EXHIBIT 10.4
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AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT
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This AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is entered into as of April 26, 2007 (the "Effective Date"), by and among, on
the one hand, the lender identified on the signature page hereof (such lender,
together with its successors and assigns, is referred to hereinafter as the
"Lender"), XXXXX FARGO RETAIL FINANCE II, LLC, as collateral agent and
administrative agent (the "Agent") for the Lender and any other holder of
Obligations (as defined in the Loan Agreement referred to below) and, on the
other hand, HAROLD'S STORES, INC., an Oklahoma corporation ("Parent"), HAROLD'S
FINANCIAL CORPORATION, an Oklahoma corporation ("Harold's Finance"), HAROLD'S
DIRECT, INC., an Oklahoma corporation ("Harold's Direct"), HAROLD'S STORES OF
TEXAS, L.P., a Texas limited partnership ("Harold's Texas"), and HAROLD'S OF
JACKSON, INC., a Mississippi corporation ("Harold's Mississippi", and
collectively with Harold's Texas, Harold's Direct, Harold's Finance and Parent,
the "Borrowers" and each, a "Borrower").
BACKGROUND
FACT ONE: Lender, Agent, the Borrowers, and Harold's Stores of Georgia,
L.P., a Georgia limited partnership ("Harold's Georgia"), entered into that
certain Loan and Security Agreement, dated as of February 5, 2003, as amended by
each of the following amendments (as so amended, the "Loan Agreement"): (A) that
certain Amendment No. 1 to Loan and Security Agreement dated July 10, 2003, by
and among Lenders, Agent, Borrowers, and Harold's Georgia; (B) that certain
Amendment No. 2 to Loan and Security Agreement dated April 29, 2004, by and
among Lenders, Agent, the Borrowers and Harold's Georgia; (C) that certain
Amendment No. 3 to Loan and Security Agreement dated January 26, 2006, by and
among Lenders, Agent, the Borrowers and Harold's Georgia; (D) that certain
Amendment No. 4 to Loan and Security Agreement, dated as of June 1, 2006, by and
among Lenders, Agent and the Borrowers, and (E) that certain Amendment No. 5 to
Loan and Security Agreement, dated as of August 31, 2006, by and among Lenders,
Agent and the Borrowers.
FACT TWO: Pursuant to the Loan Agreement, Lender has agreed to make
loans and other financial accommodations to, or for the benefit of, Borrowers on
the terms and otherwise subject to the conditions and limitations contained
therein.
FACT THREE: Borrowers have requested that Lender and Agent agree to
modify certain terms and conditions set forth in the Loan Agreement in the
manner set forth in this Amendment in order to permit the Borrowers to incur
certain subordinated indebtedness subject to the conditions and limitations
contained in the Loan Agreement, as amended by this Amendment.
FACT FOUR: Lender and Agent have agreed to modify certain terms and
conditions set forth in the Loan Agreement in the manner set forth in this
Amendment, subject in all cases to the fulfillment of the conditions set forth
in this Amendment.
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 1
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NOW, THEREFORE, Lender, Agent and the Borrowers hereby modify,
supplement and amend the Loan Agreement as follows:
1. INCORPORATION OF DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, have the meanings assigned to such
terms in the Loan Agreement, as amended hereby.
2. AMENDMENTS AND ADDITIONS TO LOAN AGREEMENT.
2.1 ADDITIONAL DEFINITIONS. As of the Effective Date, Section 1.1 of
the Loan Agreement is hereby amended by the addition of the following
definition, in the appropriate alphabetical order:
"`Amendment No. 6' means Amendment No. 6 to Loan and Security
Agreement, dated as of April 26, 2007, by and among the Lenders, Agent
and Borrowers."
2.2 REVISION TO EXISTING DEFINITIONS. As of the Effective Date, the
definitions of the term "Certificate of Designation", "Minimum Excess
Availability", "Restricted Payment", "Permitted Preferred Payments", and
"Subordinated Loan Documents" are hereby amended and restated to read in their
entirety as follows:
"'Certificates of Designation' means, individually and
collectively, as appropriate; (a) the Certificate of Designation of the
Amended Series 2001-A Preferred Stock ($0.01 Par Value) of Harold's
Stores, Inc. as filed on August 2, 2002, with the Oklahoma Secretary of
State; (b) the Certificate of Designation of the Series 2002-A
Preferred Stock ($0.01 Par Value) of Harold's Stores, Inc. as filed on
August 2, 2002, with the Oklahoma Secretary of State; (c) the
Certificate of Designation of the Series 2003-A Preferred Stock ($.01
Par Value) of Harold's Stores, Inc. as filed on February 4, 2003, with
the Oklahoma Secretary of State; (d) the Certificate of Designation of
the Series 2006-A Preferred Stock ($.01 Par Value) of Harold's Stores,
Inc. as filed on January 24, 2006, with the Oklahoma Secretary of
State; (e) the Certificate of Correction to Certificate of Designation
of the Series 2006-A Preferred Stock ($.01 Par Value) of Harold's
Stores, Inc. as filed on August 31, 2006; (f) the Certificate of
Amendment to Certificate of Designation of the Series 2006-A Preferred
Stock ($.01 Par Value) of Harold's Stores, Inc. as filed on August 31,
2006; (g) the Certificate of Designation of the Series 2006-B Preferred
Stock ($.01 Par Value) of Harold's Stores, Inc. as filed on August 31,
2006, with the Oklahoma Secretary of State; (f) the Certificate of
Amendment to Certificate of Designation of the Series 2006-B Preferred
Stock ($.01 Par Value) of Harold's Stores, Inc. as filed on April 26,
2007, (g) the Certificate of Designation of the Series 2007-A Senior
Preferred Stock ($.01 Par Value) of Harold's Stores, Inc. as filed on
April 26, 2007, with the Oklahoma Secretary of State; and (h)
Certificate of Designation of the Series 2007-B Senior Preferred Stock
($.01 Par Value) of Harold's Stores, Inc., as filed on April 26, 2007,
with the Oklahoma Secretary of State."
"Minimum Excess Availability" means an amount equal to
$500,000 at all times.
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 2
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"'Restricted Payment' means (i) any cash dividend or other
cash distribution or payment, direct or indirect, on or on account of
any shares of any class of stock of any Borrower now or hereafter
outstanding; (ii) any dividend or other distribution (other than
payments made solely in Series 2006-B Preferred Stock of Parent, Series
2007-A Senior Preferred Stock of Parent or Series 2007-B Preferred
Senior Stock of Parent in satisfaction of Subordinated Indebtedness) in
respect of, or redemption, purchase or other acquisition, direct or
indirect, of any shares of any class of stock of any Borrower now or
hereafter outstanding or of any warrants, options or rights to purchase
any such stock (including, without limitation, the repurchase of any
such stock, warrant, option or right or any refund of the purchase
price thereof in connection with the exercise by the holder thereof of
any right of rescission or similar remedies with respect thereto); and
(iii) any direct salary, non-salary managerial fees, fee (consulting,
management or other), fringe benefit, allowance or other expense
directly or indirectly paid or payable by any Borrower (as compensation
or otherwise) to any shareholder or Affiliate of any Borrower (other
than to an employee, to the extent of such employee's compensation;
provided that the terms of such compensation are approved by the
applicable board of directors or the compensation committee thereof) or
any partner, shareholder or Affiliate thereof."
"'Permitted Preferred Payments' means the payment of dividends
in respect of the Series 2002-A Preferred Stock of Parent, the Amended
Series 2001-A Preferred Stock, the Series 2003-A Preferred Stock, the
Series 2006-A Preferred Stock and the Series 2006-B Preferred Stock of
Parent, and the Series 2007-A Preferred Stock and the Series 2007-B
Preferred Stock of Parent (in each case when issued in whole or part as
contemplated by Schedule 5.8) to the extent each of the following
conditions precedent is met at the time such dividends are declared and
at the time such dividends are paid: (a) such dividends are made at the
times, in the amounts and otherwise in accordance with the applicable
Certificate of Designation as in effect on the date of Amendment No. 6,
or in such lesser amount as may be required thereunder pursuant to any
amendment or modification of such certificates of designation; (b) no
Default or Event of Default shall have occurred and be continuing as of
either of such dates; and (c) no Default or Event of Default shall
result from the payment or declaration of such dividend."
"'Subordinated Loan Documents' means each of the following,
each as may be amended, restated, supplemented or otherwise modified
from time to time in accordance with terms and conditions of the
Intercreditor Agreement: (a) that certain Subordinated Loan Agreement,
dated as of August 31, 2006, by and between Parent and Subordinated
Lender; (b) that certain Amended and Restated Subordinated Secured
Promissory Note, dated as of April 26, 2007, executed by Parent and
payable to the order of Subordinated Lender in the stated face amount
of up to $12,000,000; (c) that certain Subordinated Guaranty, dated as
of August 31, 2006, executed by certain Subsidiaries of Parent for the
benefit of Subordinated Lender; (d) that certain Subordinated Security
Agreement, dated as of August 31, 2006, entered into by Parent and
certain of its Subsidiaries, for the purpose of securing the
obligations of Parent and certain of its Subsidiaries pursuant to the
aforementioned Subordinated Loan Agreement, Amended and Restated
Subordinated Secured Promissory Note and Subordinated Guaranty, as
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 3
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applicable; and (e) all other instruments, documents, agreements,
certificates from time to time delivered pursuant to, in connection
with, or otherwise securing obligations under any of the foregoing."
2.3 AMENDMENT TO SECTION 7.1(G). As of the Effective Date, Section
7.1(g) of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
"(g) Subordinated Indebtedness in an aggregate principal
amount not to exceed the sum of $12,000,000 and the amount of any
accrued but unpaid interest that is added to the principal balance
outstanding under and in accordance with the terms of the Subordinated
Loan Documents and to the extent (i) such Indebtedness shall be
evidenced by Subordinated Loan Documents in form and substance
satisfactory to Agent; and (ii) such Indebtedness, and any Liens
securing the same, shall be subordinated to the Obligations, and any
Liens securing the same, pursuant to the Intercreditor Agreement."
2.4 ADDITIONAL AFFIRMATIVE COVENANT. As of the Effective Date, a new
Section 6.20 is hereby added to the Loan Agreement to read in its entirety as
follows:
"6.20 Notice of Interest Payments. Promptly and in no event
later than 5 days of the date thereof, the Administrative Borrower shall provide
Agent with notice of the date that the aggregate amount of interest in respect
of the Subordinated Indebtedness paid by adding such amounts to the outstanding
principal balance of the Subordinated Indebtedness evidenced by the Subordinated
Loan Documents is equal to or greater than $1,000,000 or the date that any and
all interest due and payable under the Subordinated Loan Documents is otherwise
no longer required to be paid by adding such amounts due and payable to the
outstanding principal balance of the Subordinated Indebtedness evidenced by the
Subordinated Loan Documents."
2.5 UPDATE OF SCHEDULE 5.8 TO LOAN AGREEMENT. As of the Effective Date,
Exhibit C-1 and Schedule 5.8 to the Loan Agreement are hereby combined, amended
and restated in their entirety to read as set forth hereto as Exhibit C-1 and
Schedule 5.8 attached hereto and incorporated herein, and from and after the
Effective Date all references to Exhibit C-1 and Schedule 5.8 shall be to such
amended and restated schedule.
3. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
3.1 RATIFICATIONS. Except as expressly amended and supplemented by this
Amendment, the terms and provisions of the Loan Agreement are ratified and
confirmed and continue in full force and effect. The Borrowers hereby agree that
the Loan Agreement, as amended hereby, continues to be legal, valid, binding and
enforceable against Borrowers in accordance with its terms and hereby reaffirm
each covenant and agreement set forth therein.
3.2 REPRESENTATIONS AND WARRANTIES. In order to induce Agent and Lender
to enter into this Amendment, each Borrower makes the following representations
and warranties to Lender as to itself:
(a) the execution, delivery and performance of this Amendment
and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate or
limited partnership power, as appropriate, on the
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 4
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part of the Borrower and will not violate any of its constituent
documents (including, as applicable, its articles of incorporation,
certificate of incorporation, by-laws, partnership agreement and
certificate of limited partnership) or any other agreement to which
Borrower is a party or by which its properties may be bound;
(b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Document are true and
correct in all material respects on and as of the date hereof as though
made on and as of the date hereof (except to the extent that such
representations and warranties relate solely to an earlier date or
violations have been disclosed to Agent in writing and approved in
writing by Agent); and
(c) no Default or Event of Default has occurred or is
continuing under the Loan Agreement, and no Default or Event of Default
will result from the execution, delivery or performance of this
Amendment or the consummation of the transactions herein authorized by
Lender.
4. FURTHER ASSURANCES.
The Borrowers hereby agree, upon Agent's request (i) to deliver to
Agent such fully authorized and executed agreements and instruments, including,
but not limited to, any amendments to Loan Documents, within 10 days of such
request, and (ii) to take such actions as Agent, in its Permitted Discretion,
deems necessary and appropriate in connection with the transactions contemplated
by this Amendment.
5. CHOICE OF LAW.
THE VALIDITY OF THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY THEREIN), THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
6. GENERAL PROVISIONS.
6.1 EFFECTIVENESS. The effectiveness of this Amendment and the
enforceability of the terms hereof against Borrowers, Agent and Lender are
subject to fulfillment of each of the following conditions precedent:
(a) Lender's execution of this Amendment and receipt of one or
more counterparts of this Amendment duly executed by each Borrower; and
(b) Lender's receipt of a consent and reaffirmation of the
obligations of each Guarantor under the Continuing Guaranty and
Security Agreement, in form acceptable to Lender; and
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 5
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(c) Lender's receipt of copies of any and all documents and
instruments executed in connection with the incurrence of the
Subordinated Indebtedness, which documents shall be in each instance
acceptable to Agent and Lender in their sole discretion.
6.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Amendment.
6.3 SEVERABILITY OF PROVISIONS. Each provision of this Amendment will
be severable from every other provision of this Amendment for the purpose of
determining the legal enforceability of any specific provision.
6.4 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, will be deemed to be
an original, and all of which, when taken together, will constitute but one and
the same Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile will be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also will deliver an original executed
counterpart of this Amendment but the failure to deliver an original executed
counterpart will not affect the validity, enforceability, and binding effect of
this Amendment. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.
6.5 INTEGRATION. This Amendment, the Loan Agreement and the other Loan
Documents contain the entire agreement between the parties relating to the
transactions contemplated hereby. All prior or contemporaneous understandings,
representations, statements and agreements, whether written or oral, are merged
herein and superseded by this Agreement. THIS WRITTEN AMENDMENT, THE LOAN
AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
6.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made herein and in the Loan Agreement, as amended hereby, will
survive the execution and delivery of this Amendment, and no investigation by
Agent or Lender or any closing shall affect the representations and warranties
or the right of Agent or Lender to rely upon them.
6.7 REFERENCE TO LOAN AGREEMENT. The Loan Agreement, as amended hereby,
and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms thereof are hereby amended so that any reference
in the Loan Agreement or such other agreements, documents and instruments will
mean a reference to the Loan Agreement, as amended hereby.
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 6
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6.8 EXPENSES OF LENDER. The Borrowers agree to pay on demand all
reasonable costs and expenses incurred by Lender in connection with the
preparation, negotiation and execution of this Amendment, including, without
limitation, the reasonable costs and fees of Agent's or Lender's legal counsel.
In addition, the Borrowers agree to pay on demand: (a) all costs and expenses
incurred by Agent or Lender in connection with the enforcement or preservation
of any rights under the Loan Agreement, as amended hereby, or any agreement,
document or instrument executed in connection therewith, including without
limitation this Amendment; and (b) all reasonable costs and expenses incurred by
Agent or Lender in connection with the preparation, negotiation and
administration of this Amendment, including the reasonable fees and costs of
Agent's and Lender's legal counsel.
6.9 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and will
inure to the benefit of Agent, Lender and each Borrower and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations hereunder without the prior written consent of Agent.
6.10 RELEASE. EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT) OR TO SEEK
AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT, LENDER AND THEIR
RESPECTIVE PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES,
EMPLOYEES AND REPRESENTATIVES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT, LENDER AND
THEIR RESPECTIVE PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES,
EMPLOYEES AND REPRESENTATIVES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING
IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH
BORROWER MAY NOW OR HEREAFTER HAVE AGAINST AGENT, LENDER AND THEIR RESPECTIVE
PREDECESSORS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES, EMPLOYEES AND
REPRESENTATIVES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY
SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT),
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE MAXIMUM RATE, THE EXERCISE OF
ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR ANY AGREEMENT, DOCUMENT OR
INSTRUMENT ENTERED INTO IN CONNECTION THEREWITH.
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Page 7
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
BORROWERS:
HAROLD'S STORES, INC.
By /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S FINANCIAL CORPORATION
By /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S DIRECT, INC.
By /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S STORES OF TEXAS, L.P.
By: HSTX, Inc., General Partner
By /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S OF XXXXXXX, INC.
By /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: CEO
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Signature Page
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AGENT AND LENDER:
XXXXX FARGO RETAIL
FINANCE II, LLC,
AS AGENT AND LENDER
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, Senior Vice President
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT - Signature Page
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EXHIBIT C-1
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FORM OF COMPLIANCE CERTIFICATE
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Date __________ __, 200__
XXXXX FARGO RETAIL FINANCE, LLC
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
RE: Loan and Security Agreement (the "Loan Agreement"), dated as of
February 5, 2003, among the lender identified on the signature pages
thereof (together with its permitted successors and assigns, the
"Lenders"), Xxxxx Fargo Retail Finance, LLC, as collateral agent and
administrative agent for the Lenders ("Agent"), Harold's Stores, Inc.,
an Oklahoma corporation ("Parent"), Harold's Financial Corporation, an
Oklahoma corporation ("Harold's Finance"), Harold's Direct, Inc., an
Oklahoma corporation ("Harold's Direct"), Harold's Stores of Texas,
L.P., a Texas limited partnership ("Harold's Texas"), Harold's Stores
of Georgia, L.P., a Georgia limited partnership ("Harold's Georgia"),
Harold's of Jackson, Inc., a Mississippi corporation ("Harold's
Mississippi", and collectively with Harold's Georgia, Harold's Texas,
Harold's Direct, Harold's Finance and Parent, the "Borrowers" and each,
a "Borrower")
Dear Sir or Madam:
Capitalized terms used in this Compliance Certificate (this
"Certificate") have the respective meanings set forth in the Loan Agreement,
unless otherwise specified herein. Together with this Certificate, Borrower is
delivering to Agent a consolidated balance sheet, income statement, and
statement of cash flow, each prepared by Parent and covering Parent's and its
Subsidiaries' operations for the most recently ended Fiscal Period. On behalf of
each Borrower and not individually, the undersigned Chief Financial Officer
hereby certifies as follows to Agent:
(a) In accordance with Section 6.3(a)(ii) of the Loan Agreement, (i)
all financial statements delivered herewith have been prepared in accordance
with GAAP (except for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the financial condition
of Parent and its Subsidiaries, (ii) all representations and warranties of the
Borrowers set forth in the Loan Agreement and other Loan Documents are true and
correct in all material respects on and as of the date of this Certificate, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date), and (iii)
there does not exist any condition or event that constitutes a Default or Event
of Default, or if there is such a Default or Event of Default, the nature of it
and the steps (if any) being taken or contemplated by Borrower to be taken on
account thereof are set forth as Exhibit 1 attached hereto.
(a) [INCLUDE IF THIS CERTIFICATE IS TO BE DELIVERED WITH RESPECT TO THE
LAST FISCAL PERIOD OF A FISCAL QUARTER] In accordance with Section 6.3(g) of the
Loan Agreement, attached hereto as Exhibit 2 is a schedule describing any
additional trademarks and copyrights that have been registered by any Borrower
or any Guarantor during the period since the [last such schedule delivered to
Agent pursuant to Section 6.3(g) of the Loan Agreement] [Closing Date], which
schedule is sufficient for Agent to supplement its Copyright Security Agreement
and Trademark Security Agreements delivered to Agent on the Closing Date.
(b) Borrower is in compliance with Section 6.11 [Leases] of the Loan
Agreement except as set forth on Exhibit 3 attached hereto.
(c) Borrower is in compliance with Section 6.7 [Taxes] of the Loan
Agreement except as set forth on Exhibit 4 attached hereto.
(d) Borrower is in compliance with Section 6.8 [Insurance] of the Loan
Agreement except as set forth on Exhibit 5 attached hereto.
(e) [TO BE INCLUDED ON EACH CERTIFICATE FOR EACH FISCAL YEAR END].
Borrower [has/has not] made capital expenditures for the fiscal year ended
[January 31, 2008] (the "Fiscal Year") in excess of the amounts permitted under
Section 7.21(a) of the Loan Agreement.
Capital expenditure amount set forth in the Loan Agreement/ Business
Plan:
[$2,750,000]
(f) Each day during Borrower's most recently ended fiscal month,
Borrower has been in compliance with Section 7.21(b) Minimum Excess Availability
of the Loan Agreement except as set forth on Exhibit 6 attached hereto.
(g) The last payment of interest in respect of the Subordinated
Indebtedness [was/was not] paid by adding such interest payment to the
outstanding principal balance of the Subordinated Indebtedness evidenced by the
Subordinated Loan Documents.
Such certification is made as of the fiscal month ending ___ __, 200__.
Sincerely,
HAROLD'S STORES, INC.
By:
----------------------------
Name:
Chief Financial Officer
SCHEDULE 5.8
CAPITALIZATION OF BORROWERS
Authorized Stock Outstanding Stock
---------------- -----------------
Company Common Preferred Common Preferred
------- ------ --------- ------ ---------
Harold's Stores, Inc. 25,000,000 Series 2001-A 500,000 6,223,508 Series 2001-A 342,653
Series 2002-A 300,000 Series 2002-A 231,550
Series 2003-A 100,000 Series 2003-A 56,742
Series 2006-A 75,000 Series 2006-A 25,000
Series 2006-B 15,000 Series 2006-B --
Series 2007-A 5,000 Series 2007-A 2,000
Series 2007-B 5,000 Series 2007-B --
Harold's Financial Corporation 20,000 180,000 20,000 180,000
Harold's Direct, Inc. 50,000 N/A 50,000 N/A
Harold's Limited Partners, Inc. 50,000 N/A 500 N/A
Harold's DBO, Inc. 50,000 N/A 1,000 N/A
HSTX, Inc. 50,000 N/A 1,000 N/A
Harold's of Xxxxxxx, Inc. 50,000 50,000 50,000 50,000
The Corner Properties, Inc. 50,000 N/A 50,000 N/A
Harold's of White Flint, Inc. 10,000 N/A 10,000 N/A
Harold's Stores of Texas, L.P.- owned by HSTX, Inc. (1%) and Harold's Limited Partners, Inc. (99%)
