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EXHIBIT 10.7
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Amendment"), made and
entered into this 30th day of September, 1996 by and among MAZEL COMPANY L.P., a
Delaware limited partnership (the "Partnership"), MAZEL STORES, INC., an Ohio
corporation (the "Company"), and XXX XXXXXXXX (the "Employee"), is to evidence
the following agreements and understandings:
WITNESSETH:
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WHEREAS, the Employee made and entered into an Employment Agreement
with the Partnership, effective March 28, 1996 (the "Agreement");
WHEREAS, the Company has acquired all of the assets and assumed
substantially all of the liabilities of the Partnership in exchange for all of
the capital stock in the Company; and
WHEREAS, the Company is now contemplating an initial public offering of
its Common Stock (the "Initial Public Offering") and the parties have agreed to
amend and restate the original Agreement to facilitate the Initial Public
Offering.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. TERM. The Company hereby employs the Employee, and the Employee
hereby accepts such employment, for an initial term commencing on the effective
date of the Initial Public Offering (the "Effective Date") and ending on January
31, 1999, unless sooner
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terminated in accordance with the provisions of Section 4 or Section 5; with
such employment to continue in accordance with the terms of this Agreement from
year to year thereafter (subject to termination as aforesaid) unless either
party notifies the other party in writing not less than thirty (30) days prior
to the expiration of the initial term and each annual renewal thereof (said
initial term and any continuation thereof being hereinafter referred to as the
"TERM").
2. DUTIES. The Employee, in her capacity as Senior Vice
President--Chief Financial Officer and Treasurer, shall faithfully perform for
the Company the duties of said offices and shall perform such other duties of an
executive, managerial or administrative nature as shall be specified and
designated from time to time by the Board of Directors. The Employee shall
devote substantially all of her business time and effort to the performance of
her duties hereunder.
3. COMPENSATION.
3.1 SALARY. The Company shall pay the Employee during the Term
a salary at the rate of One Hundred Seventeen Thousand Six Hundred Dollars
($117,600) per annum (the "ANNUAL SALARY"). The Annual Salary shall be payable
in equal semi-monthly installments, less such deductions as shall be required to
be withheld by applicable law and regulations. Commencing on each anniversary of
the commencement date of the Term, the Annual Salary shall be increased by an
amount (if a positive number) equal to the product of (i) the Annual Salary in
effect immediately prior to such date, multiplied by (ii) the
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percentage, if any, by which the Consumer Price Index (all items less Shelter),
Urban Wage Earners and Clerical Workers, for the North Central
Region/Populations Size B, published by the United States Government for the
month preceding such date exceeds such index for the comparable month in the
preceding year.
3.2 ANNUAL BONUS. During the Term, the Employee shall be
entitled to receive an annual bonus (the "ANNUAL BONUS") based upon the
Company's pre-tax income for each fiscal year of the Company ending during the
Term, commencing with the fiscal year ending January 25, 1997 ("Fiscal 1996").
Subject to the terms, conditions and limitations set forth below, the Annual
Bonus for any fiscal year shall be an amount equal to forty-eight and
four-tenths percent (48.4%) of the Annual Salary in effect at the beginning of
the relevant fiscal year in the event that the Company's pre-tax income,
calculated in accordance with generally accepted accounting principles
consistently applied, equals or exceeds the "TARGET AMOUNT" (as hereinafter
defined) for such fiscal years. If the Company's pre-tax income for any fiscal
year is less than the Target Amount for such fiscal year, the Annual Bonus shall
be the amount, if any, equal to (i) (A) the percentage of the Target Amount that
such pre-tax income represents, minus eighty percent (80%), divided by (B)
twenty percent (20%), multiplied by (ii) forty-eight and four-tenths percent
(48.4%) of the Employee's Annual Salary in effect at the beginning of such
fiscal year. For example, if the Company's pre-tax income for Fiscal 1996 is
ninety percent (90%) of the Target Amount and Employee's Annual Salary is
$117,600, the Annual Bonus shall be calculated as follows:
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(90%-80%)
--------- X $56,918 = $28,459
20%
If the Company's pre-tax income for any fiscal year is less than eighty percent
(80%) of the Target Amount for such fiscal year, no Annual Bonus shall be
payable for such fiscal year. For purposes of this Agreement, the term "TARGET
AMOUNT" shall mean an amount to be determined by the Compensation Committee of
the Board of Directors prior to the end of the first quarter of such year after
consulting with the Employee except that the Target Amount with respect to
Fiscal 1996 shall be $9,500,000, which shall be adjusted to reflect both charges
and credits attributable or otherwise resulting from the Initial Public
Offering. The Annual Bonus for each fiscal year shall be paid in full to the
Employee as soon as practicable (but not later than thirty (30) days) after the
Company's audited financial statement for such fiscal year is available to the
Company. In the event Employee's employment terminates in the second half of any
fiscal year, due to death, disability or expiration of the Term as provided in
Section 1 hereof, then Employee shall be entitled to a pro rata share of an
Annual Bonus with the percentage equal to the number of full weeks of employment
during the fiscal year divided by 52. No bonus shall be paid for any year in
which the Employee is terminated for "cause" or the Employee voluntarily elects
to terminate her employment.
3.3 OPTIONS. On the effective date of the Initial Public
Offering, the Employee shall be granted under the Mazel Stores, Inc. 1996 Stock
Option Plan a non-qualified option to purchase up to 30,000 Common Shares of the
Company at an exercise price equal to the initial public offering price (the
"OFFERING PRICE"). The option shall expire
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on the tenth (10th) anniversary of the Effective Date. The options shall vest at
a rate of twenty percent (20%) per year, assuming the Employee remains an
employee of the Company, commencing with the first anniversary of the Effective
Date.
3.4 STOCK SALARY REDUCTION AWARDS.
In consideration of the salary reductions effected at the time of the
Initial Public Offering, in lieu of the salary amount payable under the original
Agreement, the Company grants Employee the number of Common Shares as equal (A)
1.25 times the sum of $45,000 times the number of years (or fractional years) in
the period between the Effective Date and January 31, 1999, DIVIDED BY (B) the
Offering Price.
The award of securities under this Section 3.4 shall be deemed exempt
from the registration requirements of the Securities Act of 1933, as amended,
pursuant to Rule 701 promulgated under such Act, but shall be subject to any
lock-up agreement required of officers and directors by the underwriting
agreement between the Company and the underwriters. In furtherance of such
agreement, the Employee agrees, for a period of one hundred and eighty (180)
days following the Effective Date, not to offer, sell or contract to sell, or
otherwise dispose of any Common Shares of the Company, without the prior written
consent of the representatives of the Initial Public Offering's underwriters. In
addition to the foregoing, the Company agrees to lend the Employee, if
requested, an amount that will cover the Employee's income tax obligations
arising from the grant of the Common Shares. The loan principal and accrued
interest shall be due on the earliest of (i) five (5) years after the
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Effective Date, (ii) ten (10) days following the date the Employee first sells
any of the Company's Common Stock, but only to the extent of net proceeds from
such sale or (iii) thirty (30) days following the date of Employee's voluntary
termination of employment by the Company or any affiliate. Interest on the loan
shall accrue at the applicable federal rate in effect on the date of the loans.
3.5 BENEFITS. The Employee shall be permitted during the Term
to participate in any group life, hospitalization or disability insurance plans,
health programs, pension plans or similar benefits that may be available to
other senior executives of the Company generally, on the same terms as such
other executives, in each case to the extent that the Employee is eligible under
the terms of such plans or programs.
3.6 EXPENSES. The Company shall pay or reimburse the Employee
for all reasonable expenses actually incurred or paid by the Employee during the
Term in the performance of the Employee's services under this Agreement.
4. TERMINATION UPON DEATH OR DISABILITY. If the Employee dies during
the term, this Agreement shall terminate as of the date of the Employee's death.
If the Employee by virtue of ill health or other disability is unable to perform
substantially and continuously the duties assigned to her for more than 180
consecutive or non-consecutive days out of any consecutive 12 month period, the
Company shall have the right to terminate the employment of the Employee upon
notice in writing to the Employee. Upon termination, the Employee (or the
Employee's estate or beneficiaries in the case of the death of the Employee)
shall be
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entitled to receive any Annual Salary, Annual Bonus and other benefits earned
and accrued under this Agreement, and reimbursement under this Agreement for
expenses incurred, prior to the date of termination. No provision of this
Agreement shall limit any of Employee's rights under any insurance, pension or
other benefit programs of the Company for which the Employee shall be eligible
at the time of such death or disability.
5. TERMINATION FOR CAUSE. If the Employee (i) is convicted of a felony,
a crime of moral turpitude or any crime involving the Company (other than
pursuant to actions taken at the direction or with the approval of the Board of
Directors); (ii) is found by reasonable determination of the Board of Directors
made in good faith, to have engaged in (A) willful misconduct, (B) willful or
gross neglect, (C) fraud, (D) misappropriation or (E) embezzlement in the
performance of her duties hereunder; or (iii) breaches in any material respect
the terms and provisions of this Agreement and fails to cure such breach within
ten days following written notice from the Company specifying such breach, the
Company may terminate the Employee's employment hereunder on written notice
given to the Employee at any time following the occurrence of any of the events
described in clauses (i) and (ii) above and on written notice given to the
Employee at any time not less than 30 days following the occurrence of any of
the events described in clause (iii) above. The Employee shall have no right to
receive any compensation or benefit hereunder on and after the effective date of
the notice provided in the preceding sentence other than Annual Salary, Annual
Bonus and other benefits earned and accrued under this Agreement, and
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reimbursement under this Agreement for expenses incurred, prior to the effective
date of such notice.
6. EARLY TERMINATION. In the event the Company elects not to renew the
Term of this Agreement or the Company elects to terminate this Agreement at any
time for any reason other than "cause", the Company shall continue to pay the
Employee her then Annual Salary for one (1) year after the date of termination.
Employee shall be entitled to receive all health care benefits, including health
insurance, payable under this Agreement until the earlier of the (i) the end of
such twelve (12) month period or (ii) the date Employee commences other
employment and is eligible for health care benefits from her new employer.
7. OTHER PROVISIONS.
7.1 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, or sent by facsimile transmission or, if mailed, five days after the
date of deposit in the United States mails as follows:
(i) If to the Company, to:
Mazel Stores, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: President
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with a copy to:
ZS Fund L.P.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxx
(ii) If to the Employee, to:
Xxx Xxxxxxxx
00000 Xxxxx Xxxx Xxxx
Xxxxxx, Xxxx 00000
Any such person may by notice given in accordance with this Section to the other
parties hereto designate another address or person for receipt by such person of
notices hereunder.
7.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto,
including, but not limited to, the original Agreement, which shall become null
and void and of no further force and effect on the Effective Date.
7.3 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance.
7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio without regard to
principles of conflicts of law.
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7.5 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.
7.6 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original but all such counterparts together shall
constitute one and the same instrument. Each counterpart may consist of two
copies hereof each signed by one of the parties thereto.
7.7 INVALIDITY. This Agreement shall be deemed void and of no
effect if the Initial Public Offering fails to occur prior to December 31, 1996.
In the event this Agreement is deemed null and void, the March 28, 1996
(original) Agreement shall still be effective.
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the day and year first above written.
MAZEL COMPANY L.P. MAZEL STORES, INC.
By: ZS Mazel L.P.,
its Managing Partner By: /s/ Xxxxxx Xxxxxxx, Chairman
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Xxxxxx Xxxxxxx, Chairman
By: ZS Mazel, Inc.,
General Partner of
ZS Mazel L.P. /s/ XXX XXXXXXXX
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XXX XXXXXXXX
By: /s/ Xxxxxx Xxxxx, Vice President
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Xxxxxx Xxxxx,
Vice President
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