Exhibit (e)(8)
MUTUAL RELEASE
THIS MUTUAL RELEASE (this "Release") made this 13th day of September,
2004, by and between (A) (y) Rag Shops, Inc. and (z) each direct and indirect
subsidiary of Rag Shops, Inc. (collectively, the "Corporation"), on the one
hand, and (B) Xxxxxxx Xxxxxxxxxx, an individual ("Xxxxxxxxxx"), on the other
hand. The Corporation and Xxxxxxxxxx shall be collectively referred to herein as
the "Parties" and each as a "Party."
W I T N E S S E T H :
WHEREAS, Crafts Retail Holding Corp., a Delaware corporation
("Parent"), and Crafts Retail Acquisition Corp., a Delaware corporation ("Sub")
(each of which is an affiliate of Sun Capital Partners, Inc. ("Sun Capital"))
and the Corporation on the date hereof entered into an Agreement and Plan of
Merger (the "Acquisition Agreement"), wherein, subject to the terms and
conditions in the Acquisition Agreement, in a transaction to be effected through
a tender offer and subsequent merger, Sub will acquire for cash all of the
issued and outstanding shares of common stock of the Corporation, par value $.01
per share (the "Common Stock") (other than those owned by Sub), at a per share
at a price per share of $4.30 (the "Transaction");
WHEREAS, as a condition to the willingness of Sun Capital to enter into
the Transaction, Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxx And Xxxxx Xxxxxxxxxx
Charitable Foundation, Inc., Xxxx Xxxxxxx, Xxxx Xxxx, Xxxxxx Xxxxxxx, and Xxxxxx
Xxxxxxxx (the "Selling Stockholders") and Sub on the date hereof entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement") whereby each Selling
Stockholder sold to Sub 100 percent of the shares of Common Stock owned by them
(in the aggregate 2,671,199 shares of Common Stock) for cash at a per share
price of $4.30 (the "Stock Sale"), which number of shares constitutes
approximately 55.6% of the issued and outstanding Common Stock; and
WHEREAS, in connection with the Transaction and the Stock Sale,
Xxxxxxxxxx desires to resign as Chairman and Chief Executive Officer of the
Corporation and as a member of the Board of Directors of the Corporation;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
(a) Xxxxxxxxxx hereby resigns as (i) an employee of the
Corporation, including each officer position now held by Xxxxxxxxxx at the
Corporation, and (ii) a member of the Board of Directors, effective immediately
prior to the consummation of the Stock Sale and the execution and delivery of
the Acquisition Agreement.
(b) The Corporation, on the one hand, and Xxxxxxxxxx, on the
other hand, hereby release and discharge the other and, as applicable, each of
the other's respective officers, directors, employees, affiliates, agents,
representatives, successors and assigns (collectively, the "Releasees" and each
a "Releasee") from all actions, causes of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, in law, admiralty or equity
(collectively, "Claims"), that against the Corporation or Xxxxxxxxxx, as the
case may be, or his or its heirs, executors, administrators, successors and
assigns ever had, now have or hereafter can, shall or may, have for, upon, or by
reason of any matter, cause or thing whatsoever from the beginning of the world
to the day of the date of this Release but excluding any and all obligations and
liabilities of every kind and nature arising under or related to (I) the Stock
Purchase Agreement, the Acquisition Agreement,
any indemnification agreement or arrangement entered into or otherwise available
through the Corporation for the benefit of Xxxxxxxxxx in his capacity as an
officer or director of the Corporation (collectively, "Indemnification
Arrangements"), (II) any healthcare benefits required to be continued under
applicable law, (III) to the extent applicable, any compensation or expense
reimbursement earned or due and unpaid through the date of this Release, and
(IV) that certain Funding Agreement, dated as of the date hereof, by Xxxxxxxxxx
for the benefit of the Company and the related Escrow Agreement, dated as of the
date hereof, by an among, Xxxxxxxxxx, the Company and the escrow agent party
thereto (collectively, the "Funding Arrangements"). (Each of the Claims so
released and discharged being referred to herein as the "Released Claims").
(c) In furtherance of the foregoing release and discharge, the
Corporation, on the one hand, and Xxxxxxxxxx, on the other hand, agree not to
commence or institute against the other any suit or action of any kind in
respect of any of the Released Claims.
(d) This Release (together with the Stock Purchase Agreement,
the Acquisition Agreement, the Indemnification Arrangements and the Funding
Arrangements) set forth the entire agreement and understanding of the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings relating to the subject matter of
this agreement.
[signature page follows]
IN WITNESS WHEREOF, each of the Parties has executed and delivered this
Release as of the date first written above.
/s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
Rag Shops, Inc.,
on behalf of itself and each of its
direct and indirect subsidiaries
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President & Chief Operating
Officer
Acknowledged:
Crafts Retail Holding Corp.
By: /s/ Xxxxxxx Fieldstone
----------------------------
Name: Xxxxxxx Fieldstone
Title: Vice President
Crafts Retail Acquisition Corp.
By: /s/ Xxxxxxx Fieldstone
----------------------------
Name: Xxxxxxx Fieldstone
Title: Vice President
