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EXHIBIT 10.32
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT
SOLO SERVE CORPORATION
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March 31, 1997
Congress Financial Corporation (Southwest)
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Gentlemen:
Congress Financial Corporation (Southwest) ("Lender") and Solo Serve
Corporation ("Borrower") have entered into certain financing arrangements
pursuant to the Loan and Security Agreement, dated June 20, 1995, between
Lender and Borrower, as amended by Amendment No. 1 to Loan and Security
Agreement, dated October 27, 1995, Amendment No. 2 to Loan and Security
Agreement, dated January 31, 1996, Amendment No. 3 to Loan and Security
Agreement, dated June 26, 1996 and Amendment No. 4 to Loan and Security
Agreement, dated September 16, 1996 (and as amended hereby and as the same may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement", together with all agreements, documents and
instruments at any time executed and/or delivered in connection therewith or
related thereto, collectively, the "Financing Agreements").
Borrower has requested that Lender agree to certain amendments to the
Loan Agreement, and Lender is willing to agree to such amendments, subject to
the terms and conditions contained herein. By this Amendment, Lender and
Borrower desire and intend to evidence such amendments.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definition. As used herein, the following term shall
mean, and the Loan Agreement is hereby amended to include, in addition and not
in limitation, the following:
"Net Recovery Cost Percentage" shall mean the fraction,
expressed as a percentage, (a) the numerator of which is the amount equal to
the recovery on the aggregate amount of Inventory at such time on a "going out
of business" basis as set forth in the most recent
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acceptable appraisal of Inventory received by Lender in accordance with Section
7.3, net of operating expenses, liquidation expenses and commissions, and (b)
the denominator of which is the original Value of the aggregate amount of the
Inventory subject to such appraisal."
(b) Interpretation. All capitalized terms used herein shall have
the meanings assigned thereto in the Loan Agreement, unless otherwise defined
herein.
2. Loans. Section 2.1(a) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"(a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount equal to:
(i) the least of the following: (A) for the period from and
including March 1 through and including May 15 and for the period from and
including September 1 through and including November 30 of each year, sixty
percent (60%) of the Value of Eligible Inventory and, at all other times,
fifty-five percent (55%) of the Value of Eligible Inventory; or (B) the amount
equal to (1) the percentage equal to eighty (80%) percent of the Net Recovery
Cost Percentage, multiplied by (2) the Value of Eligible Inventory; or (C) the
Maximum Credit; less
(ii) the sum of: (A) for the period from and including March 1
through and including May 15 and for the period from and including September 1
through and including November 30 of each year, forty percent (40%) of the then
undrawn amounts of Letter of Credit Accommodations issued for the purpose of
purchasing Eligible Inventory and, at all other times, forty-five percent (45%)
of the then undrawn amounts of Letter of Credit Accommodations issued for the
purpose of purchasing Eligible Inventory, plus (B) one hundred percent (100%)
of the face amount of the outstanding Letter of Credit Accommodations issued
for any purpose other than as set forth in Section 2.1(a)(ii)(A) above; less
(iii) the amount equal to all Obligations outstanding at any
time and from time to time (other than Obligations otherwise set forth in
Section 2.1(a)(ii) hereof); less
(iv) any Availability Reserves."
3. Letter of Credit Accommodations. Section 2.2(c) of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit Accommodations,
the Revolving Loans available to Borrower (subject to the Maximum Credit, any
Availability Reserves and any other limitations imposed by Section 2.1 hereof)
are equal to or greater than: (i) if the proposed Letter of Credit
Accommodation is for the purpose of purchasing Eligible Inventory, the sum of,
for the period from and including March 1 through and including May 15 and for
the period from and including
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September 1 through and including November 30 of each year, forty percent (40%)
and, at all other times, forty-five percent (45%) of the sum of (1) the cost of
such Eligible Inventory plus (2) freight, taxes, duty and other amounts which
Lender estimates must be paid in connection with such Inventory upon arrival
and for delivery to one of Borrower's locations for Eligible Inventory within
the United States of America, and (ii) if the proposed Letter of Credit
Accommodation is for any other purpose, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to Borrower shall be reduced by the applicable amount
set forth in Section 2.2(c)(i) or Section 2.2(c)(ii)."
4. Adjusted Net Worth. Section 9.15 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"9.15 Adjusted Net Worth. Borrower shall at all times maintain
Adjusted Net Worth of not less than $3,750,000."
5. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower to Lender pursuant to the Financing Agreements, Borrower
hereby represents, warrants and covenants with and to Lender as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists on the date of this Amendment (after
giving effect to the amendment to the Loan Agreement made by this Amendment).
(b) This Amendment has been duly executed and delivered by Borrower
and is in full force and effect as of the date hereof, and the agreements and
obligations of Borrower contained herein constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms.
6. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of the following conditions
precedent in a manner satisfactory to Lender and its counsel:
(a) the receipt by Lender of an original of this Amendment, duly
authorized, executed and delivered by Borrower;
(b) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be existing and continuing which,
with notice or passage of time or both, would constitute an Event of Default;
7. Facility Fee. Borrower shall pay to Lender, in addition to all
other amounts payable under the Financing Agreements, an annual facility fee in
an amount equal to $10,000
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while the Loan Agreement is in effect and for so long thereafter as any
Obligations are outstanding, which fee shall be fully earned as of and payable
in advance commencing with the date hereof and, thereafter, on March 1 of each
year. When so earned and payable, such facility fee shall constitute part of
the Obligations and may, at Lender's option, be charged directly to any
account(s) of the Borrower maintained with Lender.
8. Effect of this Amendment. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control. The Loan Agreement and this Amendment shall be read and construed as
one agreement.
9. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary
or desirable to effectuate the provisions and purposes of this Amendment.
10. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in
accordance with the laws of the State of Texas (without giving effect to
principles of conflicts of law).
11. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
12. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Lender, shall
become a binding agreement between Borrower and Lender.
Very truly yours,
SOLO SERVE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Chief Operating Officer and
Chief Financial Officer
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AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Senior Vice President
Acknowledged and Consented to (and also acknowledging and consenting to
Amendment No. 4 to Loan and Security Agreement, dated September 16, 1996):
GENERAL ATLANTIC CORPORATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Vice President
