DAIRY MART CONVENIENCE STORES INC
EX-10.9
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>4
<FILENAME>l88054aex10-9.txt
<DESCRIPTION>EX-10.9
<TEXT>

<PAGE>   1


Exhibit 10.9

                               SEVERANCE AGREEMENT


THIS AGREEMENT between Dairy Mart Convenience Stores, Inc., a Delaware
corporation (hereinafter referred to as the "COMPANY"), and Gregory G. Landry
(hereinafter referred to as the "EXECUTIVE"), dated as of this 15th day of
March, 2001:

WHEREAS, the Executive is the Executive Vice President and Chief Financial
Officer of the Company and a director of the Company;

WHEREAS, the Company and DM Acquisition Corp. (the "BUYER") have entered into an
Agreement and Plan of Merger, dated the date hereof, pursuant to which the Buyer
will be merged with and into the Company (the "MERGER");

WHEREAS, it is contemplated that upon consummation of the Merger, the Executive
will cease to serve on the Company's board of directors;

WHEREAS, the Company has determined to effect certain changes in management of
the Company, which changes contemplate, INTER ALIA, the termination of the
Executive's employment with the Company;

WHEREAS, the Executive will have the right to terminate his employment for Good
Reason (as defined in the Employment Agreement) after the closing under the
Merger Agreement because the Executive will cease to serve on the Company's
board of directors following the closing under the Merger Agreement;

WHEREAS, the Company and the Executive desire to confirm the Executive's
severance benefits to which he is entitled under the Employment Agreement;

NOW, THEREFORE, in consideration of the mutual promises set forth herein and of
the Executive's past employment with and contributions to the Company and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

Capitalized terms used and not otherwise defined upon first usage herein are
defined in EXHIBIT A attached to this Agreement.

1.       SEVERANCE BENEFITS.

         1.1.     BASIC BENEFITS. At the effective time of the Merger, the
                  Executive shall have Good Reason to terminate his employment
                  with the Company and has voluntarily determined to terminate
                  his employment. The date such termination occurs shall be the
                  "Effective Date" and the Executive shall be entitled to the
                  following benefits as provided in the Employment Agreement:

<PAGE>   2

                  (a)      SEVERANCE PAY. No later than the fifth business day
                           following the Effective Date, the Company shall pay
                           to the Executive an aggregate amount equal to:

                                    (i) his accrued and unpaid Base Salary
                           through the Effective Date, PLUS

                                    (ii) $136,500 (representing his bonus
                           amount) MULTIPLIED BY a fraction, the numerator of
                           which is the number of days elapsed from February 4,
                           2001 through the Effective Date and the denominator
                           of which is 365, PLUS

                                    (iii) $1,234,500.

                  (b)      GROSS-UP PAYMENT. In addition to the amount set forth
                           in Section 1.1(a) hereof, the Company shall pay to
                           the Executive no later than the fifth business day
                           following the Effective Date the amount of the
                           Gross-Up Payments referred to in Section 12(b)(iii)
                           of the Employment Agreement, subject to the
                           provisions of Section 12(b)(v) of the Employment
                           Agreement.

                  (c)      AUTOMOBILE. No later than the fifth business day
                           following the Effective Date, the Company shall
                           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
                           Executive's use and the Company shall pay or
                           reimburse all sales or other similar taxes due as a
                           result of such transfer.

                  (d)      BENEFITS. Until the earlier of (i) the third
                           anniversary of the Effective Date; or (ii) the date
                           on which the Executive and his dependents shall have
                           become eligible for substantially equivalent coverage
                           provided by a subsequent employer, the Company shall
                           maintain in full force and effect for the benefit of
                           the Executive and his family continued coverage under
                           all health, medical, dental and hospitalization plans
                           (but not any other employee benefits plans, stock
                           programs, qualified plans or other forms of
                           retirement or deferred compensation) maintained by
                           the Company or its successor during such period on
                           the same terms and conditions, including, without
                           limitation, any premium payment obligations
                           applicable to executive officers of the Company. Such
                           period shall be inclusive of any applicable COBRA
                           period. The Executive, however shall not be entitled
                           to participate in any programs under or related to an
                           Internal Revenue Code of 1986, Section 125 program.

<PAGE>   3

                  (e)      LIFE INSURANCE POLICIES. As of the Effective Date,
                           the Company shall assign to the Executive all right,
                           title and interest in and to the two life insurance
                           policies covering the Employee's life that are held
                           by the Company, each of which is in the face amount
                           of $250,000 (including the cash surrender value
                           relating thereto).

                  (f)      OFFICE EQUIPMENT. As of the Effective Date, subject
                           to compliance with Section 13(b) of the Employment
                           Agreement, the Company shall assign to the Executive
                           all right, title and interest in and to the personal
                           computer of the Company currently used by the
                           Executive in his home.

                  (g)      EXPENSE REIMBURSEMENT. The Company shall reimburse
                           the Executive for all business expenses incurred by
                           the Executive through the Effective Date in
                           connection with his employment by the Company
                           promptly upon submission by the Executive to the
                           Company of appropriate vouchers or expense
                           statements, pursuant to, and subject to the Company's
                           normal business practices in this regard.

                  (h)      SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN ("SERP"). No
                           later than the fifth business day following the
                           Effective Date, the Company shall pay to the
                           Executive an amount equal to his benefits under the
                           Supplemental Executive Retirement Plan calculated on
                           the basis that his Target Retirement Benefit (as
                           defined in the SERP) will be multiplied by a fraction
                           (not greater than one) equal to the number of his
                           credited Years of Benefit Service (as defined in the
                           SERP) as of the Effective Date divided by the total
                           number credited Years of Benefit Service that he
                           would have on the first day of the month next
                           following his 65th birthday.

1.2.     OPTIONS AND OTHER STOCK AWARDS. The Company and the Executive
         acknowledge that (a) all options and other rights to purchase stock
         (including stock grants) granted under the Company's various stock
         plans to the Executive as of the Effective Date shall immediately vest
         and become exercisable in full and the Executive shall be entitled to
         the rights provided under Section 2.01(e) of the Merger Agreement with
         respect to the options to acquire 277,500 shares of the Company's
         common stock held by the Executive (including all such options which
         have become vested pursuant to this clause (a)) and (b) the Executive
         shall be entitled to the rights provided under Section 2.01(c) of the
         Merger Agreement with respect to the 34,875 shares of the Company's
         common stock owned by the Executive and the 78,750 shares of the
         Company's common stock which were granted to the Executive on July 14,
         1997. Without limiting the foregoing, if the Merger does not occur by
         July 14, 2001, then in lieu of the Executive receiving such 78,750
         shares of the Company's common stock which were granted to the

<PAGE>   4

         Executive on July 14, 1997, he will receive on the Effective Date a
         cash bonus equal to $354,375.

2.       WITHHOLDING. All payments required to be made by the Company hereunder
         to the Executive shall be subject to the withholding of such amounts,
         if any, relating to tax and other payroll deductions as the Company may
         reasonably determine it must withhold pursuant to any applicable law or
         regulation.

3.       MUTUAL RELEASE

         3.1      EXECUTIVE RELEASE. The Executive understands and agrees that
                  as of the Effective Date he releases and discharges the
                  Company, its affiliates, and each of Company's affiliates,
                  shareholders, officers, directors, employees, and agents
                  (collectively, the "Company Released Parties"), of and from
                  any and all claims, demands, actions or liability whatsoever,
                  based on events or circumstances existing as of the Effective
                  Date, whether known or unknown, arising out of or in
                  connection with his employment by, or membership on the Board
                  of Directors of, the Company or the termination of such
                  employment, including, but not limited to, any and all claims
                  arising under any federal, state or local laws prohibiting
                  age, race, sex, disability and other forms of discrimination,
                  including, but not limited to, age discrimination claims under
                  the Age Discrimination in Employment Act, claims under Title
                  VII of the 1964 Civil Rights Act, the Americans with
                  Disabilities Act, the Employee Retirement Income Security Act,
                  or arising under any other federal, state or local statute
                  relating to employment.

                  The Executive understands that he may be replaced by a younger
                  individual and expressly agrees that among the claims being
                  released herein are any and all claims that might arise out of
                  any such action by the Company or the Company's Released
                  Parties. The Executive voluntarily waives any right to seek
                  reemployment by the Company.

                  The Executive also agrees that neither he nor anyone acting on
                  his behalf will file, claim, sue or cause or permit to be
                  filed or claimed, any action for damages or other relief
                  against the Company or the Company Released Parties involving
                  any matter occurring prior to the date of this Agreement, or
                  involving the effects of actions or practices which arose
                  prior to the date of this Agreement solely arising out of
                  Executive's Employment. The Executive further agrees that he
                  will neither seek nor accept any further benefit or
                  consideration from any source whatsoever in respect to any
                  claims solely arising out of Executive's Employment which he
                  has asserted or could have asserted against the Company or the
                  Company Released Parties.

                  Further, Executive agrees that this Agreement meets the
                  requirements of the Age Discrimination in Employment Act of
                  1967 ("ADEA"), as

<PAGE>   5

                  amended by the Older Workers' Benefit Protection Act of 1990
                  ("OWBPA"), including the provisions of 29 U.S.C. ss. 626(f)(1)
                  regarding specific requirements for the waiver of rights and
                  claims thereunder in any way arising prior to the execution of
                  this Agreement. Those requirements include that Executive
                  understands and acknowledges that by executing this Agreement:

                           a. Executive is knowingly and voluntarily waiving any
                  and all rights and claims he may have under the ADEA and
                  OWBPA;

                           b. Executive is receiving hereunder consideration in
                  addition to anything of value to which he is already entitled;

                           c. Executive has been advised to consult with an
                  attorney prior to executing this Agreement;

                           d. Executive has carefully read this Agreement, knows
                  and understand its contents and its significance, and intends
                  to be bound by its terms;

                           e. Executive has been given a period of 21 days from
                  the receipt of this Agreement to consider its contents and
                  ramifications and his decision to sign it (although it may be
                  executed and returned prior to that if desired).

                           f. Executive will be given seven days following
                  execution of this Agreement to revoke it by notifying the
                  Company in writing as provided in Section 7, since it will not
                  become effective or enforceable and no payments will be made
                  under this Agreement until that seven day revocation period
                  has expired.

                  The Executive agrees that the contents of these paragraphs not
                  only release the Company and the Company Released Parties from
                  any and all claims as stated herein which he could or may make
                  on his own behalf, but also those claims solely with respect
                  to Executive's employment which could or may be made by any
                  other person or entity (including Executive's spouse and
                  family members).

                  It is further understood and agreed that this entire Agreement
                  is not to be construed as an admission of liability by the
                  Company or the Company Released Parties. Further, the payment
                  of monies under this Agreement does not constitute an
                  admission by or on behalf of the Company or the Company
                  Released Parties that you are entitled to any payment pursuant
                  to any policy or practice.

                  Nothing in this Agreement shall be construed as a release,
                  waiver or other relinquishment by you of (i) any claims,
                  demands, actions or liabilities based upon Executive's rights
                  pursuant to this Agreement, (ii) any indemnity to which the
                  Executive may be entitled pursuant to the terms and conditions
                  of the Company's Certificate of Incorporation, By-laws or any
                  directors' and officers' liability insurance policy in effect
                  as of the

<PAGE>   6

                  Effective Date (including, without limitation, any right the
                  Executive may have to retain separate counsel and
                  reimbursement by the Company in connection therewith) and
                  (iii) any right to collect any vested benefits to which he may
                  be entitled under the Company's 401(k) retirement plan.


         3.2      COMPANY RELEASE. The Company understands and agrees that as of
                  the Effective Date it releases and discharges the Executive of
                  and from any and all claims, demands, actions or liability
                  whatsoever, based on events or circumstances as of the
                  Effective Date, whether known or unknown, arising out of or in
                  connection with the Executive's employment by the Company, or
                  the termination of such employment, except for any claims,
                  demands, actions or liability based upon the Company's rights
                  pursuant to this Agreement. Notwithstanding the foregoing, the
                  obligations and provisions under Section 13 of the Employment
                  Agreement shall survive in accordance with their terms.

4.       RESIGNATIONS.

         4.1      The Executive shall resign from the offices of Executive Vice
                  President and Chief Financial Officer of the Company on the
                  first business day following the consummation of the Merger.
                  The Executive shall resign as a member of the Board of
                  Directors of the Company immediately prior to the consummation
                  of the Merger pursuant to the terms of the Merger Agreement.

         4.2      Prior to the consummation of the Merger, the Executive shall,
                  at the instruction of Robert B. Stein, Jr., withdraw as a
                  general partner of New DM Management Associates I or assign
                  his general partnership interests to either Robert B. Stein,
                  Jr. or New DM Management Associates I, in each case, without
                  receiving any additional consideration therefor, PROVIDED THAT
                  to the extent such withdrawal or assignment results in any
                  taxable income to the Executive that is not (a) able to be
                  offset against prior loss carry-forwards generated by New DM
                  Management Associates I or (b) as a result of the Executive
                  having been allocated prior losses from New DM Management
                  Associates I, the Company shall pay to the Executive a cash
                  bonus in an amount sufficient to satisfy the Executive's tax
                  liability with respect to such income. Contemporaneously with
                  and as a condition of such withdrawal or assignment, the
                  Executive's options that are subject to a pledge under
                  Partnership Agreement of DM Associates Limited Partnership, by
                  and among New DM Management Associates I, HNB Investment Corp.
                  and the Company, as amended, shall be released from that
                  pledge.

<PAGE>   7

5.       REPRESENTATIONS AND WARRANTIES.

         5.1      The Company has all requisite power and full legal right to
                  enter into this Agreement and to perform its agreements and
                  obligations hereunder. This Agreement and the transactions
                  contemplated hereby have been duly approved and authorized by
                  all requisite corporate action on the part of the Company.
                  This Agreement has been duly executed and delivered by the
                  Company and constitutes the legal, valid and binding
                  obligation of the Company enforceable against the Company in
                  accordance with its terms.

         5.2      The execution, delivery, and performance by the Company of
                  this Agreement in accordance with its terms, and the
                  consummation by the Company of the transactions contemplated
                  hereby, will not result in any conflict, violation, breach, or
                  default, under or in respect of (x) the charter documents or
                  by-laws of the Company, (y) any judgment, decree, order,
                  statute, rule, or regulation binding on or applicable to the
                  Company or (z) any agreement or instrument to which the
                  Company is a party (including, without limitation, the Merger
                  Agreement).

6.       ARBITRATION. Any controversy or claim arising out of or relating to
         this Agreement, or the breach thereof, shall be settled exclusively by
         single-arbitrator arbitration in accordance with the Commercial
         Arbitration Rules of the American Arbitration Association then in
         effect, and judgment upon the award rendered by the arbitrator may be
         entered in any court having jurisdiction thereof.

7.       LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
         expenses, including but not limited to, counsel fees, stenographer
         fees, printing costs, etc., reasonably incurred by the Executive in
         connection with the negotiation, execution and delivery of this
         Agreement or in seeking in good faith to obtain any right or benefit to
         which the Executive is entitled under this Agreement. Any amount
         payable under this Agreement that is not paid when due shall accrue
         interest at the prime rate as from time to time in effect at the
         Company's agent bank until paid in full.

8.       NOTICES. Any notices required to be given under this Agreement shall be
         in writing and shall be deemed given five (5) days after mailing in the
         continental United States by registered or certified mail, or upon
         personal receipt after delivery, telex, telecopy, or telegram, to the
         party entitled thereto at the address stated below or to such changed
         address as the addressee may have given by a similar notice:

         TO THE COMPANY:   Dairy Mart Convenience Stores, Inc.
                           One Dairy Mart Way
                           300 Executive Parkway West
                           Hudson, Ohio  44236
                           Attn: Robert B. Stein, Jr.

<PAGE>   8

         WITH COPIES TO:   Milbank, Tweed, Hadley & McCloy LLP
                           1 Chase Manhattan Plaza
                           New York, New York 10005-1413
                           Attn:  Roland Hlawaty

                           Baker & Hostetler LLP
                           3200 National City Center
                           1900 E. 9th Street
                           Cleveland, Ohio 44114-3485
                           Attention:  Albert T. Adams

         TO THE EXECUTIVE: Gregory G. Landry
                           1803 Forest Oaks Drive
                           Hudson, Ohio  44236

         WITH A COPY TO:   Victor J. Paci, Esq.
                           Bingham Dana LLP
                           150 Federal Street
                           Boston, MA 02110

9.       GENERAL PROVISIONS.

         9.1.     BINDING AGREEMENT. This Agreement shall be binding upon and
                  inure to the benefit of the parties and be enforceable by the
                  Executive's personal or legal representatives or successors if
                  the Executive dies while any amounts would still be payable to
                  him hereunder, benefits would still be provided to his family
                  hereunder, or rights would still be exercisable by him
                  hereunder as if he had continued to live. Such amounts shall
                  be paid to the Executive's estate, such benefits shall be
                  provided to the Executive's family, and such rights shall
                  remain exercisable by the Executive's estate in accordance
                  with the terms of this Agreement. This Agreement shall not
                  otherwise be assignable by the Executive.

         9.2.     SUCCESSORS. This Agreement shall inure to and be binding upon
                  the Company and the Company's successors and assigns. The
                  Company shall require any successor to all or substantially of
                  the business and/or assets of the Company by sale, merger
                  (where the Company is not the surviving corporation),
                  consolidation, lease or otherwise, by agreement in form and
                  substance satisfactory to the Executive, to assume this
                  Agreement expressly. This Agreement shall not otherwise be
                  assignable by the Company. In the event that it is
                  impracticable for a successor of the Company to perform the
                  Company's obligations under paragraph 1.1(d), of this
                  Agreement, the Company shall pay to the Executive, in a lump
                  sum payment without discounting to present value, an amount
                  equal to the aggregate of all remaining payments due under
                  such paragraph 1.1(d).

<PAGE>   9

         9.3.     AMENDMENT OR MODIFICATION; WAIVER. This Agreement may not be
                  amended or modified unless agreed to in writing by the
                  Executive and the Company. No waiver by either party of any
                  breach of this Agreement shall be deemed a waiver of a
                  subsequent breach.

         9.4.     SEVERABILITY. In the event that any provision of this
                  Agreement shall be determined to be invalid or unenforceable,
                  such provision shall be enforceable in any jurisdiction in
                  which valid and enforceable, and in any event the remaining
                  provisions shall remain in full force and effect to the
                  fullest extent permitted by law.

         9.5.     RIGHTS GRANTED. This Agreement shall not give the Executive
                  any right to compensation or benefits from the Company or any
                  Subsidiary, except for the rights specifically stated herein,
                  including those certain severance and other benefits that
                  become due as of the Effective Date.

         9.6.     GOVERNING LAW. The validity, interpretation, performance, and
                  enforcement of this Agreement shall be governed by the laws of
                  the State of Ohio, without regard to conflict of law
                  principles.

10.      EXCLUSIVE AGREEMENT. It is agreed and understood that this Agreement
         represents the entire agreement between the Company and the Executive
         concerning the subject matter hereof and, as of the Effective Date,
         this Agreement shall supersede all prior agreements and understandings
         concerning the Executive and the Executive's rights upon the
         termination of his employment, including, without limitation, the
         Employment Agreement (except with respect to Section 13 thereof). Until
         the Effective Date, the Employment Agreement shall remain in full force
         and effect except as modified hereby and, after the Effective Date, to
         the extent there is any express conflict between the Employment
         Agreement and this Agreement, the provisions of this Agreement shall
         control.

11.      EFFECTIVENESS OF AGREEMENT. This Agreement will only become effective
         upon the consummation of the Merger and will terminate upon the
         termination of the Merger Agreement, except for the provisions of
         Section 7 hereof which shall be effective as of the date hereof and
         which shall survive termination of the Merger Agreement.


<PAGE>   10


IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year first above written.


Dairy Mart Convenience Stores, Inc.         Executive
By its Authorized Representative

By:      /s/ Robert B. Stein, Jr.           /s/ Gregory G. Landry
   ------------------------------           ---------------------
Name:  Robert B. Stein, Jr.                 Gregory G. Landry
Title: Chairman, President and C.E.O.




<PAGE>   11


                                    EXHIBIT A

                                   DEFINITIONS

The following terms as used in this Severance Agreement have the following
meanings:

(a)      "BASE SALARY" means the Executive's base salary, exclusive of any bonus
         or other benefits he may receive, at the annual rate in effect on the
         Effective Date, which annual rate is $275,000.

(b)      "COMPANY" means Dairy Mart Convenience Stores, Inc. or any successor.

(c)      "EMPLOYMENT AGREEMENT" means the Employment Agreement effective as of
         January 1, 2000 between the Company and the Executive.

(d)      "SUBSIDIARY" means any corporation in which the Company owns, directly
         or indirectly, 50 percent (50%) or more of the total combined voting
         power of all classes of stock.



</TEXT>
</DOCUMENT>
