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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 ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇, 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.
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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;
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(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,
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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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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. ▇▇▇. art. 5069-15.01 et seq.(▇▇▇▇▇▇ 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:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President and Chief Executive
Officer
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Chief Executive Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Office: (210) 662-6262 ext. 303
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Counsel for Solo Serve
Office: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
GENERAL ATLANTIC CORPORATION
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Vice President
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Office: 212-838-7100 ext.225
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Ltd.
▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
General Counsel
for General Atlantic
Office: 011-44171-434-3737
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
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