TERMINATION AGREEMENT
This TERMINATION AGREEMENT dated as of May 12, 1998, is made by and
between Gantos, Inc., a Michigan corporation (the "Company"), and Xxxxxx X.
Xxxxx, a resident of Connecticut ("Employee").
WHEREAS, the Company and Employee entered into an Employment Letter
Agreement dated June 20, 1996 (the "Employment Agreement") (the Employment
Agreement is attached hereto as EXHIBIT A);
WHEREAS, pursuant to the Employment Agreement, Employee currently serves
as a director, the Chief Executive Officer, and the President of the Company;
WHEREAS, the Company proposes to enter into a Merger Agreement (the
"Merger Agreement") with HOM Holding, Inc. ("Holding") and Hit or Miss Inc., a
wholly-owned subsidiary of Holding ("Sub"), pursuant to which Holding will
merge with and into the Company (the "Merger"); and
WHEREAS, effective as of the date of the Merger (the "Closing Date"), the
Company and Employee desire to terminate the Employment Agreement.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Employee hereby
agree as follows:
1. TERMINATION OF EMPLOYMENT. Effective as of the Closing Date and
notwithstanding anything contained in the Employment Agreement to the contrary,
Employee's employment with the Company shall cease.
2. EMPLOYMENT AGREEMENT. Notwithstanding anything contained herein to the
contrary, the Employment Agreement will remain in full force and effect until
the Closing Date. Effective as of the Closing Date, Employee hereby agrees
that the Employment Agreement attached hereto as EXHIBIT A is terminated and
shall be of no further force or effect.
3. PAYMENT.
(a) Effective as of the Closing Date and notwithstanding anything
contained in the Employment Agreement to the contrary, the Company shall pay
Employee a total of Seven Hundred Fifty Thousand Dollars ( $750,000) (the
"Severance Amount") over the eighteen (18) month period following the Closing
Date (the "Period") payable in equal monthly installments of $41,666.67 on the
fifteenth (15th) day of each month.
(b) If the Company fails to make any such payment when due as set forth
in Section 1(a) hereof, interest shall accrue at a rate of eight percent 8%
per annum thereon from the date such payment is due until such payment is
paid in full. If the Company fails to make three (3) successive payments as
required pursuant to Section 1(a) hereof during the Period and has not paid
in full the outstanding amounts due (including any accrued interest), the
Severance Amount less any payments made during the Period pursuant to Section
1(a) hereof shall become immediately due and payable ten (10) days after the
date on which such third successive payment was due. If the Company defaults
on it obligations to make payments to Employee as required pursuant to
Section 1(a) hereof during the Period in a consistent pattern evidencing a
bad faith intent to avoid acceleration of the unpaid Severance Amount, the
Severance Amount less any payments made during the Period pursuant to Section
1(a) hereof shall become immediately due and payable.
4. RESPONSIBILITIES. Effective as of the Closing Date and notwithstanding
anything contained in the Employment Agreement to the contrary, during the
Period, Employee shall be available from time to time by telephone and,
subject to the availability of Employee, when reasonably requested by the
Company, shall assist the Company with any management or strategic issues
which may arise after the Merger.
5. BENEFITS. Effective as of the Closing Date and notwithstanding anything
contained in the Employment Agreement to the contrary, during the Period, the
Company shall provide Employee with medical, long-term disability, dental,
and prescription drug insurance to the extent and on the same terms as may
from time to time be generally available to the Company's executive officers
and, to the extent that it is automatically renewable or Employee is
insurable at standard rates, the Life Policy (as that term is defined in the
Employment Agreement). On the expiration date of the Period, the Life Policy
shall be assigned to Employee to the extent permitted by its terms, and the
Company shall have no further obligations under the Life Policy, including
without limitation any obligation to make any payments thereunder.
6. OPTIONS. Effective as of the Closing Date and notwithstanding anything
contained in the Employment Agreement to the contrary, Employee's unvested
options shall vest and shall be exercisable for ninety (90) days after the
Closing Date, all in accordance with the terms of the certain Stock Option
Agreement dated July 1, 1996 by and between Employee and the Company.
7. RELEASE.
(a) Effective upon the Closing Date, Employee releases and forever
discharges the Company, Holding and Sub, their successors and assigns, all
affiliates, all related entities, and the current and former directors,
officers, employees, and agents of any of the foregoing (any and all of whom
or which are referred to hereinafter as the "Releasees") of and from all
debts, actions, causes of action, suits, accounts, covenants, contracts,
agreements, damages, and any and all claims, demands, and liabilities
whatsoever of every name and nature which against the
Releasees, Employee has, claims to have, ever had, or ever claimed to have
had, known or unknown (all hereinafter referred to as "claims") including,
without implication of limitation, all claims relating to Employee's
employment with the Company or the termination of Employee's employment with
the Company, all claims of alleged wrongful or bad faith termination of
employment, all claims of any form of alleged unlawful employment
discrimination, including all claims based upon the Age Discrimination
Employment Act, 29 U.S.C. Section 621 ET SEQ., Title VII of the Civil Rights
Act of 1964, 42 U.S.C. Section 2000e ET SEQ., all claims based upon any
Michigan law, including without limitation, all claims of breach of either
express or implied contract (including, without implication of limitation,
all claims based upon the Employment Agreement, all claims of interference
with Employees' employment, all claims for wages, vacation pay, separation
pay, expense reimbursement, or any other form of compensation, all claims for
attorney's fees, and all claims for reinstatement of employment with the
Company). Notwithstanding the foregoing, Employee does not release or
discharge the Company from any claims for the benefits payable to Employee
under this Termination Agreement or under Gantos, Inc. Employees' 401(k) Plan
as accrued through the Closing Date or any indemnification obligations the
Company may have under its Restated Articles of Incorporation and Bylaws or
under Michigan law with respect to her actions taken solely in her capacity
as a director or an officer of the Company.
(b) Effective upon the Closing Date, the Company releases and forever
discharges Employee and her successors and assigns (any and all of whom or
which are referred to hereinafter as the "Employee Releasees") of and from
all debts, actions, causes of action, suits, accounts, covenants, contracts,
agreements, damages, and any and all claims, demands, and liabilities
whatsoever of every name and nature which against the Employee Releasees, the
Company has, claims to have, ever had, or ever claimed to have had, known or
unknown (all hereinafter referred to as "Company claims") including, without
implication of limitation, all Company claims relating to Employee's
employment with the Company or the termination of Employee's employment with
the Company, all claims based upon any Michigan law, all claims of breach of
either express or implied contract (including, without implication of
limitation, all claims based upon the Employment Agreement, all claims for
attorney's fees, and all claims for reinstatement of employment with the
Company). Notwithstanding the foregoing, the Company does not release or
discharge any Company claims it may have against the Employee Releasees under
this Termination Agreement or with respect to bad faith, intentional
wrongdoing or gross negligence in the performance of Employee's duties during
her employment with the Company, including without limitation with respect to
any indemnification obligations the Company may have under its Restated
Articles of Incorporation and Bylaws or under Michigan law with respect to
Employee's actions taken solely in her capacity as a director or an officer
of the Company
8. LITIGATION. To the extent any litigation arises with respect to the
terms of this Termination Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees and costs from the non-prevailing party.
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9. ATTORNEYS FEES. Subject to the appropriate documentation and
substantiation, the Company shall pay up to an aggregate of Two Thousand Five
Hundred Dollars ($2,500) of Employee's attorneys' fees generated solely in
connection with the negotiation of this Termination Agreement.
10. CONFIDENTIALITY. Employee and the Company agree to keep the financial
terms of this Termination Agreement completely confidential. Employee agrees
not to reveal any such matters to any person except Employee's attorney and
Employee's spouse, and to them only provided that they first agree for the
benefit of the Company to keep the financial terms of this Termination
Agreement completely confidential, and the Company agrees not to reveal any
such matters to any person except the Company's attorney and Holding's
attorney, and to them only provided that they first agree for the benefit of
Employee to keep the financial terms of this Termination Agreement completely
confidential. Notwithstanding the foregoing, Employee and the Company may
disclose such matters to the extent required by law or to the extent
necessary to obtain legal enforcement of this Termination Agreement. In this
regard, the Employee acknowledges that this Termination Agreement will be
required to be filed with the Securities and Exchange Commission.
11. ACKNOWLEDGMENTS. The Company states and Employee acknowledges that this
Termination Agreement is not and should not be considered as an admission or
acknowledgment of any liability by the Company nor should it be considered to
establish or reflect any policy or practice of the Company. Employee
acknowledges that both the Company and HOM Holding, Inc. are relying on this
Termination Agreement in connection with the Merger.
12. ENTIRE AGREEMENT. The Company and Employee agree that this Termination
Agreement constitutes the entire agreement between the Company and Employee
and supersedes any previous or contemporaneous contracts, agreements, or
representations of any form, including, without implication of limitation,
the Employment Agreement.
13. ADVISORS. Employee acknowledges that Employee has been advised to
consult with an attorney before signing this Termination Agreement. Employee
further understands that Employee has been given the opportunity, if Employee
so desired, to consider this Termination Agreement for up to twenty-one (21)
days before deciding whether to sign it. If Employee signed this Termination
Agreement before the expiration of that twenty-one (21) day period, Employee
acknowledges that such decision was entirely voluntary. Employee understands
that for a period of seven (7) days after Employee executes this Termination
Agreement Employee has the right to revoke it by a written notice to be
received by the Company by the end of that period. Employee also understands
that this Termination Agreement shall not be effective or enforceable until
the expiration of that period.
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14. REVIEW OF AGREEMENT. Employee represents and agrees that Employee has
carefully read and fully understands all of the provisions of this Termination
Agreement and that Employee voluntarily agrees to those provisions.
15. TERM. This Termination Agreement shall become effective upon the
Closing Date. If the Closing Date does not occur, the Employment Agreement
shall remain in full force and effect in accordance with its terms, and this
Termination Agreement shall have no effect.
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IN WITNESS WHEREOF, this Termination Agreement has been executed as a
sealed instrument as of the date first set forth above by the Company and
Employee.
GANTOS, INC.
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By:
Title:
EMPLOYEE
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Xxxxxx X. Xxxxx
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EXHIBIT A
Employment Agreement
A-1
