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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, effective as of the 17th day of March, 1998 (the
"Effective Date") by and between SOLO SERVE CORPORATION, a Delaware corporation
(the "Company"), and XXXX X. XXXXXXXXXXX ("Employee") (the Company and the
Employee are sometimes collectively referred to as the "Parties").
WHEREAS, the Employee has previously been in the employment of the Company;
WHEREAS, the Company desires to continue to employ the Employee;
WHEREAS, the Employee desires to continue to be employed by the Company;
and
WHEREAS, the Employee and the Company desire to continue their relationship
under amended terms and conditions and are therefore entering into this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the Parties agree as follows:
1. Definitions. As used herein, the following terms shall have the meanings
set forth below.
"Agreement" shall mean this Employment Agreement executed between the
Employee and the Company.
"Cause" shall have the meaning set forth in Section 8(b).
"Disability" means the Employee is unable to perform his duties as required
by the terms of this Agreement for a period of more than 60 consecutive days or
more than 120 non-consecutive days during any 12-month period.
"Employment Termination Date" means the date of termination of Employee's
employment pursuant to this Agreement.
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2. Employment and Term. The Company hereby employs the Employee, and the
Employee hereby accepts such employment by the Company, for the purposes and
upon the terms and conditions contained in this Agreement. The term of such
employment shall be until March 15, 2001 or until such earlier Employment
Termination Date as is prescribed by this Agreement (the "Employment Term").
3. Compensation. For all services rendered by the Employee during the
Employment Term, the Company shall pay the Employee as follows:
(a) The Employee shall be paid an annual base salary of $125,000
(subject to adjustment as set forth herein, the "Base Salary") in biweekly
payments of 1/26th of that Base Salary. Thereafter, on each succeeding
anniversary date of the Effective Date of this Agreement during the
Employment Term, the Company may, but shall not be obligated to, grant to
Employee an annual increase in Base Salary. All salary, bonuses, severance
and any other payments to Employee so classified under applicable IRS
Regulations, paid to the Employee or his designee, shall be subject to
withholding for applicable taxes, including F.I.C.A., federal income taxes,
and any taxes required by state or local law;
(b) The Employee may be paid a discretionary annual bonus each year
during the Employment Term. Notwithstanding the foregoing, if the Company
realizes a Net Profit during any of the fiscal years ending on or about
January 31, 1999, January 31, 2000 or January 31, 2001, the Company shall
pay to Employee a bonus for that fiscal year in an amount equal to: (i) if
the Net Profit for the fiscal year in question is between $0 and $150,000,
one-third of twenty percent (20%) of the Company's Net Profit; and (ii) if
the Net Profit is greater than $150,000, $10,000 plus one-third of 10% of
the Company's Net Profit in excess of $150,000, subject in any case to a
maximum bonus pursuant
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to the terms of this Agreement for any fiscal year of 15% of the Employee's
Base Salary as of the end of the fiscal year in question. For purposes of
the foregoing bonus calculation, "Net Profit" shall mean the Net Profit
reflected on the Company's audited financial statements for the fiscal year
in question. Any bonuses paid to the Employee shall be payable within ten
(10) days of delivery to the Company of audited financial statements for
the fiscal year in question, and the Employee must be employed by the
Company as of the end of the fiscal year in question to be eligible to
receive any such bonus.
4. Insurance and Other Benefits. During the Employment Term the Employee
shall be eligible for all medical, life insurance and retirement benefits as set
forth in the Company's existing policies for senior executives and/or employees
in general, whichever are greater. Except as may be provided for in this
Agreement, the Employee shall be eligible for vacations, sick leave and other
personal time in accordance with the Company's existing policies and procedures
for senior executives. The Company shall take such actions as shall be necessary
or appropriate to cause Employee to be covered by the Company's current
director's and officer's liability insurance policy and any successor policy
that the Company may secure.
5. Duties.
(a) During the Employment Term, the Employee shall be employed as
Senior Vice President/Planning and Allocation of the Company, and as such
his duties shall be such as are prescribed by the Chief Executive Officer
and the Board of Directors. As Senior Vice President/Planning and
Allocation, Employee shall report directly to the President and Chief
Executive Officer of the Company.
(b) The Employee shall have such other duties and responsibilities
consistent with his position and title as the Board of Directors of the
Company may from time to time determine.
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(c) During the Employment Term, the Employee shall devote his full
time and attention to the business affairs of the Company, except for such
vacations as shall be provided pursuant to this Agreement.
However, subject to Section 12 hereof, nothing in this Agreement shall preclude
the Employee from (a) being a passive investor in other business enterprises
and/or (b) in a manner consistent with any policies or procedures the Company
may have and/or implement, devoting a reasonable amount of his time and efforts
to civic, community, charitable, personal, professional and trade association
affairs and matters. Notwithstanding the foregoing, the Employee shall not
become a member of any board of directors without the prior written approval of
the Company's Board of Directors.
6. Working Facilities. The Company shall furnish the Employee in San
Antonio, Texas with an office, equipment and such other facilities and services
as are suitable for the performance of the Employee's duties and in keeping with
Employee's position as Senior Vice President/Planning and Allocation of the
Company.
7. Reimbursement of Expenses. The Company shall pay or reimburse the
Employee for reasonable expenses paid or incurred by the Employee on behalf of
the Company in accordance with the existing policies and procedures of the
Company, as such may be amended from time to time by the Company.
8. Termination. The Employee's employment by the Company shall terminate
effective upon the first to occur of the following:
(a) March 15, 2001, or a date mutually agreed to in writing by the
Company and the Employee, which date in either case shall be the Employment
Termination Date.
(b) The date on which Employee receives notice of his termination for
cause, which date shall be the Employment Termination Date. The Board of
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Directors of the Company may terminate Employee's employment with the
Company at any time "for Cause" upon notice to the Employee. As used in
this Agreement, "Cause" shall mean the occurrence of any one or more of the
following events:
(i) the Employee has engaged in willful misconduct in the
performance of his duties, functions and responsibilities, as
prescribed from time to time by the Board of Directors of the
Company;
(ii) the Employee has breached a policy or procedure of the
Company which is generally applicable to officers of the Company,
which breach is material and continues for a period of thirty
(30) days after being given written notice of such breach by the
Company;
(iii) the Employee has failed in any material respect to
perform his duties as reasonably prescribed and amended from time
to time by the Board of Directors of the Company which failure
continues for a period of thirty (30) days after being given
notice of such breach by the Company;
(iv) the Employee has been charged by a governmental agency
or department with any violation of law, regulation or ordinance
of a governmental entity (other than traffic violations and
similar minor offenses) which violation, if proven, would result
in a felony conviction of Employee; or the Employee has violated
any judicial decree applicable to the Company or the Employee; or
(v) the Employee has materially breached any of the terms of
this Agreement or any other written agreement between Employee
and the Company, which breach continues for a period of thirty
(30) days after being given written notice of such breach by the
Company.
(c) The death or Disability of the Employee, in which case the
Employment Termination Date shall be the date of death or the date on
which the Disability is determined as the case may be.
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(d) A date specified by the Company to the Employee for any reason
other than a reason specified in the above-referenced subparagraphs, so
long as the Company provides the Employee with sixty (60) days notice of
termination, or pays the Employee sixty (60) days Base Salary in lieu of
notice of termination. The Employment Termination Date shall be the date
sixty days following delivery of notice of termination.
(e) A date specified by the Employee to the Company for any reason so
long as the Employee provides the Company with sixty (60) days notice of
the termination. The date so specified upon sixty (60) days notice shall be
the Employment Termination Date.
From and after the Employment Termination Date, the Employee shall have no
obligation or duty to be employed by the Company in any capacity and the Company
shall have no obligation to employ the Employee in any capacity.
9. Post-Employment Payments. The Company shall pay to the Employee the
respective amounts provided below upon expiration of the Employment Term.
(a) If the Employee's employment is terminated pursuant to Section
8(a), 8(b), 8(c) or 8(e) hereof, then the Company shall pay the Employee
his Base Salary compensation through the Employment Termination Date and
the Company shall have no further obligations to the Employee, except with
respect to his vested and exercisable options and ERISA benefits.
(b) If the Employee is terminated under Section 8(d), then the Company
shall pay to Employee (i) his Base Salary compensation through the
Employment Termination Date; and (ii) six months of his Base Salary, the
amount of Base Salary calculated as provided in this clause 9(b)(ii) being
hereinafter referred to as Severance Pay; and (iii) if notice of
termination is
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delivered to the Employee at any time during the fourth fiscal quarter of
any fiscal year, and if the Employee would have been entitled to a bonus
for the full fiscal year pursuant to the second sentence of Section 3(b)
hereof had he been employed by the Company for the full fiscal year,
Employee shall be entitled to receive an additional payment equal to the
bonus amount that would have been due Employee for the full fiscal year in
question multiplied by a fraction, the numerator of which shall be the
number of days in the fiscal year in question prior to the date of delivery
of notice of termination and the denominator of which shall be 365. The
Severance Pay shall be payable in bi-weekly payments over six (6) months,
and any amount payable pursuant to clause (iii) hereof shall be payable as
set forth in Section 3(b) of this Agreement.
10. Warranty. Employee represents and warrants that Employee is capable of
fulfilling the terms of this Agreement and that Employee is not bound in any
manner, whether by written or oral agreement, contract or other obligation,
which would prevent Employee from providing the services to the Company
contemplated under this Agreement. Specifically, Employee represents and
warrants that he is not bound by any non-competition agreement or other covenant
which would prevent or interfere with his abilities to perform the functions
required under this Agreement. Employee agrees that if litigation is commenced
by a prior employer of Employee which would challenge the legal right of
Employee to enter into this Agreement or to perform the functions required under
this Agreement, such action shall constitute cause under Section 8 for
termination of this Agreement.
11. Confidentiality. The Employee acknowledges that by reason of the nature
of the Employee's duties, the Employee will or may have access to and become
informed of confidential and secret information which is a competitive asset of
the Company, including without limitation (i) customer information such as
names,
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addresses, sales histories, purchasing habits, credit status, and pricing
levels, (ii) certain prospective customer information and lists, (iii)
merchandise and product information, (iv) merchandise and product suppliers, and
prospective suppliers' names, addresses and contacts, (v) future corporate
planning data, (vi) marketing strategies, (vii) the Company's financial results
and business condition, and (viii) any of the foregoing which belong to any
other person or company but to which the Employee has had access by reason of
his employment with the Company (collectively, "Confidential Information"). The
Employee agrees to keep in strict confidence, and not, either directly or
indirectly, including through other entities, corporations, partnerships or
limited liability companies, to make known, divulge, reveal, furnish, make
available or use (except for use in the regular course of the Employee's duties
hereunder), any Confidential Information. The Employee acknowledges that all
sales manuals, instructions books, catalogs, price lists, information and
records, technical manuals and documentation, drafts of instructions, guides and
manuals, and other sales or technical information and aids relating to the
Company's business and any and all other documents containing Confidential
Information furnished the Employee by any employee of the Company or otherwise
acquired or developed by the Employee shall at all times be the property of the
Company. Upon termination of the Employee's employment with the Company, the
Employee shall return to the Company any materials containing Confidential
Information which are in the Employee's possession, custody or control. The
Employee's obligations under this Section shall survive such termination of the
Employee's employment with the Company, but shall not be applicable to (i) any
such Confidential Information which becomes, through no fault of the Employee,
generally known to the trade, (ii) information which the Employee can
demonstrate was known to him prior to commencing his employment with the
Company, (iii) information in the public domain, (iv) information required to be
disclosed under or by subpoena or lawful court order or by direction of the
Board of Directors, and (v)
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information which the Employee needs to disclose to his personal financial or
legal advisors. The Employee's obligations under this Section are in addition
to, and not in limitation or pre-emption of, all other obligations of
confidentiality which the Employee may have to the Company under general common
law or pursuant to other legal or equitable principles.
12. Non-Competition.
(a) For the purposes of this Section 12, Entity shall include, without
limitation, a person, firm, partnership, limited liability company,
corporation or any other form of business enterprise.
(b) The Employee acknowledges that during the term of this Agreement,
the Employee's access to the Confidential Information will enable the
Employee to benefit from the Company's goodwill and know-how. To protect
these vital interests of the Company, the Employee agrees that (i) during
the term of this Agreement and for a period of six (6) months following the
Employment Termination Date if Employee's employment is terminated pursuant
to Section 8(b) or 8(e) hereof, or (ii) for so long as Employee is
receiving payments pursuant to this Agreement if Employee's employment is
terminated pursuant to Section 8(d) hereof, the Employee will not, without
the prior written consent of the Company, directly or indirectly, whether
as a director, officer, employee, agent, consultant, shareholder, partner,
inventor or otherwise,become employed or engaged by or associated with any
company that operates as an off-price retailer with multiple store
locations in New Orleans, Louisiana or San Antonio, Texas and a majority of
whose sales are comprised of apparel, except in a corporate headquarters
position for a regional or a national off-price retailer wherein the
responsibilities of the position do not include supervision of store
operations or in-store merchandising in the New Orleans, Louisiana or San
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Antonio, Texas markets, or as a passive investment constituting less than
5% of the outstanding equity interests of a publicly-traded corporation.
(c) In addition to the restrictions set forth in Section 12(b), supra,
if Employee's employment is terminated for any reason, including expiration
of the term of this Agreement, Employee will not, without the prior written
consent of the Company, directly or indirectly, whether as a director,
officer, employee, agent, consultant, shareholder, partner or otherwise,
actively solicit the employment or hiring by any Entity of any employee of
the Company.
(d) This covenant not to compete and non-solicitation agreement shall
apply whether the Employee acts as an individual or for his own account, or
as a partner, employee, agent, salesman, distributor, consultant or
representative of any other Entity.
(e) Nothing in this Agreement shall be construed to allow the Company
to cease making payments to the Employee under this Agreement unless the
Employee breaches or threatens to breach any of the provisions of this
Section 12.
13. Remedies for Breach of Confidentiality and Competitive Activities. If
Employee breaches, or threatens to breach, any of the provisions of Section 12
hereof, the Company shall have the following rights and remedies, in addition to
any others, each of which shall be independent of the other and severally
enforceable:
(i) The right to have the provisions of Section 12 of this Agreement
specifically enforced by any court having equity jurisdiction, including
the right to certain emergency injunctive relief, 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;
(ii) The right to immediately cease making any payments required under
Section 9 and the right to recover any sums previously paid under such
provision.
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(iii) The right and remedy to require Employee to account for and pay
over to the Company an amount equal to the monetary damages sustained by
the Company as a result of the breach; provided, however, except with
regard to any purchase or sale of the Company's common stock and/or any of
the assets or liabilities of the Company, Employee shall not be required to
pay over to the Company pursuant to this provision an amount in excess of
all compensation, profits, monies, accruals, increments or other benefits
(hereinafter collectively the "Benefits") derived or received by Employee
pursuant to this Agreement, and Employee hereby agrees to the extent of the
damages incurred by the Company to pay over said Benefits to the Company;
and
(iv) If this Agreement is still in effect, the right to terminate this
Agreement for Cause pursuant to Section 8 hereof.
14. Additional Remedies - Arbitration of Disputes. Should any dispute arise
between the Parties relating to this Agreement, including without limitation,
any dispute relating to Employee's employment or termination of employment from
the Company, the Parties specifically stipulate and agree to submit any such
dispute to final and binding arbitration conducted under the auspices of the
National Rules for the Resolution of Employment Law Disputes, then in effect, of
the American Arbitration Association, with the costs of such arbitration to be
split equally between the Parties; provided, however, that upon conclusion of
the arbitration, the prevailing party in the arbitration shall be entitled to
reimbursement of its costs of arbitration from the non-prevailing party.
Employee, with an adequate opportunity to consult with legal counsel, knowingly
and voluntarily waives any right to trial by jury of any dispute pertaining to
or relating in any way to Employee's employment with or termination from the
Company, including any matters relating to this Agreement, the provisions of any
federal, state or local law, regulation or ordinance notwithstanding. The Award
of the Arbitrator(s) may be entered in any federal or state court having
jurisdiction. Notwithstanding the foregoing provisions, if the Employee breaches
any of the non-disclosure or non-competition provisions of this Agreement, the
Company shall have the right to seek immediate injunctive relief in the form of
a temporary, preliminary or permanent
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mandatory or restraining injunction, enjoining the Employee from such further
breach of those provisions of this Agreement.
No delay or omission by the Company or the Employee in exercising any right
or remedy under any of the terms of this Agreement shall operate as a waiver of
any rights or remedies which the Company or Employee may have under this
Agreement, either at law or in equity, and no single or partial exercise of any
such right shall preclude any other or further exercise thereof or of the
exercise of any other right or remedy.
15. Consent to Jurisdiction. For the purposes of obtaining a temporary,
preliminary, or permanent injunction or restraining injunction, order or decree
to enforce the non-disclosure or non-compete provisions of this Agreement, such
action shall be filed and prosecuted solely and exclusively in a state or
federal court sitting in San Antonio, Bexar County, Texas, and Employee
irrevocably accepts the jurisdiction of the courts of the State of Texas, and
the federal courts located in such State. Employee expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Employee hereby irrevocably waives any objection which Employee
may have based upon personal jurisdiction, improper venue or forum
non-conveniens and hereby irrevocably consents to the granting of such legal or
equitable relief as is deemed appropriate by such court. The Employee and the
Company, each with an adequate opportunity to consult with counsel, hereby
irrevocably waives any right to a trial by jury in any injunction or arbitration
proceeding. Any injunctive relief obtained by the Company under this Agreement
shall be in addition to any other relief to which the Company may be entitled to
assert in the arbitration proceeding, at law or in equity. This Agreement was
entered into and is performable in San Antonio, Bexar County, Texas. Employee
covenants to Company and Company covenants to Employee that no litigation
arising out of or relating to this Agreement will ever be commenced in any court
other than a court sitting in San Antonio, Bexar
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County, Texas. The Parties further agree and covenant that the sole and
exclusive venue for any court or arbitration proceeding shall be in San Antonio,
Bexar County, Texas.
16. Governing Law. This Agreement has been negotiated, executed and
delivered in the State of Texas, and shall in all respects be interpreted,
construed, and governed by and in accordance with the internal substantive laws
of the State of Texas.
17. Headings. The captions set forth in this Agreement are for convenience
of reference only and shall not be considered as part of this Agreement or as in
any way limiting or amplifying the terms and provisions hereof.
18. Severability. Each provision of this Agreement constitutes a separate
and distinct undertaking, covenant and/or provision hereof. In the event that
any provision of this Agreement shall finally be determined to be unlawful, such
provision shall be deemed severed from this Agreement, but every other provision
of this Agreement shall remain in full force and effect, and in substitution for
any such provision held unlawful, there shall be substituted a provision of
similar import reflecting the original intent of the parties hereto to the
extent possible under law. Notwithstanding the foregoing, to the extent the
non-compete provisions of this Agreement are held to be invalid or in any manner
unenforceable, the Company shall be relieved of its obligations to make any
payments to the Employee as provided in Section 9.
19. Prohibition Against Assignment. Employee agrees, for himself and on
behalf of his executors and administrators, heirs, legatees, distributes, and
any other person or persons claiming any benefit under him by virtue of this
Agreement, that this Agreement and rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in any way by the
Employee or any executor, administrator, heir, legatee, distributee or other
persons claiming under the Employee by virtue of this Agreement. Any attempt to
assign, transfer, pledge or hypothecate or
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otherwise dispose of this Agreement, or of any rights, interests, and benefits
contained herein, contrary to the foregoing provisions shall be null and void
and without effect and shall relieve the Company of any and all liability
hereunder.
20. Entire Agreement
(a) This Agreement constitutes the entire agreement between the
Parties and contains all of the agreements between the Parties with respect
to the subject matter hereof and supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
subject matter hereof and all such prior agreements are hereby terminated.
(b) No change or modification of this Agreement shall be valid unless
the same be in writing and signed by the Employee and an authorized
representative of the Company.
21. Communications. All notices, requests, demands, and other
communications under this Agreement shall be in writing and, unless otherwise
provided herein, shall be deemed to have been duly given upon hand-delivery or
upon deposit in the United States Mail, postage prepaid, certified or registered
mail, return receipt requested, as follows:
If to the Company: Chief Executive Officer
Solo Serve Corporation
0000 Xxxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
With a copy to: Xxx & Xxxxx Incorporated
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxxx X. XxXxxxx
If to Employee: Xxxx X. Xxxxxxxxxxx
000 Xxxxxxxxx Xxx.
Xxx Xxxxxxx, Xxxxx 00000
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with a copy to: Xxxxxxxxxxx, Blend, Xxxxxxxx & Xxxx, Inc.
000 Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxx Xxxxxxxxxxx
or at such other address as shall have been furnished to the other in writing in
accordance herewith, except that such notice of such change shall be effective
only upon receipt.
22. Policies and Procedures. As used in this Agreement, the phrases
"policies and procedures" or "existing policies and procedures" shall mean the
policies and procedures of the Company as such may be amended from time to time
in the discretion of the Company, which amendments the Employee shall be given
notice of by the Company.
23. Termination of Original Agreement. As of the Effective Date hereof,
this Agreement shall supersede and any and all agreements between the Employee
and the Company relating to employment of the Employee and neither Party shall
have any continuing duties, payment obligations or other obligations under any
prior agreement.
IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement effective on the___ day of March, 1998.
THE EMPLOYEE
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XXXX X. XXXXXXXXXXX
THE COMPANY
SOLO SERVE CORPORATION
By:
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XXXXXXX X. XXXXXX
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