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EXHIBIT 10.14
CONFORMED COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Amendment"), made and entered into this 7TH
day of May, 2001 by and among MAZEL STORES, INC., an Ohio corporation (the
"Company"), and XXXXX X. XXXXX (the "Employee"), is to evidence the following
agreements and understandings:
WITNESSETH:
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WHEREAS, the Company desires to employ Employee, and Employee wishes to
accept such employment, on the terms contained herein.
NOW, THEREFORE, the parties agree as follows:
1. TERM. The Company hereby employs the Employee, and the Employee
hereby accepts such employment, for a term commencing on May 7, 2001 (the
"Effective Date") and ending on May 7, 2004, unless sooner terminated in
accordance with the provisions of Sections 4, 5 or 7; provided that commencing
May 7, 2003, the May 7, 2004 date (as extended hereunder) shall automatically be
extended each day by one day creating a new one-year term until a date one-year
after the Company or the Employee shall have given written notice to the other
of non-renewal (the "TERM").
2. DUTIES. The Employee, in his capacity as Chief Executive Officer,
shall faithfully perform for the Company the duties of said office 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. In his capacity as an officer of the Company, the Employee shall have
the executive authority, responsibilities and duties
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typically held and executed by a Chief Executive Officer of a publicly held
corporation. Without limiting the foregoing, all officers and employees and all
operations and divisions of the Company shall report to Employee or his
designees and the Employee shall report solely to the Board of Directors and its
committees. The Employee shall devote substantially all of his business time and
effort to the performance of his duties hereunder. During the Term, the Company
agrees that Employee shall also serve as a Director of the Company.
3. COMPENSATION.
3.1 SALARY. The Company shall pay the Employee during the Term
a salary at the rate of Five Hundred Fifty Thousand Dollars ($550,000) per annum
(the "ANNUAL SALARY"). 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 percentage, if any, by which the
Consumer Price Index (All Items less Shelter), Urban Wage Earners and Clerical
Workers, for the Mid-Atlantic Region/Population Size A, published by the United
States Government for the month preceding such date exceeds such index for the
comparable month in the preceding year. 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.
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 February 2, 2002. Subject to the
terms, conditions and limitations set forth below,
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the maximum Annual Bonus for any fiscal year shall be Two Hundred Fifty Thousand
Dollars ($250,000). The Annual Bonus shall be based on the Company's pre-tax
income, calculated in accordance with generally accepted accounting principles
consistently applied, to the extent such income exceeds 80% of the "TARGET
AMOUNT" (as hereinafter defined) for such fiscal year; PROVIDED, HOWEVER, that
the Annual Bonus for the fiscal year ending February 2, 2002 ("Fiscal 2001")
shall not be less than One Hundred Thousand Dollars ($100,000). 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)
$250,000. For example, if the Company's pre-tax is ninety five percent (95%) of
the Target Amount for the Fiscal Year ending February 2, 2002, the Annual Bonus
shall be calculated as follows:
(95% - 80%) X $250,000 = $187,500
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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. 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 due to death,
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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 during which the
Employee is terminated for "cause" or the Employee voluntarily elects to
terminate his employment.
3.3 OPTIONS. On the Effective Date of this Agreement, the
Employee shall be granted a non-qualified option (the "Option") to purchase up
to five hundred thousand (500,000) Common Shares of the Company at an exercise
price equal to Two and 60/100 Dollars ($2.60). The Option shall expire on the
tenth (10th) anniversary of the Effective Date. The Option 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. Except as provided below, if Employee's employment is
terminated, then to the extent any portion of the Option is not yet vested, such
portion of the Option shall terminate on the date of termination of employment.
If the employment is terminated for "Cause" as defined below or prior to the
first date the Option becomes Exercisable as a result of a voluntary termination
by Employee (other than for "Good Reason"), the entire Option shall terminate on
the date of termination. In the event Employee's employment is terminated by the
Company without "Cause" or by him with "Good Reason" (as each such term is
defined below) one-half of the Options which are not then vested shall vest,
unless such termination occurs after a "Change-in-Control" (as defined below) in
which case all the non-vested Options shall vest. All vested Options shall
terminate, unless exercised, three (3) months after the date of termination of
employment, except if such termination is due to
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death in which case the vested Option shall expire one year after termination of
employment. The number of Common Shares subject to the Option and the Option
exercise price shall be subject to adjustment upon the occurrence of certain
events set forth in Section 12 of the 1996 Stock Option Plan, as in effect as of
the date of this Agreement, which Section 12 is incorporated into this Agreement
by reference. In the event of a "Change in Control" (as defined below), the
Compensation Committee of the Board of Directors shall have the authority and
power to cause the Option to be immediately exercisable notwithstanding any
vesting limitation otherwise previously imposed on such Option and to accelerate
the termination date of such Option; provided that the Option shall be treated
in the same manner as options granted under the Plan to other senior executive
officers of the Company and further provided that in the event of a cash tender
offer or a cash merger or other acquisition of the Company principally for cash
that resulted in a Change in Control, the Option will immediately be exercisable
in full notwithstanding any vesting limitation otherwise previously imposed on
such Option. Thereafter, upon such determination, the Employee may exercise the
Option (in whole or in part, whether or not such Option is by its terms fully
exercisable at such time) and the Committee may authorize the acceptance of the
surrender of the right to exercise such Option or any portion thereof, but in no
event after the expiration of the term of the Option.
3.4 LETTER OF CREDIT. The Company shall secure, in part, its
obligation under Sections 3.1 and 7 of this Agreement by establishing a two (2)
year standby letter of credit ("SLC") in favor of Employee issued by the
Company's senior institutional lender, in the form attached hereto as Exhibit A.
The SLC shall be in an amount of Five Hundred Fifty
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Thousand Dollars ($550,000) and shall provide that Employee may draw upon the
SLC, on a monthly basis, upon presentation to the bank of an affidavit signed by
Employee that (i) the Company has failed to make the salary or termination
payment due under this Agreement and (ii) such payment is more than five (5)
business days late. No draw may exceed the amount of the overdue payment. In the
event the Letter of Credit is scheduled to expire prior to the end of the two
year period referenced above, and the Company has failed to provide a renewal or
replacement letter of credit, the Company shall cause the Letter of Credit Bank
to notify Employee at least 30 days prior to the expiration date of the
scheduled expiration and [The Provident Bank,] as escrow agent, shall be
permitted to fully draw upon the Letter of Credit and hold such funds in escrow
pursuant to the Escrow Agreement attached hereto as Exhibit B.
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. Without limiting the foregoing, the
benefits include term life insurance in an amount equal to one times annual
salary, up to $500,000. The Company agrees to purchase additional group term
life insurance or disability insurance in the amounts determined by the Employee
provided that the maximum annual aggregate premiums for such additional
insurance shall not exceed $10,000. The Employee shall also be entitled to
receive vacation of four (4) weeks per year. During the Term, the Employee shall
be entitled to usage of an automobile of his choice
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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.
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. In
addition, the Company agrees to pay Employee Fifty Five Thousand Dollars
($55,000) to cover the cost of Employee and his family's move to New Jersey,
which payment shall be made in two (2) installments of Twenty Seven Thousand
Five Hundred Dollars ($27,500) each, th first payable on the Effective Date and
the balance immediately upon completion of Employee's family move.
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 him 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 entitled to receive any Annual Salary and other benefits (excluding
Bonus) 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. The
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Employee (or his estate or beneficiaries in the case of the death of the
Employee) shall be entitled to a fractional share of the Annual Bonus for the
year of termination, with the numerator being the number of full weeks employed
by the Employee during the fiscal year and the denominator being 52. The Annual
Bonus shall be payable at the same time such bonus is payable to other
employees.
5. TERMINATION FOR CAUSE. If the Employee (i) is convicted of a felony
or of a crime of moral turpitude or dishonesty involving the Company (other than
pursuant to actions taken at the direction or with the approval of the Board of
Directors); (ii) engages 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 and fails to cure such breach, to the extent
curable, within ten days following written notice from the Company specifying
such breach ("Cause"), 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.
Notwithstanding the foregoing, no cure period under clause (iii) above shall be
required to be given by the Company for a third (3rd) or subsequent breach in
any material respect of the terms and conditions of this Agreement by Employee
in any twelve-month period, and notice of termination may be given at any time
by the Company following such third or subsequent material breach. The Employee
shall have no right to receive any compensation or benefit hereunder on and
after the effective date of the notice provided in
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the preceding sentence other than Annual Salary and other benefits (other than
Bonuses) earned and accrued under this Agreement, and reimbursement under this
Agreement for expenses incurred, prior to the effective date of such notice. The
decision to terminate Employee for Cause must be made by a majority of the Board
of Directors, including a majority of the outside, non-employee Board members,
and may not be made without providing Employee the opportunity to appear before
the Board, with counsel present. Nothing set forth in this Section shall
preclude the Company from dismissing Employee without "Cause" as provided in
Section 7 hereof.
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
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 and affiliates
herein being collectively referred to as the "Company Business"); (ii) the value
of all goodwill resulting from the operation of the Company Business should
properly belong to the Company and its subsidiaries and 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 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
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in 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 and affiliates) 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 and
affiliates) 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 Nasdaq market 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.
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(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 subsidiaries and affiliates, all confidential matters
relating to the Company Business learned by the Employee on or after
the Effective Date directly or indirectly from the Company or its
subsidiaries and affiliates, 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 and affiliates, except with
the Company's express written consent and except for Confidential
Company Information that (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.
(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 or affiliates, any employee of the Company,
such subsidiaries or affiliates, or hire any employee who has left the
employment of the Company, its subsidiaries or affiliates after the
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effective date of this Agreement within one year of the termination of
such employee's employment with the Company, its subsidiaries or
affiliates.
(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 and affiliates 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 Employee and can be
readily identified as such by him.
(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
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(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
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
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COVENANTS"), the Company 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 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.
(b) The right and remedy to require the Employee to account
for and pay over to the Company 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.
7. OTHER TERMINATION.
7.1 EARLY TERMINATION. In addition to its right to terminate
this Agreement for "Cause" under Section 5 hereof, the Company may terminate
this Agreement at any time
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for any reason other than "Cause", or Employee may terminate his employment for
"Good Reason". In either event, the Company shall pay the Employee, in an
immediate lump-sum payment, less applicable taxes, an amount equal to one times
his current Annual Salary. Employee shall also be entitled to receive a pro-rata
portion of the bonus for the year of termination, to be determined in accordance
with Section 3.2 and paid at the same time payment is made to other Company
executives. Employee's pro rata portion shall be equal to (A) a fraction the
numerator of which is the number of full weeks during the fiscal year worked by
Employee and the denominator of which is 52 MULTIPLIED by (B) the bonus the
Employee would have received had he remained with the Company through fiscal
year end. Notwithstanding the foregoing, in the event the termination occurs
after a "Change-in- Control", Employee shall be entitled, in lieu of the pro
rata bonus payment, an amount equal to his annual bonus had the Target Amount
been achieved; such payment shall be made at the time of termination. Employee
shall also be entitled to receive all benefits, including life insurance,
payable under this Agreement for the duration of such twelve (12) months.
7.2 DEFINITIONS. (A)"CHANGE IN CONTROL" means the occurrence
during the Term of any of the following events:
(i) the Company merges into itself, or merged or
consolidated with, another entity and as a result of
such merger or consolidation less than 51% of the
voting power of the then-outstanding voting
securities of the surviving or resulting entity
immediately after such transaction are
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directly or indirectly beneficially owned in the
aggregate by the former shareholders of the Company
immediately prior to such transaction.
(ii) A person or group acting in concert within the
meaning of Section 3(a)(9) or 13(3)(3) (as in effect
on the date of this Agreement) of the Securities
Exchange Act of 1934, becomes the beneficial owner
(as defined in Rule 13d-3) of 50% or more of the
voting power of the then outstanding voting
securities of the Company without prior approval of
the Company's Board of Directors.
(B) For purposes of this Agreement, "Good Reason" means
(i) a material adverse change in the natur or scope of
the authorities, powers, functions, responsibilities
or duties attached to the position with the Company
which the Employee holds under this Agreement
(including but not limited to assignment by the
Company to the Employee of duties inconsistent with
his current positions, duties, responsibilities, and
status with the Company or a change of his reporting
responsibilities or titles currently in effect)
without the prior written consent of the Employee,
which is not remedied within ten (10) calendar days
after receipt by the Company of written notice from
the Employee of such change; or
(ii) the Company fails to make any payment due Employee or
to provide him with the benefits set forth under this
Agreement and such failure
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is not remedied within ten (10) calendar days after
written notice to the Company from Employee of such
default.
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8. OTHER PROVISIONS.
8.1 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.
8.2 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, 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.
8.3 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 jurisdiction
hold the Restrictive Covenants wholly unenforceable by reason of breadth of
scope or 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 to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such
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Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdictions being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of res judicata.
8.4 DIRECTORS & OFFICERS INSURANCE. During the Term, the
Employee shall be covered by the Company's directors' and officers' insurance
policy to the same extent as other officers and directors. Further, for six
years following the Term, the Company, to the extent it retains in effect
directors' and officers' liability insurance, shall maintain for Employee
coverage for acts or omissions occurring prior to the termination of his
employment.
8.5 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile or other electronic 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 electronic 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:
Xxxxxx Xxxxx,
Chairman, Compensation Committee
c/o ZS Fund L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxx X. Xxxxxxxxxxx, Esq.
Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A.
The Tower at Erieview, Suite 2600
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
(ii) If to the Employee to:
Xxxxx X. Xxxxx
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with a copy to:
Xxxxx Xxxxx, Esq.
Sonnenschein, Nath & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 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.
8.6 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, which
shall become null and void and of no further force and effect on the Effective
Date.
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8.7 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 rights, 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.
8.8 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.
8.9 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.
8.10 INDEMNIFICATION.
(a) The Employee represents and warrants to the Company that
the Employee's execution, delivery and performance of this Agreement
does not and will
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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.
(b) Subject to the provisions of this Section 8.10, 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 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
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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 8.10(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 8.10 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.
8.11 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.
8.12 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
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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.
8.13 SURVIVAL. Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Sections 6.1, 6.2 and 8.10 shall
survive termination of this Agreement.
8.14 HEADINGS. The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.
8.15 INTEREST; FEES AND EXPENSES. In the event the Company
fails to make any payment due Employee, such defaulted amount shall bear
interest, from the date due until payment is made, at a rate equal to the
Company's borrowing rate under its principal revolving credit facility. Each
party shall bear and be responsible for its own fees and
expenses, including counsel fees, incurred in connection with the preparation,
negotiation sand execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the day and year first above written.
MAZEL STORES, INC.
By: /s/ Xxxxxx X. Xxxxx
Chairman of the Compensation Committee
Board of Directors
/s/ Xxxxx Xxxxx
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XXXXX XXXXX
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