UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. 2)*
Solo Serve Corporation
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(Name of Issuer)
Common Stock, par value $.01
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(Title of Class of Securities)
834263-20-4
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(CUSIP Number)
Julie Lefkowitz, c/o General Atlantic Corporation,
950 Third Avenue, 26th Floor, New York, NY 10022
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 17, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 834263-20-4
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Corporation
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a) |_| (b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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| 7 SOLE VOTING POWER
| 679,203
NUMBER OF |-----------------------------------------------------------
SHARES | 8 SHARED VOTING POWER
BENEFICIALLY | 0
OWNED BY |-----------------------------------------------------------
EACH | 9 SOLE DISPOSITIVE POWER
REPORTING | 679,203
PERSON |-----------------------------------------------------------
WITH | 10 SHARED DISPOSITIVE POWER
| 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
679,203
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.0%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Atlantic Foundation
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a) |_| (b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
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| 7 SOLE VOTING POWER
| 679,203
NUMBER OF |-----------------------------------------------------------
SHARES | 8 SHARED VOTING POWER
BENEFICIALLY | 0
OWNED BY |-----------------------------------------------------------
EACH | 9 SOLE DISPOSITIVE POWER
REPORTING | 679,203
PERSON |-----------------------------------------------------------
WITH | 10 SHARED DISPOSITIVE POWER
| 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
679,203
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.0%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
AMENDMENT NO. 2 AND RESTATEMENT OF SCHEDULE 13D
This Amendment No. 2 and Restatement of Schedule 13D filed by General
Atlantic Corporation ("GAC") amends Items 3, 4, 5, 6 and 7.
Item 1. Security and Issuer.
Common Stock, par value $.01 per share ("Shares"), of Solo Serve
Corporation ("Solo Serve"), 1610 Cornerway Boulevard, San Antonio, Texas
78219-2900.
Item 2. Identity and Background.
The "Reporting Persons" are: (1) GAC, a Delaware corporation, 950 Third
Avenue, New York, New York 10022 and (2) The Atlantic Foundation, a Bermuda
not-for-profit foundation ("Atlantic"), P.O. Box HM 666, Clarendon House, Church
Street, Hamilton HM CX, Bermuda.
The directors and officers of GAC, the address for each of whom is c/o
General Atlantic Corporation, 950 Third Avenue, New York, New York 10022, are:
Christopher G. Oechsli, President and Director; Julie S. Lefkowitz,
Vice-President, Secretary and Director; and David I. Walsh, Vice-President and
Treasurer and Director.
None of the Reporting Persons and none of the above individuals has been a
defendant in (i) any criminal proceeding or (ii) any civil proceeding which has
resulted in any judgment, decree or final order finding any violation of federal
or state securities laws or enjoining future violations of, or prohibiting or
mandating activities subject to, such laws.
GAC is a wholly-owned subsidiary of Genant Securities N.V., a Netherlands
Antilles corporation. The address of Genant Securities N.V. is c/o Holland
Intertrust N.V., De Ruyter Kade 58A, Netherlands Antilles. Genant Securities
N.V. is a wholly-owned subsidiary of General Atlantic Investments Limited, a
Bermuda corporation. The address of General Atlantic Investments Limited is
Washington Mall II, Church Street, Hamilton 5, Bermuda. General Atlantic
Investments Limited is a wholly-owned subsidiary of General Atlantic Group
Limited. The address of General Atlantic Group Limited is Washington Mall II,
Church Street, Hamilton 5, Bermuda. General Atlantic Group Limited is a
wholly-owned subsidiary of Exeter Associates Limited, a Bermuda corporation. The
address of Exeter Associates Limited is P.O. Box HM 666, Clarendon House, Church
Street, Hamilton HM CX, Bermuda. Exeter Associates Limited is a wholly-owned
subsidiary of Atlantic.
Item 3. Source and Amount of Funds or Other Consideration.
All Shares or Preferred Stock beneficially owned by the Reporting Persons
were acquired with general corporate funds.
Item 4. Purpose of Transaction
On July 6, 1995, the United States Bankruptcy Court for the Western
District of Texas, San Antonio Division, Judge Ronald B. King, presiding,
entered an order confirming the First Amended Plan of Reorganization of Solo
Serve Corporation dated May 17, 1995 as further modified by the Non-material
Modifications to the First Amended Chapter 11 Plan of Solo Serve Corporation
(the "Plan"). The Effective Date of the Plan was July 18, 1995.
Under the terms of the Plan, Solo Serve issued 1,388,889 shares of
Preferred Stock to GAC in consideration of an aggregate purchase price of
$2,500,000 on July 18, 1995. The Preferred Stock is convertible into an equal
number of Shares, votes with the Shares on a share-for-share basis, and was not
subject to reduction by the two-for-one reverse split effected in connection
with the Plan.
As of July 18, 1995, there were 5,712,252 Shares issued and outstanding
before effecting the two-for-one reverse split. On July 18, 1995, Solo Serve
amended its Certificate of Incorporation to provide for the two-for-one reverse
split of Shares and to designate the Preferred Stock. After the reverse split,
GAC held 1,255,000 Shares and 1,388,889 shares of Preferred Stock.
On October 2, 1997, GAC sold 1,255,000 Shares to Charles M. Siegel
("Siegel") pursuant to a Stock Purchase Agreement, dated as of September 26,
1997, for a purchase price of $125,500. A copy of such Stock Purchase Agreement
is attached to this Schedule 13D as Exhibit 3 and incorporated herein by
reference. Such purchase price was paid by a promissory note from Siegel to GAC
payable in five equal annual installments with interest at the fixed rate of 7%.
On March 17, 1998, GAC sold 236,562 shares of Preferred Stock to each of
Ross E. Bacon ("Bacon"), Mark J. Blankenship ("Blankenship") and Terry Lalosh
("Lalosh" and, collectively with Bacon and Blankenship, the "Purchasers")
pursuant to a Stock Purchase Agreement, dated as of March 17, 1998, for a
purchase price of $0.10 per share. A copy of such Stock Purchase Agreement is
attached to this Schedule 13D as Exhibit 3 and incorporated herein in its
entirety by reference. Each of the Purchasers purchased the shares from GAC in
exchange for a Non-Recourse Promissory Note payable to GAC in the principal
amount of $23,656.20 (each a "Note" and, together the "Notes"), copies of which
are attached to this Schedule 13D as Exhibits 4, 5 and 6 and incorporated herein
by reference. The Notes provide for five equal annual installments of principal
to be paid commencing on March 17, 1999, together with interest on outstanding
principal at a fixed rate of 7%. In the event that a Purchaser defaults on
payments under his Note, GAC will be limited in its ability to recover the
unpaid amounts due under such Note by the terms and conditions of the Note and a
Security Agreement - Pledge executed by each such Purchaser and GAC. Copies of
each such Security Agreement - Pledge are attached to this Schedule 13D as
Exhibits 7, 8 and 9, respectively, and incorporated herein in their entirety by
reference. The aggregate of 709,686 shares of Preferred Stock was converted into
an equal number of Shares in connection with the sale of such Preferred Stock.
In connection with the sale by GAC of Preferred Stock to the Purchasers,
GAC, Siegel and the Purchasers entered into a Stockholders Agreement, dated
March 17, 1998 (the "Stockholders Agreement"), a copy of which is attached to
this Schedule 13D as Exhibit 10 and incorporated herein in its entirety by
reference. The Stockholders Agreement provides that no party thereto will sell,
exchange, transfer or otherwise dispose of Shares 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.
Except as set forth in this Item 4, GAC has no plan, proposal, or intention
which related to or would have resulted in any action with respect to the
matters listed in paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) GAC and Atlantic are the beneficial owners of 679,203 shares of
Preferred Stock convertible into an equal number of Shares, or 16.0% of the
outstanding Shares on an "as converted" basis.
(b) GAC and Atlantic have sole voting and dispositive power with respect to
679,203 Shares, or 16.0% of the outstanding Shares on an "as converted" basis.
(c) Except as described in Item 4 above, there have been no transactions in
the Shares that were effected in the past sixty days by GAC or Atlantic.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
For information regarding such contracts, arrangements, understandings
or relationships, see Item 4 above.
Item 7. Material to Be Filed as Exhibits
Exhibit 1 Joint Filing Agreement, dated as of February 14, 1994, between
General Atlantic Corporation and The Atlantic Foundation
(incorporated by reference to Exhibit 1 to Schedule 13G dated
February 14, 1994 of General Atlantic Corporation and The Atlantic
Foundation).
Exhibit 2 Stock Purchase Agreement, dated as of September 26, 1997, between
Charles M. Siegel and General Atlantic Corporation (incorporated by
reference to Exhibit 2 to Amendment No. 1 and Restatement of
Schedule 13D dated October 2, 1997 of General Atlantic Corporation
and The Atlantic Foundation).
Exhibit 3 Stock Purchase Agreement, dated as of March 17, 1998, between Ross
E. Bacon, Mark J. Blankenship and Terry Lalosh, as buyers, and
General Atlantic Corporation, as seller.
Exhibit 4 Non-Recourse Promissory Note, dated March 17, 1998, executed by Ross
E. Bacon and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 5 Non-Recourse Promissory Note, dated March 17, 1998, executed by
Terry Lalosh and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 6 Non-Recourse Promissory Note, dated March 17, 1998, executed by Mark
J. Blankenship and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 7 Security Agreement - Pledge, dated March 17, 1998, by and between
Ross E. Bacon and General Atlantic Corporation.
Exhibit 8 Security Agreement - Pledge, dated March 17, 1998, by and between
Terry Lalosh and General Atlantic Corporation.
Exhibit 9 Security Agreement - Pledge, dated March 17, 1998, by and between
Mark J. Blankenship and General Atlantic Corporation.
Exhibit 10 Stockholders Agreement, dated March 17, 1998, by and among General
Atlantic Corporation, Charles M. Siegel, Ross E. Bacon, Terry Lalosh
and Mark J. Blankenship.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 7, 1998
General Atlantic Corporation*
By: /s/ Julie Lefkowitz
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Julie Lefkowitz
Vice President and Secretary
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* Pursuant to Joint Filing Agreement between General Atlantic Corporation and
The Atlantic Foundation dated as of February 14, 1994, this filing also
constitutes a filing by The Atlantic Foundation.
<PAGE>
SCHEDULE 13D
Index to Exhibits
Exhibit 1 Joint Filing Agreement, dated as of February 14, 1994, between
General Atlantic Corporation and The Atlantic Foundation
(incorporated by reference to Exhibit 1 to Schedule 13G dated
February 14, 1994 of General Atlantic Corporation and The Atlantic
Foundation).
Exhibit 2 Stock Purchase Agreement, dated as of September 26, 1997, between
Charles M. Siegel and General Atlantic Corporation (incorporated by
reference to Exhibit 2 to Amendment No. 1 and Restatement of
Schedule 13D dated October 2, 1997 of General Atlantic Corporation
and The Atlantic Foundation).
Exhibit 3 Stock Purchase Agreement, dated as of March 17, 1998, between Ross
E. Bacon, Mark J. Blankenship and Terry Lalosh, as buyers, and
General Atlantic Corporation, as seller.
Exhibit 4 Non-Recourse Promissory Note, dated March 17, 1998, executed by Ross
E. Bacon and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 5 Non-Recourse Promissory Note, dated March 17, 1998, executed by
Terry Lalosh and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 6 Non-Recourse Promissory Note, dated March 17, 1998, executed by Mark
J. Blankenship and payable to General Atlantic Corporation in the
principal amount of $23,656.20.
Exhibit 7 Security Agreement - Pledge, dated March 17, 1998, by and between
Ross E. Bacon and General Atlantic Corporation.
Exhibit 8 Security Agreement - Pledge, dated March 17, 1998, by and between
Terry Lalosh and General Atlantic Corporation.
Exhibit 9 Security Agreement - Pledge, dated March 17, 1998, by and between
Mark J. Blankenship and General Atlantic Corporation.
Exhibit 10 Stockholders Agreement, dated March 17, 1998, by and among General
Atlantic Corporation, Charles M. Siegel, Ross E. Bacon, Terry Lalosh
and Mark J. Blankenship.
<PAGE>
EXHIBIT 3
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of the 17th day
of March, 1998, between Ross E. Bacon ("Bacon"), Mark J. Blankenship
("Blankenship") and Terry Lalosh ("Lalosh") (Bacon, Blankenship and Lalosh are
referred to collectively herein as the "Buyers") and General Atlantic
Corporation, a Delaware corporation (the "Seller").
WHEREAS, the Seller owns beneficially and of record 709,686 shares (the
"Shares") of the issued and outstanding shares of Preferred Stock, par value
$.01 per share, of Solo Serve Corporation, a Delaware corporation ("Solo
Serve"), having its principal office at 1610 Cornerway Boulevard, San Antonio TX
78219; and
WHEREAS, subject to the terms and conditions set forth herein, Buyers
desire to purchase from the Seller, and the Seller desires to sell to each of
the Buyers, 236,562 Shares; and
WHEREAS, as a condition to Closing, the Shares are to be converted to
Common Stock of Solo Serve, either prior to the Closing or immediately after the
Closing; and
WHEREAS, for purposes of this Agreement, the term Shares shall mean either
709,686 shares of Preferred Stock of Solo Serve or 709,686 shares of Common
Stock of Solo Serve, depending on when the conversion to Common Stock of Solo
Serve is effective;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties and conditions contained in this Agreement, the
parties hereto hereby agree as follows:
1. DEFINITIONS
1.1.Certain Defined Terms. Unless the context otherwise requires, as used
in this Agreement, the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" with respect to any Person, means any other Person directly or
indirectly Controlling, Controlled by or under common Control with such Person.
"Applicable Law" means all applicable laws, statutes, regulations and
orders of any governmental authority or regulatory body and judgments, decrees,
injunctions, writs, orders, or like action of any court, arbitrator or other
judicial tribunal of competent jurisdiction with respect thereto.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banks in the State of New York are required or authorized by
law to close.
"Contract" means, with respect to a Person, any contract, agreement, lease,
indenture, deed of trust, mortgage, license, note, instrument, guarantee or
obligation to which such Person is a party or by which such Person or its
property is bound or affected.
"Control" whether used as a noun or verb, refers to the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Person" means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other entity.
2. CONSIDERATION FOR PURCHASE AND SALE OF SHARES; TRANSFER OF SHARES
2.1.Consideration for Shares. Subject to the terms and conditions set forth
in this Agreement, at the Closing the Seller agrees to sell, assign, transfer,
convey and deliver to each of the Buyers, and each of the Buyers agree to
purchase, acquire and accept delivery from Seller of, 236,562 Shares for the
Purchase Price. The Purchase Price payable by each Buyer shall be $0.10 a share,
payable by delivery of a Non-Recourse Promissory Note (the "Notes") in the form
of Exhibit A. Each Note provided by Buyer shall be secured by a pledge of the
Shares being purchased by such Buyer pursuant to a Security Agreement Pledge
(the "Security Agreements") in the form of Exhibit B.
2.2.Transfer of Shares. On the Closing Date, the Seller shall sell, assign,
transfer, convey and deliver to each of the Buyers 236,562 Shares, together with
appropriate stock powers and other transfer documents signed in blank.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
The parties hereto recognize that Buyers were responsible for the
management of the business of Solo Serve prior to the date hereof and are
expected to continue in such capacity subsequent to the Closing Date.
Consequently, the Seller has relied, in part, upon information supplied by
Buyers regarding the business and affairs of Solo Serve and is selling the
Shares "as is" without representations or warranties regarding the business or
affairs of Solo Serve and only with the following representations and
warranties:
3.1 Corporate Existence. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.2 Ownership of Stock. Seller is and as of the Closing will be the
registered holder and beneficial owner of all of the Shares. Seller has, and at
the Closing will have, good and marketable title to all of the Shares, free and
clear of any and all liens and encumbrances.
3.3.Due Authorization; No Restrictions. Seller has full corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to carry out the transactions contemplated hereunder. The execution,
delivery and performance of this Agreement by Seller will not conflict with,
result in a default, right to accelerate or loss of rights under, or require the
consent of any governmental authority or regulatory body or other Person under
any provision of the certificate of incorporation or by-laws of Seller, or (b)
any material Contract of Seller or any Applicable Law. This Agreement has been
duly authorized, executed and delivered by Seller and constitutes Seller's
legal, valid and binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the enforcement of
creditors' rights generally and except as enforceability may be subject to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
4. REPRESENTATIONS AND WARRANTIES OF BUYERS
Each of the Buyers hereby represents, covenants and warrants, as to
himself, as follows and acknowledges that Seller is relying upon such
representations, covenants and warranties in connection with the sale,
assignment and transfer to each Buyer of the Shares:
4.1. Due Authorization; No Breach. Each of the Buyers has full power and
authority to execute, deliver and perform his obligations under this Agreement
and to carry out the transactions contemplated hereunder. The execution,
delivery and performance of this Agreement, the Note, the Security Agreement and
the Collateral Pledge Agreement by each Buyer will not conflict with, result in
a default, right to accelerate or loss of rights under or require the consent of
any governmental authority or regulatory body or other Person pursuant to any
material Contract of the Buyer or Solo Serve or any Applicable Law. This
Agreement has been duly executed and delivered by Buyers and constitutes, and
the applicable Notes, the Security Agreements and the Collateral Pledge
Agreements when executed and delivered in accordance with this Agreement will
constitute, Buyers' legal, valid and binding obligations enforceable in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting the enforcement of creditors' rights generally and except as
enforceability may be subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
4.2. Investment Representation. Each of the Buyers is acquiring the number
of shares listed in Section 2.2 hereof for his own account and with no present
intention of dividing the same or otherwise making any distribution of the same.
Each of the Buyers will not make any sale, transfer or other disposition of any
of the Shares being purchased by such Buyer in violation of the Securities Act
of 1933, as amended, or applicable state securities laws.
4.3. No Material Litigation. No litigation or administration of or before
any court, tribunal or governmental body is presently pending, or, to the
knowledge of Buyers, threatened against Buyers or any of their properties which,
if adversely determined, would have a material adverse effect on the business,
assets or financial condition of the Buyers.
4.4. Purchase of Solo Serve Distribution Center. The Buyers are not aware
of any indication from the prospective purchaser of Solo Serve's distribution
center that such purchaser does not intend to close the purchase of the
distribution center according to the terms and conditions of the "Solo
Serve/Koontz/McCombs; Earnest Money Contract" dated January 14, 1998, as amended
by the "First Amendment to Earnest Money Contract Between Solo Serve
Corporation, as Seller, and Koontz/McCombs, L.L.C., as Buyer" dated March 13,
1998.
5. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF BUYERS AND SELLER
All statements contained herein or any certificate delivered pursuant to
this Agreement shall be deemed representations, warranties, covenants and
agreements made by Buyers or Seller, as the case may be. Each statement,
representation, warranty, covenant and agreement made or deemed made by Seller
shall remain in effect continuously to and including the Closing but shall not
survive the Closing except that the representations and warranties made by the
Seller in Section 3.2 shall survive for a period of five years after the Closing
Date. Each statement, representation, warranty, covenant and agreement made or
deemed made by Buyers shall remain in effect continuously to and including the
date one year after the date on which all indebtedness under the Notes shall
have been paid in full.
6. THE CLOSING
6.1. Time and Place. Subject to satisfaction or waiver of the conditions
set forth in Article 7 hereof, the transfer of beneficial ownership of and legal
title to the Shares by the Seller to the Buyers and transfer of the Purchase
Price by the Buyers to the Seller (the "Closing") shall occur at the offices of
Cox & Smith Incorporated, at __________ M. local time, on March ____, 1998, or
at such other place and time as may be mutually agreed in writing by the Seller
and the Buyers. The date on which the Closing takes place is referred to herein
as the "Closing Date."
6.2 Closing Actions. At the Closing the Seller shall deliver to each of the
Buyers certificates representing the number of Shares purchased by each Buyer
hereunder, endorsed or accompanied by stock powers executed in blank sufficient
to transfer good and marketable legal title in and beneficial ownership of the
Shares to Buyers or their designee against payment by Buyers of the Purchase
Price by delivery of the Notes and the Security Agreements. Seller shall pay any
documentary stamp tax or transfer tax due or payable by the Seller in connection
with the transfer of the Shares to Buyers or their designee. Immediately
following the Closing, the certificates representing the Shares shall be
delivered to the Seller to perfect the liens granted pursuant to the Collateral
Pledge Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller and Buyers to sell, assign, transfer, convey,
deliver and/or purchase the Shares and to consummate the transactions
contemplated hereunder is subject to the satisfaction of the conditions set
forth in this Article 7. Seller or Buyers, as applicable, may, however, waive
the fulfillment of any of these conditions, either before or after the Closing,
but any waiver, to be binding upon the affected party, must be by a writing duly
executed by it. Each of the Buyers and the Seller shall use his or its best
efforts to cause each condition set forth in this Article 7 to be fulfilled.
7.1. Conversion of Shares to Common Stock. The Shares have been converted
from Preferred Stock to Common Stock of Solo Serve prior to the Closing, or
contemporaneous with the Closing, the Seller provides evidence of delivery of
instructions to the transfer agent, Harris Trust and Savings Bank, directing
such transfer agent to convert the Shares to Common Stock of Solo Serve prior to
issuance of the new stock certificates to the Buyers.
7.2. Pledge of Certificates of Deposit. Pursuant to a Collateral Pledge
Agreement in the form attached hereto as Exhibit C, each of the Buyers pledges
to Seller a $100,000 certificate of deposit issued by Camino Real Bank, N.A. to
secure payment of losses owed by Seller to Sanwa Business Credit Corporation
("Sanwa") pursuant to letters of credit in favor of Sanwa. The Collateral Pledge
Agreement is to be executed and delivered to Seller at the Closing.
7.3. Extension of Credit Facility. Sanwa has amended its existing credit
facility with Solo Serve to create an additional borrowing base of $600,000
based on Seller's providing a letter of credit in favor of Sanwa in the amount
of $600,000 (the "Letter of Credit"). To support the Letter of Credit, Solo
Serve shall have pledged to Seller, in a form reasonably satisfactory to Seller,
additional security in an amount not less than the Letter of Credit. The
amendment to the existing Loan and Security Agreement dated for reference
purposes September 23, 1997 between Solo Serve and Sanwa shall include (i) a
waiver of the Minimum Net Worth and Interest Coverage Ratio covenants as of
January 31, 1998, (ii) elimination of any future Minimum Net Worth covenant, and
(iii) adjustment of the existing Interest Coverage Ratio for the six (6)
fiscal-month period ending on or about April 30, 1998, to 0.65 to 1.0, for the
nine (9) fiscal-month period ending on or about July 31, 1998 to 1.25 to 1.0 and
the four (4) fiscal-month quarter period ending on or about October 31, 1998,
1.0 to 1.0.
7.4. Pledge of Shares. Pursuant to a Security Agreement - Pledge in the
form attached hereto as Exhibit B, each of the Buyers shall pledge to Seller as
security for payment by the Buyer of his respective Note, the number of Shares
being purchased by such Buyer hereunder. The Security Agreements are to be
executed and delivered by each Buyer and the Seller at the Closing. Each Buyer
shall deliver to Seller at the Closing, a certificate representing the number of
Shares being purchased by such Buyer, together with appropriate stock powers
signed in blank.
7.5. Stockholders Agreement. The Stockholders Agreement, in the form of
Exhibit D, shall have been executed by the parties hereto.
8. MISCELLANEOUS
8.1. Notices. All notices, requests and other communications hereunder
shall be in writing and shall be delivered personally, telegraphed, telexed
(with appropriate answer back received), sent by facsimile transmission (with
immediate confirmation thereafter by telephone or otherwise), or sent by U.S.
registered, certified or express mail, postage prepaid, return receipt
requested, or sent by a nationally recognized overnight courier service, marked
for overnight delivery. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed (provided the correct answer back is received),
or sent by facsimile transmission (provided confirmation is received immediately
thereafter); or if sent by express mail or overnight courier, one Business Day
after the date of delivery to a U.S. Post Office or the courier service marked
for overnight delivery; or if so sent by registered or certified mail, seven
days after the date of deposit in the mails; in each case addressed as follows:
(a) If to Buyers, to:
Ross E. Bacon
1610 Cornerway Blvd.
San Antonio, TX 78219
Mark J. Blankenship
1610 Cornerway Blvd.
San Antonio, TX 78219
Terry Lalosh
1610 Cornerway Blvd.
San Antonio, TX 78219
with a copy to:
David Oppenheimer, Esq.
Oppenheimer, Blend, Harrison & Tate
711 Navarro, 6th Floor
San Antonio, TX 78205
(b) If to Seller, to:
General Atlantic Corporation
950 Third Avenue
New York, NY 10022
Attention: Christopher G. Oechsli
Facsimile No.: (212) 826-3813
with a copy to:
Christopher G. Oechsli
Gerard, Atkins & Co.
17 Savile Row
London W1X 1AE,
England
Facsimile No.: (44-171) 434-3738
or to such other address as the parties hereto may specify from time to time by
notice given as provided herein.
8.2. No Waiver. No modification hereof nor any waiver of any breach or
default hereunder shall be valid unless in writing and signed by the parties
making such modification or giving such waiver, and no such waiver shall be
deemed a waiver of any subsequent breach or default of the same or similar
nature.
8.3. Binding Effect. This Agreement shall be binding upon and inure to the,
benefit of each party hereto, and its successors and permitted assigns. This
Agreement shall not be transferred or assigned by either Buyer or Seller and any
attempted transfer or assignment shall be null and void.
8.4. Headings. The article and section headings contained herein are for
the purpose of convenience only and are not intended to define or limit the
contents of said articles or sections.
8.5. Merger. This Agreement cancels and supersedes all prior letters of
intent, memoranda of terms, and other documents of understanding heretofore
executed by or exchanged, circulated or discussed between the parties with
respect to the subject matter hereof.
8.6. GOVERNING LAW. THIS AGREEMENT AND ALL AMENDMENTS HEREOF SHALL, IN ALL
RESPECTS, BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW) OF THE STATE OF
TEXAS.
8.7. Expenses. Each party shall bear its own costs and expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
8.8. Brokers. None of the parties hereto nor any of their respective
Affiliates is obligated to pay, or has retained any broker or finder or any
other Person who is entitled to, any broker's or finder's fee or any other
commission or financial advisory fee based on any agreement or undertaking made
by or for the benefit of Seller or Buyers in connection with the sale of the
Shares and the consummation of the transactions contemplated herein. Each party
hereto agrees to indemnify, defend and hold the other party hereto harmless from
any claim or deemed from any Person for any and all such fees and commissions
through Seller or Buyers.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
------------------------------------
Ross E. Bacon
------------------------------------
Mark J. Blankenship
------------------------------------
Terry Lalosh
GENERAL ATLANTIC CORPORATION
By:_________________________________
Name:
Title:
<PAGE>
Exhibit A
to Stock Purchase Agreement
[See Exhibits 4-6 to this Statement
on Schedule 13D.]
<PAGE>
Exhibit B
to Stock Purchase Agreement
[See Exhibits 7-9 to this Statement
on Schedule 13D.]
<PAGE>
Exhibit C
to Stock Purchase Agreement
[Intentionally Omitted.]
<PAGE>
Exhibit D
to Stock Purchase Agreement
[See Exhibit 10 to this Statement on Schedule 13D.]
<PAGE>
EXHIBIT 4
NON-RECOURSE PROMISSORY NOTE
$23,656.20 March 17, 1998
FOR VALUE RECEIVED, the undersigned (the "Maker") hereby agrees to pay to
the order of General Atlantic Corporation, a Delaware Corporation (the
"Corporation"), the principal sum of Twenty-Three Thousand Six Hundred Fifty-Six
and 20/100 Dollars ($23,656.20) in five (5) equal annual installments commencing
on March 17, 1999, together with interest on such principal amount from the date
hereof at a fixed rate of 7% per annum. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. The Maker may prepay the full
principal amount of this Note, together with interest due thereon to date of
payment, without penalty or premium.
This Note has been made and delivered pursuant to the terms and conditions
of the Stock Purchase Agreement, dated March 17, 1998, between the Corporation,
the Maker, Mark J. Blankenship, and Terry Lalosh (the "Stock Purchase
Agreement").
Any installment of principal and interest that is paid more than ten (10)
days late shall be subject to a 2% penalty. In addition, Maker shall pay any
court costs and reasonable attorneys' fees and other charges incurred by the
holder in connection with the collection of amounts due hereunder.
The outstanding balance of this Note may be accelerated by the holder and
declared immediately due and payable upon the failure to pay any installment of
principal and interest within ten (10) day after it is due or upon the
insolvency of Maker, an assignment for the benefit of creditors or the
institution of bankruptcy or similar proceedings by Maker.
THIS NOTE SHALL BE NON-RECOURSE TO THE MAKER. The only recourse for this
Note is pursuant to a security interest granted in a Security Agreement Pledge
of even date herewith, whereby the undersigned granted the Corporation a
security interest in 236,562 shares of the Common Stock of Solo Serve
Corporation, a Delaware corporation, which shares were purchased by Maker from
the Corporation pursuant to the Stock Purchase Agreement.
The terms of this Note shall be governed by and construed and enforced in
accordance with the internal laws (without regard to the principles of conflicts
of law) of the State of Texas.
------------------------------
ROSS E. BACON
<PAGE>
EXHIBIT 5
NON-RECOURSE PROMISSORY NOTE
$23,656.20 March 17, 1998
FOR VALUE RECEIVED, the undersigned (the "Maker") hereby agrees to pay to
the order of General Atlantic Corporation, a Delaware Corporation (the
"Corporation"), the principal sum of Twenty-Three Thousand Six Hundred Fifty-Six
and 20/100 Dollars ($23,656.20) in five (5) equal annual installments commencing
on March 17, 1999, together with interest on such principal amount from the date
hereof at a fixed rate of 7% per annum. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. The Maker may prepay the full
principal amount of this Note, together with interest due thereon to date of
payment, without penalty or premium.
This Note has been made and delivered pursuant to the terms and conditions
of the Stock Purchase Agreement, dated March 17, 1998, between the Corporation,
the Maker, Ross E. Bacon, and Mark J. Blankenship (the "Stock Purchase
Agreement").
Any installment of principal and interest that is paid more than ten (10)
days late shall be subject to a 2% penalty. In addition, Maker shall pay any
court costs and reasonable attorneys, fees and other charges incurred by the
holder in connection with the collection of amounts due hereunder.
The outstanding balance of this Note may be accelerated by the holder and
declared immediately due and payable upon the failure to pay any installment of
principal and interest within ten (10) day after it is due or upon the
insolvency of maker, an assignment for the benefit of creditors or the
institution of bankruptcy or similar proceedings by Maker.
THIS NOTE SHALL BE NON-RECOURSE TO THE MAKER. The only recourse for this
Note is pursuant to a security interest granted in a Security Agreement Pledge
of even date herewith, whereby the undersigned granted the Corporation a
security interest in 236,562 shares of the Common Stock of Solo Serve
Corporation, a Delaware corporation, which shares were purchased by Maker from
the Corporation pursuant to the Stock Purchase Agreement.
The terms of this Note shall be governed by and construed and enforced in
accordance with the internal laws (without regard to the principles of conflicts
of law) of the State of Texas.
------------------------------
TERRY LALOSH
<PAGE>
EXHIBIT 6
NON-RECOURSE PROMISSORY NOTE
$23,656.20 March 17, 1998
FOR VALUE RECEIVED, the undersigned (the "Maker") hereby agrees to pay to
the order of General Atlantic Corporation, a Delaware Corporation (the
"Corporation"), the principal sum of Twenty-Three Thousand Six Hundred Fifty-Six
and 20/100 Dollars ($23,656.20) in five (5) equal annual installments commencing
on March 17, 1999, together with interest on such principal amount from the date
hereof at a fixed rate of 7% per annum. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. The Maker may prepay the full
principal amount of this Note, together with interest due thereon to date of
payment, without penalty or premium.
This Note has been made and delivered pursuant to the terms and conditions
of the Stock Purchase Agreement, dated March 17, 1998, between the Corporation,
the Maker, Ross E. Bacon, and Terry Lalosh (the "Stock Purchase Agreement").
Any installment of principal and interest that is paid more than ten (10)
days late shall be subject to a 2% penalty. In addition, Maker shall pay any
court costs and reasonable attorneys' fees and other charges incurred by the
holder in connection with the collection of amounts due hereunder.
The outstanding balance of this Note may be accelerated by the holder and
declared immediately due and payable upon the failure to pay any installment of
principal and interest within ten (10) day after it is due or upon the
insolvency of Maker, an assignment for the benefit of creditors or the
institution of bankruptcy or similar proceedings by Maker.
THIS NOTE SHALL BE NON-RECOURSE TO THE MAKER. The only recourse for this
Note is pursuant to a security interest granted in a Security Agreement Pledge
of even date herewith, whereby the undersigned granted the Corporation a
security interest in 236,562 shares of the Common Stock of Solo Serve
Corporation, a Delaware corporation, which shares were purchased by Maker from
the Corporation pursuant to the Stock Purchase Agreement.
The terms of this Note shall be governed by and construed and enforced in
accordance with the internal laws (without regard to the principles of conflicts
of law) of the State of Texas.
------------------------------
MARK J. BLANKENSHIP
<PAGE>
EXHIBIT 7
SECURITY AGREEMENT - PLEDGE
This SECURITY AGREEMENT - PLEDGE ("Security Agreement") is made and entered
into effective as of the day of March, 1998, by and between ROSS E. BACON (the
"Pledgor") in favor of GENERAL ATLANTIC CORPORATION, a Delaware corporation (the
"Secured Party").
W I T N E S S E T H:
WHEREAS, the Pledgor has purchased from Secured Party Two Hundred
Thirty-Six Thousand Five Hundred Sixty-Two (236,562) shares of the common stock
in Solo Serve Corporation, a Delaware corporation (the "Purchased Stock"); and
WHEREAS, in consideration for the purchase of the Purchased Stock, Pledgor
has delivered to the Secured Party that one certain Promissory Note (the "Note")
of even date herewith in the original principal amount of Twenty Three Thousand
Six Hundred Fifty-Six and 20/100 Dollars ($23,656.20); and
WHEREAS, Secured Party has conditioned its agreement to sell the Purchased
Stock to the Pledgor in exchange for the Note on the Pledgor's agreement to
pledge to Secured Party the collateral described below and to execute and
deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
SECURITY INTEREST
SECTION 1.01. GRANT OF SECURITY INTEREST. Pledgor hereby grants to Secured
Party a security interest in, a general lien upon, and a right of setoff against
the following described property (the "Collateral"):
(a) Two Hundred Thirty-Six Thousand Five Hundred Sixty-Two (236,562)
shares of common stock of Solo Serve Corporation, a Delaware corporation
evidenced by Certificate No. ___; and
(b) All proceeds, products, and accessions of and to any of the
foregoing.
The security interest in, general lien upon, and right of set-off against
the Collateral is granted to Secured Party to secure (a) the payment and
performance by the Pledgor of the Note; (b) the performance of Pledgor of the
covenants, terms, conditions, obligations and provisions of this Agreement; (c)
all renewals, extensions, and modifications of the foregoing documents and any
other documents executed in connection herewith or therewith; and (d) all costs,
expenses, advances and liabilities which may be made or incurred by Secured
Party in the disbursement, administration and collection of the Note and in the
protection, maintenance and liquidation of the security interest hereby granted
(the aforementioned obligations of the Pledgor are collectively referred to
hereinafter as the "Secured Obligations" or the "Indebtedness").
SECTION 1.02. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENT BY THE
PLEDGOR. The Pledgor hereby represents, warrants, covenants, and agrees to and
with the Secured Party as follows:
(a) Transfer of Collateral. Pledgor shall not, without the express
prior written consent of the Secured Party, sell, encumber, pledge,
hypothecate, dispose of, or grant any other security interest in the
Collateral, regardless of whether same is allegedly or expressly inferior
to the security interest granted hereby.
(b) Payment of Impositions. Pledgor shall pay, at the cost and expense
of the Pledgor, prior to delinquency, any tax, charge, lien, or assessment
against the Collateral.
(c) Defense. Pledgor shall defend, at the cost and expense of the
Pledgor, any action, claim, or demand affecting (i) the Collateral, (ii)
the security interest granted hereby, (iii) the right, title, interest and
benefit of the Pledgor in and to the Collateral, or (iv) the right, title,
interest, and benefit of the Secured Party in and to the Collateral.
Pledgor shall give Secured Party notice of any such action, claim or demand
within five (5) days from the date such action, claim or demand is made or
asserted, detailing the origin and nature thereof.
(d) Additional Documents. Pledgor shall execute and deliver to the
Secured Party such other and further certificates, documents and
instruments, including, but not limited to, the stock certificate
representing the Purchased Stock and a stock power endorsed by Pledgor in
blank, as shall be deemed reasonably necessary by the Secured Party so as
to maintain, give notice of, perfect, or otherwise assure the priority and
perfection of the security interest granted hereby. Pledgor shall execute
and deliver to the Secured Party, from time to time, such financing
statements as the Secured Party may reasonably request, in a form
satisfactory to Secured Party.
(e) Ownership. Pledgor owns the Collateral and has the authority to
grant this security interest.
SECTION 1.03. POWER OF ATTORNEY. Secured Party is hereby authorized and
appointed as agent and attorney-in-fact of the Pledgor, which appointment is
coupled with an interest and shall be irrevocable so long as any of the Secured
Obligations remain outstanding, to sign and deliver such documents, endorsements
and instruments, and to take all such other actions, in the name of the Pledgor
as Secured Party may deem necessary or advisable to perfect, preserve or
foreclose Secured Party's security interest in and lien on the Collateral.
ARTICLE II
EVENTS OF DEFAULT
SECTION 2.01. EVENTS. Any of the following events shall be considered an
"Event of Default" as that term is used herein:
(a) Principal and Interest Payments under Note. Principal and interest
under the Note or any other Indebtedness is not paid when due and such
default continues for a period of five (5) days after written notice
thereof by Secured Party to the Pledgor; or
(b) Other Note Terms. There is a default under any term of the Note or
this Agreement, other than default in payment of the Note, and such default
continues for a period of thirty (30) days after written notice thereof by
Secured Party to the Pledgor; or
(c) Involuntary Bankruptcy Proceedings. A receiver, conservator,
custodian, liquidator, creditors, committee, board of inspectors, or
trustee of Pledgor or of any of the property of Pledgor is created,
engaged, retained, procured, authorized or appointed in the United States
or under any law of any foreign country by the order or decree of any court
or agency or supervisory authority having jurisdiction; or Pledgor becomes
a debtor under the Bankruptcy Code of the United States or under the law of
any foreign country, and is the subject of an order for relief, or becomes
a bankrupt or insolvent; or any of Pledgor's property is sequestered,
seized or attached in the United States or under any law of any foreign
country by court order or decree; or a complaint, petition or similar
pleading is filed against Pledgor under any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law of any
Jurisdiction, in the United States or in any foreign country, whether such
law is now in existence or hereafter in effect, and such filing is not
dismissed within sixty (60) days of the date of such filing; or
(d) Voluntary Petitions. Pledgor files a petition in bankruptcy or
reorganization or seeks relief under any provision of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, in the United States or in any foreign
country, whether such law is now in existence or hereafter in effect, or
Pledgor is the subject of an order for relief or winding-up petition
entered by any bankruptcy court, or Pledgor consents to the filing of any
petition against it under any such law in the United States or in any
foreign country; or
(e) Assignments, Conveyances or Transfers for Benefit of Creditors.
Pledgor makes an assignment, conveyance or transfer for the benefit of his
creditors, or for the purpose of enforcing a lien against his property, or
admits in writing his inability to pay his debts generally as they become
due, or is generally not paying his debts as such debts become due, or
consents to the appointment of a custodian, receiver, trustee, assignee or
liquidator of all, substantially all, less than substantially all, or any
part of the Pledgor's property for the purpose of enforcing a lien against
the Pledgor's property; or
(f) Breach of Terms of Agreement. Pledgor breaches any of the terms of
this Security Agreement, including any representation, warranty or covenant
contained in Section 1.02, and such default continues for a period of
thirty (30) days after written notice thereof by Secured Party to Pledgor;
or
(g) False Representation. Any statement, representation or warranty
made by Pledgor in, under or pursuant to this Security Agreement or the
Note secured hereby or any affidavit or certificate executed or sworn to in
connection with either such document shall be false or misleading in any
material respect.
SECTION 2.02. REMEDIES.
(a) Upon the happening of any Event of Default specified in Section
2.01, Secured Party may declare the entire principal amount of all
Indebtedness then outstanding, including interest accrued thereon, to be
immediately due and payable (provided that the occurrence of any event
described in Subsections 2.01(b) or (c) shall automatically accelerate the
maturity of the Indebtedness, without the necessity of any action by
Pledgor) without presentment, demand, protest, notice of protest or
dishonor, further notice of default, notice of intent to accelerate the
maturity thereof, notice of acceleration of the maturity thereof, or other
notice of any kind, all of which are expressly waived by Pledgor;
(b) If all or any part of the Indebtedness shall become due and
payable as specified in (a) above, Secured Party may then, or at any time
thereafter, apply, set-off, sell in one of more sales, lease or otherwise
dispose of all or any part of the Collateral, and the proceeds, products,
additions, substitutions and accessions Of and to any and all of the
foregoing Collateral, following any commercially reasonable preparation or
processing, in such order as Secured Party may elect;
(c) Any sale made pursuant to subsection (b) above, may be made either
at public or private sale at Secured Party's place of business or
elsewhere, either for cash or upon credit or for future delivery, at such
price as Secured Party may deem fair, and Secured Party may be the
purchaser of any or all Collateral so sold and hold the same thereafter in
its own right free from any claim of Pledgor or right of redemption. No
such purchase or holding by Secured Party shall be deemed a retention by
Secured Party in satisfaction of the Indebtedness. If, notwithstanding the
foregoing provisions, any applicable provision of the Texas Business and
Commerce Code (the "Code") or other law requires Secured Party to give
reasonable notice of any such sale or notice shall constitute reasonable
notice. Any sale made hereunder may be conducted by an auctioneer or any
agent of Secured Party. The Collateral need not be present at any such
sale.
SECTION 2.03. PROCEEDS. The proceeds of any sale or other disposition of
the Collateral and all sums received or collected by Secured Party from or on
account of the Collateral shall be applied by Secured Party in the manner set
forth in Section 9.504 of the Code as presently in effect.
SECTION 2.04. DEFICIENCY. This Note is non-recourse to the Pledgor; hence,
Pledgor shall not remain liable to Secured Party for any deficiency, advances,
costs, charges and expenses, together with interest thereon remaining unpaid.
SECTION 2.05. RETENTION OF COLLATERAL. The parties hereby agree that, upon
an Event of Default, the Secured Party may retain the Collateral in satisfaction
of the Indebtedness pursuant to the terms of Section 9.505(b) of the Code.
SECTION 2.06. EXERCISE OF RIGHTS. Time shall be of the essence for the
performance of any act under this Security Agreement, but neither Secured
Party's acceptance of partial or delinquent payment nor any forbearance, failure
or delay by Secured Party in exercising any right, power or remedy shall be
deemed a waiver of any Indebtedness or of any right, power or remedy of Secured
Party or preclude any other or further exercise thereof; and no single or
partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
SECTION 2.07. REMEDY AND WAIVER. Secured Party may remedy any default and
may waive any default without waiving the default remedied or waiving any prior
or subsequent default.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. NOTICES. Any notice or demand to Pledgor under this Security
Agreement or in connection with this Security Agreement may be given and shall
conclusively be deemed and considered to have been given and received three (3)
days after the deposit thereof, in writing, duly stamped and addressed to
Pledgor at the address of Pledgor set forth next to Pledgor's signature below,
unless Pledgor has notified Secured Party in writing at Secured Party's address
next to Secured Party's signature below of a change of Pledgor's address, in the
U.S. Mail, but actual notice, however given or received, shall always be
effective.
SECTION 3.02. CONSTRUCTION. THIS SECURITY AGREEMENT HAS BEEN MADE IN AND
THE SECURITY INTEREST GRANTED HEREBY IS GRANTED IN AND BOTH SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS (EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER
JURISDICTION GOVERN THE PERFECTION AND PRIORITY OF THE SECURITY INTEREST GRANTED
HEREBY) AND OF THE UNITED STATES OF AMERICA, AS APPLICABLE, IN ALL RESPECTS,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEMENT AND PERFORMANCE.
SECTION 3.03. AMENDMENT AND WAIVER. This Security Agreement may not be
amended, altered or modified (nor may any of its terms be waived) except in
writing duly signed by Secured Party and Pledgor.
SECTION 3.04. INVALIDITY. If any provision of this Security Agreement is
rendered or declared invalid, illegal or unenforceable by reason of any existing
or subsequently enacted legislation or by a judicial decision which shall have
become final, Pledgor and Secured Party shall promptly meet and negotiate
substitute provisions for those rendered invalid, illegal or unenforceable, but
all of the remaining provisions shall remain in full force and effect.
SECTION 3.05. SUCCESSORS AND ASSIGNS. The covenants, representations,
warranties and agreements herein set forth shall be binding upon Pledgor and
shall inure to the benefit of Secured Party and Secured Party's legal
representatives, successors and assigns.
SECTION 3.06. SURVIVAL OF AGREEMENTS. All representations and warranties of
Pledgor herein, and all covenants and agreements herein not fully performed
before the effective date of this Security Agreement, shall survive such date.
SECTION 3.07. TITLES OF ARTICLES AND SECTIONS. All titles or headings to
articles, sections or other divisions of this Security Agreement are only for
the convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such articles, sections or other
divisions, such other content being controlling as to the agreement between the
parties hereto.
SECTION 3.8. MULTIPLE COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Security Agreement
effective as of the date first written above.
ADDRESSES: PLEDGOR:
1610 Cornerway Blvd. __________________________________
San Antonio, Texas 78219 ROSS E. BACON
SECURED PARTY:
GENERAL ATLANTIC CORPORATION
950 Third Avenue By: _________________________________
Friday, April 03, 1998 ___________________, its ____________
New York, New York 10022
<PAGE>
EXHIBIT 8
SECURITY AGREEMENT - PLEDGE
This SECURITY AGREEMENT - PLEDGE ("Security Agreement") is made and entered
into effective as of the day of March, 1998, by and between TERRY LALOSH (the
"Pledgor") in favor of GENERAL ATLANTIC CORPORATION, a Delaware corporation (the
"Secured Party").
W I T N E S S E T H:
WHEREAS, the Pledgor has purchased from Secured Party Two Hundred
Thirty-Six Thousand Five Hundred Sixty-Two (236,562) shares of the common stock
in Solo Serve Corporation, a Delaware corporation (the "Purchased Stock"); and
WHEREAS, in consideration for the purchase of the Purchased Stock, Pledgor
has delivered to the Secured Party that one certain Promissory Note (the "Note")
of even date herewith in the original principal amount of Twenty-Three Thousand
Six Hundred Fifty-Six and 20/100 Dollars ($23,656.20); and
WHEREAS, Secured Party has conditioned its agreement to sell the Purchased
Stock to the Pledgor in exchange for the Note on the Pledgor's agreement to
pledge to Secured Party the collateral described below and to execute and
deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST
SECTION 1.01. GRANT OF SECURITY INTEREST. Pledgor hereby grants to Secured
Party a security interest in, a general lien upon, and a right of setoff against
the following described property (the "Collateral"):
(a) Two Hundred Thirty-Six Thousand Five Hundred Sixty-Two (236,562)
shares of common stock of Solo Serve Corporation, a Delaware corporation
evidenced by Certificate No. ___; and
(b) All proceeds, products, and accessions of and to any of the
foregoing.
The security interest in, general lien upon, and right of set-off against
the Collateral is granted to Secured Party to secure (a) the payment and
performance by the Pledgor of the Note; (b) the performance of Pledgor of the
covenants, terms, conditions, obligations and provisions of this Agreement; (c)
all renewals, extensions, and modifications of the foregoing documents and any
other documents executed in connection herewith or therewith; and (d) all costs,
expenses, advances and liabilities which may be made or incurred by Secured
Party in the disbursement, administration and collection of the Note and in the
protection, maintenance and liquidation of the security interest hereby granted
(the aforementioned obligations of the Pledgor are collectively referred to
hereinafter as the "Secured Obligations" or the "Indebtedness").
SECTION 1.02. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENT BY THE
PLEDGOR. The Pledgor hereby represents, warrants, covenants, and agrees to and
with the Secured Party as follows:
(a) Transfer of Collateral. Pledgor shall not, without the express
prior written consent of the Secured Party, sell, encumber, pledge,
hypothecate, dispose of, or grant any other security interest in the
Collateral, regardless of whether same is allegedly or expressly inferior
to the security interest granted hereby.
(b) Payment of Impositions. Pledgor shall pay, at the cost and expense
of the Pledgor, prior to delinquency, any tax, charge, lien, or assessment
against the Collateral.
(c) Defense. Pledgor shall defend, at the cost and expense of the
Pledgor, any action, claim, or demand affecting (i) the Collateral, (ii)
the security interest granted hereby, (iii) the right, title, interest and
benefit of the Pledgor in and to the Collateral, or (iv) the right, title,
interest, and benefit of the Secured Party in and to the Collateral.
Pledgor shall give Secured Party notice of any such action, claim or demand
within five (5) days from the date such action, claim or demand is made or
asserted, detailing the origin and nature thereof.
(d) Additional Documents. Pledgor shall execute and deliver to the
Secured Party such other and further certificates, documents and
instruments, including, but not limited to, the stock certificate
representing the Purchased Stock and a stock power endorsed by Pledgor in
blank, as shall be deemed reasonably necessary by the Secured Party so as
to maintain, give notice of, perfect, or otherwise assure the priority and
perfection of the security interest granted hereby. Pledgor shall execute
and deliver to the Secured Party, from time to time, such financing
statements as the Secured Party may reasonably request, in a form
satisfactory to Secured Party.
(e) Ownership. Pledgor owns the Collateral and has the authority to
grant this security interest.
SECTION 1.03. POWER OF ATTORNEY. Secured Party is hereby authorized and
appointed as agent and attorney-in-fact of the Pledgor, which appointment is
coupled with an interest and shall be irrevocable so long as any of the Secured
Obligations remain outstanding, to sign and deliver such documents, endorsements
and instruments, and to take all such other actions, in the name of the Pledgor
as Secured Party may deem necessary or advisable to perfect, preserve or
foreclose Secured Party's security interest in and lien on the Collateral.
ARTICLE II
EVENTS OF DEFAULT
SECTION 2.01. EVENTS. Any of the following events shall be considered an
"Event of Default" as that term is used herein:
(a) Principal and Interest Payments under Note. Principal and interest
under the Note or any other Indebtedness is not paid when due and such
default continues for a period of five (5) days after written notice
thereof by Secured Party to the Pledgor; or
(b) Other Note Terms. There is a default under any term of the Note or
this Agreement, other than default in payment of the Note, and such default
continues for a period of thirty (30) days after written notice thereof by
Secured Party to the Pledgor; or
(c) Involuntary Bankruptcy Proceedings. A receiver, conservator,
custodian, liquidator, creditors, committee, board of inspectors, or
trustee of Pledgor or of any of the property of Pledgor is created,
engaged, retained, procured, authorized or appointed in the United States
or under any law of any foreign country by the order or decree of any court
or agency or supervisory authority having jurisdiction; or Pledgor becomes
a debtor under the Bankruptcy Code of the United States or under the law of
any foreign country, and is the subject of an order for relief, or becomes
a bankrupt or insolvent; or any of Pledgor's property is sequestered,
seized or attached in the United States or under any law of any foreign
country by court order or decree; or a complaint, petition or similar
pleading is filed against Pledgor under any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, in the United States or in any foreign country, whether such
law is now in existence or hereafter in effect, and such filing is not
dismissed within sixty (60) days of the date of such filing; or
(d) Voluntary Petitions. Pledgor files a petition in bankruptcy or
reorganization or seeks relief under any provision of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, in the United States or in any foreign
country, whether such law is now in existence or hereafter in effect, or
Pledgor is the subject of an order for relief or winding-up petition
entered by any bankruptcy court, or Pledgor consents to the filing of any
petition against it under any such law in the United States or in any
foreign country; or
(e) Assignments, Conveyances or Transfers for Benefit of Creditors.
Pledgor makes an assignment, conveyance or transfer for the benefit of his
creditors, or for the purpose of enforcing a lien against his property, or
admits in writing his inability to pay his debts generally as they become
due, or is generally not paying his debts as such debts become due, or
consents to the appointment of a custodian, receiver, trustee, assignee or
liquidator of all, substantially all, less than substantially all, or any
part of the Pledgor's property for the purpose of enforcing a lien against
the Pledgor's property; or
(f) Breach of Terms of Agreement. Pledgor breaches any of the terms of
this Security Agreement, including any representation, warranty or covenant
contained in Section 1.02, and such default continues for a period of
thirty (30) days after written notice thereof by Secured Party to Pledgor;
or
(g) False Representation. Any statement, representation or warranty
made by Pledgor in, under or pursuant to this Security Agreement or the
Note secured hereby or any affidavit or certificate executed or sworn to in
connection with either such document shall be false or misleading in any
material respect.
SECTION 2.02. REMEDIES.
(a) Upon the happening of any Event of Default specified in Section
2.01, Secured Party may declare the entire principal amount of all
Indebtedness then outstanding, including interest accrued thereon, to be
immediately due and payable (provided that the occurrence of any event
described in Subsections 2.01(b) or (c) shall automatically accelerate the
maturity of the Indebtedness, without the necessity of any action by
Pledgor) without presentment, demand, protest, notice of protest or
dishonor, further notice of default, notice of intent to accelerate the
maturity thereof, notice of acceleration of the maturity thereof, or other
notice of any kind, all of which are expressly waived by Pledgor;
(b) If all or any part of the Indebtedness shall become due and
payable as specified in (a) above, Secured Party may then, or at any time
thereafter, apply, set-off, sell in one of more sales, lease or otherwise
dispose of all or any part of the Collateral, and the proceeds, products,
additions, substitutions and accessions of and to any and all of the
foregoing Collateral, following any commercially reasonable preparation or
processing, in such order as Secured Party may elect;
(c) Any sale made pursuant to subsection (b) above, may be made either
at public or private sale at Secured Party's place of business or
elsewhere, either for cash or upon credit or for future delivery, at such
price as Secured Party may deem fair, and Secured Party may be the
purchaser of any or all Collateral so sold and hold the same thereafter in
its own right free from any claim of Pledgor or right of redemption. No
such purchase or holding by Secured Party shall be deemed a retention by
Secured Party in satisfaction of the Indebtedness. If, notwithstanding the
foregoing provisions, any applicable provision of the Texas Business and
Commerce Code (the "Code") or other law requires Secured Party to give
reasonable notice of any such sale or disposition or other action, Pledgor
agrees ten (10) days, prior written notice shall constitute reasonable
notice. Any sale made hereunder may be conducted by an auctioneer or any
agent of Secured Party. The Collateral need not be present at any such
sale.
SECTION 2.03. PROCEEDS. The proceeds of any sale or other disposition of
the Collateral and all sums received or collected by Secured Party from or on
account of the Collateral shall be applied by Secured Party in the manner set
forth in Section 9.504 of the Code as presently in effect.
SECTION 2.04. DEFICIENCY. The Note is non-recourse to the Pledgor; hence,
Pledgor shall not remain liable to Secured Party for any deficiency, advances,
costs, charges and expenses, together with interest thereon remaining unpaid.
SECTION 2.05. RETENTION OF COLLATERAL. The parties hereby agree that, upon
an Event of Default, the Secured Party may retain the Collateral in satisfaction
of the Indebtedness pursuant to the terms of Section 9.505(b) of the Code.
SECTION 2.06. EXERCISE OF RIGHTS. Time shall be of the essence for the
performance of any act under this Security Agreement, but neither Secured
Party's acceptance of partial or delinquent payment nor any forbearance, failure
or delay by Secured Party in exercising any right, power or remedy shall be
deemed a waiver of any Indebtedness or of any right, power or remedy of Secured
Party or preclude any other or further exercise thereof; and no single or
partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
SECTION 2.07. REMEDY AND WAIVER. Secured Party may remedy any default and
may waive any default without waiving the default remedied or waiving any prior
or subsequent default.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. NOTICES. Any notice or demand to Pledgor under this Security
Agreement or in connection with this Security Agreement may be given and shall
conclusively be deemed and considered to have been given and received three (3)
days after the deposit thereof, in writing, duly stamped and addressed to
Pledgor at the address of Pledgor set forth next to Pledgor's signature below,
unless Pledgor has notified Secured Party in writing at Secured Party's address
next to Secured Party's signature below of a change of Pledgor's address, in the
U.S. Mail, but actual notice, however given or received, shall always be
effective.
SECTION 3.02. CONSTRUCTION. THIS SECURITY AGREEMENT HAS BEEN MADE IN AND
THE SECURITY INTEREST GRANTED HEREBY IS GRANTED IN AND BOTH SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS (EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER
JURISDICTION GOVERN THE PERFECTION AND PRIORITY OF THE SECURITY INTEREST GRANTED
HEREBY) AND OF THE UNITED STATES OF AMERICA, AS APPLICABLE, IN ALL RESPECTS,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEMENT AND PERFORMANCE.
SECTION 3.03. AMENDMENT AND WAIVER. This Security Agreement may not be
amended, altered or modified (nor may any of its terms be waived) except in
writing duly signed by Secured Party and Pledgor.
SECTION 3.04. INVALIDITY. If any provision of this Security Agreement is
rendered or declared invalid, illegal or unenforceable by reason of any existing
or subsequently enacted legislation or by a judicial decision which shall have
become final, Pledgor and Secured Party shall promptly meet and negotiate
substitute provisions for those rendered invalid, illegal or unenforceable, but
all of the remaining provisions shall remain in full force and effect.
SECTION 3.05. SUCCESSORS AND ASSIGNS. The covenants, representations,
warranties and agreements herein set forth shall be binding upon Pledgor and
shall inure to the benefit of Secured Party and Secured Party's legal
representatives, successors and assigns.
SECTION 3.06. SURVIVAL OF AGREEMENTS. All representations and warranties of
Pledgor herein, and all covenants and agreements herein not fully performed
before the effective date of this Security Agreement, shall survive such date.
SECTION 3.07. TITLES OF ARTICLES AND SECTIONS. All titles or headings to
articles, sections or other divisions of this Security Agreement are only for
the convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such articles, sections or other
divisions, such other content being controlling as to the agreement between the
parties hereto.
SECTION 3.8. MULTIPLE COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Security Agreement
effective as of the date first written above.
<PAGE>
ADDRESSES: PLEDGOR:
1610 Cornerway Blvd. __________________________________
San Antonio, Texas 78219 TERRY LALOSH
SECURED PARTY:
GENERAL ATLANTIC CORPORATION
950 Third Avenue By:_________________________________
Friday, April 03, 1998 ______________, its _____________
New York, New York 10022
<PAGE>
EXHIBIT 9
SECURITY AGREEMENT - PLEDGE
This SECURITY AGREEMENT - PLEDGE ("Security Agreement") is made and entered
into effective as of the - day of March, 1998, by and between MARK J.
BLANKENSHIP (the "Pledgor") in favor of GENERAL ATLANTIC CORPORATION, a Delaware
corporation (the "Secured Party").
W I T N E S S E T H:
WHEREAS, the Pledgor has purchased from Secured Party Two Hundred
Thirty-Six Thousand Five Hundred Sixty-Two (236,562) shares of the common stock
in Solo Serve Corporation, a Delaware corporation (the "Purchased Stock"); and
WHEREAS, in consideration for the purchase of the Purchased Stock, Pledgor
has delivered to the Secured Party that one certain Promissory Note (the "Note")
of even date herewith in the original principal amount of Twenty-Three Thousand
Six Hundred Fifty-Six and 20/100 Dollars ($23,656.20); and
WHEREAS, Secured Party has conditioned its agreement to sell the Purchased
Stock to the Pledgor in exchange for the Note on the Pledgor's agreement to
pledge to Secured Party the collateral described below and to execute and
deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST
SECTION 1.01, GRANT OF SECURITY INTEREST. Pledgor hereby grants to Secured
Party a security interest in, a general lien upon, and a right of setoff against
the following described property (the "Collateral"):
(a) Two Hundred Thirty-Six Thousand Five Hundred Sixty-Two (236,562)
shares of common stock of Solo Serve Corporation, a Delaware corporation
evidenced by Certificate No. ___; and
(b) All proceeds, products, and accessions of and to any of the
foregoing.
The security interest in, general lien upon, and right of set-off against
the Collateral is granted to Secured Party to secure (a) the payment and
performance by the Pledgor of the Note; (b) the performance of Pledgor of the
covenants, terms, conditions, obligations and provisions of this Agreement; (c)
all renewals, extensions, and modifications of the foregoing documents and any
other documents executed in connection herewith or therewith; and (d) all costs,
expenses, advances and liabilities which may be made or incurred by Secured
Party in the disbursement, administration and collection of the Note and in the
protection, maintenance and liquidation of the security interest hereby granted
(the aforementioned obligations of the Pledgor are collectively referred to
hereinafter as the "Secured Obligations" or the "Indebtedness").
SECTION 1.02. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENT BY THE
PLEDGOR. The Pledgor hereby represents, warrants, covenants, and agrees to and
with the Secured Party as follows:
(a) Transfer of Collateral. Pledgor shall not, without the express
prior written consent of the Secured Party, sell, encumber, pledge,
hypothecate, dispose of, or grant any other security interest in the
Collateral, regardless of whether same is allegedly or expressly inferior
to the security interest granted hereby.
(b) Payment of Impositions. Pledgor shall pay, at the cost and expense
of the Pledgor, prior to delinquency, any tax, charge, lien, or assessment
against the Collateral.
(c) Defense. Pledgor shall defend, at the cost and expense of the
Pledgor, any action, claim, or demand affecting (i) the Collateral, (ii)
the security interest granted hereby, (iii) the right, title, interest and
benefit of the Pledgor in and to the Collateral, or (iv) the right, title,
interest, and benefit of the Secured Party in and to the Collateral.
Pledgor shall give Secured Party notice of any such action, claim or demand
within five (5) days from the date such action, claim or demand is made or
asserted, detailing the origin and nature thereof.
(d) Additional Documents. Pledgor shall execute and deliver to the
Secured Party such other and further certificates, documents and
instruments, including, but not limited to, the stock certificate
representing the Purchased Stock and a stock power endorsed by Pledgor in
blank, as shall be deemed reasonably necessary by the Secured Party so as
to maintain, give notice of, perfect, or otherwise assure the priority and
perfection of the security interest granted hereby. Pledgor shall execute
and deliver to the Secured Party, from time to time, such financing
statements as the Secured Party may reasonably request, in a form
satisfactory to Secured Party.
(e) Ownership. Pledgor owns the Collateral and has the authority to
grant this security interest.
SECTION 1.03. POWER OF ATTORNEY. Secured Party is hereby authorized and
appointed as agent and attorney-in-fact of the Pledgor, which appointment is
coupled with an interest and shall be irrevocable so long as any of the Secured
Obligations remain outstanding, to sign and deliver such documents, endorsements
and instruments, and to take all such other actions, in the name of the Pledgor
as Secured Party may deem necessary or advisable to perfect, preserve or
foreclose Secured Party's security interest in and lien on the Collateral.
ARTICLE II
EVENTS OF DEFAULT
SECTION 2.01. EVENTS. Any of the following events shall be considered an
"Event of Default" as that term is used herein:
(a) Principal and Interest Payments under Note. Principal and interest
under the Note or any other Indebtedness is not paid when due and such
default continues for a period of five (5) days after written notice
thereof by Secured Party to the Pledgor; or
(b) Other Note Terms. There is a default under any term of the Note or
this Agreement, other than default in payment of the Note, and such default
continues for a period of thirty (30) days after written notice thereof by
Secured Party to the Pledgor; or
(c) Involuntary Bankruptcy Proceedings. A receiver, conservator,
custodian, liquidator, creditors, committee, board of inspectors, or
trustee of Pledgor or of any of the property of Pledgor is created,
engaged, retained, procured, authorized or appointed in the United States
or under any law of any foreign country by the order or decree of any court
or agency or supervisory authority having jurisdiction; or Pledgor becomes
a debtor under the Bankruptcy Code of the United States or under the law of
any foreign country, and is the subject of an order for relief, or becomes
a bankrupt or insolvent; or any of Pledgor's property is sequestered,
seized or attached in the United States or under any law of any foreign
country by court order or decree; or a complaint, petition or similar
pleading is filed against Pledgor under any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, in the United States or in any foreign country, whether such
law is now in existence or hereafter in effect, and such filing is not
dismissed within sixty (60) days of the date of such filing; or
(d) Voluntary Petitions. Pledgor files a petition in bankruptcy or
reorganization or seeks relief under any provision of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, in the United States or in any foreign
country, whether such law is now in existence or hereafter in effect, or
Pledgor is the subject of an order for relief or winding-up petition
entered by any bankruptcy court, or Pledgor consents to the filing of any
petition against it under any such law in the United States or in any
foreign country; or
(e) Assignments, Conveyances or Transfers for Benefit of Creditors.
Pledgor makes an assignment, conveyance or transfer for the benefit of his
creditors, or for the purpose of enforcing a lien against his property, or
admits in writing his inability to pay his debts generally as they become
due, or is generally not paying his debts as such debts become due, or
consents to the appointment of a custodian, receiver, trustee, assignee or
liquidator of all, substantially all, less than substantially all, or any
part of the Pledgor's property for the purpose of enforcing a lien against
the Pledgor's property; or
(f) Breach of Terms of Agreement. Pledgor breaches any of the terms of
this Security Agreement, including any representation, warranty or covenant
contained in Section 1.02, and such default continues for a period of
thirty (30) days after written notice thereof by Secured Party to Pledgor;
or
(g) False Representation. Any statement, representation or warranty
made by Pledgor in, under or pursuant to this Security Agreement or the
Note secured hereby or any affidavit or certificate executed or sworn to in
connection with either such document shall be false or misleading in any
material respect.
SECTION 2.02. REMEDIES.
(a) Upon the happening of any Event of Default specified in Section
2.01, Secured Party may declare the entire principal amount of all
Indebtedness then outstanding, including interest accrued thereon, to be
immediately due and payable (provided that the occurrence of any event
described in Subsections 2.01(b) or (c) shall automatically accelerate the
maturity of the Indebtedness, without the necessity of any action by
Pledgor) without presentment ` demand, protest, notice of protest or
dishonor, further notice of default, notice of intent to accelerate the
maturity thereof, notice of acceleration of the maturity thereof, or other
notice of any kind, all of which are expressly waived by Pledgor;
(b) If all or any part of the Indebtedness shall become due and
payable as specified in (a) above, Secured Party may then, or at any time
thereafter, apply, set-off, sell in one of more sales, lease or otherwise
dispose of all or any part of the Collateral, and the proceeds, products,
additions, substitutions and accessions of and to any and all of the
foregoing Collateral, following any commercially reasonable preparation or
processing, in such order as Secured Party may elect;
(c) Any sale made pursuant to subsection (b) above, may be made either
at public or private sale at Secured Party's place of business or
elsewhere, either for cash or upon credit or for future delivery, at such
price as Secured Party may deem fair, and Secured Party may be the
purchaser of any or all Collateral so sold and hold the same thereafter in
its own right free from any claim of Pledgor or right of redemption. No
such purchase or holding by Secured Party shall be deemed a retention by
Secured Party in satisfaction of the Indebtedness. If, notwithstanding the
foregoing provisions, any applicable provision of the Texas Business and
Commerce Code (the "Code") or other law requires Secured Party to give
reasonable notice of any such sale or disposition or other action, Pledgor
agrees ten (10) days, prior written notice shall constitute reasonable
notice. Any sale made hereunder may be conducted by an auctioneer or any
agent of Secured Party. The Collateral need not be present at any such
sale.
SECTION 2.03. PROCEEDS. The proceeds of any sale or other disposition of
the Collateral and all sums received or collected by Secured Party from or on
account of the Collateral shall be applied by Secured Party in the manner set
forth in Section 9.504 of the Code as presently in effect.
SECTION 2.04. DEFICIENCY. The Note is non-recourse to the Pledgor; hence,
Pledgor shall not remain liable to Secured Party for any deficiency, advances,
costs, charges and expenses, together with interest thereon remaining unpaid.
SECTION 2.05. RETENTION OF COLLATERAL. The parties hereby agree that, upon
an Event of Default, the Secured Party may retain the Collateral in satisfaction
of the Indebtedness pursuant to the terms of Section 9.505(b) of the Code.
SECTION 2.06. EXERCISE OF RIGHTS. Time shall be of the essence for the
performance of any act under this Security Agreement, but neither Secured
Party's acceptance of partial or delinquent payment nor any forbearance, failure
or delay by Secured Party in exercising any right, power or remedy shall be
deemed a waiver of any Indebtedness or of any right, power or remedy of Secured
Party or preclude any other or further exercise thereof; and no single or
partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
SECTION 2.07. REMEDY AND WAIVER. Secured Party may remedy any default and
may waive any default without waiving the default remedied or waiving any prior
or subsequent default.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. NOTICES. Any notice or demand to Pledgor under this Security
Agreement or in connection with this Security Agreement may be given and shall
conclusively be deemed and considered to have been given and received three (3)
days after the deposit thereof, in writing, duly stamped and addressed to
Pledgor at the address of Pledgor set forth next to Pledgor's signature below,
unless Pledgor has notified Secured Party in writing at Secured Party's address
next to Secured Party's signature below of a change of Pledgor's address, in the
U.S. Mail, but actual notice, however given or received, shall always be
effective.
SECTION 3.02. CONSTRUCTION. THIS SECURITY AGREEMENT HAS BEEN MADE IN AND
THE SECURITY INTEREST GRANTED HEREBY IS GRANTED IN AND BOTH SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS (EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER
JURISDICTION GOVERN THE PERFECTION AND PRIORITY OF THE SECURITY INTEREST GRANTED
HEREBY) AND OF THE UNITED STATES OF AMERICA, AS APPLICABLE, IN ALL RESPECTS,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEMENT AND PERFORMANCE.
SECTION 3.03. AMENDMENT AND WAIVER. This Security Agreement may not be
amended, altered or modified (nor may any of its terms be waived) except in
writing duly signed by Secured Party and Pledgor.
SECTION 3.04. INVALIDITY. If any provision of this Security Agreement is
rendered or declared invalid, illegal or unenforceable by reason of any existing
or subsequently enacted legislation or by a judicial decision which shall have
become final, Pledgor and Secured Party shall promptly meet and negotiate
substitute provisions for those rendered invalid, illegal or unenforceable, but
all of the remaining provisions shall remain in full force and effect.
SECTION 3.05. SUCCESSORS AND ASSIGNS. The covenants, representations,
warranties and agreements herein set forth shall be binding upon Pledgor and
shall inure to the benefit of Secured Party and Secured Party's legal
representatives, successors and assigns.
SECTION 3.06. SURVIVAL OF AGREEMENTS. All representations and warranties of
Pledgor herein, and all covenants and agreements herein not fully performed
before the effective date of this Security Agreement, shall survive such date.
SECTION 3.07. TITLES OF ARTICLES AND SECTIONS. All titles or headings to
articles, sections or other divisions of this Security Agreement are only for
the convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such articles, sections or other
divisions, such other content being controlling as to the agreement between the
parties hereto.
SECTION 3.8. MULTIPLE COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Security Agreement
effective as of the date first written above.
ADDRESSES: PLEDGOR:
1610 Cornerway Blvd. __________________________________
San Antonio, Texas 78219 MARK J. BLANKENSHIP
SECURED PARTY:
GENERAL ATLANTIC CORPORATION
950 Third Avenue By:________________________________
Friday, April 03, 1998 ______________, its ____________
New York, New York 10022
<PAGE>
EXHIBIT 10
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 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 17, 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
With a copy to: Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, TX 78205
Attention: James B. Smith, Jr.
If to a Principal Charles M. Siegel
Stockholder: 1403 Fortune Hill
San Antonio, Texas 78258
Ross E. Bacon
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 6.
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 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.
<PAGE>
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
