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EXHIBIT 10.3
[EXECUTION]
2000 EMPLOYMENT AGREEMENT
2000 EMPLOYMENT AGREEMENT dated February 25, 2000, effective
as of August 14, 2000, by and between MAZEL STORES, INC., an Ohio corporation,
with its principal place of business at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000
(hereinafter referred to as the "COMPANY"), and Xxxxx X. Churches, an individual
residing at 0000 Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000 (hereinafter
referred to as the "EMPLOYEE").
WHEREAS, the Company wishes to employ the Employee, and the
Employee wishes to accept such employment, on the terms contained herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM. The Company hereby employs the Employee, and the
Employee hereby accepts such employment, for a term commencing as of the
effective date hereof and ending on October 31, 2003, unless sooner terminated
in accordance with the provisions of Section 4 or Section 5 (the "TERM").
2. DUTIES. The Employee, in his capacity as President-Mazel
Retail Division (or such other and comparable titles and position as shall be
given the Employee by the board of directors of the Company (the "BOARD")),
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. The
Employee shall devote substantially all of his business time and effort to the
performance of his duties hereunder. The Employee shall have the right (after
consultation with the President of the Company) to hire and terminate all
employees of the Company's Retail Division who are subordinate to the Employee.
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3. COMPENSATION.
3.1 SALARY. The Company shall pay the Employee (a) for the
period August 14, 2000 through October 31, 2000, a salary at the rate of Four
Hundred Six Thousand Five Hundred Ten Dollars ($406,510) per annum, and (b) for
the portion of the Term commencing November 1, 2000, a salary at the rate of
Five Hundred Thirteen Thousand One Hundred Sixty One Dollars ($513,161) per
annum (the "ANNUAL SALARY"); PROVIDED, that on each of November 1, 2001 and
November 1, 2002, the Annual Salary shall be increased by four percent (4%) from
the Annual Salary in effect for the preceding 12-month period.
3.2 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.
3.3 EXPENSES - IN GENERAL. The Company shall pay or reimburse
the Employee for all reasonable out-of-pocket expenses actually incurred or paid
by the Employee during the Term in the performance of the Employee's services
under this Agreement; PROVIDED that the Employee submits proof of such expenses,
with the properly completed forms, as prescribed from time to time by the
Company, no later than thirty (30) days after such expenses have been so
incurred.
3.4 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 (a "FISCAL YEAR")
ending during the Term, commencing with the Fiscal Year ending January 31, 2001.
The Annual Bonus shall be an amount equal to fifty percent (50%) of the Annual
Salary in effect at the end of the relevant Fiscal Year in the event that the
Company's pre-tax income,
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calculated in accordance with generally accepted accounting principles
consistently applied, equals or exceeds the "TARGET AMOUNT" (as hereinafter
defined) for such Fiscal Year. 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
which such pre-tax income represents, minus eighty percent (80%), divided by (B)
twenty percent (20%), multiplied by (ii) fifty percent (50%) of the Employee's
Annual Salary in effect at the end of such Fiscal Year. For example, if the
Company's pre-tax is ninety percent (90%) of the Target Amount for the Fiscal
Year ending January 1, 2001, the Annual Bonus shall be calculated as follows:
(90%-80%)
_________ X $256,580.50 = $128,290.25
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 after consulting with the Employee (if the Employee is then employed
hereunder). The Annual Bonus for each Fiscal Year shall be paid in full to the
Employee as soon as practicable after (but not later than thirty (30) days) the
Company's audited financial statement for such Fiscal Year is available to the
Company. The Employee hereby (i) acknowledges that the Annual Bonus payable
hereunder with respect to the Fiscal Year ending January 31, 2001 is in lieu of
any annual bonus payable with respect to such Fiscal Year pursuant to to the
Employment Agreement dated November 1, 1995 (as amended from time to time) by
and between Mazel Company L.P. (the "PARTNERSHIP"), the Employee and, pursuant
to an Amendment to Employment Agreement made and entered into on September 30,
1996, the Company (the "1995
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AGREEMENT"), and (ii) irrevocably waives any right to an annual bonus with
respect to such Fiscal Year under the 1995 Agreement.
3.5 AUTOMOBILE. During the Term, the Employee shall be
entitled to usage of an automobile of his choice which shall be leased by the
Company, provided that the monthly lease payments thereon do not exceed Five
Hundred Dollars ($500) and the Company shall be responsible for the insurance,
gasoline and maintenance required for such automobile.
4. TERMINATION UPON DEATH OR DISABILITY. If the Employee dies
during the Term, the obligations of the Company to or with respect to the
Employee shall terminate in their entirety except as otherwise provided under
this Section 4. If the Employee by virtue of ill health or other physical or
mental disability is unable to perform substantially and continuously any
material portion of the duties assigned to him for ninety (90) days in the
aggregate during any twelve (12) month period, or for any sixty (60) consecutive
days, the Company shall have the right to terminate the employment of the
Employee upon notice in writing to the Employee; provided that (i) after receipt
of notice from the Company, the Employee shall have the right within ten (10)
days after such notice to dispute the Company's ability to terminate him under
this Section 4, (ii) within ten (10) days after exercising such right he shall
submit to a physical examination by the Chief of Medicine of any major hospital
in the metropolitan Columbus, Ohio area, and (iii) unless such physician shall
issue his written statement to the effect that in his opinion, based on his
diagnosis, the Employee is capable of resuming his employment and devoting his
full time and energy to discharging his duties within ten (10) days after the
date of such statement the Company shall have the right to terminate the
Employee under this Section 4 without further dispute. Upon termination under
this Section 4, the Employee (or the Employee's estate or beneficiaries in the
case of the death of the Employee) shall be entitled to receive any Annual
Salary, Annual Bonus and other benefits earned and accrued under
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this Agreement, and reimbursement under this Agreement for expenses incurred,
prior to the date of termination (for these purposes, if such termination occurs
during a fiscal year, the Annual Bonus for such fiscal year shall be prorated
based upon the number of days in such fiscal year which elapsed before such
termination and shall be paid at the time provided for in Section 3.4);
thereafter, the Company shall have no further liability to the Employee. No
provision of this Agreement shall limit any of the Employee's (or his
beneficiaries') 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. CERTAIN TERMINATIONS OF EMPLOYMENT.
5.1 TERMINATION FOR CAUSE. "CAUSE" shall be deemed to exist if
the Employee (i) is convicted of (or pleads nolo contendere to) 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), (ii) is
found by reasonable determination of the Board, 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 his duties hereunder,
or (iii) breaches in any material respect the terms and provisions of this
Agreement (including, but not limited to, any termination by the Employee of his
employment hereunder otherwise than as described in Section 5.2). The Company
may terminate the Employee's employment hereunder for Cause on written notice
(which notice shall specify the reasons for such termination) given to the
Employee at any time following the occurrence of any of the events described in
clauses (i) through (iii) of the foregoing sentence. Upon such termination, the
Employee shall be 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 such termination (provided
that, for these
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purposes and for all other purposes of this Agreement, if such termination
occurs after the last day of a fiscal year then the unpaid Annual Bonus (if any)
otherwise payable under Section 3.4 for such fiscal year shall be deemed to have
been earned and accrued, but in no event shall any portion of any other
subsequent Annual Bonus be deemed to have been earned or accrued); thereafter,
the Company shall have no further liability to the Employee.
5.2. TERMINATION BY THE COMPANY WITHOUT CAUSE; CERTAIN
TERMINATIONS BY THE EMPLOYEE. During the Term, the Company may terminate the
Employee's employment hereunder for any reason on at least thirty (30) days'
written notice given to the Employee. If (i) the Company so terminates the
Employee during the Term, and such termination is not described in Section 4 or
5.1, or (ii) at a time at which no Cause exists, the Employee terminates his
employment hereunder during the Term and such termination (A) is described in
Section 5.3 or (B) is because of any material adverse modification or diminution
of the Employee's duties or material diminution in the Employee's authority,
title or office, which modification or diminution is not cured by the Company
within fifteen (15) days' written notice from the Employee, then
(I) the Employee shall be 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 such termination;
(II) during the twenty-four (24) month period following such
termination, the Employee shall also be entitled to
(A) continue to receive the Annual Salary payable in
the amounts and at the times provided for in Section 3.1 as if
such employment had not otherwise been so terminated;
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(B) continue to receive the Annual Bonus or, if
applicable, Annual Bonuses (if any) payable at the times provided for
in Section 3.4 as if such employment had not otherwise been so
terminated; provided, however, that, for these purposes, and
notwithstanding Section 3.4, the amount of each Annual Bonus (if any)
otherwise payable under the foregoing provisions of this clause (B)
shall be an amount equal to the average of the Annual Bonuses
(including, but not limited to, Annual Bonuses of $0) actually payable
under Section 3.4 of this Agreement or Section 3.6 of the 1995
Agreement, as applicable, for the three fiscal years ending before such
termination (or if less, the number of fiscal years ending before such
termination); and
(C) continuation of any group life, health and
automobile- related benefits to which the Employee is otherwise
entitled hereunder on substantially the same terms and conditions
(including with respect to the cost, if any, to the Employee), subject
to generally applicable changes to the level (and cost) of coverage
that may be made with respect to senior executives generally; provided
that such continuation shall not be required hereunder to the extent
that the Employee is entitled (absent any individual waivers or other
arrangements) to receive during such period the same type of coverage
from another employer or recipient of the Employee's services;
provided that no amounts shall be payable under this clause (II) if the
Employee's employment is terminated by the Company or by him after the issuance
of a court order that restricts the Employee's ability to work for the Company.
Thereafter, the Company shall have no further liability to the
Employee.
5.3 CHANGE IN CONTROL. (a) The Company shall make its best
efforts to give the Employee notice of a Change in Control at least thirty (30)
days before the Change in Control is
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consummated; provided that such notice may be given at such time as the Company
becomes aware of the proposed Change in Control within such thirty (30) day
period. If the Employee elects to terminate his employment hereunder effective
upon the consummation of such Change in Control, then such termination shall be
deemed for purposes of this Agreement to be described by Section 5.2 if (i) the
termination occurs at a time at which no Cause exists and (ii) the Employee has
reasonably determined, after a diligent and good-faith review of all relevant,
objective facts and circumstances, that his authority has been adversely
modified or diminished (provided that in no event shall there be deemed to have
occurred such a modification or diminution solely because the business of the
Company becomes part of a larger business, and the Employee's responsibilities
do not extend to the other aspects of such larger business). For these purposes,
"CHANGE IN CONTROL" means: (i) the first purchase of shares pursuant to a tender
offer or exchange for all or 20% or more of the Company's Common Shares of any
class or any securities convertible into such Common Shares; (ii) the receipt by
the Company of a Schedule 13D or other advise indicating that a person (other
than ZS Fund, L.P., Mazel/D&K, Inc., Xxxxxx Xxxxxxx and/or any affiliate
thereof) is the "beneficial owner" (as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of thirty percent (30%) or more of the
Company's Common Shares calculated as provided in paragraph (d) of said Rule
13d-3; (iii) the date of consummation of any consolidation or merger of the
Company in which the Company will not be the continuing or surviving corporation
or pursuant to which shares of capital stock, of any class or any securities
convertible into such capital stock, of the Company would be converted into
cash, securities or other property, other than a merger of the Company in which
holders of common stock of all classes of the Company immediately prior to the
merger would have the same proportion of ownership of common stock of the
surviving corporation immediately after the merger; (iv) the date of
consummation of any sale, lease, exchange or other
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transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; (v) the adoption of any plan or
proposal for the liquidation (but not a partial liquidation) or dissolution of
the Company; (vi) the date (the "MEASUREMENT DATE") on which the individuals who
at the beginning of a two-consecutive-year period ending on the Measurement
Date, cease, for any reason, to constitute at least a majority of the Board,
unless the election, or the nomination for election by the Company's
shareholders, of each new director during such two-year period was approved by
an affirmative vote of the directors then still in office who were directors at
the beginning of said two-year period.
(b) Notwithstanding any other provision of this Agreement, in
the event that any payment or benefits provided by the Company (or any entity
directly or indirectly controlling or controlled by the Company or any of its
subsidiaries, any such entity, an "AFFILIATE") to the Employee under or outside
of the terms of this Agreement would constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE"), the payments or benefits provided hereunder shall be reduced to the
extent necessary so that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code, but only if, by reason of such reduction,
the Employee's net after tax benefit shall exceed the net after tax benefit if
such reduction were not made. "NET AFTER TAX BENEFIT" for purposes of this
Section 5.3 shall mean the sum of
(i) the total amount payable to the Employee under
this Agreement, PLUS ----
(ii) all other payments and benefits which the
Employee receives or is then entitled to receive from the
Company and any of its Affiliates that would constitute a
"parachute payment" within the meaning of Section 280G of the
Code, LESS
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(iii) the amount of federal income taxes payable with
respect to the payments and benefits described in clauses (i) and (ii)
above calculated at the maximum marginal income tax rate for each year
in which such payments and benefits shall be paid to the Employee
(based upon the rate in effect for such year as set forth in the Code
at the time of the first payment of the foregoing), LESS
(iv) the amount of excise taxes imposed with respect
to the payments and benefits described in clauses (i) and (ii) above by
Section 4999 of the Code.
All calculations under this Section 5.3(b) shall be made by
the Company in consultation with its outside auditors.
6. COVENANT OF THE EMPLOYEE.
6.1. COVENANT AGAINST COMPETITION. The Employee acknowledges
that (i) the principal businesses of the Company and its subsidiaries and other
Affiliates are the "WHOLESALE BUSINESS" (as defined below) and the "RETAIL
CLOSEOUT BUSINESS" (as defined below) (such businesses, and any and all other
businesses that, after the effective date hereof and from time to time during
the Term, are engaged in by the Company or its subsidiaries or other Affiliates,
herein being collectively referred to as the "COMPANY BUSINESS"); (ii) the value
of all goodwill resulting from the operation of the Company Business of the
Company and its subsidiaries and other Affiliates should properly belong to the
Company and its subsidiaries and other Affiliates; (iii) upon the termination of
the Employee's employment, the Employee will have no right or interest to such
goodwill; (iv) the covenants and agreements of the Employee in this Section 6
are necessary to preserve the value of such goodwill for the benefit of the
Company and its subsidiaries and other Affiliates; (v) the Employee has had and
will have access to Confidential Company Information (as defined below); (vi)
the Company Business is the same business in which the Employee has and will
participate in
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and for which he has and will have responsibility while at the Company; (vii)
the length of the Restricted Period (as defined below) is necessary and
appropriate to protect the legitimate business interests of the Company because,
among other reasons, the Confidential Company Information he has had and will
have access to will continue to have competitive significance throughout the
Restricted Period; and (vii) the Company would not have entered into this
Agreement but for the covenants and agreements set forth in this Section 6.
Accordingly, the Employee covenants and agrees that:
(a) During the period commencing on the Effective Date and
ending on the date twelve (12) months following the expiration of the Term (the
"RESTRICTED PERIOD"), the Employee shall not in the United States of America (1)
engage in the Company Business, whether as part of a division or otherwise, for
the Employee's own account; (2) render any services to any person or entity
(other than the Company or its subsidiaries) engaged in such activities, whether
as part of a division or otherwise; or (3) become interested in any such person
or entity (other than the Company or its subsidiaries) as a partner, officer,
director, shareholder, principal, agent, employee, consultant or in any other
relationship or capacity; provided, however, that notwithstanding the above, the
Employee may own, directly or indirectly, solely as an investment, securities of
any such person or entity which are traded on any national securities exchange
or the National Association of Securities Dealers, Inc. Automated Quotation
System if the Employee (A) is not a controlling person of, or a member of a
group which controls, such person or entity and (B) does not, directly or
indirectly, own four percent (4%) or more of any class of securities of such
person or entity.
(b) During and after the Restricted Period, the Employee shall
keep secret and retain in strictest confidence, and shall not disclose, rely on
or otherwise use for his benefit or the benefit of others, except in connection
with the business and affairs of the Company and its
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subsidiaries, all confidential matters relating to the Company Business and to
the Company and its subsidiaries learned by the Employee on or after the
effective date hereof directly or indirectly from the Company and its
subsidiaries, including, without limitation, information with respect to (a)
prospective store locations, (b) sales figures (whether per store or otherwise),
(c) profit or loss figures (whether per store or otherwise), and (d) customers,
clients, suppliers, sources of supply and customer lists (the "CONFIDENTIAL
COMPANY INFORMATION") and shall not disclose the Confidential Company
Information to anyone outside of the Company or its subsidiaries except with the
Company's express written consent and except for Confidential Company
Information which (1) is at the time of receipt or thereafter becomes publicly
known through no wrongful act of the Employee, (2) is received from a third
party not under an obligation to keep such information confidential and without
breach of this Agreement or (3) was previously known by the Employee before
being employed by the Company or the Partnership under this Agreement or the
1995 Agreement.
(c) During the Restricted Period, the Employee shall not,
without the Company's prior written consent, directly or indirectly, knowingly
solicit, recruit or encourage to leave the employment of the Company or its
subsidiaries, any employee of the Company or its subsidiaries or hire any
employee who has left the employment of the Company or its subsidiaries after
the effective date of this Agreement within one year of the termination of such
employee's employment with the Company and its subsidiaries.
(d) All memoranda, notes, lists, records and other documents
(and all copies thereof) made or compiled by the Employee or made available to
the Employee concerning the Company Business or the Company and its subsidiaries
shall be the Company's property and shall be delivered to the Company at any
time on request, provided such property is then possessed by the
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Employee and can be readily identified as such by him; provided that,
notwithstanding the foregoing, the Employee may retain a copy of his rolodex.
(e) For purposes hereof, "WHOLESALE BUSINESS" shall mean any
business involving (i) the wholesale distribution of merchandise acquired
through purchases of (A) overstocks, (B) closeouts, (C) items liquidated by a
manufacturer or by a retail store, (D) merchandise available in connection with
bankruptcies or other distress situations, (E) merchandise at or below regular
price primarily as a result of the production of the merchandise occurring
during periods in which the production facilities otherwise would be idle or
would have underutilized capacity or (F) buybacks made by a manufacturer of a
competitor's or its own merchandise, or (ii) the importing of types or
categories of merchandise with respect to which, at the time the Employee
terminates employment or at any time during the Term, the Company (A) transacts
(or has transacted) wholesale business, or otherwise sells or purchases (or has
sold or purchased) or (B) has committed to sell or purchase; provided that a
business shall be deemed to be a Wholesale Business only if it has Ten Million
Dollars ($10,000,000) or more in sales from activities described from clauses
(i) and (ii) in the aggregate during either of the following periods: (1) the
twelve (12) most recently completed calendar months prior to the Employee's
involvement with such business or (2) the Restricted Period.
(f) For purposes hereof, "RETAIL CLOSEOUT BUSINESS" shall mean
any retail business (i) fifty percent (50%) or more of the inventory of which,
in the aggregate, is acquired through purchase of (A) overstocks, (B) closeouts,
(C) items liquidated by a manufacturer or by a retail store, (D) merchandise
available in connection with bankruptcies or other distress situations, (E)
merchandise at below regular price primarily as a result of the production of
the merchandise occurring during periods in which the production facilities
otherwise would be idle or would have underutilized capacity or (F) buybacks
made by a manufacturer of a competitor's or its own
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merchandise, and (ii) which owns or operates a location within a ten (10) mile
radius of any location owned or operated by the Company or its subsidiaries or
other Affiliates; provided that in no event shall the business of operating
discount stores, specialty stores or deep-discount drug store businesses be
considered to be a Retail Closeout Business at any particular time unless (A)
the Company is engaged in such business at such time or (B) the business is part
of an operation which, taking into account such business and the other aspects
of the operation in the aggregate, is a Retail Closeout Business as a result of
purchases of merchandise described in clauses (i) (A) through (i) (F).
6.2 RIGHTS AND REMEDIES UPON BREACH. If the Employee breaches,
or threatens to commit a breach of, any of the provisions of Section 6.1 (the
"RESTRICTIVE COVENANTS"), the Company and its subsidiaries shall have the
following rights and remedies (upon compliance with any necessary prerequisites
imposed by law upon the availability of such remedies), each of which rights and
remedies shall be independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company or its subsidiaries under law or in
equity:
(a) The right and remedy to have the Restrictive Covenants
specifically enforced (without posting bond) by any court having equity
jurisdiction, including, without limitation, the right to an entry against the
Employee of restraining orders and injunctions (preliminary, mandatory,
temporary and permanent) against violations, threatened or actual, and whether
or not then continuing, of such covenants, it being acknowledged and agreed that
any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
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(b) The right and remedy to require the Employee to account
for and pay over to the Company and its subsidiaries all compensation, profits,
monies, accruals, increments or other benefits (collectively, "BENEFITS")
derived or received by him as the proximate result - i.e. actual damages - of a
breach of the Restrictive Covenants, and the Employee shall account for and pay
over such Benefits to the Company and, if applicable, its affected subsidiaries.
7. OTHER PROVISIONS.
7.1 SEVERABILITY. The Employee acknowledges and agrees that
(i) he has had an opportunity to seek advice of counsel in connection with this
Agreement and (ii) the Restrictive Covenants are reasonable in geographical and
temporal scope and in all other respects. If it is determined that any of the
provisions of this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the provisions of this Agreement shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
7.2 BLUE-PENCILLING. If any court determines that any of the
covenants contained in this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, then, after such determination
has become final and unappealable, the duration or scope of such provision, as
the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
7.3 ENFORCEABILITY; JURISDICTIONS. The Company and the
Employee intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
the Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of
breadth of scope or
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otherwise, it is the intention of the Company and the Employee that such
determination not bar or in any way affect the Company's right or the right of
its subsidiaries to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other respective jurisdictions,
such Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable, diverse and independent covenants, subject, where
appropriate, to the doctrine of RES JUDICATA.
7.4 SET-OFF. The Employee acknowledges and agrees that the
Company may set-off against any or all amounts payable to the Employee hereunder
any or all amounts payable by the Employee to the Company in respect of a breach
by the Employee of any of the provisions of Section 6.
7.5 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, 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, telegraphed, telexed 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: Xxxxxx Xxxxxxx
with a copy to:
ZS Fund L.P.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
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and
Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A.
Xxx Xxxxx xx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxxx
(ii) If to the Employee to:
Xxxxx X. Churches
0000 Xxxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
with a copy to:
Xxxxx X. Xxxx, Esq.
Schwartz, Kelm, Warren & Xxxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, 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.
7.6 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.
7.7 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. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege
nor any single or partial exercise of any such right, power or privilege,
preclude any other or further exercise thereof or the exercise of any other such
right, power or privilege.
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7.8 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.
7.9 ASSIGNMENT. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee; any purported
assignment by the Employee in violation hereof shall be null and void. In the
event of any sale, transfer or other disposition of all or substantially all of
the Company's assets or business, whether by merger, consolidation or otherwise,
the Company may assign this Agreement and its rights hereunder.
7.10 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. 7.11 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 hereto.
7.12 HEADINGS. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.
7.13 CHANGE OF LOCATION. During the Term, the Company's Retail Division
shall be headquartered in the Columbus Metropolitan Area, Ohio. In the event
that the Board shall explicitly, in writing, request or demand to the Employee
that such headquarters be relocated outside of the Columbus Metropolitan Area,
the Employee may on thirty (30) days prior written notice to the Company elect
to terminate his employment hereunder in the event that the Company does not
rescind its request or demand, in which case the Employee's employment hereunder
shall be deemed
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to have been terminated by the Company pursuant to Section 5.2 and he shall be
entitled to receive the amounts set forth in such Section, and Section 6 shall
no longer apply.
7.14 EXPENSES. In the event that the Employee commences any legal
proceeding against the Company to enforce the Employee's rights under this
Agreement and the Employee prevails in such legal proceeding, the Company shall
reimburse the Employee for the reasonable fees and disbursements of the
Employee's attorneys incurred with respect to that portion of the legal
proceeding with respect to which the Employee is the prevailing party.
7.15 INDEMNIFICATION. (a) The Employee represents and warrants
to the Company that: (i) the Employee's execution, delivery and performance of
this Agreement does not and will not violate, conflict with or constitute a
default (with notice or lapse of time or both) under any written agreement or
instrument to which the Employee is a party and (ii) prior to the effective date
of this Agreement, the Employee has disclosed to the Board all material facts
regarding the circumstances concerning the Employee's previous employment with
Consolidated.
(b) Subject to the provisions of this Section 7.15, to the
fullest extent permitted by law, the Company shall indemnify the Employee if he
is a party or is threatened to be made a party to any legal proceeding (other
than a legal proceeding against the Employee by the Company) (a "PROCEEDING"),
threatened or pending, whether civil, criminal, administrative or investigative,
by reason of his service to the Company as a director, officer, trustee,
employee or agent, or service at the written request of the Company as a
director, officer, trustee, employee or agent of another corporation,
partnership, joint venture, trust or enterprise, against the Employee's
reasonable attorneys' fees and disbursements, reasonable out-of-pocket travel
expenses to and from the forum of the Proceeding and judgments, fines and
amounts paid in settlement in connection with the Proceeding. Such attorneys'
fees and expenses shall be paid by the Company as they are incurred
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upon receipt, in each case, of an undertaking by the Employee to repay such
amounts if it is ultimately determined, as provided below, that the Employee is
not entitled to indemnification hereunder. The Employee shall not settle any
Proceeding without the prior written consent of the Company unless, as a
condition thereof, the Company receives a full and unconditional release of all
liability in respect of the Proceeding. The Employee shall provide the Company
with prompt written notice of any Proceeding in respect of which he is entitled
to indemnification hereunder, provided that the Employee shall not lose his
rights to indemnification hereunder for failure to give such notice unless the
Company is prejudiced by such failure.
(c) The indemnification provided for in Section 7.15(b) (i)
shall apply in all cases except where the Employee did not act or failed to act
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company or where the Employee's action or failure to
act constituted gross negligence or willful misconduct, or, with respect to any
criminal action or proceeding, where he did not have reasonable cause to believe
his conduct was lawful (collectively, the "STANDARD OF CARE") and (ii) may be
denied by the Company only if a court of competent jurisdiction determines that
the Employee did not meet the Standard of Care.
(d) The indemnification provided by this Section shall survive
termination of the Employee's employment with the Company.
(e) The provisions of this Section 7.15 shall not be deemed to
be exclusive of any other rights to which the Employee may be entitled under
applicable law or any other written agreement between the Company and the
Employee.
7.16 WITHHOLDING. The Company shall be entitled to
withhold from any payments or deemed payments any amount of withholding required
by law.
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7.17 RELEASE. The Employee and the Company will execute
a release (to be agreed upon by the Employee and the Company) at the termination
of the Employee's employment.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have signed their names
as of the day and year first above written.
MAZEL STORES, INC.
By:
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Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
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XXXXX X. CHURCHES
