Exhibit (e)(7)
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) Xxxxx 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, Xxxxxxx 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 Secretary 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 an employee of the
Corporation, including each officer position now held by Xxxxxxxxxx at the
Corporation, 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 her 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 (x) the Stock
Purchase Agreement, the Acquisition Agreement, any indemnification agreement or
any arrangement entered into by or otherwise available through the
Corporation for the benefit of Xxxxxxxxxx in her capacity as an officer or
director of the Corporation (collectively, "Indemnification Arrangements"), (y)
any healthcare benefits required to be continued under applicable law or (z) to
extent applicable, any compensation or expense reimbursement earned or due and
unpaid through the date of this Release. (Each of the Claims so released and
discharged being referred to herein as the "Released Claims").
(d) 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.
(e) This Release (together with the Stock Purchase Agreement,
the Acquisition Agreement and the Indemnification 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/ Xxxxx Xxxxxxxxxx
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XXXXX 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
