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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
March 17, 1998
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Solo Serve Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-19994 74-2048057
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(Commission File Number) (I.R.S. Employer Identification Number)
1610 Cornerway Blvd.
San Antonio, Texas 78219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(210) 662-6262
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ITEM 5. OTHER EVENTS.
The Company has amended its loan agreement with its primary lender,
Sanwa Business Credit Corporation, to increase the Company's access to working
capital and amend certain covenants. The description of the amendment
contained in this report is qualified in its entirety by reference to the full
text of the First Amendment to Loan and Security Agreement by and between the
Company and Sanwa, a copy of which has been filed as Exhibit 10.1 to this
report.
The Amendment waives compliance with the financial covenants at
January 31, 1998, eliminates the Company's minimum net worth covenant entirely,
and revises the interest coverage covenants for 1998.
The Amendment also increases the advance rate on the Company's
eligible inventory from 65% to 70% immediately through December 10, 1998 and
provides for an additional $600 thousand available to borrow based upon a new
$600 thousand letter of credit in favor of Sanwa provided by General Atlantic
Corporation, one of the Company's principal stockholders. The new $600
thousand letter of credit, which is anticipated to terminate May 31, 1998, is
in addition to an existing $750,000 letter of credit previously provided by
General Atlantic, which is anticipated to terminate December 31, 1998. The
letters of credit are secured by a second lien on substantially all of the
assets of the Company other than real estate. Based on current inventory
levels, the increase in the advance rate and the new letter of credit, the
Company has access to new working capital borrowings of approximately $1.2
million. The description set forth above is qualified in its entirety by
reference to the complete text of the Amended and Restated Letter of Credit and
Security Agreement by and between the Company and General Atlantic, a copy of
which is filed as Exhibit 10.2 to this report.
In a related transaction, each of three members of senior management,
Ross Bacon, Executive Vice President, Chief Operating Officer and Chief
Financial Officer, Terry Lalosh, Senior Vice President and General Merchandise
Manager, and Mark Blankenship, Senior Vice President of Planning and
Allocation, have provided a $100 thousand certificate of deposit for the
benefit of General Atlantic to collateralize in part the $600 thousand and $750
thousand letters of credit.
Additionally, each of Bacon, Lalosh and Blankenship has acquired
236,562 shares of the Company's Common Stock from General Atlantic Corporation,
which shares General Atlantic received upon conversion of an equal number of
shares of the Company's Preferred Stock. General Atlantic continues to own
679,203 shares of the Company's Preferred Stock, which represents approximately
16% of the aggregate voting stock of Solo Serve. Also, Charles M. Siegel,
Chief Executive Officer of the Company, has transferred
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to each of Bacon, Lalosh and Blankenship 80,000 shares of Common Stock. Siegel
will continue to own 1,015,000 shares of Common Stock, which represents
approximately 24% of the voting stock of the Company. As previously reported,
in October 1997 Siegel previously acquired 1,255,000 shares of Common Stock, or
approximately 30% of the aggregate voting stock of the Company, from General
Atlantic. The stock transferred by Siegel to Messrs. Bacon, Lalosh and
Blankenship was transferred for no stated consideration.
In connection with the acquisition of shares of capital stock of the
Company by Messrs. Bacon, Lalosh and Blankenship, General Atlantic, Siegel,
Bacon, Lalosh and Blankenship entered into a Stockholders Agreement. The
Stockholders Agreement provides that no party thereto will sell, exchange,
transfer or otherwise dispose of shares of the Company's Common Stock or
Preferred Stock owned by such stockholder without the prior written consent of
the other parties thereto and no party will exercise incentive stock options or
other rights to acquire capital stock or will otherwise acquire capital stock
of the Company without the prior written consent of the others. The
Stockholders Agreement provides that the certificates representing shares of
capital stock of the Company currently held by the parties, as well as any
additional shares issued to the parties, shall each bear a legend evidencing
the existence of the Stockholders Agreement and the restrictions upon transfer
contained therein. The Stockholders Agreement terminates on March 17, 2001
unless terminated earlier or extended by agreement of all parties. The
description of the Stockholders Agreement contained in this report is qualified
in its entirety by reference to the full text of the Stockholders Agreement by
and among General Atlantic, Siegel, Bacon, Lalosh and Blankenship, a copy of
which has been filed as Exhibit 10.3 to this report.
Currently, the Company has a significant net operating loss
carryforward. Under applicable law and regulations, the Company's ability to
utilize its net operating loss carryforward to offset future earnings could be
severely limited if the Company experiences an ownership change as defined in
Section 382 of the Internal Revenue Code of 1986, as amended. While the
acquisitions of stock by Siegel, Bacon, Lalosh and Blankenship have not
resulted in an ownership change as defined in Section 382, the Company's
ability to utilize its net operating loss carryforward could be adversely
affected if a purchaser were to acquire five percent (5%) or more of the
Company's stock.
Contemporaneously with the transactions described above, the Company
entered into new three-year employment agreements with each of Messrs. Bacon,
Blankenship, and Lalosh. Each of the employment agreements provides for a term
of employment until March 17, 2001, or until earlier termination as provided
therein. Under each employment agreement, the employee shall receive an annual
salary and, if the Company is profitable, a bonus based upon a formula, which
bonus cannot exceed 15% of the employee's annual salary. The Company may, but
is not obligated to, pay to the employee a discretionary bonus if the Company
does not make a profit. Each employment agreement
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provides for the employee to receive all medical, life insurance and retirement
benefits and to be eligible for vacations, sick leave and other personal time in
accordance with the Company's existing policies for senior executives and/or
employees.
The employment agreements further provide that upon termination the
Company shall pay to each employee his salary through the termination date. In
the case of termination by the Company other than for cause, each employment
agreement provides that the Company shall also pay to the employee six months
salary and, if notice of termination was delivered by the employee during the
fourth quarter of any fiscal year, a prorated amount of any bonus the employee
would otherwise have been entitled to receive during such fiscal year. The
agreements also contain confidentiality provisions and a limited noncompetition
agreement.
This summary of the employment agreements is qualified in its entirety
by reference to the complete text of the employment agreements, which are filed
as Exhibits 10.4, 10.5, and 10.6 to this report.
The Company has entered into two agreements to sell and leaseback the
Company's owned real estate, one for the distribution center and corporate
headquarters and one for its three owned retail store locations. These
agreements replaced a previously announced agreement which was terminated in
accordance with terms in January 1998. These agreements are subject to
customary conditions and upon the negotiation and execution of leases by the
Company of all of the properties. There can be no assurance that they will be
consummated. However, the sales of the properties are anticipated to close in
April 1998 and are expected to result in net cash proceeds to the Company after
selling costs and payment or assumption of related indebtedness of
approximately $2 million.
Forward-looking Statements
Forward-looking statements in this report are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. There are
certain important factors that could cause results to differ materially from
those anticipated by some of the statements made above. Investors are
cautioned that all forward-looking statements involve risks and uncertainty.
In addition to the factors discussed above, among the other factors that could
cause actual results to differ materially are the following: general economic
conditions, consumer demand and preferences, and weather patterns in the
Company's markets; competitive factors, including continuing pressure from
pricing and promotional activities of competitors; impact of excess retail
capacity; the availability, selection and purchasing of attractive merchandise
on favorable terms; availability of financing; and relationships with vendors
and factors. Additional information concerning those and other factors are
contained in the Company's Securities and Exchange Commission filings, copies
of which are available from
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the Company without charge. The Company does not undertake to publicly update
or revise its forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied therein will not
be realized.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>
Number Document
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<S> <C>
10.1 First Amendment to Loan and Security Agreement by and between the Company and Sanwa
Business Credit Corporation
10.2 Amended and Restated Letter of Credit and Security Agreement by and between the
Company and General Atlantic Corporation
10.3 Stockholder Agreement
10.4 Employment Agreement between the Company and Ross E. Bacon
10.5 Employment Agreement between the Company and Mark J. Blankenship
10.6 Employment Agreement between the Company and Terry Lalosh
</TABLE>
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOLO SERVE CORPORATION
By: /s/ Ross E. Bacon
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Ross E. Bacon,
Secretary and Chief Financial Officer
Dated: March 17, 1998
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EXHIBIT 10.1
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "AMENDMENT")
is dated for reference purposes only as of March 16, 1998, by and between SANWA
BUSINESS CREDIT CORPORATION, a Delaware corporation ("LENDER"), having an office
at One South Wacker Drive, Chicago, Illinois 60606 ("LENDER") and SOLO SERVE
CORPORATION, a Delaware corporation ("BORROWER"), having its chief executive
office at 1610 Cornerway Boulevard, San Antonio, Texas 78219.
RECITALS:
A. Lender has made financial accommodations to Borrower (the "LOAN")
pursuant to a certain Loan and Security Agreement dated for reference purposes
only as of September 25, 1997 (the "EXISTING AGREEMENT").
B. Borrower and Lender have agreed to amend the terms of the Existing
Agreement to, inter alia, (i) amend the definition of Current Asset Base, (ii)
modify certain financial covenants, (iii) provide for delivery to Lender of a
letter of credit as additional collateral for the Loan, (iv) permit Borrower to
enter into a sale-leaseback of certain of its owned facilities, and (v) waive
any default arising from Borrower's failure to satisfy certain financial
covenants.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for $10.00 and other good and valuable consideration in hand paid
by each party to the other, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby covenant and agree as follows:
1. Recital Representations. Borrower hereby represents and warrants to
Lender that the foregoing Recitals are (a) true and accurate and (b) an integral
part of this Amendment. Borrower and Lender hereby agree that all of the
Recitals of this Amendment are hereby incorporated into this Amendment and made
a part hereof. Any term not otherwise defined herein shall have the meaning set
forth in the Existing Agreement.
2. Liabilities. All references in the Existing Agreement and the
Ancillary Agreements to Borrower's Liabilities shall refer to and include,
without limitation, all amounts now or hereafter due pursuant to the Existing
Agreement, as amended hereby or otherwise, payment of which amounts, Borrower
hereby expressly acknowledges to be secured by all Collateral pursuant to the
grant of a security interest under the Existing Agreement.
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3. Amendment to Existing Agreement. The Existing Agreement is hereby
amended as follows:
3.1. Section 1.1 (h) is hereby deleted in its entirety and the
following is substituted therefor:
(h) "BORROWING BASE" SHALL MEAN AN AMOUNT EQUAL TO THE SUM
(AS OF THE DATE OF DETERMINATION) OF: (I) THE CURRENT ASSET BASE, PLUS
(II) AN AMOUNT EQUAL TO THE GAC LETTERS OF CREDIT THEN HELD BY LENDER.
3.2. Section 1.1(t) is hereby deleted in its entirety and the
following is substituted therefor:
(t) "CURRENT ASSET BASE" SHALL MEAN AT ANY TIME AN AMOUNT
EQUAL TO THE SUM AT SUCH TIME OF:
(a) SEVENTY PERCENT (70%) OF ELIGIBLE INVENTORY, COMMENCING
ON EACH MAY 1, AND ENDING ON EACH DECEMBER 10, DURING THE TERM HEREOF,
(b) SEVENTY PERCENT (70%) OF ELIGIBLE INVENTORY AT ALL TIMES
THAT THE $600,000 GAC LETTER OF CREDIT IS THEN HELD BY LENDER; AND
(c) SIXTY-FIVE PERCENT (65%) OF ELIGIBLE INVENTORY AT ALL
OTHER TIMES, LESS AT ALL TIMES ANY RESERVES AS LENDER MAY, AT ANY TIME
AND FROM TIME TO TIME, ESTABLISH IN THE EXERCISE OF REASONABLE CREDIT
JUDGMENT AS A RESULT OF CHANGING CIRCUMSTANCES.
3.3. Section 1.1(ll) is hereby deleted in its entirety and the
following is substituted therefor:
(ll) "GAC LETTERS OF CREDIT" SHALL MEAN THE $600,000 GAC
LETTER OF CREDIT AND THE $750,000 GAC LETTER OF CREDIT, AND ALL
AMENDMENTS, MODIFICATIONS, SUPPLEMENTS, RENEWALS, SUBSTITUTIONS,
EXTENSIONS OR REPLACEMENTS THEREOF.
3.4. The following definition is hereby added to Section 1.1:
(bbbb) "600,000 GAC LETTER OF CREDIT" SHALL HAVE THE MEANING
SET FORTH IN SECTION 4.2(b).
(cccc) "$750,000 GAC LETTER OF CREDIT" SHALL HAVE THE MEANING
SET FORTH IN SECTION 4.2(a).
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3.5. Section 2.2(a) is hereby deleted in its entirety and the
following is substituted therefor:
(a) SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT, LENDER AGREES, FOR SO LONG AS NO DEFAULT OR EVENT OF
DEFAULT EXISTS, TO MAKE REVOLVING LOANS ("REVOLVING LOANS") TO
BORROWER FROM TIME TO TIME, AS REQUESTED BY BORROWER IN ACCORDANCE
WITH THE TERMS OF SECTION 2.3 HEREOF, UP TO A MAXIMUM PRINCIPAL AMOUNT
AT ANY TIME OUTSTANDING EQUAL TO THE LESSER OF (I) TWELVE MILLION AND
NO/100 DOLLARS ($12,000,000.00) MINUS LETTER OF CREDIT USAGE, AND (II)
THE BORROWING BASE AT SUCH TIME MINUS LETTER OF CREDIT USAGE. IT IS
EXPRESSLY UNDERSTOOD AND AGREED THAT LENDER MAY USE THE BORROWING BASE
AS A MAXIMUM CEILING ON THE PRINCIPAL AMOUNT OF LOANS (INCLUDING
LETTER OF CREDIT USAGE) OUTSTANDING TO BORROWER AT ANY TIME. IT IS
FURTHER EXPRESSLY AGREED THAT, NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, IN THE EVENT BORROWER HAS NOT DELIVERED TO
LENDER CONFIRMATION OF THE EXTENSION OF THE EXPIRY DATE OF A GAC
LETTER OF CREDIT ON OR BEFORE 30-DAYS PRIOR TO ITS EXPIRY DATE (AS MAY
BE EXTENDED), SUCH GAC LETTER OF CREDIT SHALL NOT BE INCLUDED IN THE
BORROWING BASE FOR PURPOSES OF DETERMINING THE MAXIMUM PRINCIPAL
AMOUNT WHICH MAY BE OUTSTANDING AT SUCH TIME. IF THE UNPAID PRINCIPAL
BALANCE OF THE REVOLVING LOANS SHOULD EXCEED THE CEILING SO DETERMINED
OR ANY OTHER LIMITATION SET FORTH IN THIS AGREEMENT, SUCH REVOLVING
LOANS SHALL NEVERTHELESS CONSTITUTE LIABILITIES THAT ARE SECURED BY
THE COLLATERAL AND ENTITLED TO ALL THE BENEFITS THEREOF. IN NO EVENT
SHALL LENDER BE REQUIRED TO MAKE A LOAN AT ANY TIME THAT THERE EXISTS
A DEFAULT OR AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING
PROVISIONS OF THIS SECTION 2.2(A), LENDER SHALL HAVE THE RIGHT TO
ESTABLISH RESERVES IN SUCH AMOUNTS, AND WITH RESPECT TO SUCH MATTERS,
AS LENDER SHALL, IN THE SOLE EXERCISE OF ITS REASONABLE DISCRETION,
DEEM NECESSARY OR APPROPRIATE, AGAINST THE AMOUNT OF REVOLVING LOANS
WHICH BORROWER MAY OTHERWISE REQUEST UNDER THIS SECTION 2.2(A). EXCEPT
AS OTHERWISE PROVIDED HEREIN, EACH REVOLVING LOAN SHALL BE MADE ON
NOTICE, GIVEN NOT LATER THAN 11:00 A.M. (CHICAGO TIME) ON THE BUSINESS
DAY OF THE PROPOSED REVOLVING LOAN, BY BORROWER TO LENDER. EACH SUCH
NOTICE (A "NOTICE OF REVOLVING LOAN") SHALL BE IN WRITING (INCLUDING
BY FACSIMILE TRANSMISSION) TO THE ACCOUNT EXECUTIVE OF LENDER IN
CHARGE OF BORROWER'S ACCOUNT (BARBARA BUCK AT CLOSING), OR, IN HER
ABSENCE, TO A DESIGNEE SPECIFIED BY LENDER, SPECIFYING THEREIN THE
REQUESTED DATE AND AMOUNT OF SUCH REVOLVING LOAN. BORROWER MAY ALSO
DELIVER ITS NOTICE OF BORROWING BY TELEPHONE COMMUNICATION TO LENDER,
BUT SUCH NOTICE SHALL NOT BE EFFECTIVE UNTIL LENDER SHALL HAVE
RECEIVED A CONFIRMATION IN WRITING (BY FACSIMILE OR OTHERWISE) OF SUCH
NOTICE OF BORROWING. LENDER SHALL, BEFORE 2:30 P.M. (CHICAGO TIME) ON
THE DATE OF THE PROPOSED REVOLVING LOAN, UPON FULFILLMENT OF THE
APPLICABLE CONDITIONS SET FORTH HEREIN, WIRE TO A BANK DESIGNATED BY
BORROWER AND REASONABLY ACCEPTABLE TO LENDER, THE AMOUNT OF SUCH
REVOLVING LOAN.
3.6. Section 4.2 is hereby deleted in its entirety and the
following is substituted therefor:
4.2 GAC LETTERS OF CREDIT.
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(a) BORROWER SHALL HAVE THE RIGHT, FROM TIME TO TIME
DURING THE TERM HEREOF, TO DELIVER TO LENDER A LETTER OF CREDIT ISSUED
UPON THE APPLICATION OF GAC, NAMING LENDER AS BENEFICIARY THEREOF, IN
AN AMOUNT NOT TO EXCEED $750,000, WHICH LETTER OF CREDIT SHALL BE IN
FORM AND SUBSTANCE ACCEPTABLE TO LENDER, IN LENDER'S SOLE AND EXCLUSIVE
DISCRETION (SAID LETTER OF CREDIT, TOGETHER WITH ALL AMENDMENTS,
MODIFICATIONS, SUBSTITUTIONS, SUPPLEMENTS, EXTENSIONS, RENEWALS OR
REPLACEMENTS THEREOF, THE "$750,000 LETTER OF CREDIT").
(b) CONCURRENTLY WITH THE EXECUTION OF THIS
AMENDMENT, BORROWER SHALL DELIVER TO LENDER A LETTER OF CREDIT ISSUED
UPON THE APPLICATION OF GAC, NAMING LENDER AS BENEFICIARY THEREOF, IN
AN AMOUNT NOT TO EXCEED $600,000 (SAID LETTER OF CREDIT, TOGETHER WITH
ALL AMENDMENTS, MODIFICATIONS, SUPPLEMENTS, SUBSTITUTIONS, EXTENSIONS,
RENEWALS OR REPLACEMENTS THEREOF, THE "600,000 LETTER OF CREDIT"),
WHICH LETTER OF CREDIT SHALL BE IN FORM AND SUBSTANCE ACCEPTABLE TO
LENDER, IN LENDER'S SOLE AND EXCLUSIVE DISCRETION.
(c) THE $600,000 GAC LETTER OF CREDIT AND THE
$750,000 LETTER OF CREDIT SHALL BE ISSUED BY A COMMERCIAL BANK OR
FINANCIAL INSTITUTION ACCEPTABLE TO LENDER, IN LENDER'S SOLE AND
ABSOLUTE DISCRETION, BUT WHICH IN ALL EVENTS MEETS THE FOLLOWING
CRITERIA: (I) SUCH FINANCIAL INSTITUTION SHALL HAVE AGGREGATE ASSETS OF
NO LESS THAN $2,000,000,000, (II) SUCH FINANCIAL INSTITUTION SHALL HAVE
A LONG-TERM DEPOSIT RATING OR A LONG-TERM DEBT RATING OF NO LESS THAN A
AND (II) SUCH FINANCIAL INSTITUTION SHALL HAVE AN OPERATING AND
PORTFOLIO QUALITY TRENDS WHICH ARE STABLE OR IMPROVING.
(d) BORROWER AND BANK HEREBY ACKNOWLEDGED THAT THE
$600,000 GAC LETTER OF CREDIT DEPOSITED CONCURRENTLY HEREWITH SHALL
HAVE AN EXPIRY DATE OF MAY 31, 1998 AND THE $750,000 GAC LETTER OF
CREDIT HAS AN EXPIRY DATE OF DECEMBER 31, 1998; PROVIDED THAT EACH GAC
LETTER OF CREDIT PROVIDES FOR AUTOMATIC RENEWAL THEREOF UNLESS NOTICE
IS GIVEN TO LENDER OF THE ISSUING BANK'S INTENT NOT TO RENEW.
NOTWITHSTANDING SUCH PROVISION, IF BORROWER ELECTS TO RENEW SUCH LETTER
OF CREDIT, BORROWER SHALL DELIVER TO LENDER A CONFIRMATION, NOT LESS
THAN THIRTY (30) DAYS PRIOR TO THE EXPIRY DATE OF THE APPLICABLE GAC
LETTER OF CREDIT, THAT THE APPLICABLE EXPIRY DATE OF SUCH GAC LETTER OF
CREDIT HAS BEEN EXTENDED. IN THE EVENT BORROWER DOES NOT DELIVER A
CONFIRMATION OF SUCH EXTENSION OR RENEWAL OF SUCH GAC LETTER OF CREDIT
ON OR BEFORE THIRTY (30) DAYS PRIOR TO THE THEN APPLICABLE EXPIRY DATE,
AND IN THE EVENT THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AT ANY
TIME DURING SUCH 30-DAY PERIOD IMMEDIATELY PRIOR TO THE EXPIRY DATE OF
THE APPLICABLE GAC LETTER OF CREDIT IS GREATER THAN THE BORROWING BASE
(WITHOUT GIVING EFFECT TO ANY INCREASE THEREOF BASED UPON THE THEN
EXPIRING GAC LETTER OF CREDIT) LENDER SHALL HAVE THE RIGHT, WITHOUT
NOTICE TO BORROWER, TO DRAW UPON THE THEN EXPIRING GAC LETTER OF CREDIT
AND TO APPLY THE PROCEEDS THEREOF TO BORROWER'S LIABILITIES.
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(e) IN THE EVENT BORROWER ELECTS TO EXTEND OR RENEW
EITHER OF THE GAC LETTERS OF CREDIT, BORROWER SHALL HAVE THE RIGHT
DURING ANY SUCH EXTENSION PERIOD, UPON NOT LESS THAN THIRTY (30) DAYS
PRIOR WRITTEN NOTICE TO LENDER TO TERMINATE EITHER GAC LETTER OF CREDIT
AND TO REQUEST A RETURN THEREOF IF: (I) THE BORROWING BASE (EXCLUDING
ANY AMOUNT THEREOF ATTRIBUTABLE TO THE APPLICABLE GAC LETTER OF CREDIT)
IS THEN EQUAL TO OR GREATER THAN THE OUTSTANDING PRINCIPAL AMOUNT OF
THE LOANS, AND (II) NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING OR WOULD BE CREATED THEREBY, EITHER ON THE DATE OF SUCH
NOTICE OR ON THE DATE FOR TERMINATION OF THE APPLICABLE GAC LETTER OF
CREDIT. UPON RECEIPT OF SUCH NOTICE, SATISFACTION OF SUCH CONDITIONS,
AND EXPIRATION OF SAID 30-DAY PERIOD, LENDER SHALL RETURN THE
APPLICABLE GAC LETTER OF CREDIT TO BORROWER OR AS DIRECTED BY BORROWER.
FOR PURPOSES OF DETERMING BORROWER'S RIGHT TO TERMINATE ONE OR MORE OF
THE GAC LETTERS OF CREDIT ONLY, LOANS WILL BE ALLOCATED FIRST TO THE
BORROWING BASE, EXCLUSIVE OF BOTH GAC LETTERS OF CREDIT, THEN TO THE
BORROWING BASE PLUS THE $750,000 GAC LETTER OF CREDIT, AND FINALLY TO
THE BORROWING BASE PLUS BOTH GAC LETTERS OF CREDIT.
(f) EXCEPT AS PROVIDED IN SECTION 4.2(D) RELATING TO DRAWS
UPON THE GAC LETTERS OF CREDIT DURING THE 30-DAY PERIOD IMMEDIATELY
PRECEDING THE EXPIRY THEREOF, LENDER HEREBY AGREES NOT TO PRESENT ANY
GAC LETTER OF CREDIT FOR PAYMENT AT ANY OTHER TIME UNLESS AN EVENT OF
DEFAULT OR DEFAULT HAS OCCURRED AND IS CONTINUING. ANY PROCEEDS OF THE
GAC LETTER OF CREDIT PAID TO LENDER SHALL BE APPLIED BY LENDER TO THE
LIABILITIES, IN SUCH ORDER OF PRIORITY AS LENDER SHALL, IN ITS SOLE
DISCRETION DETERMINE.
3.7. Section 6.9 is hereby deleted in its entirety and the
following is substituted therefor:
6.9 GAC PERMITTED LIEN. LENDER HEREBY CONSENTS TO BORROWER
GRANTING TO GAC A LIEN ON CERTAIN OF BORROWER'S ASSETS, INCLUDING
PORTIONS OF THE COLLATERAL, TO SECURE BORROWER'S OBLIGATION TO
REIMBURSE GAC FOR DRAWS UPON THE GAC LETTERS OF CREDIT (THE "GAC
PERMITTED LIEN"). THE MAXIMUM AMOUNT SECURED BY THE GAC PERMITTED LIEN
SHALL EQUAL THE FACE AMOUNT OF THE GAC LETTERS OF CREDIT THEN
OUTSTANDING, INTEREST ACCRUED THEREON FOLLOWING A DRAW THEREOF, AND
REASONABLE ENFORCEMENT CHARGES. THE GAC PERMITTED LIEN SHALL BE
EXPRESSLY SUBORDINATE TO THE LIEN SECURING THE LIABILITIES, PURSUANT
TO THE TERMS OF A SUBORDINATION AND INTERCREDITOR AGREEMENT ENTERED
INTO BETWEEN LENDER AND GAC CONCURRENTLY HEREWITH, AS AMENDED,
MODIFIED, SUPPLEMENTED, EXTENDED OR RESTATED FROM TIME TO TIME.
3.8. Section 10.1 (w) is hereby deleted in its entirety and the
following is substituted therefor:
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(w) AT ALL TIMES DURING THE TERM HEREOF, CHARLES M. SIEGEL
SHALL OWN NOT LESS THAN 1,015,000 SHARES OF THE ISSUED AND OUTSTANDING
SHARES OF THE BORROWER.
3.9. Section 11.1 is hereby deleted in its entirety and the following
is substituted therefor:
11.1 FINANCIAL COVENANTS.
(a) BORROWER SHALL MAINTAIN AN INTEREST COVERAGE RATIO,
MEASURED QUARTERLY ON A ROLLING FOUR-QUARTER BASIS (EXCEPT AS
NOTED) IN THE FOLLOWING AMOUNTS AT THE FOLLOWING TIMES:
FOR THE 3 FISCAL-MONTH PERIOD
ENDING ON OR ABOUT 01/31/98: WAIVED
FOR THE 6 FISCAL-MONTH PERIOD
ENDING ON OR ABOUT 04/30/98: .65 TO 1.0
FOR THE 9 FISCAL-MONTH PERIOD
ENDING ON OR ABOUT 07/31/98: 1.25 TO 1.0
FOR THE ROLLING 4-FISCAL QUARTER
PERIOD ENDING ON OR ABOUT
10/31/98: 1.0 TO 1.0
FOR THE ROLLING 4-FISCAL QUARTER
PERIOD ENDING ON OR ABOUT
01/31/99 THROUGH 07/31/99: 1.70 TO 1.0
FOR THE ROLLING 4-FISCAL QUARTER
PERIOD ENDING ON OR ABOUT
10/31/99 OR THEREAFTER: 2.00 TO 1.0
(b) BORROWER SHALL NOT MAKE CAPITAL EXPENDITURES IN EXCESS OF
(I) $1,000,000 DURING FISCAL YEAR ENDING ON OR ABOUT JANUARY
31, 1998, (II) $2,500,000 DURING FISCAL YEAR ENDING ON OR
ABOUT JANUARY 31, 1999, (III) $1,750,000 DURING FISCAL YEAR
ENDING ON OR ABOUT JANUARY 31, 2000, OR (IV) $1,000,000 DURING
FISCAL YEAR ENDING JANUARY 31, 2001, MEASURED QUARTERLY.
3.10. Exhibits N and O, attached to the Existing Agreement are
hereby deleted in their entirety and Exhibits N and O attached hereto are hereby
substituted therefor. Lender
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hereby consents to the sale of that parcel of real property commonly known as
the Distribution Center to Koontz/McCombs, LLC. or its assigns and the lease of
said parcel from Koontz/McCombs, LLC or its assigns, as landlord to Borrower, as
tenant, provided that in connection with said sale and leaseback, (i) Borrower
delivers to Lender a Landlord's Waiver in form and substance acceptable to
Lender, in Lender's sole and absolute discretion and (ii) Borrower shall give
Bank no less than 5 days prior notice of the closing of such transaction. Lender
hereby further consents to the sale and leaseback of all other real property
owned by Borrower upon the following terms and conditions: (i) no Event of
Default or Default shall have occurred and be continuing, (ii) Lender shall have
received a true, accurate and complete copy of the Lease entered into in
connection therewith, and (iii) Borrower shall have delivered to Lender and
Landlord's Waiver, in form and substance acceptable to Lender, in Lender's sole
and absolute discretion.
4. Payment of Expenses. Upon demand by Lender therefor, Borrower shall
reimburse Lender for all costs, fees and expenses incurred by Lender or for
which Lender becomes obligated, in connection with the negotiation, preparation
and conclusion of this Amendment, including without limitation, reasonable
attorneys' fees, costs and expenses, search fees, title insurance policy fees,
costs and expenses, filing and recording fees and all taxes payable in
connection with this Amendment.
5. Waiver of Claims. Borrower hereby acknowledges, agrees and affirms
that it possesses no claims, defenses, offsets, recoupment or counterclaims of
any kind or nature against or with respect to the enforcement of the Loan
Agreement, as amended hereby or any Ancillary Agreement, (collectively
referred to herein as the "CLAIMS"), nor does Borrower now have knowledge of
any facts that would or might give rise to any Claims. If facts now exist
which would or could give rise to any Claim against or with respect to the
enforcement of the Existing Agreement as amended by this Amendment, the Note,
and/or any Ancillary Agreements, Borrower hereby unconditionally, irrevocably
and unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
6. Representations of Borrower. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. To induce Lender to enter into this Amendment, Borrower hereby
represents and warrants to Lender that, as of the effective date of this
Amendment:
(a) the execution and delivery of this Amendment, and the
performance by Borrower of its obligations under this Amendment, the Existing
Agreement and the Ancillary Agreements, as amended hereby, are within Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval (if any shall be required) and
do not and will not contravene or conflict with any provisions of law or the
Articles of Incorporation or By-Laws of Borrower or of any agreement binding
upon Borrower;
7
<PAGE> 8
(b) this Amendment, and each other instrument executed by
Borrower concurrently herewith, are the legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms, except as
enforcement thereof may be subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and to the general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law);
(c) all of the representations and warranties of Borrower made
in the Existing Agreement are true and correct as of the date hereof, except
where such representation or warranty specifically relates to an earlier date;
and
(d) no Default or Event of Default under the Existing
Agreement exists.
7. Representation by Counsel. Borrower hereby represents that: (i) it
has been represented by competent counsel of its choice in the negotiation and
execution of this Amendment; (ii) that it has read and fully understood the
terms hereof; (iii) Borrower and its counsel have been afforded an opportunity
to review, negotiate and modify the terms of this Amendment, and (iv) Borrower
intends to be bound hereby. In accordance with the foregoing, the general rule
of construction to the effect that any ambiguities in a contract are to be
resolved against the party drafting the contract shall not be employed in the
construction and interpretation of this Amendment.
8. Amendment Supplementary. This Amendment is supplementary to the Loan
Documents. All of the provisions of the Loan Documents, including without
limitation the right to declare principal and accrued interest due for any cause
specified in the Loan Documents, shall remain in full force and effect except as
herein expressly modified and they are hereby reaffirmed, ratified and confirmed
in their entirety and incorporated by reference as if fully set forth herein.
The Existing Agreement and all rights and powers created thereby and thereunder
or under such other documents are in all respects ratified and confirmed. From
and after the date hereof, the Existing Agreement shall be deemed to be amended
and modified as herein provided, but, except as so amended and modified, the
Existing Agreement shall continue in full force and effect and the Existing
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument. On and after the date hereof, the term "THE LOAN AGREEMENT" as
used in the Note, and all Ancillary Agreements shall mean the Existing Agreement
as amended hereby.
9. SUBMISSION TO JURISDICTION; VENUE. The provisions of Section 14.10
of the Existing Agreement are hereby incorporated herein by reference as if
fully set forth herein.
10. NO JURY TRIAL. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS
8
<PAGE> 9
AMENDMENT, THE EXISTING AGREEMENT, THE ANCILLARY AGREEMENTS, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING FROM ANY DISPUTE
OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS AMENDMENT, THE
EXISTING AGREEMENT, THE ANCILLARY AGREEMENTS, OR ANY SUCH AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK)
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Amendment dated for
reference purposes only as of March 16, 1998.
BORROWER: LENDER:
SOLO SERVE CORPORATION SANWA BUSINESS CREDIT
CORPORATION
By: By:
------------------------- -----------------------------
Charles M. Siegel, Name:
President and -----------------------------
Chief Executive Officer Title:
----------------------------
10
<PAGE> 11
EXHIBIT N
SOLO SERVE CORPORATION
LOAN AND SECURITY AGREEMENT, AS AMENDED
March 13, 1998
Real Estate Owned
Solo Serve #1
118 Soledad
San Antonio, TX
Solo Serve #2
7000 San Pedro
San Antonio, TX
Solo Serve #3
114 SW Military Drive
San Antonio, TX
Distribution Center
1610 Cornerway
San Antonio, TX
11
<PAGE> 12
EXHIBIT O
SOLO SERVE CORPORATION
LOAN AND SECURITY AGREEMENT, AS AMENDED
March 13, 1998
Existing Leases
PART 1
Solo Serve #4
Walzem Plaza
San Antonio, TX
Solo Serve #5
Ingram Square
San Antonio, TX
Solo Serve #6
Airport Blvd.
Austin, TX
Solo Serve #8
Elmwood Shopping Center
Harahan, LA
Solo Serve #9
Westside (South)
Shopping Center
Gretna, LA
Old Store
Solo Serve #9
Westside (North)
Shopping Center
Gretna, LA
New Store
Solo Serve #11
St. Bernard Plaza
W. Judge Perez
Chamette, LA
12
<PAGE> 13
Solo Serve #13
Staples Shopping Center
Corpus Christi, TX
Solo Serve #14
Westgate Shopping Center
Metairie, LA
Solo Serve #15
Eastlake Shopping Center
New Orleans, LA
Solo Serve #16
Westlakes Shopping Center
San Antonio, TX
Solo Serve #17
Park Oaks Shopping Center
San Antonio, TX
Solo Serve #18
Bandera Festival
San Antonio, TX
Solo Serve #19
Crosstowne Plaza
San Antonio, TX
Solo Serve #20
Five Points Shopping Center
Corpus Christi, TX
Solo Serve #23
Northern Hills Shopping Center
San Antonio, TX
Solo Serve #24
Las Tiendas Plaza
McAllen, TX
Solo Serve #25
Lake Creek Festival
Austin, TX
13
<PAGE> 14
Solo Serve #27
Plaza De Laredo
Laredo, TX
Solo Serve #31
Colonies North Shopping Center
San Antonio, TX
Solo Serve #32
Resaca Village Drive
Brownsville, TX
Solo Serve #41
Southbrook Town Center
Austin, TX
Solo Serve #42
Bon Marche Mall
Baton Rouge, LA
Solo Serve #43
South Park Mall
San Antonio, TX
Solo Serve #44
Sunset Crossing Shopping Center
San Angelo, TX
Solo Serve #45
Commerce Sq. Shopping Center
Brownwood, TX
New York Office
Distribution Center
1610 Cornerway
San Antonio, TX
14
<PAGE> 15
PART 2
Solo Serve #12
Springdale Mall
E-27 Springdale
Mobile, AL
Solo Serve #39
9032 Mansfield Road
Shrevesport, LA 71118
15
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
LETTER OF CREDIT AND SECURITY AGREEMENT
This Amended and Restated Letter of Credit and Security Agreement
(this "Agreement") is made and entered into as of March 16, 1998 by and between
General Atlantic Corporation, a Delaware corporation ("GAC" or "Secured Party")
and Solo Serve Corporation, a Delaware corporation ("Solo Serve" or "Debtor").
WHEREAS, Sanwa Business Credit Corporation ("SBCC") and Solo Serve
have entered into certain financing arrangements pursuant to a Loan and
Security Agreement dated as of September 25, 1997, as amended by First
Amendment to Loan and Security Agreement dated as of March 16, 1998 (the "First
Amendment"), between SBCC and Solo Serve, (as the same may hereinafter be
further amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement"); and
WHEREAS, as of the date hereof, and after taking into account the sale
of 709,686 shares of common stock to Ross E. Bacon, Mark J. Blankenship and
Terry Lalosh, GAC owns 15.9%, on a fully diluted basis, of the issued and
outstanding shares of common stock (including shares of preferred stock
convertible into common stock) of Solo Serve; and
WHEREAS, as part of the consideration for SBCC agreeing to the matters
set forth in the First Amendment, Solo Serve has requested that GAC provide for
the benefit of SBCC an additional Irrevocable Standby Letter of Credit in the
face amount of $600,000 expiring May 31, 1998, as the same may hereinafter be
amended, modified, supplemented, extended, renewed, restated or replaced (the
"$600,000 GAC L/C") which meets SBCC's requirements;
WHEREAS, GAC has agreed to provide the $600,000 GAC L/C and to
continue to provide the $750,000 GAC L/C (hereinafter defined) subject to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, GAC and Solo Serve hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein
shall have the same meanings as in the Loan Agreement, the terms and provisions
of which are incorporated herein by this reference. For purposes of this
Agreement, the following terms shall have the respective meanings given to them
below:
1.1 "GAC L/C's" shall mean collectively the $600,000 GAC L/C and
the $750,000 GAC L/C as the same may hereinafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
<PAGE> 2
1.2 "Intercreditor Agreement" shall mean that one certain
Intercreditor and Subordination Agreement dated as of September 25, 1997 by and
between SBCC and GAC, the terms and provisions of which are incorporated herein
by this reference as the same may hereinafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.3 "Obligations" shall mean any and all loans, letter of credit
accommodations, reimbursement obligations and all other obligations,
liabilities and indebtedness of every kind, nature, description owing by Solo
Serve to GAC, arising out of or as contemplated by this Agreement, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement, the GAC L/C's or the Loan
Agreement, whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured and however acquired by GAC.
1.4 "Prime Rate" shall mean the rate of interest from time to time
publicly announced by Chase Manhattan Bank or its successors at its offices in
New York, New York, as its prime or base commercial lending rate, whether or
not such announced rate is the best rate available at such bank.
1.5 "$750,000 GAC L/C" shall mean that certain Irrevocable Letter
of Credit No. P-396821 dated September 30,1997 in the amount of $750,000 issued
by The Chase Manhattan Bank in favor of SBCC as the same may hereinafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
2. Letters of Credit. GAC agrees to provide the GAC L/C's for
the benefit of SBCC, subject however to GAC's right to cease providing or not
renew same pursuant to the Loan Agreement.
3. Solo Serve Payments. In consideration of GAC's agreement, and
subject to the terms and conditions of the Intercreditor Agreement, Solo Serve
agrees to:
(a) Pay GAC the sum of One Hundred and No/100 Dollars ($100.00)
per year for each year that this Agreement is in effect;
(b) Reimburse GAC for (i) all customary and reasonable letter of
credit fees charged by any issuing and confirming banks with
respect to the GAC L/C's and any renewals thereof or
amendments thereto, provided however, such bank fees shall not
exceed $15,000 for any calendar year that this Agreement is in
effect and (ii) other reasonable third party costs and
expenses incurred by GAC in connection with the furnishing of
the GAC L/C's, provided however, such third party costs and
expenses shall not to exceed $5,000 for any calendar year that
this Agreement is in effect;
2
<PAGE> 3
(c) Reimburse GAC, upon demand, an amount equal to the amount
which GAC is required to pay any issuing bank or confirming
bank with respect to any drawings under either of the GAC
L/C's; and
(d) Pay GAC interest at a rate equal to the lesser of (i) the
maximum non-usurious rate of interest permitted by applicable
law or (ii) the Prime Rate in effect from time to time plus
one per cent (1%) adjusted daily on the amount outstanding
from time to time under Section 3(c) above.
Solo Serve's obligations under this Section 3 shall survive the
termination of this Agreement.
4. Security Interest. Further, in consideration of GAC's
agreement to provide the GAC L/C's and in order to secure payment and
performance of the Obligations, Solo Serve as Debtor hereby grants to GAC as
Secured Party a continuing security interest in and lien upon and the right of
set-off against and hereby assigns to GAC as security, the following property
and interests in property, whether now owned or hereafter acquired or existing,
and wherever located (collectively, the "Collateral"), which security interest
and lien is and shall be subordinate to the security interest and lien of SBCC
in the Collateral pursuant to the Intercreditor Agreement:
4.1 Accounts;
4.2 All present and future contract rights, general intangibles
(including, but not limited to, any and all rights to payments of cash held by
factors ("Factors"), tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action and other
claims), chattel paper, documents, instruments, letters of credit, bankers'
acceptances and guaranties;
4.3 All present and future monies, securities, credit balances,
deposits and deposit accounts and other property of Debtor now or hereafter
held or received by or in transit to Secured Party or its affiliates or at any
other depository or other institution from or for the account of Debtor,
whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other
collateral, including, without limitation, rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, rights of stoppage in transmit,
replevin, repossession, reclamation and other rights and remedies of an unpaid
vendor, lienor or secured party, finished goods inventory described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Accounts or other collateral, including, without
limitation, returned,
3
<PAGE> 4
repossessed and reclaimed finished goods inventory, and deposits by and
property of account debtors or other persons securing the obligations of
account debtors;
4.4 Inventory;
4.5 Equipment;
4.6 Records;
4.7 All parts, accessories, attachments, special tools, additions,
replacements, substitutions and accessions to or for any or all of the
foregoing; and
4.8 All products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
Notwithstanding anything to the contrary contained in Sections 4.5 and
4.7 above, the types or items of Collateral described in such Sections shall
not include any such types or items of Collateral which are, on the date of the
execution of this Agreement, subject to a lien or security interest itemized in
the Loan Agreement if: (a) the valid grant of a security interest or lien to
Secured Party in such items of Collateral is prohibited by the terms of the
agreement between Debtor and the holder of such lien or security interest and
(b) any obligations are owing by Debtor to the holder of such lien or security
interest.
5. Default and Remedies. Subject to the terms of the
Intercreditor Agreement, upon the failure of Solo Serve to comply with any of
its obligations hereunder as and when due or upon the occurrence of an Event of
Default under the Loan Agreement, GAC shall be entitled to exercise all the
rights and remedies of a secured party under the Uniform Commercial Code of the
State of Texas.
6. Term. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until the earlier of: (a)
the expiration of the GAC L/C's by their own terms or (b) 120 days after the
termination of the Loan Agreement, provided, however the payment obligations of
Solo Serve and the liens and security interests granted herein shall remain in
full force and effect until the Obligations are irrevocably and indefeasibly
paid in full.
7. Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Secured Party at its address set forth below and to
Debtor at its chief executive office set forth below, or to such other address
as either party may designate by written notice to the other in accordance with
this provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver
the next business day, one (1) business day after sending; and if by certified
mail, return receipt requested, five (5) days after mailing.
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<PAGE> 5
8. Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
9. Successors. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Secured Party, Debtor and their respective
successors and assigns, except that Debtor may not assign its rights under this
Agreement or any other document referred to herein without the prior written
consent of Secured Party.
10. Entire Agreement. This Agreement and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represent the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersedes all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written.
11. Nonapplicability of Article 5069-15.01 et. seq. Debtor and
Secured Party hereby agree that, except for Section 15.10(b) thereof, the
provisions of Tex. Rev. Civ. Stat. Ann. art. 5069-15.01 et seq.(Vernon 1987)
(regulating certain revolving credit loans and revolving tri-party accounts)
shall not apply to this Agreement.
12. Governing Law; Choice of Forum; Service of Process; Jury Trail
Waiver. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND ANY
DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO, WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW).
13. Subordination. THE RIGHTS OF GAC HEREUNDER ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THE INTERCREDITOR AGREEMENT, AND ARE SUBORDINATE IN
RIGHT OF PAYMENT TO THE PAYMENT OF THE SENIOR DEBT (AS DEFINED IN THE
INTERCREDITOR AGREEMENT).
EXECUTED the date and year first above written.
SOLO SERVE CORPORATION
By:
-------------------------------
Charles M. Siegel
Its: President and Chief Executive
Officer
5
<PAGE> 6
Chief Executive Office:
1610 Cornerway Blvd.
San Antonio, Texas 78219
Office: (210) 662-6262 ext. 303
Fax: (210) 662-0938
with a copy to:
Ward T. Blacklock, Jr., Esq.
Cox & Smith Incorporated
112 E. Pecan St., Suite 1800
San Antonio, Texas 78205-1521
Counsel for Solo Serve
Office: 210-554-5235
Fax: 210-226-8395
GENERAL ATLANTIC CORPORATION
By:
-------------------------------
Julie Lefkowitz
Its: Vice President
Attn: Ms. Julie Lefkowitz
950 Third Avenue, 26th Floor
New York, N.Y. 10022
Office: 212-838-7100 ext.225
Fax: 212-826-3813
with a copy to:
Chris Oechsli, Esq.
Gerard Atkins & Co. Ltd.
17 Savile Row
London, WIXIAE, England
General Counsel
for General Atlantic
Office: 011-44171-434-3737
Fax: 011-44-171-434-3738
6
<PAGE> 1
EXHIBIT 10.3
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT ("Agreement) made and entered into as of
March 17, 1998 by and among General Atlantic Corporation, a Delaware
corporation, Charles M. Siegel, Ross E. Bacon, Terry Lalosh and Mark J.
Blankenship (together, the "Principal Stockholders"), each a principal
stockholder of Solo Serve Corporation (the "Company").
W I T N E S S E T H:
WHEREAS, each of the Principal Stockholders owns and holds shares of
the common stock, par value $.01 per share (the "Common Stock") or the preferred
stock, par value $.01 per share (the "Preferred Stock"), of the Company;
WHEREAS, the Principal Stockholders desire to limit their ability to
transfer shares of Common Stock and Preferred Stock of the Company as set forth
herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and sufficiency of all of which are hereby
acknowledged, the parties hereto agree as follows:
1. A copy of this Agreement and of every amendment or supplement hereto
shall be filed in the principal office of the Company in San Antonio, Texas, and
shall be open to inspection by any holder of capital stock of the Company (as
hereinafter defined), in person or by agent or attorney, daily during business
hours, to the same extent as such holder would be entitled to examine the books
and records of the Company, under the provisions of the Delaware General
Corporation Law or other applicable law.
2. For the purposes of this Agreement, the term "capital stock" shall
mean the Company's common stock and the preferred stock, if any, of the Company
of every class and series. The term "Shares" shall mean all shares of capital
stock of the Company owned and/or held by the Principal Stockholders, including
those issued in connection with any stock split, stock dividend or other
recapitalization of the Company or in connection with the exercise of stock
options, as well as any additional shares of the capital stock of the Company
hereafter acquired by the Principal Stockholders.
3. During the term of this Agreement, (i) no Principal Stockholder
shall sell, exchange, transfer or otherwise dispose of shares of Common Stock or
Preferred Stock owned by any such shareholder, whether for cash or other
consideration or by gift, without the prior written consent of all other
Principal Stockholders; and (ii) no Principal Stockholder who has or hereafter
is granted incentive stock options or other rights to acquire capital stock of
the Company shall exercise any such options or otherwise
<PAGE> 2
acquire any shares of capital stock without the prior written consent of all
other Principal Stockholders.
4. Pursuant to Section 202 of the Delaware General Corporation Law, the
restrictions on transfer set forth herein shall be noted conspicuously on the
certificates representing shares of capital stock owned by the Principal
Stockholders, with each of such certificates to bear the following restrictive
legend:
The shares represented by this certificate may not be sold, exchanged,
transferred or disposed of, whether for cash or other consideration or
by gift, without the prior written consent of all other Principal
Stockholders, as defined in that certain Stockholder Agreement dated
March __, 1998, between and among General Atlantic Corporation, a
Delaware corporation, Charles M. Siegel, Ross E. Bacon, Terry Lalosh
and Mark J. Blankenship. A copy of the referenced Stockholder Agreement
is on file at the principal office of Solo Serve Corporation (the
"Company") in San Antonio, Texas and is available for inspection by any
holder of capital stock of the Company to the same extent as any such
holder would be entitled to examine the books and records of the
Company under the provisions of the Delaware General Corporation Law.
If and to the extent additional shares of capital stock are issued to
any of the Principal Stockholders during the term of this Agreement, the
certificates evidencing such shares shall be legended as set forth above.
5. The term of this Agreement shall commence as of the date hereof and
shall terminate on March 15, 2001, unless terminated earlier or extended by
agreement of all parties. Upon termination of this Agreement, the restrictions
set forth in paragraph 3 hereof shall lapse and be of no further force and
effect, and the restrictive legend set forth in paragraph 4 hereof may be
removed from certificates representing capital stock owned by the Principal
Stockholders.
6. In the event that a notice or other document is required to be sent
hereunder, such notice or other document shall be sent by registered or
certified mail, return receipt requested, to the party entitled to receive such
notice or other document at the address reflected below or at such other address
as such party shall request in a written notice sent to the other party:
If to the Company: Chief Executive Officer
Solo Serve Corporation
1610 Cornerway Blvd.
San Antonio, TX 78219
2
<PAGE> 3
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, TX 78205
Attention: James B. Smith, Jr.
Charles M. Siegel
1403 Fortune Hill
San Antonio, Texas 78258
If to a Principal Ross E. Bacon
Stockholder: 2279 Encino Loop
San Antonio, Texas 78259
Terry Lalosh
105 Ponca Bend
San Antonio, Texas 78231
Mark J. Blankenship
733 Patterson Ave.
San Antonio, Texas 78209
with a copy to: Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, Suite 600
San Antonio, Texas 78205
Attn: J. David Oppenheimer
General Atlantic Corporation
950 Third Avenue, 26th Floor
New York, New York 10022
Attention: Julie S. Lefkowitz
Any party may change the address as to which a notice or other document
is sent to such party by giving all other parties hereto notice thereof in
accordance with this Section 5.
7. This Agreement shall be binding upon and inure to the benefit of the
respective heirs, executors, administrators, legal representatives, successors,
assigns and affiliates of each of the parties hereto. This Agreement and the
rights and obligations evidenced hereby may not be transferred, assigned,
pledged or hypothecated by any party hereto.
8. This Agreement shall be construed and enforced in accordance with
the laws of the State of Texas. The parties hereto acknowledge that any breach
or threatened breach of any provision of this Agreement will cause irreparable
injury for which there is no adequate remedy at law, and each party agrees that
each of the other
3
<PAGE> 4
parties hereto shall be entitled to specific performance and injunctive and
other equitable relief in case of any such breach or attempted breach.
9. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same instrument.
10. This Agreement embodies the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof, and except
as expressly set forth herein, the rights of the Principal Stockholders incident
to ownership of capital stock of the Company shall not be restricted hereby.
This Agreement may be altered, modified or amended, in whole or in part, at any
time only by an instrument in writing signed by each of the parties hereto.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and duly delivered the same or caused the same to be duly delivered on
their behalf as of the date first above written.
--------------------------------
Charles M. Siegel
--------------------------------
Ross E. Bacon
--------------------------------
Terry Lalosh
--------------------------------
Mark J. Blankenship
GENERAL ATLANTIC CORPORATION
By:
-----------------------------
Julie S. Lefkowitz
5
<PAGE> 1
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 ROSS E. BACON ("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.
<PAGE> 2
"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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<PAGE> 3
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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<PAGE> 4
(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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<PAGE> 5
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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<PAGE> 6
(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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<PAGE> 7
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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<PAGE> 8
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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<PAGE> 9
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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<PAGE> 10
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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<PAGE> 11
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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<PAGE> 12
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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<PAGE> 14
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
1610 Cornerway Blvd.
San Antonio, TX 78219
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, TX 78205
Attention: Ms. Donna K. McElroy
If to Employee: Ross E. Bacon
2279 Encino Loop
San Antonio, Texas 78259
with a copy to: Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, Suite 600
San Antonio, Texas 78205
Attn: J. David Oppenheimer
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
------------------------------
ROSS E. BACON
THE COMPANY
SOLO SERVE CORPORATION
By:
---------------------------
CHARLES M. SIEGEL
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<PAGE> 1
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 MARK J. BLANKENSHIP ("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.
<PAGE> 2
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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<PAGE> 3
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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<PAGE> 4
(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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<PAGE> 5
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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<PAGE> 6
(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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<PAGE> 7
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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<PAGE> 8
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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<PAGE> 9
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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<PAGE> 10
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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<PAGE> 12
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
1610 Cornerway Blvd.
San Antonio, TX 78219
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, TX 78205
Attention: Ms. Donna K. McElroy
If to Employee: Mark J. Blankenship
733 Patterson Ave.
San Antonio, Texas 78209
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with a copy to: Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, Suite 600
San Antonio, Texas 78205
Attn: J. David Oppenheimer
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
------------------------------
MARK J. BLANKENSHIP
THE COMPANY
SOLO SERVE CORPORATION
By:
---------------------------
CHARLES M. SIEGEL
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<PAGE> 1
EXHIBIT 10.6
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 TERRY LALOSH ("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.
<PAGE> 2
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 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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<PAGE> 3
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/General Merchandise Manager 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/General Merchandise Manager, Employee shall report directly
to the President and Chief Executive Officer of the Company.
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<PAGE> 4
(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 Senior Vice President/General Merchandise Manager 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:
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<PAGE> 5
(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
(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
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<PAGE> 6
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 Company shall have no further obligations to
the Employee, except with respect to his vested and exercisable options
and ERISA benefits.
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<PAGE> 7
(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 the legal right of
Employee to enter into this Agreement or to perform the functions
7
<PAGE> 8
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 materials containing Confidential
Information which are in the Employee's possession,
8
<PAGE> 9
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 consent
of the Company, directly or indirectly, whether as a director, officer,
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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.
13. Remedies for Breach of Confidentiality and Competitive Activities.
If Employee breaches, or threatens to breach, any of the provisions of Section
12 hereof,
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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 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,
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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
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
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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 the extent
the non-compete provisions of this Agreement are held to be invalid or in any
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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
1610 Cornerway Blvd.
San Antonio, TX 78219
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, TX 78205
Attention: Ms. Donna K. McElroy
If to Employee: Terry Lalosh
105 Ponca Bend
San Antonio, Texas 78231
with a copy to: Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, Suite 600
San Antonio, Texas 78205
Attn: J. David Oppenheimer
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.
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IN WITNESS WHEREOF, the Employee and the Company have executed this
Agreement effective on the___ day of March, 1998.
THE EMPLOYEE
-----------------------------
TERRY LALOSH
THE COMPANY
SOLO SERVE CORPORATION
By:
--------------------------
CHARLES M. SIEGEL
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