EXHIBIT 10.2
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SECOND GLOBAL AMENDMENT AND
REAFFIRMATION OF SUBORDINATED DEBT DOCUMENTS
THIS SECOND GLOBAL AMENDMENT AND REAFFIRMATION OF SUBORDINATED DEBT
DOCUMENTS (this "Global Amendment") is made as of September 26, 2007, by and
among RONHOW, LLC, a Georgia limited liability company, (the "Lender"), XXXXXX'S
STORES, INC., an Oklahoma corporation (the "Parent"), XXXXXX'S FINANCIAL
CORPORATION, an Oklahoma corporation, XXXXXX'S DIRECT, INC., an Oklahoma
corporation, XXXXXX'S STORES OF TEXAS, L.P., a Texas limited partnership,
XXXXXX'S OF XXXXXXX, INC., a Mississippi corporation, THE CORNER PROPERTIES,
INC., an Oklahoma corporation, XXXXXX'S DBO, INC., a Texas corporation, HAROLD'S
LIMITED PARTNERS, INC., an Oklahoma corporation, and HSTX, INC., a Texas
corporation (each, individually, a "Guarantor" and collectively the
"Guarantors").
RECITALS:
WHEREAS, Xxxxxx and Parent have entered into that certain Subordinated
Loan Agreement, dated as of August 31, 2006 and amended as of April 26, 2007
("Subordinated Loan Agreement"), and Guarantors have guaranteed the obligations
of Parent thereunder in favor of Lender pursuant to that certain Subordinated
Guaranty, dated as of August 31, 2006 and amended as of April 26, 2007
("Subordinated Guaranty"). The Subordinated Loan Agreement and the Subordinated
Guaranty are secured by the Subordinated Security Agreement, dated as of August
31, 2006 and amended as of April 26, 2007, by Xxxxxx and Guarantors in favor of
Xxxxxx ("Subordinated Security Agreement"); and
WHEREAS, on the date hereof, Xxxxx Fargo Retain Finance II, LLC or its
affiliate (collectively, "Xxxxx") has established a general ledger account (the
"Deposit Account") in the name of the Lender to secure letters of credit (the
"LCs") issued by Xxxxx for the account of the Parent; and
WHEREAS, on the date hereof, Xxxxxx has delivered to Xxxxx by wire
transfer of immediately available funds the sum of $600,000 (the "Deposit") for
deposit into the Deposit Account;
WHEREAS, concurrent with the execution and delivery of this Global
Amendment, the Lender will deliver to Xxxxx a Limited Recourse Guaranty and
Security Agreement (the "Lender Guaranty"); and
WHEREAS, the Lender Guaranty shall authorize Xxxxx to set off amounts
held in the Deposit Account against any obligations owed by the Parent to Xxxxx
under the LCs; and
WHEREAS, the Lender, the Parent and the Guarantors desire that any
amounts of the Deposit set off pursuant to the terms of the Lender Guaranty
shall be deemed advances to the Parent under the Tranche B Revolving Loan
(defined below) under the Subordinated Loan Agreement, in each case until such
time as Xxxxx or the Parent may restore to the Deposit Account such amounts set
off; and
WHEREAS, the Lender, the Parent and the Guarantors desire to (i)
increase the amount available to be borrowed by the Parent under the Tranche B
Revolving Loan under the Subordinated Loan Agreement to (ii) allow portions of
the Deposit Account set off by Xxxxx to be deemed advances to the Parent under
the Tranche B Revolving Loan; (iii) allow a fee payable by the Parent to the
Lender in consideration of its establishment of the Deposit Account and making
of the Deposit to be deemed accrued interest under the Tranche B Revolving Loan
and payable as provided in the Second Amended and Restated Subordinated Secured
Promissory Note dated on the date of this Agreement and made by the Parent in
favor of the Lender in the face principal amount of $15,000,000.00 (the "Note");
and (iv) allow the Lender to make additional advances to the Parent from time to
time under the Tranche B Revolving Loan; and
WHEREAS, the Lender, the Parent and the Guarantors desire to allow the
Parent to re-borrow at any time, and from time to time, principal amounts under
the Subordinated Loan Agreement that have been repaid pursuant to either the
conversion of indebtedness under the Tranche A Term Loan into shares of Series
2007-A Senior Preferred Stock of the Parent, or the conversion of indebtedness
under the Tranche B Revolving Loan into shares of 2007-B Senior Preferred Stock
of the Parent, in each case issued to the Lender in exchange for the forgiveness
of such indebtedness; and
WHEREAS, the Lender, the Parent and the Guarantors desire to amend
certain provisions of the Subordinated Loan Agreement, Subordinated Guaranty and
the Subordinated Security Agreement to facilitate the foregoing.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth in this Global Amendment, Parent, Guarantors, and Xxxxxx hereby agree
as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the
Subordinated Loan Agreement.
SECTION 2. GLOBAL AMENDMENT. All references to any written agreement,
document or note described or defined in the Subordinated Loan
Agreement, Subordinated Guaranty or Subordinated Security Agreement
shall be deemed to refer to such written agreement, document or note as
the same may have been or may be amended, supplemented, modified,
extended or restated from time to time.
SECTION 3. AMENDMENTS TO SUBORDINATED LOAN AGREEMENT.
A. The first WHEREAS clause of the RECITALS of the
Subordinated Loan Agreement is hereby amended by amending and restating such
WHEREAS clause in its entirety as follows:
WHEREAS, Xxxxxxxx has requested that Lender make available to Borrower
a loan in the aggregate principal amount of up to Fifteen Million Dollars
($15,000,000) (the "Loan"), on the terms and conditions hereinafter set forth,
and for the purpose(s) hereinafter set forth; and
B. The second sentence of Section 1.1 of the Subordinated Loan
Agreement is hereby amended by amending and restating such sentence in its
entirety as follows:
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The Loan shall be evidenced by a Second Amended and Restated
Subordinated Secured Promissory Note in the face principal amount of Fifteen
Million Dollars ($15,000,000), dated as of September 26, 2007, executed by
Xxxxxxxx in favor of Xxxxxx (the "Note").
C. Section 1.2 of the Subordinated Loan Agreement is hereby
amended by amending and restating such Section in its entirety as follows:
1.2 Advances under the Loan; Payment of Interest.
(a) Commitments. Xxxxxxxx has requested, and the Lender agrees, on the
terms and conditions set forth in this Agreement, to extend credit to the
Borrower from time to time prior to May 31, 2010 (the "Maturity Date") by making
loans to the Borrower (i) on a non-revolving basis in an amount not to exceed
the aggregate principal amount of Five Million Dollars ($5,000,000) (the
"Tranche A Term Loan"), and (ii) on a revolving basis from time to time (the
"Tranche B Revolving Loan"), provided, however, that at no time shall the
aggregate outstanding amount of such loans exceed Ten Million Dollars
($10,000,000) (the "Revolving Commitment"). Upon the issuance to the Lender from
time to time of shares of Xxxxxxxx's Series 2007-A Senior Preferred in exchange
for forgiveness of principal under the Tranche A Term Loan, (i) the maximum
aggregate principal amount of the Tranche A Term Loan will be reduced, and (ii)
the Revolving Commitment shall be increased, in each case on a dollar-for-dollar
basis by the amount of the principal so forgiven under the Tranche A Term Loan.
Subject to the terms and conditions of this Agreement, the Borrower may borrow,
repay, and re-borrow from time to time hereunder the amount of the Revolving
Commitment under this Section 1.2(a) to the extent that such repayment occurs
only through the issuance to the Lender of shares of Xxxxxxxx's Series 2007-B
Senior Preferred in exchange for forgiveness of principal and accrued and unpaid
interest under the Tranche B Revolving Loan.
(b) Advances. Lender has made (i) prior advances under the Tranche A
Term Loan in the aggregate amount of $7,000,000, of which $2,000,000 has been
repaid by the Borrower pursuant to a conversion of that amount of indebtedness
to Series 2007-A Senior Preferred of the Borrower, and (ii) prior advances under
the Tranche B Revolving Loan of $5,000,000. All amounts contained in that
certain deposit account established by Xxxxx Fargo Retain Finance II, LLC or its
affiliate ("Xxxxx") for the account of Lender (the "Deposit Account") that Xxxxx
may at any time, and from time to time, set off against any obligations owed by
Xxxxxx to Xxxxx pursuant to that certain Limited Recourse Guaranty and Security
Agreement by and between Lender and Xxxxx dated September 26, 2007, shall be
deemed advances by Lender to Borrower under the Tranche B Revolving Loan, in
each case from the time of such set-off until such time as such amounts set off
are restored and credited to the Deposit Account. Except as specified in the
preceding sentence, Lender shall not be obligated to make any further advance to
Borrower under the Loan. Any such further advance shall be made following
Xxxxxxxx's written request for such advance, at Xxxxxx's sole discretion and
subject to such conditions as Lender shall specify.
(c) Interest.
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(i) Interest on the outstanding principal balance of the
Tranche A Term Loan shall accrue at the rate of thirteen and one-half
percent (13.5%) per annum (computed on the basis of a 360-day year
consisting of twelve 30 day months). Interest on the outstanding
principal balance of the Tranche B Revolving Loan shall accrue at the
rate of eighteen percent (18%) per annum (computed on the basis of a
360-day year consisting of twelve 30 day months).
(ii) Interest on the outstanding principal balance of the Loan
shall be payable, in arrears, on the first day of each month or, if any
such date shall not be a business day, on the next succeeding business
day to occur after such date (each date on which interest shall be so
payable, an "Interest Payment Date"), provided that, (A) on each
Interest Payment Date through and including the first Interest Payment
Date on which the aggregate amount of interest accruing from March 1,
2007, through such Interest Payment Date under the Tranche A Term Loan
and the Tranche B Revolving Loan equals or exceeds $1,000,000 (the
"Final Mandatory Compounding Date"), the accrued interest under the
Tranche A Term Loan payable on such date shall be added to the
principal balance thereof and the accrued interest under the Tranche B
Revolving Loan payable on such date shall be added to the Tranche B
Revolving Loan, in each case in lieu of cash payment of such accrued
interest by the Borrower; and (B) all accrued and unpaid interest shall
be due and payable on the earlier of the Maturity Date and the date on
which the Lender demands repayment pursuant to the terms of this
Agreement.
(iii) On each Interest Payment Date occurring after the Final
Mandatory Compounding Date, if any interest accrued under the Loan is
not actually paid in cash to the Lender, at the Lender's option and in
the Lender's sole discretion, the outstanding principal balance of the
Loan shall be increased by an amount equal to the difference between
(i) interest accruing on the principal balance of such tranche during
the period from and including the previous Interest Payment Date to,
but not including, such Interest Payment Date and (ii) interest
actually paid in cash on the principal balance of such tranche on such
Interest Payment Date, and such amount shall thereafter earn interest
as principal. Any such increase to the principal amount of the Loan
shall be deemed a payment of interest then due under the Note, and no
Event of Default (as defined below) shall occur under this Agreement as
a result thereof.
(d) Deposit Account Fee. Prior to the Maturity Date and subject to the
terms and conditions set forth in this Agreement, the Borrower shall pay to the
Lender a fee (the "Deposit Account Fee") in consideration of Xxxxxx's
establishment of the Deposit Account and making of the Deposit, in an amount
determined in accordance with the following provisions:
(i) In respect of all amounts of the Deposit that continue to
be held in the Deposit Account from time to time and against which
Xxxxx does not exercise its right of set-off under the Lender Guaranty,
or which are set-off by Xxxxx under the Lender Guaranty but are
restored through payment or credit to the principal balance of the
Deposit Account ("Deposited Collateral"), the Borrower shall pay to the
Lender an amount equal to the excess of (i) the amount of interest that
would accrue on such amounts of Deposited Collateral if such amounts
were outstanding principal under the Tranche B Term Loan over (ii) the
amount of interest paid by Xxxxx to the Lender in
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respect of the Deposit Account, in each case during the period such
Deposited Collateral is actually held on deposit in the Deposit
Account; and
(ii) In respect of all amounts of the Deposit against which
Xxxxx exercises its right of set-off under the Lender Guaranty and
which are not restored to the principal balance of the Deposit Account,
the Borrower shall not pay a fee to the Lender.
(e) The Deposit Account Fee shall be payable, in arrears, on the first
day of each month or, if any such date shall not be a business day, on the next
succeeding business day to occur after such date; provided, however, that in
lieu of any payment in cash of the Deposit Account Fee, the amount of the
accrued Deposit Account Fee shall be deemed for all purposes under this
Agreement to be accrued but unpaid interest under the Tranche B Revolving Loan
that shall be subject to addition to principal as provided in Sections
1.2(c)(ii) and (iii) of this Agreement.
D. Section 4.2 of the Subordinated Loan Agreement is hereby
amended by amending and restating such Section in its entirety as follows:
4.2 Advances under the Tranche B Revolving Loan. The obligation of
Lender to fund the initial advance of $2,000,000 under the Tranche B Revolving
Loan was subject to the acceptance and acknowledgment by execution of Xxxxxxxx
and delivery to Lender, on or prior to April 4, 2007, of that certain letter
agreement between Lender and Borrower, dated as of March 30, 2007, regarding the
$2,000,000 advance under this Agreement and the Note, a copy of which is
attached hereto as Exhibit B. The obligation of Lender to fund all additional
advances under the Tranche B Revolving Loan:
(i) shall be subject to the fulfillment of each of the following
conditions (any or all of which may be waived in writing by
the Lender in its sole discretion):
(a) Borrower shall have and shall have caused Guarantors
to have performed and complied in all material
respects with all of the covenants, agreements,
obligations and conditions required by this Agreement
and the other Loan Documents;
(b) All representations and warranties of Borrower and
Guarantors set forth in this Agreement and the other
Loan Documents shall be true and correct in all
material respects on and as of the date of such
additional advance, as though made on and as of such
date (except to the extent that such representations
and warranties relate solely to an earlier date);
(c) There does not exist any condition or event that
constitutes a Default or an Event of Default, nor
will any thereof occur after giving effect to such
additional advance;
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(d) Borrower shall have delivered to Lender an amended
and restated subordinated secured promissory note
executed by Xxxxxxxx, in form and substance
satisfactory to Lender;
(e) Borrower shall have delivered to Lender a global
amendment and reaffirmation of subordinated debt
documents, (a "Global Amendment") executed by
Xxxxxxxx and Guarantors, in form and substance
satisfactory to Lender;
(f) Borrower shall have delivered to Lender an amendment
to the Subordination and Intercreditor Agreement,
executed by Xxxxxxxx, Guarantors, and Xxxxx, as the
senior creditor, in form and substance satisfactory
to Lender; and
(ii) may, at the Lender's option, be subject to the fulfillment of
any of the following conditions:
(a) Borrower shall have delivered to Lender a certificate
of the secretary or assistant secretary of Borrower
certifying that: the copy of the corporate charter
and other publicly filed organizational documents of
Borrower, certified by the Secretary of State or
other appropriate public official in the jurisdiction
in which Borrower is formed, and a copy of the bylaws
of Borrower delivered to Lender in connection
therewith, are true, correct and complete copies and,
such corporate charters, organizational documents,
and bylaws, have not been further amended, modified
or rescinded and are in full force and effect as of
the date of the Global Amendment;
(b) Borrower shall have caused each Guarantor to deliver
to Lender a certificate of the secretary or assistant
secretary of such Guarantor certifying that: (x) the
copy of the corporate charter and other publicly
filed organizational documents of such Guarantor,
certified by the Secretary of State or other
appropriate public official in the jurisdiction in
which such Guarantor is formed and the copy of the
bylaws or limited partnership agreement, as
applicable, of such Guarantor delivered to Lender in
connection therewith, are true, correct and complete
copies and such corporate charters, organizational
documents, bylaws and limited partnership agreement,
as applicable, have not been further amended,
modified or rescinded and are in full force and
effect as of the date of the Global Amendment; and
(y) such Guarantor is in good standing in its
jurisdiction of formation as of the date of the
Global Amendment;
(c) Borrower shall have delivered to Lender certified
copies of all corporate action taken by Xxxxxxxx and
each Guarantor, including resolutions of its Board of
Directors, authorizing the execution, delivery and
performance of the documents described in this
Section 4.2;
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(d) Xxxxxxxx shall have delivered to Lender a certificate
as to the legal existence and good standing of
Borrower, issued by the Secretary of State or other
appropriate public official in the jurisdiction in
which Borrower, no more than thirty days prior to the
effective date of the Global Amendment; or
(e) Borrower shall have delivered to Lender all other
documents and legal matters in connection with the
transactions contemplated by this Agreement or the
Global Amendment which shall be in form an substance
satisfactory to Lender.
SECTION 4. REFERENCES TO CERTAIN SUBORDINATED DEBT DOCUMENTS. All
references to each of the Subordinated Loan Agreement, Subordinated
Guaranty and Subordinated Security Agreement in any of the Loan
Documents shall be deemed a reference to each of the Subordinated Loan
Agreement, Subordinated Guaranty and Subordinated Security Agreement as
amended by this Global Amendment. Except as expressly provided in this
Global Amendment, the execution and delivery of this Global Amendment
does not and will not amend, modify or supplement any provision of, or
constitute a consent to or a waiver of any noncompliance with the
provisions of, the Subordinated Loan Agreement, Subordinated Guaranty
and Subordinated Security Agreement or any of the other Loan Documents
executed in connection therewith. To the extent not inconsistent
herewith, the Subordinated Loan Agreement, Subordinated Guaranty and
Subordinated Security Agreement and each of the other Loan Documents
executed by Parent, and Guarantors in connection therewith shall remain
in full force and effect and are hereby ratified and confirmed by the
parties thereto.
SECTION 5. EFFECTIVE DATE. This Global Amendment shall become effective
as of its date and shall bind all parties only upon (i) the execution
and delivery by the Parent and Guarantors to Lender of this Global
Amendment, (ii) the execution and deliver by the Parent, Guarantors,
and Xxxxx to Lender of that certain Second Amendment to Subordination
and Intercreditor Agreement, dated as of the date hereof, and (iii)
such other documents or agreements executed and delivered by Parent and
Guarantors or any other party as Lender shall reasonably request; and
shall be conditioned upon the correctness of all representations and
warranties made by Parent and Guarantors.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND GUARANTORS.
Each of the Parent and Guarantors hereby represents and warrants to
Lender as follows:
A. Such party has the right and power, and has taken all
necessary action to authorize it, to execute, deliver and perform this Global
Amendment in accordance with its terms. This Global Amendment has been duly
executed and delivered by such party and is a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms.
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B. The execution, delivery and performance of this Global
Amendment in accordance with its terms do not and will not, by the passage of
time, the giving of notice or otherwise,
(i) require any governmental approval or violate any
applicable law relating to such party;
(ii) conflict with, result in a breach of or
constitute a default under the organizational documents of such party, any
material provision of any indenture, agreement or other instrument to which it
is a party or by which it or any of its properties may be bound or any
governmental approval relating to it; or
(iii) result in or require the creation or imposition
of any lien (except as permitted by the Loan Documents) upon or with respect to
any property now owned or hereafter acquired by such party.
C. That, after giving affect to the amendments set forth in
this Global Amendment, the representations and warranties of such party set
forth in the Loan Documents and in any other document, instrument or agreement
executed or delivered in connection therewith are true and correct as of the
date hereof as if made on the date hereof.
D. No Event of Default under the Loan Documents, other than as
specifically waived herein, has occurred and is continuing as of this date.
SECTION 7. NO NOVATION. It is the intention of the parties hereto that
this Global Amendment shall not constitute a novation of the
Subordinated Loan Agreement, Subordinated Guaranty or Subordinated
Security Agreement and shall in no way adversely affect or impair the
validity of the Loan Documents, it being the intention of the parties
hereto merely to amend the Subordinated Loan Agreement, Subordinated
Guaranty or Subordinated Security Agreement as expressly set forth
herein.
SECTION 8. COUNTERPARTS. This Global Amendment may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
SECTION 9. GOVERNING LAW. THIS GLOBAL AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
SECTION 10. THIS GLOBAL AMENDMENT. This Global Amendment is executed
pursuant to the Subordinated Loan Agreement, Subordinated Guaranty and
Subordinated Security Agreement and shall be construed, administered
and applied in accordance with all of the terms and provisions of the
same.
SECTION 11. REAFFIRMATION. Guarantors hereby
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(i) acknowledge that, as of the date hereof, the face
principal amount of the Subordinated Note has been increased to $15,000,000, the
interest rate on the Tranche B Revolving Loan is 18% per annum, Xxxxxx has
agreed to defer payment of approximately $1,000,000 of interest on the Loan and
permit such accrued but unpaid interest to be added to the principal balance
outstanding under the Note, and may, in its sole discretion, defer and/or permit
the addition to principal of certain accrued interest under the Note in excess
of $1,000,000, as provided in Section 3(B) of this Global Amendment;
(ii) agree that each of the Subordinated Guaranty and
Subordinated Security Agreement remains in full force and effect and continues
to be the legal, valid and binding obligation of each of the Guarantors
enforceable against each of the Guarantors in accordance with its terms, except
as expressly modified by the relevant provisions of this Global Amendment; and
(iii) affirms that the Subordinated Guaranty
guarantees all of the present and future indebtedness owing by Parent to Lender
under or in connection with the Subordinated Loan Agreement and the other Loan
Documents, as modified by the Amendments, and the Subordinated Security
Agreement secures all of the payment and performance obligations of Parent and
Guarantors, whether now existing or hereafter arising, under the Subordinated
Loan Agreement, the Note or the Subordinated Guaranty, as modified by the
Amendments.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned Xxxxxx has executed this Global
Amendment as of the date first above written.
LENDER:
RONHOW, LLC, a Georgia limited liability company
By: Ronus, Inc., a Georgia corporation,
Managing Member
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
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IN WITNESS WHEREOF, the undersigned Xxxxxx and Guarantors have executed this
Global Amendment as of the date first above written.
PARENT:
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HAROLD'S STORES, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
GUARANTORS:
-----------
HAROLD'S FINANCIAL CORPORATION
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
XXXXXX'S DIRECT, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S STORES OF TEXAS, L.P.
By: HSTX, Inc., General Partner
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
XXXXXX'S OF XXXXXXX, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
THE CORNER PROPERTIES, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
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XXXXXX'S DBO, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
HAROLD'S LIMITED PARTNERS, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
HSTX, INC.
By: /s/ Xxx Xxxxxxxxx
--------------------------
Name: Xxx Xxxxxxxxx
Title: CEO
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Exhibit B
[attached]
RonHow, LLC
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
March 30, 2007
Xxxxxx's Stores, Inc.
000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx, Chief Financial Officer
Dear Xxxx:
In conjunction with discussions among Xxxxxx's Stores, Inc. and its
majority investors regarding continued financial support for Xxxxxx's, the
parties have developed a short-term financing plan as outlined in the attached
summary term sheet.
Given Xxxxxx's immediate need for cash, XxxXxx is willing to make an
additional $2 million advance under the existing Subordinated Loan Agreement and
related note, each dated as of August 31, 2006. As a condition to making this
advance, XxxXxx is requiring that Xxxxxx's agree to the following:
1. Subject to the approval of Xxxxxx's senior lender, Xxxxx Fargo
Retail Finance II, LLC, interest will accrue on this $2 million
advance at a rate of 18.0% per annum. Upon such approval, the
18.0% per annum rate will be applied retroactively to the date of
the advance, in place of the 13.5% per annum rate otherwise
applicable pursuant to the current terms of the subordinated note.
2. Xxxxxx's will use commercially reasonable efforts to obtain, as
promptly as practicable, the approval of Xxxxx Fargo for the 18.0%
per annum interest rate on such advance.
3. Xxxxxx's will execute and deliver, and cause the guarantors of the
subordinated loan to execute and deliver, any and all documents
reasonably requested by XxxXxx to evidence the 18.0% per annum
interest rate accruing on the advance and the continuing
effectiveness of the guaranty and security provided by the
guarantors with respect to all of the indebtedness outstanding
under the subordinated debt facility, including this additional
advance.
4. Xxxxxx's will use commercially reasonable efforts to obtain, as
promptly as practicable, the consent and approval of Xxxxx Fargo
to all aspects of the proposed
Xxxxxx's Stores, Inc.
March 30, 2007
Page 2
short-term financing plan as described in the attached summary
term sheet that require Xxxxx Fargo's approval.
If Xxxxxx's is in agreement with the above conditions to the $2 million
advance, please execute the enclosed copy of this letter in the place indicated
below and return it to me.
Sincerely,
/s/ Xxxxxx X. Xxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxx
President, Xxxxx, Inc.,
Managing Member of RonHow, LLC
Accepted and agreed to on behalf of Xxxxxx's Stores, Inc.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Title: Chief Financial Officer
Date: March 30, 2007
