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EXHIBIT 10.4
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. XXXXX ("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.
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"Employment Termination Date" means the date of termination of
Employee's employment pursuant to this Agreement.
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
$145,000 (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
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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 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 Executive Vice President, Chief Financial Officer and Chief
Operating Officer of the Company, and his duties shall be such as are
prescribed by the Chief Executive Officer and the Board of Directors.
As, Executive Vice President, Chief Financial Officer and Chief
Operating Officer, Employee shall report directly to the President and
Chief Executive Officer of the Company.
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(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.
(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 Executive Vice President, Chief Financial Officer and
Chief Operating Officer 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.
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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 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
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(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.
(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
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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; (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 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
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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, 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
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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) 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
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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 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.
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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.
(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
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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 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
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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 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
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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 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
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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. Xxxxx
0000 Xxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
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
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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. XXXXX
THE COMPANY
SOLO SERVE CORPORATION
By:
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XXXXXXX X. XXXXXX
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