EXHIBIT 10.8
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is effective November 1, 2001, by and between
DAIRY MART CONVENIENCE STORES, INC., a Delaware corporation with its principal
offices at 000 Xxxxxxxxx Xxxxxxx Xxxx, Xxxxxx, Xxxx 00000 (the "Company"), and
XXXXXXX X. XXXXXX, with his residence located at 0000 Xxxxxx Xxxx Xxxxx, Xxxxxx,
Xxxx 00000 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue to secure the
services of the Employee in the capacities set forth herein, and the Employee
has agreed to continue to supply his services in such capacities, upon the terms
and conditions set forth in this Agreement.
WHEREAS the Company and the Employee desire that this
Agreement replace and supercede that certain Employment Agreement effective as
of August 1, 2001 (the "Existing Employment Agreement"), between Employer and
Employee.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties hereby agree
that the Existing Employment Agreement is amended and restated in its entirety
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.
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"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.
"Change of Control" shall mean any one or more of the
following:
(i) If any "person" (as the terms used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Common
Stock of the Company representing 20% or more of the Company's outstanding
Common Stock;
(ii) If the individuals who constitute the Board on
the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for election
by the Company's stockholders, was approved by a
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vote of at least three-quarters of the directors then comprising the Incumbent
Board shall be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board;
(iii) A merger, consolidation, reorganization, sale
of all or substantially all of the assets of the Company or similar transaction
occurs in which the Company is not the resulting entity, other than a
transaction following which (A) at least 51% of the equity ownership interests
of the entity resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under Exchange Act) in substantially the same
relative proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership interests in the
Company and (B) at least 51% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Company; or
(iv) A tender offer is completed for 20% or more of
the voting securities of the Company then outstanding.
"Common Stock" shall mean the common stock of the Company.
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"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 or
responsibilities inconsistent with his status as Chief Executive Officer of the
Company, his removal from that position, or a diminution in the nature or status
of his responsibilities from those in effect as of the date hereof;
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(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;
(iv) relocation of the Employee's principal place of
employment by more than 60 miles from its location as of the date hereof;
(v) a material breach of this Agreement by the Company that
remains uncured for a period of 30 days after Employee has provided the
Company's Board of Directors written notice that specifically identifies, in
reasonable detail, the manner in which the Company materially breached the
Agreement; or
(vi) notwithstanding the foregoing, the occurrence of a
"Change of Control" and the further occurrence of any event listed in items (i)
through (v) hereof within two years following a Change of Control.
"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.
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"Value of the Transaction" shall mean for the purpose of
calculating the Emergence Bonus (as defined in Paragraph 6(b) hereof) the total
proceeds and other consideration paid to or received by the Company, or any of
its affiliates or other parties in interest in connection with an event
described in item (iii) of the definition of "Change of Control" (the
"Transaction") (which consideration shall be deemed to include amounts in
escrow, any deposits or other amounts forfeited by an investor in the Company),
including, without limitation, cash, notes, securities, and other property;
payments made or the present value of payments to be made in installments;
amounts paid under consulting agreements, above-market employment contracts,
non-compete agreements or similar arrangements; and insurance proceeds upon the
occurrence of an insurable event that diminishes the value of the Company. Upon
a Change of Control where less than 100% of the ownership of the equity
interests are sold, the Value of the Transaction shall be calculated as if 100%
of the ownership of the equity interests of the Company had been sold by
dividing (i) the total consideration, whether in cash, securities, notes or
other forms of consideration, received or receivable by the Company and/or its
affiliates by (ii) the percentage of ownership which is sold. In addition, if
any of the Company's secured bank debt, public bond indebtedness, capitalized
lease obligations or other liabilities are assumed, decreased, satisfied or
otherwise paid off in conjunction with a Transaction (by the Company or any
investor in the Company, in the form of "cure" payments or otherwise), or any of
the Company's assets are retained, sold or otherwise transferred outside of the
Company's ordinary course of business to another party prior to the consummation
of a Transaction, the Value of the Transaction will be increased to reflect the
reasonable value of any such liabilities to the Company, as agreed upon between
the parties, and the fair market value of any such assets.
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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 July 30, 2001 and, unless sooner terminated on an
earlier date in accordance with the provisions hereinafter provided, shall
terminate on July 30, 2004; provided, however, that commencing on July 30, 2002
and each July 30 thereafter, the term of this Agreement shall automatically be
extended for one additional year such that the remaining unexpired term shall be
three years unless, not later than July 1 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
July 30, 2001 and ending on July 30, 2004 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 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
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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 $450,000 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. Bonus Arrangements.
(a) Retention Bonus. In addition to the Base Salary
and the Emergence Bonus, the Employee shall receive a bonus of $450,000 (the
"Retention Bonus") paid in three equal semi-annual installments payable on
February 1, 2002, August 1, 2002 and February 1, 2003, provided the Employee is
employed by the Company on such dates. If a plan of reorganization or
liquidation of the Company is confirmed, or the Employee's employment is
terminated by the Company without Cause or by the Employee for Good Reason, then
any unpaid balance (in whole or in part) of the Retention Bonus shall be paid
within 10 days following the effective date of such confirmation or termination
without Cause or for Good Reason, as applicable.
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(b) Emergence Bonus. In addition to the Base Salary
and the Retention Bonus, the Employee shall receive a one-time bonus (the
"Emergence Bonus") equal to the amount that (I) either (A) $450,000 if either of
the following events occur: (x) a stand-alone plan of reorganization of the
Company is confirmed during the Employment Term prior to February 28, 2003, or
(y) the events described in items (i), (ii) or (iv) of the definition of "Change
of Control" occur during the Employment Term and the Employee's employment is
subsequently terminated by the Company without Cause or by the Employee for Good
Reason, or (B) in the event of the occurrence of an event described in item
(iii) of the definition of "Change of Control" prior to February 28, 2003 then
an amount equal to the respective value listed on Exhibit A based upon the Value
of the Transaction and the date on which the Change of Control is consummated,
exceeds (II) the Retention Bonus. The Emergence Bonus shall be paid within 10
days following the date of the Change of Control, confirmation or termination
without Cause or for Good Reason, as applicable.
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.
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(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, provided that the net
lease costs of such automobile to the Company may not exceed $750 per month
during the Employment Term (which cap does not affect all other costs and
expenses of the automobile being paid by the Company as provided under this
Section 9).
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, other than (a) (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
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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, and (b) the obligation to pay to the Employee the
portion of the Retention Bonus under Section 6(a) hereof which remains unpaid as
of the Date of Termination pro rated through the Date of Termination.
Notwithstanding the foregoing clause (a), 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 (excluding the Retention Bonus and the Emergence Bonus)
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
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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 (excluding the Retention
Bonus and the Emergence Bonus) made to or earned by the Employee in respect of
the last three twelve month periods preceding the date of death and (iii) an
amount equal to the portion of the Retention Bonus under Section 6(a) hereof
which remains unpaid as of the date of death pro rated through the date of
death. Such additional sum shall be paid in lump sum 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.
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(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, 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 (excluding the Retention Bonus and the Emergence Bonus)
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, as
severance pay and in consideration of the Employee's continued obligations
provided for in Paragraph 13(a) and (b) hereof, a payment (the "Severance
Payment") equal to 1.5 times the sum of his full Base
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Salary, as in effect at the time the Notice of Termination is given. The
Severance Payment 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). The Severance Payment shall
be paid in installments with one-half of the Severance Payment paid on a date
which is no later than the fifth day following the Date of Termination and the
balance paid in 9 equal monthly installments commencing on the one month
anniversary of the Date of Termination and continuing for 8 months thereafter.
In addition, as provided in, and subject to the terms of, Paragraphs 6(a) and
(b) hereof, the Employee shall be entitled to the Retention Bonus and the
Emergence Bonus.
(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
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"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.
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(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 owing as a result of such transfer.
(vii) For the period of time from the Date
of Termination through the earlier of three 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
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coverage under all health, medical, dental and hospitalization plans maintained
by the Company or its successor during such time period on the same terms and
conditions applicable to executive officers of the Company. In the event of the
liquidation of the Company or in the event that the Company will not have a
successor to provide such benefits after the Date of Termination, the Company
shall provide the Employee with a lump sum upon the Date of Termination, based
on $1,500 per month for three years, in order to provide the Employee with the
same coverage the Employee is entitled to receive under this clause (vii).
(vii) 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 and to the life insurance policies covering the
Employee's life that were held by the Company as of such date for the benefit of
the Employee. 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 Date of Termination. For avoidance
of doubt, the Company will not assign
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any life insurance policy it owns for its own benefit insuring Employee's life
or any cash surrender value relating thereto.
(x) Upon the Date of Termination, the
Company will assign to the Employee all of its right, title and interest in and
to the personal computer of the Company that Employee maintains in his household
for use for the benefit of the Company.
(xi) 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 this 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 of this Agreement, 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, and subject to the
terms of, Paragraph 12(b) (ii) hereof to which the Employee will be entitled
will be equal to the sum of (y) his full Base Salary in effect for the last
fiscal year of the Company completed during the Employment Term and (z) the
Emergence Bonus to the extent that the
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conditions to payment of the Emergence Bonus have been satisfied prior to the
end of the Employment Term but such Emergence Bonus has not yet been paid to the
Employee as of such date. 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
-20-
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
-21-
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
-22-
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: Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
To the Company: Dairy Mart Convenience Stores, Inc.
000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Chairman of the Board
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
-23-
Paragraphs 10, 11, 12, 13 and 15 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, within 10 days of becoming successor,
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 if no such
succession had taken place.
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 and this Agreement supersedes all prior oral and
written agreements with respect to the subject matter hereof (including the
Existing Employment Agreement, as well as, the earlier employment agreement
between the Employer and the Employee dated January 1, 2000). 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 Ohio without reference to the conflicts of laws
principles thereof.
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.
-24-
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, the remainder of this Agreement shall not be affected thereby,
and each remaining provision hereof shall be validated and shall be enforced to
the fullest extent permitted by law.
-25-
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/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
Vice President-Finance, Treasurer and
Chief Financial Officer
By: /s/ J. Xxxxxx Xxxxxxxxxx
-------------------------------------
J. Xxxxxx Xxxxxxxxxx
Chairman of the Board
Agreed to as of the 1st day
of November, 2001
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
-26-
EXHIBIT A
SUCCESS BONUS AS A PERCENTAGE OF TRANSACTION VALUE
VALUE OF TRANSACTION
TIMING OF --------------------------------------------------------------------------------------------------
TRANSACTION $100M OR LESS $101M - $119M $120M - $129M $130M - $139M $140M - $149M $150M OR MORE
----------------- ---------- ------------- ------------- ------------- ------------- ------------- -------------
12/1/02 - 2/28/03 Percentage 0.50% 0.55% 0.60% 0.65% 0.70% 0.75%
Value $500,000 $605,000 $720,000 $845,000 $980,000 $1,125,000
9/1/02 -11/31/02 Percentage 0.55% 0.60% 0.65% 0.70% 0.75% 0.80%
Value 550,000 660,000 780,000 910,000 1,050,000 1,200,000
6/1/02 - 8/31/02 Percentage 0.60% 0.65% 0.70% 0.75% 0.80% 0.85%
Value 600,000 715,000 840,000 975,000 1,120,000 1,275,000
3/1/02 - 5/31/02 Percentage 0.65% 0.70% 0.75% 0.80% 0.85% 0.90%
Value 650,000 770,000 900,000 1,040,000 1,190,000 1,350,000
1/1/02 - 2/28/02 Percentage 0.70% 0.75% 0.80% 0.85% 0.90% 0.95%
Value 700,000 825,000 960,000 1,105,000 1,260,000 1,425,000
PRIOR TO 12/31/01 Percentage 0.75% 0.80% 0.85% 0.90% 0.95% 1.0%
Value 750,000 880,000 1,020,000 1,170,000 1,330,000 1,500,000
