, for, upon or by reason of Nirenberg's former employment with, service as an officer and director of, or direct or indirect holding of equity securities in, or in any other capacity relating to the Company (including as a direct or indirect general partner of DM Associates, New DM Management I or New DM Management II and the transactions relating to the dissolution and/or reconstitution of DM Associates and DM Management Associates and the replacement of DM Management Associates as general partner of DM Associates by New DM Management I and New DM Management II and any action taken by Nirenberg or any of the foregoing entities to effect a change in the composition of the Board of Directors of the Company), including, but not limited to, any claims arising under any federal, state or local law or ordinance, tort, employment contract (express or implied), public policy, or any other obligation, other than (i) those relating to the performance of Nirenberg's obligations under this Agreement and (ii) subject to Nirenberg's reservation of rights in Section 8(a) hereof and rights pursuant to Section 9 hereof, 13 claims made prior to or after the date of this Agreement by one or more stockholders of the Company seeking to act on behalf of the Company. (d) Stein and Landry, in their individual capacities and as general partners of New DM Management I and New DM Management II, each hereby agrees to waive all claims against Nirenberg in his capacity as general partner of New DM Management I and New DM Management II and as an indirect general partner of DM Associates and hereby releases and discharges him in such capacities from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that he ever had, now has, or hereafter can, shall or may have; provided, however, that notwithstanding the foregoing, each of Stein and Landry reserves and shall not be deemed to have released his ability to seek and obtain contribution or other appropriate relief from Nirenberg pursuant to the respective partnership agreements of DM Associates, New DM Management I or New DM Management II or pursuant to applicable law. Consistent with the foregoing, Stein and Landry each hereby agrees that he will not vote or take action individually or with respect to his general partner interests in New DM Management I or New DM Management II to assert, or to cause New DM Management I or New DM Management II or DM Associates to assert any claim against Nirenberg in the capacities specified and with respect to the matters released in this Section 8(d). 9. Indemnification. Provided the Closing occurs, the Company agrees to the fullest extent permitted under Delaware law to indemnify and hold Nirenberg harmless from and against any costs, expenses (including, without limitation, reasonable legal fees and expenses), 14 judgments, fines, penalties and amounts paid in settlement (collectively "Costs") which he may incur or to which he may become subject by reason of (i) the transactions contemplated hereby, and (ii) his service as an officer, director and/or employee of the Company (to the fullest extent permitted under Section 145 of the Delaware General Corporation Law), including, without limitation, Costs in connection with the Kahn litigation, (iii) the transactions relating to the reconstitution of DM Associates and the dissolution and replacement of DM Management Associates as the general partner of DM Associates by New DM Management I and New DM Management II and (iv) private causes of action by reason of the actions taken by Nirenberg and/or any of the foregoing entities to effect a change in the composition of the Board of Directors of the Company. Upon its receipt of any notice from Nirenberg with respect to any matter for which indemnification is available, the Company shall have the right to assume the defense thereof with counsel of its choice and thereafter the Company shall not be responsible for any legal fees incurred by Nirenberg in respect thereof; provided, that if Nirenberg is advised by counsel that there may be defenses available to him that differ from those available to the Company or other indemnified parties or otherwise that the potential exists for a conflict between Nirenberg and the Company and/or such other indemnified persons, then Nirenberg shall be entitled to retain one firm of legal counsel on his behalf at the Company's expense. Nirenberg shall not compromise or settle any action for which indemnification may be available without the Company's prior written consent, which shall not be unreasonably withheld. Such indemnification shall be conditional on Nirenberg reasonably cooperating with the Company with respect to any matter for which indemnification is available. 15 10. Certain Additional Agreements. (a) The Company shall reimburse Nirenberg and FCN for their previously unreimbursed fees and expenses incurred in connection with their activities relating to the Company following January 25, 1995, including the negotiation and execution of this Agreement and the transactions contemplated hereby; provided, that the Company shall not be required to reimburse Nirenberg and FCN for any amounts in excess of an aggregate of $850,000. As promptly as practical following the execution of this Agreement, the Company will cause a wire transfer of $500,000 to be made to an account or accounts designated by Nirenberg as a non-refundable reimbursement of a portion of such fees and expenses. The balance of $350,000 shall be reimbursed to Nirenberg if the Closing occurs and upon the Company's receipt of appropriate documentation therefor. (b) So long as this Agreement is in effect, Nirenberg will take no action before the Delaware Chancery Court to make effective the written consent, dated September 29, 1995, executed by New DM Management I on behalf of DM Associates and agrees that if the Closing occurs Nirenberg shall withdraw such written consent such that it shall be deemed to be null and void ab initio. Nirenberg further agrees that so long as this Agreement is in effect, neither he nor his affiliates will (i) vote or purport to take action by consent with respect to any of the Company's capital stock, (ii) conduct any discussions with any creditor of the Company or any representative thereof or (iii) object before the Delaware Chancery Court to any action proposed by the Company in connection with the financing of the cash purchase price provided in Section 1 hereof. Immediately prior to the Closing Nirenberg will, to the extent requested by Stein and Landry as general partners of New DM Management I, take action as a general partner of New DM Management I (as of the September 29, 1995 record date for the 1995 16 annual meeting of stockholders) to cause the shares of Class B common stock of the Company held by DM Associates and over which New DM Management I has voting control to be voted in favor of the election of the slate of persons nominated by the Board of Directors of the Company for election as directors of the Company and in accordance with the recommendation of the Board of Directors with respect to the other matters to be considered at the 1995 annual meeting of stockholders of the Company. (c) The parties hereto agree that the Company's 1995 annual meeting of stockholders will be convened on October 31, 1995 solely for the purpose of adjourning such meeting to November 30, 1995 with the previously-determined record date of September 29, 1995 unchanged, all in accordance with the procedures made available pursuant to Section 222(c) of the Delaware General Corporation Law. To the extent required, Nirenberg will affirm his consent to such adjournment before the Delaware Chancery Court. Notwithstanding the foregoing, the annual meeting will be held on such earlier date as may be necessary pursuant to the Company's Restated Certificate of Incorporation, Restated By-laws or Delaware law in order to preserve the record date of September 29, 1995. (d) The Company's Board of Directors has voted to increase its size effective with the execution of this Agreement to nine and has elected M. Howard Jacobson and Thomas O'Brien to fill such vacancies. Messrs. Jacobson and O'Brien has each delivered to Stanford N. Goldman, Jr., an Assistant Secretary of the Company, his resignation as a director to be effective upon the Closing. If the Closing for whatever reason does not occur on or before the Agreement Termination Date, then such resignations by their terms shall be null and void and without force or effect. 17 (e) Nirenberg, FCN and the Foundation each hereby acknowledges that as promptly as practicable following the execution of this Agreement the Company will fund a "rabbi trust" in respect of amounts aggregating $2,488,000 that may in the future be due and owing by the Company to Stein and Landry pursuant to employment agreements between the Company and such individuals. Nirenberg will not oppose such funding and will take all reasonable action consistent with his agreements in this Section 10(e) before the Delaware Chancery Court. (f) The Company, Stein and Landry shall not take any action (x) that would impair, impede, prevent or otherwise frustrate the ability of Nirenberg to vote the shares of Class B Common Stock presently held by DM Associates over which New DM Management I exercises voting control at the 1995 annual meeting of stockholders to be reconvened on November 30, 1995 or such earlier date as is required pursuant to Section 10(c) hereof in a manner determined by Nirenberg in his sole discretion in the event the Closing does not occur on or prior to the Agreement Termination Date, including, without limitation, by taking action to dissolve DM Associates or either of its general partners or (y) to change the record date for the 1995 annual meeting of stockholders. (g) Simultaneously with the execution of this Agreement, Nirenberg will be elected the Chairman of the Board of Directors of the Company and will be entitled to the use of his office at the Company's headquarters through the Closing, after which, if the same shall occur, he shall vacate such office. (h) Following the date of this Agreement and until the Closing, the Company will not issue any voting securities other than pursuant to (x) options granted on or 18 prior to the date hereof pursuant to the Company's stock option plans, (y) the securities issued to finance the payments to be made to Nirenberg, FCN and the Foundation hereunder or (z) shares issued pursuant to the Company's employee stock purchase plan. Landry and Stein each hereby agrees that from and after the date hereof until the earlier of the Closing or the Agreement Termination Date, he will not exercise any Company stock options. (i) If after the date hereof and prior to the Closing the Company files a voluntary petition seeking protection under the federal bankruptcy laws, then the Company's directors, other than Messrs. Nirenberg, Kupperman, Jacobson and O'Brien, shall resign as directors of the Company, effective with the filing of such voluntary petition. (j) At the Closing, the Company shall at its sole cost and expense transfer unrestricted ownership and legal title, free and clear of any liens or other encumbrances, to the automobile made available by the Company for Nirenberg's use as of the date hereof, including, without limitation, payment or reimbursement by the Company of any sales or other similar taxes due and owning as a result of such transfer. (k) If the Closing occurs, Nirenberg agrees that for a period commencing at the Closing and ending at the termination of the Non-Compete Period, neither he nor any of his affiliates (as defined in Rule 12b-2 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")) will, unless specifically invited in writing by the Company, directly or indirectly, in any manner: (i) acquire, offer or propose to acquire, solicit an offer to sell or agree to acquire, directly or indirectly, alone or in concert with others, by purchase or otherwise, any direct or indirect beneficial interest in any voting 19 securities or direct or indirect rights, warrants or options to acquire, or securities convertible into or exchangeable for, any voting securities of the Company; (ii) make, or in any way participate in, directly or indirectly, alone or in concert with others, any "solicitation" of "proxies" to vote (as such terms are used in the proxy rules of the Securities and Exchange Commission promulgated pursuant to Section 14 of the Exchange Act) or seek to advise or influence in any manner whatsoever any person or entity with respect to the voting of any voting securities of the Company; (iii) form, join or any way participate in a "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company; (iv) acquire, offer to acquire or agree to acquire, directly or indirectly, alone or in concert with others, by purchase, exchange or otherwise, (A) any of the assets, tangible or intangible, of the Company or any of its affiliates or (B) direct or indirect rights, warrants or options to acquire any assets of the Company or any of its affiliates, except for such assets as are then being offered for sale by the Company, or any of its affiliates; (v) arrange, or in any way participate, directly or indirectly, in any financing for the purchase of any voting securities or securities convertible or exchangeable into or exercisable for any voting securities or assets of the Company, or any of its affiliates, except for such assets as are then being offered for sale by the Company or any of its affiliates; 20 (vi) otherwise act, alone or in concert with others, to seek to propose to the Company or any of its stockholders any merger, business combination, restructuring, recapitalization or other transaction to or with the Company or otherwise seek, alone or in concert with others, to control, change or influence the management, board of directors or policies of the Company or nominate any person as a director who is not nominated by the then incumbent directors, or propose any matter to be voted upon by the stockholders of the Company; (vii) make any public announcement relating to a request or proposal to amend, waive or terminate any provision of this Section 10(k); or (viii) take any action that might result in the Company having to make a public announcement regarding any of the matters referred to in clauses (i) through (vii) of this Section 10(k), or announce an intention to do, or enter into any arrangement or understanding or discussions with others to do, any of the actions restricted or prohibited under such clauses (i) through (vii). 11. Equitable Relief. The Company, Stein, Landry and Nirenberg each hereby expressly covenants and agrees that the other will suffer irreparable damage in the event any of the provisions of Sections 1, 2, 6, 7 or 10 hereof are not performed or are otherwise breached and that such other party shall be entitled as a matter of right (without the need to prove actual damages) to an injunction or injunctions and other relief to prevent a breach or violation by such other party and to secure the enforcement of such provisions. Resort to such equitable relief, 21 however, shall not constitute a waiver of any other rights or remedies which the party seeking such relief may have. 12. Representations and Warranties. (a) Nirenberg, FCN and the Foundation represent and warrant to the Company as follows: (i) they have the full legal right, power and authority to enter into and perform all of their obligations under this Agreement and to perform the actions to be performed by them pursuant to this Agreement; (ii) the execution and delivery of this Agreement by them and the performance of their obligations hereunder will not violate any other agreement to which they are a party (other than in respect of the agreements with the CDA referred to in Sections 1 and 2 hereof and the transfer of their interests in New DM Management I, New DM Management II and DM Associates); (iii) no consent of any third party is required for the execution and performance of this Agreement by them, other than consents that may be required from DM Associates, New DM Management I, as the general partner of DM Associates, and from the other partners of DM Associates, New DM Management I and New DM Management II or from the holders of the Debentures or the Company's bank lenders; (iv) this Agreement has been duly executed and delivered by them and constitutes their legal, valid and binding agreement, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws, now or hereafter in effect, affecting creditors' rights and remedies generally and to general principles of equity; and (v) upon consummation of the transactions contemplated hereby, the Company shall have acquired good and valid title to the DM Associates Interests, free and clear of any lien, encumbrance, or other right of any third party. 22 (b) The Company represents and warrants to Nirenberg, FCN and the Foundation as follows: (i) the Company has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby; (ii) the execution, delivery and performance of this Agreement has been duly authorized and approved by all required corporate action on the part of the Company, including approval by its Board of Directors; (iii) this Agreement has been duly executed and delivered by the Company and is a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws, now or hereafter in effect, affecting creditors' rights and remedies generally and to general principles of equity; (iv) the execution and delivery of this Agreement by the Company and the performance of its obligations hereunder will not constitute a breach under (with or without notice or the passage of time or both) or violate the Company's Restated Certificate of Incorporation or by-laws, any agreement to which the Company is a party (except for the indenture pursuant to which its Senior Subordinated Notes due 2004 were issued and its agreements with its bank lenders), or any law, regulation, rule or ordinance to which the Company is subject; (v) except for the consent of the holders of its Senior Subordinated Notes due 2004 and its bank lenders, no consent of any third party is required for the execution and performance of this Agreement by the Company; and (vi) after giving effect to the transactions contemplated hereby, the Company will be Solvent. For purposes hereof, the term "Solvent" means, with reference to the Company and its consolidated subsidiaries, that the value of the properties and interests in property of the Company (both at fair value and present fair saleable value) is, on the date of determination, greater than the aggregate amount of the liabilities, 23 including, without limitation, contingent and unliquidated liabilities, of the Company as of such date and that, as of such date, the Company is able to pay all liabilities of the Company as such liabilities mature and the Company does not have unreasonably small capital. In calculating the amount of contingent or unliquidated liabilities of the Company at any date, such liabilities shall be calculated at the amount that, after accounting for all of the facts and circumstances existing at such date, reflects the amount that may reasonably be expected to become an actual or matured liability. 13. Notice. All notices, requests and other communications to any party hereunder shall be given or made in writing and mailed (by registered or certified mail or by overnight courier) or delivered by hand as follows: (a) if to the Company, to it at: One Vision Drive Enfield, CT 06082 Attention: Gregory G. Landry with a copy to: Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Attention: Dennis J. Block, Esq. (b) if to Nirenberg, FCN and the Foundation to Nirenberg at: c/o First Merchants Group Devonshire Place Suite 106 48 Holy Family Road Holyoke, MA 01040 24 with a copy to: Bingham, Dana & Gould 150 Federal Street Boston, MA 02110-1726 Attention: Daniel L. Goldberg, Esq. or such address as such party may hereafter specify for the purpose of notice to the other party hereto. Each such notice, request or other communication shall be effective when, if delivered by hand, received by the party to which it is addressed or, if mailed in the manner described above, on the third business day after the date of mailing. 14. Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit and be binding upon its successors and assigns and any entity to which its assets and business may be transferred by operation of law or otherwise. The Company may assign its rights to acquire some or all of the DM Associates Interests to one or more of its designees; provided, that no such assignment shall relieve the Company of its obligations hereunder. This Agreement is personal to Nirenberg and Nirenberg shall not, without the written consent of the Company, assign his rights or obligations hereunder, except that this Agreement will be binding upon Nirenberg's estate and legal representatives upon his death and his beneficiaries thereafter will have the benefits hereof. 15. Governing Law. This Agreement shall be construed in accordance with and governed by the substantive laws of the State of Connecticut, without regard to the choice of law rules thereof. 16. Press Release. Nirenberg and the Company shall agree on the text of a press release announcing the execution of this Agreement. 25 17. Complete Understanding. This Agreement supersedes any prior contracts, understandings, discussions and agreements among the parties and constitutes the complete understanding between them with respect to the subject matter hereof. No statement, representation, warranty or covenant has been made by any party with respect hereto except as expressly set forth therein. 18. Modification; Waiver. (a) This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company on the one hand and Nirenberg, FCN and the Foundation on the other or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and shall not be exclusive of any rights or remedies provided by law or at equity. 19. Headings. The section headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of this Agreement. 20. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by the other party hereto. 26 21. Further Assurances. The parties hereto shall, at the request of any other party, execute and deliver any further instruments or documents and take all such further action as such party reasonably may request in order to consummate and make effective the foregoing provisions of this Agreement, including, without limitation, the taking of any action following the Closing necessary to substitute a new managing general partner of New DM Management I and New DM Management II as designated by the remaining partners of such partnerships, the waiver on behalf of New DM Management I of any rights of first refusal in favor of New DM Management I to the transfer of the limited partner interests in DM Associates contemplated hereby or the rendering inapplicable to the transactions contemplated hereby of any special approval requirements pursuant to the Company's Restated Certificate of Incorporation. 27 IN WITNESS WHEREOF, the Company, FCN and the Foundation have caused this Agreement to be duly executed in their names by one of their respective officers duly authorized to enter into and execute this Agreement, and Nirenberg has manually signed his name hereto, as of the date first written above. /s/Charles Nirenberg --------------------------------- CHARLES NIRENBERG FCN PROPERTIES CORPORATION By: /s/Charles Nirenberg ------------------------------ Name: Charles Nirenberg Title: President THE NIRENBERG FAMILY CHARITABLE FOUNDATION, INC. By: /s/Charles Nirenberg ------------------------------ Name: Charles Nirenberg Title: President DAIRY MART CONVENIENCE STORES, INC. By: /s/Robert B. Stein, Jr. ------------------------------ Name: Robert B. Stein, Jr. Title: President and Chief Executive Officer 28 The undersigned each acknowledges their agreement to the provisions of Sections 8, 10(f), 10(h), 10(i) and 11 of the attached Agreement. /s/Robert B. Stein, Jr. --------------------------------- Robert B. Stein, Jr. /s/Gregory G. Landry --------------------------------- Gregory G. Landry EX-10.2 3 Exhibit 10.2 Letter dated October 30, 1995 to Mitchell J. Kupperman from Dairy Mart Convenience Stores, Inc., Robert B. Stein, Jr. and Gregory G. Landry. DAIRY MART CONVENIENCE STORES, INC. ROBERT B. STEIN, JR. GREGORY G. LANDRY c/o Dairy Mart Convenience Stores, Inc. One Vision Drive Enfield, Connecticut 06082 October 30, 1995 Mr. Mitchell J. Kupperman c/o First Merchants Group, Inc. Devonshire Place, Suite 106 48 Holy Family Road Holyoke, MA RE: Termination of Employment, Severance and Related Matters Dear Mitch: This letter agreement sets forth the terms and conditions pursuant to which, among other things, you (hereinafter sometimes referred to as "Kupperman") shall terminate your employment and directorship with Dairy Mart Convenience Stores, Inc., a Delaware corporation (the "Company"), the Company shall compensate you in connection with the termination of your employment with the Company, and you, on the one hand, and the Company, Robert B. Stein, Jr. ("Stein") and Gregory G. Landry ("Landry"), on the other hand, shall grant mutual releases. Intending to be legally bound, the parties hereby agree as follows: 1. Termination. At the closing (the "Closing") of the transactions contemplated under that certain Agreement, dated as of October 30, 1995, among the Company, Charles Nirenberg, FCN Properties Corporation and The Nirenberg Family Charitable Foundation, Inc. (the "Nirenberg Settlement Agreement"), Kupperman shall deliver to the Company his written resignation from his positions as an officer, employee and director of the Company and its subsidiaries (the "Kupperman Resignation"). Kupperman's resignation as an officer, employee and director of the Company and its subsidiaries shall become effective immediately upon delivery of the Kupperman Resignation to the Company at the Closing, without any further act being required by either the Company or Kupperman. For purposes of this Agreement, the effective date of the termination of Kupperman's employment with the Company is hereinafter referred to as the "Termination Date." Mr. Mitchell J. Kupperman October 30, 1995 Page 2 2. Consideration. For and in consideration of Kupperman's agreement to terminate his employment with the Company, the Company shall make the payments provided for or referred to in Section 3 below and shall deliver or otherwise make available to Kupperman the benefits or other consideration referred to in Sections 4 and 5 below. 3. Payments. 3.1 Amount and Timing of Payments. The Company shall make the following payments to Kupperman: (i) Upon the execution and delivery by Kupperman of this letter agreement, the Company shall make a cash payment to Kupperman of $131,500. (ii) At the Closing, the Company shall make a cash payment to Kupperman of $683,000. (iii) At the Closing, the Company shall make an additional cash payment to Kupperman if required pursuant to Section 6 hereof. 3.2 Payment Mechanics. All payments that the Company is required to make pursuant to Section 3.1 above shall be made by certified check or by wire transfer thereof in immediately available funds to an account designated by Kupperman. 4. Stock Options. 4.1 Grant of Class A Stock Option. At the Closing, the Company shall issue to Kupperman a stock option (the "Class A Stock Option") exercisable for 10,000 shares (the "Class A Option Shares") of Class A Common Stock of the Company, at an exercise price of $2.875. The Class A Stock Option shall be fully vested and be immediately exercisable for all of the Class A Option Shares and shall be exercisable for a period of 18 months from the Termination Date. At the Closing, the Company and Kupperman shall execute and deliver a stock option agreement, in form and substance similar to the form customarily used by the Company for such purposes, evidencing the issuance of the Class A Stock Option and the terms thereof. 4.2 Payment in Respect of Class B Stock Option. At the Closing, the Company shall pay Kupperman $15,000 in respect of its determination not to issue to Kupperman any option in replacement of Kupperman's previously outstanding stock option (the "Class B Stock Option") exercisable for 3,750 shares (the "Class B Option Shares") of Class B Common Stock Mr. Mitchell J. Kupperman October 30, 1995 Page 3 of the Company. Such payment pursuant to this Section 4.2 shall be made, at the Closing, by certified check or by wire transfer thereof in immediately available funds to an account designated by Kupperman. 4.3 Agreement Concerning Option Profits Agreement. The parties hereby acknowledge that Kupperman, Stein and Landry are parties to that certain Agreement Regarding Obligation to Pay Amount of Option Profits, dated March 12, 1992, by and among HNB Investment Corp. ("HNB"), Frank Colaccino, Kupperman, Stein and Landry (the "Option Profits Agreement"). Each of the Company, Stein and Landry hereby agrees that, in the event that (i) Landry or Stein effects an amendment or modification to, or in any way supersedes in whole or in part, his obligations under the Options Profits Agreement so as to decrease, release, terminate or otherwise eliminate such obligations, or (ii) Landry or Stein reaches any kind of agreement with HNB that improves his position under the Option Profits Agreement in any way, then (a) concurrently with any such decrease, reduction, termination or other elimination of the obligations of Landry or Stein, the obligations of Kupperman under the Option Profits Agreement shall be decreased, reduced, terminated or otherwise eliminated to the same extent as the obligations of Landry or Stein, as the case may be, and/or (b) concurrently with any such improvement in the position of Landry or Stein, the position of Kupperman under the Option Profits Agreement shall be improved to the same extent as the position of Landry or Stein is improved. Each of the Company, Stein and/or Landry, as the case may be, shall notify Kupperman promptly of the commencement of any discussions with HNB in connection with the taking, or any proposal to take, any of the actions described above in this Section 4.3. 5. Additional Benefits. 5.1 Benefits. In addition to the payments contemplated under Section 3 hereof and the stock option benefits contemplated under Section 4 hereof, Kupperman shall be entitled to the following benefits in connection with the termination of his employment with the Company: (i) At the Closing, the Company shall at its sole cost and expense transfer unrestricted ownership and legal title, free and clear of any liens or other encumbrances (including, without limitation, payment or reimbursement by the Company of any sales or other similar taxes due and owing as a result of such transfer), to the automobile made available by the Company for Kupperman's use as of the date hereof. (ii) From the Termination Date through the earlier of two years thereafter or the date on which Kupperman and his dependents become eligible for substantially equivalent coverage provided by a subsequent employer, the Company shall provide Kupperman and his eligible dependents with continued coverage under all health, medical, dental and Mr. Mitchell J. Kupperman October 30, 1995 Page 4 hospitalization plans maintained by the Company during such time period on the same terms and conditions applicable to executive officers of the Company. (iii) On the Termination Date, all options to purchase stock or other rights to purchase or own stock (including grants of stock) held by Kupperman that are not vested shall immediately vest and become exercisable in full (without any further action by the Company or Kupperman being required therefor) and all options to purchase stock and other rights to purchase or own stock (including grants of stock) then held by Kupperman shall remain in effect and be exercisable until the last business day of the 18th month following the Termination Date. (iv) At the Closing, the Company will assign and transfer to Kupperman, or his designee, all of the Company's right, title and interest in the life insurance policies covering Kupperman's life that were held by the Company as of the Termination Date. From and after the Closing, Kupperman shall, at his election, assume and pay any and all premiums and other costs associated with the continuation of such policies. The Company shall execute and deliver any and all appropriate instruments necessary to evidence the foregoing assignment and transfer as promptly as practicable after the Closing. (v) From and after the Termination Date, Kupperman shall continue his participation in, and shall retain all of his rights (including, without limitation, his right to receive benefits and his right to make elections or other decisions or determinations) under, all of the other employee benefit plans, practices and policies of the Company (the "Other Employee Benefit Arrangements") to the extent that such plans, practices and policies as in effect on the date hereof contemplate or provide, by their own respective terms, that (i) participating employees may continue their participation thereunder after the termination of their employment with the Company or (ii) participating employees may or shall receive benefits thereunder after such termination. Notwithstanding any term of the Other Employee Benefit Arrangements to the contrary, on the Termination Date Kupperman shall become vested on all benefits, if any, to which he would otherwise be entitled under the Other Employee Benefit Arrangements. The determination of the amount of benefits, if any, to which Kupperman is entitled under the Other Employee Benefit Arrangements shall be made as of either the date hereof or the Termination Date, whichever results in the highest benefit to Kupperman. 5.2 Mitigation. Subject to the provisions of Section 5.1(ii) hereof, Kupperman shall not be required to mitigate any of the benefits provided in this letter agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this letter agreement be reduced by any compensation or benefit earned by Kupperman as the result of employment by another employer after the Termination Date or otherwise. Mr. Mitchell J. Kupperman October 30, 1995 Page 5 6. Gross-Up Payments. The Company hereby acknowledges that (i) the payments or benefits previously and currently being received by Kupperman in connection with his employment with the Company, (ii) the payments or benefits to be received by Kupperman pursuant to the terms of this letter agreement in connection with the termination of his employment (the payments and benefits referred to in the foregoing clauses (i) and (ii) being hereinafter referred to as the "Contract Payments"), and (iii) the payments or benefits to be received by Kupperman pursuant to any plan or arrangement or other agreement with the Company (or any affiliate) ("Other Payments" and, together with the Contract Payments, the "Payments") may be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Company hereby agrees that it shall pay to Kupperman, at the Closing, an additional amount (the "Closing Gross-Up Payment"), such amount being paid by the Company to Kupperman to ensure that the net amount retained by Kupperman, after reduction of the Excise Tax on Contract Payments and Other Payments and any federal, state and local income tax and Excise Tax upon such additional amount provided for in this Section 6, and any interest and penalties or additions to tax payable by him with respect thereto, shall be equal to the total present value of the Contract Payments and Other Payments at the time such Payments are to be made, if and to the extent required by, and all as more particularly set forth in, and in accordance with the terms and provisions of, Section 12(b)(iii) and (v) of that certain Employment Agreement dated as of June 8, 1995 by and between the Company and Gregory G. Landry (the "Landry Employment Agreement"), which terms and provisions are hereby incorporated by reference herein and shall have the same effect as if set forth in full herein. For purposes of this Section 6 (including the provisions of Section 12(b)(iii) of the Landry Employment Agreement which are incorporated by reference above in this Section 6 to the same extent as if fully set forth herein); the parties hereto hereby acknowledge and agree that the Hartford, Connecticut office of Arthur Andersen LLP shall be deemed to be acceptable as the Company's independent auditors. 7. Condition Precedent. It shall be a condition precedent to the obligation of each of Kupperman and the Company to consummate the transactions contemplated under this letter agreement that the Closing, and all of the transactions to be performed at the Closing under the Nirenberg Settlement Agreement, shall have been consummated. 8. Releases. Provided the Closing occurs: (a) Kupperman, on behalf of himself and his affiliates, hereby agrees to waive all claims against the Company, its subsidiaries and their respective former, current and future officers, directors, employees, stockholders, agents, attorneys, and other representatives (collectively, "Affiliates") and hereby releases and discharges the Company and its Affiliates from any and all actions, causes of action, suits, debts, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that Kupperman and/or his affiliates ever had, now has, Mr. Mitchell J. Kupperman October 30, 1995 Page 6 or hereafter can, shall or may have, for, upon or by reason of his former employment with, service as a director of, or direct or indirect holding of equity securities in the Company, including, without limitation, any claims arising under any federal, state or local law or ordinance, tort, employment contract (express or implied), public policy, or any other obligation, including, without limitation, any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, and all claims for wrongful discharge, workers' compensation, wages, monetary or equitable relief, vacation, disability, other employee fringe benefits, benefit plans, medical plans, or attorneys' fees; provided, however, that notwithstanding the foregoing, Kupperman reserves and shall not be deemed to have released (i) any rights he may have pursuant to the Company's 401(k) and profit sharing plans, (ii) any rights he may have pursuant to the Company's Other Employee Benefit Arrangements, (iii) his ability to seek and obtain indemnification by the Company pursuant to this Agreement and the Company's Restated Certificate of Incorporation and Amended and Restated By-laws, each as in effect on the date hereof, (iv) all claims relating to the performance of the Company's obligations under this Agreement, and (v) his ability to assert claims for contribution or other appropriate relief against the Company or one or more of its Affiliates in any action in which he is a defendant commenced by any third party, including but not limited to one or more stockholders of the Company seeking to act on behalf of the Company. (b) Kupperman hereby agrees to waive all claims against each of Stein and Landry in their capacity as direct or indirect general partners of DM Associates Limited Partnership ("DM Associates"), New DM Management Associates I ("New DM Management I"), New DM Management Associates II ("New DM Management II"), and any attorneys of the foregoing and hereby releases and discharges them from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that Kupperman ever had, now has, or hereafter can, shall or may have, for, upon or by reason of any event or thing whatsoever occurring on or prior to the Termination Date and relating to his interest in DM Associates, New DM Management I and New DM Management II; provided, however, that notwithstanding the foregoing, Kupperman reserves and shall not be deemed to have released any rights he may have to seek and obtain indemnification and/or contribution or other appropriate relief from DM Associates, New DM Management I or New DM Management II or any of the partners of such partnerships pursuant to such partnerships' respective partnership agreements as in effect on the date hereof or pursuant to applicable law. (c) The Company hereby agrees to waive all claims against Kupperman and his affiliates and their respective former, current and future officers, directors, employees, stockholders, agents, attorneys and other representatives and hereby releases and discharges Kupperman, his affiliates and such other persons from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that Mr. Mitchell J. Kupperman October 30, 1995 Page 7 the Company ever had now has, or hereafter can, shall or may have, for upon or by reason of Kupperman's former employment with, service as an officer and director of, direct or indirect holding of equity securities in, or in any other capacity relating to the Company (including as direct or indirect general partner of DM Associates, New DM Management I and New DM Management I, including any claims in connection with the transactions relating to the dissolution of DM Management Associates and DM Associates, the reconstitution of DM Associates and the replacement of DM Management Associates as the general partner of DM Associates by New DM Management I and New DM Management II, and any claims in connection with any action taken by Charles Nirenberg, Kupperman, New DM Management I and DM Associates to effect a change in the composition of the Board of Directors of the Company), including, but not limited to, any claims arising under any federal, state or local law or ordinance, tort, employment contract (express or implied), public policy, or any other obligation, other than (i) those relating to the performance of Kupperman's obligations under this Agreement and (ii) subject to Kupperman's reservation of rights pursuant to Section 8(a) hereof and rights pursuant to Section 9 hereof, claims made prior to or after the date of this letter agreement by one or more stockholders of the Company seeking to act on behalf of the Company. (d) Stein and Landry in their individual capacities and as general partners of DM Management I and New DM Management II, each hereby agrees to waive all claims against Kupperman, in his capacity as general partner of New DM Management I and New DM Management II, and as indirect general partner of DM Associates, and any attorneys of the foregoing and hereby releases and discharges them from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, judgments, demands, liability, claims and damages whatsoever, in law or equity, that either both of them ever had, now has, or hereafter can, shall or may have, for, upon or by reason of any event or thing whatsoever occurring on or prior to the Termination Date and relating to Kupperman's interests in DM Associates, New DM Management I and New DM Management II, including, without limitation, any claims in connection with the transactions relating to the dissolution of DM Management Associates and DM Associates, the reconstitution of DM Associates and the replacement of DM Management Associates as the general partner of DM Associates by New DM Management I and New DM Management II and any claims in connection with any action taken by Charles Nirenberg and Kupperman, for and on behalf of New DM Management I and DM Associates, to effect a change in the composition of the Board of Directors of the Company; provided, however, that notwithstanding the foregoing, each of Stein and Landry reserves and shall not be deemed to have released his ability to seek and obtain contribution or other appropriate relief against Kupperman pursuant to the respective partnership agreements of DM Associates, New DM Management I or New DM Management II, each as in effect on the date hereof, or pursuant to applicable law. Consistent with the foregoing, Stein and Landry each hereby agrees that he will not vote or take action, individually or with respect to his general partner interests in New DM Management I or New DM Management II to assert, Mr. Mitchell J. Kupperman October 30, 1995 Page 8 or to cause New DM Management I or New DM Management II or DM Associates to assert, any claims against Kupperman in the capacities specified and with respect to the matters released in this Section 8(d). 9. Indemnification. Provided the Closing occurs, the Company agrees to the fullest extent permitted under Delaware law to indemnify and hold Kupperman harmless from and against any costs, expenses (including, without limitation, reasonable legal fees and expenses), judgments, fines, penalties and amounts paid in settlement (collectively, "Costs") which he may incur or to which he may become subject by reason of (i) the transactions contemplated hereby, (ii) his service as a director, officer and/or employee of the Company (to the fullest extent permitted under Section 145 of the Delaware General Corporation Law), including, without limitation, Costs in connection with the Kahn litigation and (iii) the transactions relating to the dissolution of DM Management Associates and DM Associates, the reconstitution of DM Associates and the replacement of DM Management Associates as general partner of DM Associates by New DM Management I and New DM Management II and any action taken by Charles Nirenberg, Kupperman and/or any of the foregoing entities to effect a change in the composition of the Board of Directors of the Company. Upon its receipt of any notice from Kupperman with respect to any matter for which indemnification is available, the Company shall have the right to assume the defense thereof with counsel of its choice and thereafter the Company shall not be responsible for any legal fees incurred by Kupperman in respect thereof; provided, that if Kupperman is advised by counsel that there may defenses available to him that differ from those available to the Company or other indemnified parties or otherwise that the potential exists for a conflict between Kupperman and the Company and/or such other indemnified persons, then Kupperman shall be entitled to retain one firm of legal counsel on his behalf of the Company's expense. Kupperman shall not compromise or settle any action for which indemnification may be available without the Company's prior written consent, which shall not be unreasonably withheld. Such indemnification shall be conditional on Kupperman reasonably cooperating with the Company with respect to any matter for which indemnification is available. Kupperman;s rights to obtain indemnification from the Company under this Section 9 shall be in addition to, and not in lieu of, any right that Kupperman may have to obtain indemnification from the Company under the Company's Restated Certificate of Incorporation and Amended and Restated By- laws, each as in effect on the date hereof, under any other agreement entered into by Kupperman with the Company, or under any other applicable provision of law. 10. Deductions and Withholding. Kupperman agrees that the Company shall withhold from any and all payments required to be made to Kupperman pursuant to this letter agreement, all federal, state, local and/or other taxes which the Company determines are required to be withheld in accordance with applicable statutes and/or regulations from time to time in effect. Mr. Mitchell J. Kupperman October 30, 1995 Page 9 11. Miscellaneous. This letter agreement supersedes in its entirety that certain Severance Agreement, dated as of September 16, 1994, between the Company and Kupperman, shall be governed by the internal substantive laws of the Commonwealth of Massachusetts and shall inure to the benefit of, and be binding upon, the heirs, personal representatives, executors, administrators, successors and permitted assigns of the parties hereto. This letter agreement shall be enforceable by Kupperman's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Kupperman should die while any amount or benefit would still be payable or available to Kupperman under this letter agreement if Kupperman had continued to live, any such amount or benefit shall be paid or made available in accordance with the terms of this letter agreement to Kupperman's devisees, legatees or other designees or, if there is no such designee, to Kupperman's estate. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this letter agreement in the same manner and to the same extent as required of the Company. The rights and obligations of any party under this letter agreement may only be assigned with the prior written consent of each of the other parties hereto. This letter agreement may only be modified or amended pursuant to a written instrument signed by all of the parties hereto. If the foregoing accurately reflects our understanding, please so acknowledge by countersigning this letter agreement in the space provided for your signature below, whereupon this letter agreement shall become our legally binding agreement. Very truly yours, /s/Robert B. Stein, Jr. ------------------------------ Robert B. Stein, Jr. /s/Gregory G. Landry ------------------------------ Gregory G. Landry Mr. Mitchell J. Kupperman October 30, 1995 Page 10 DAIRY MART CONVENIENCE STORES, INC. By /s/Robert B. Stein, Jr. ---------------------------- Robert B. Stein, Jr. Its President/CEO Accepted and Agreed to as of this 30th day of October, 1995: /s/ Mitchell J. Kupperman - --------------------------- Mitchell J. Kupperman -----END PRIVACY-ENHANCED MESSAGE-----