EXHIBIT 10.7
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SUBORDINATION AND INTERCREDITOR AGREEMENT
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THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement") is
entered into as of August 31, 2006, by and among RONHOW, LLC, a Georgia limited
liability company, (the "Subordinated Creditor" or "Subordinated Lender"),
HAROLD'S STORES, INC., an Oklahoma corporation (the "Parent"), HAROLD'S
FINANCIAL CORPORATION, an Oklahoma corporation, HAROLD'S DIRECT, INC., an
Oklahoma corporation, HAROLD'S STORES OF TEXAS, L.P., a Texas limited
partnership, HAROLD'S OF JACKSON, INC., a Mississippi corporation, THE CORNER
PROPERTIES, INC., an Oklahoma corporation, HAROLD'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"), and XXXXX FARGO RETAIL FINANCE II, LLC, as agent (the
"Agent") and lender (together with any other lenders under the Senior Loan
Agreement as defined below, collectively the "Lender"; the Agent, the Lender,
and their respective successors, transferees, and assigns, being herein
sometimes collectively referred to as the "Senior Creditor").
R E C I T A L S
A. The Subordinated Creditor has agreed to make a loan (the
"Subordinated Loan") to the Parent as evidenced by Subordinated Loan Agreement
(as defined below) and the Guarantors have agreed to guarantee the obligations
of the Subordinated Creditor thereunder pursuant to the Subordinated Guaranty
(as defined below). The Subordinated Loan and the Subordinated Guaranty are to
be secured by the Subordinated Security Documents (as defined below).
B. The Parent, certain of the Guarantors, Xxxxx Fargo Retail Finance
II, LLC, as Agent and Lender, have entered into the Senior Loan Agreement (as
defined below) pursuant to which, among other things, the Lender has agreed,
subject to the terms and conditions set forth in the Senior Loan Agreement, to
make certain loans and financial accommodations to the Parent and certain of the
Guarantors, which loans and financial accommodations are secured by the Senior
Security Documents (as defined below).
C. In order to induce Agent and Lender to consent to the Subordinated
Loan, the Subordinated Creditor has agreed to enter into this Agreement in order
to establish the relative rights and priorities of the Subordinated Creditor in
respect of the Subordinated Debt (as defined below) and the Subordinated
Security Documents, and the Senior Creditor in respect of the Senior Debt (as
defined below) and the Senior Security Documents (as defined below), all as more
particularly set forth herein.
NOW, THEREFORE, in order to induce the Senior Creditor to consent to
the Subordinated Loan, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
The following terms shall have the following meanings in this
Agreement:
"AGENT" shall mean Xxxxx Fargo Retail Finance II, LLC, a
Delaware limited liability company acting in its capacity as agent for
the Lender, or any other Person appointed by the holders of the Senior
Debt as agent for purposes of the Senior Debt Documents and this
Agreement.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code, as amended from time to time and any successor statute and all
rules and regulations promulgated thereunder.
"DISTRIBUTION" shall mean, with respect to any indebtedness or
obligation, (a) any payment or distribution by any Person of cash,
securities or other property, by set-off or otherwise, on account of
such indebtedness or obligation, including but not limited to the
payment of any special dividend or special distribution, (b) any
redemption, purchase or other acquisition of such indebtedness or
obligation by any Person, or (c) the granting of any lien or security
interest to or for the benefit of the holders of such indebtedness or
obligation in or upon any property of any Person.
"ENFORCEMENT ACTION" shall mean (a) to take from or for the
account of any Obligor, by set-off, recoupment or in any other manner,
the whole or any part of any moneys which may now or hereafter be owing
or due to any Obligor and apply the same against the Subordinated Debt,
(b) to xxx for payment of, or to initiate or participate with others in
any suit, action or Proceeding against any Obligor to enforce payment
of or to collect, the whole or any part of the Subordinated Debt, (c)
to commence judicial or nonjudicial enforcement of any of the rights
and remedies under the Subordinated Debt Documents or applicable law
with respect to the Subordinated Debt, including without limitation the
provision of notices with respect to the existence or any exercise of
rights and remedies in respect of the Subordinated Debt whether under
applicable law or contract, (d) to make demand for payment of or
accelerate the Subordinated Debt, (e) to exercise any put option or to
cause any Obligor to honor any redemption or mandatory prepayment
obligation in respect of any Subordinated Debt, (f) take any action
under the provisions of any state or federal law, including, without
limitation, the Uniform Commercial Code, or under any contract or
agreement, to enforce, foreclose upon, take possession of or sell any
property or assets of any Obligor, whether pursuant to the Subordinated
Security Documents or otherwise, (g) commence or join in any action to
seek relief from the automatic stay pursuant to Section 362 of the
Bankruptcy Code with respect to any collateral or other property of any
Obligor or seek adequate protection in respect of any liens or security
interests securing the Subordinated Debt, or (h) commence or join in
any proceedings for the appointment of a receiver, custodian or keeper
of all, or any portion, of the assets of any Obligor; provided,
however, that the Subordinated Creditor's (i) demand for payment
(without further action) of Permitted Subordinated Debt Payments in
accordance with the provisions of Section 2.3 hereof shall not be
deemed to constitute an Enforcement Action for purposes of this
Agreement and (ii) conversion of all or any portion of the Subordinated
Debt into common stock (as defined in the Senior Loan Agreement) of
Parent or preferred stock of Parent if the terms of such
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preferred stock have been approved by Senior Creditor shall not be
deemed to constitute an Enforcement Action for purposes of this
Agreement.
"OBLIGOR" means Parent, any Guarantor and any other Person
obligated in respect of the Senior Debt or the Subordinated Debt from
time to time.
"PERMITTED REFINANCING" shall mean any refinancing of all or
any portion of the Senior Debt under the Senior Loan Agreement.
"PERMITTED REFINANCING SENIOR DEBT DOCUMENTS" shall mean any
financing documentation which replaces the other Senior Loan Documents
and pursuant to which the Senior Debt under the Senior Loan Agreement
is refinanced, in whole or in part, as such financing documentation may
be amended, modified, supplemented or otherwise modified from time to
time in.
"PERMITTED SUBORDINATED DEBT PAYMENTS" means scheduled monthly
payments of accrued but unpaid interest at the rates set forth in the
Subordinated Note (including interest at the default rate to the extent
then applicable) and payments on a scheduled monthly payment date of
any accrued interest that remains unpaid due to application of this
Agreement.
"PERSON" means any natural person, corporation, general or
limited partnership, limited liability company, firm, trust,
association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.
"PROCEEDING" shall mean any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship, liquidation,
dissolution, reorganization, assignment for the benefit of creditors,
appointment of a custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the liquidation, dissolution
or other winding up of a Person.
"SENIOR COVENANT DEFAULT" shall mean any "Event of Default"
under the Senior Debt Documents (other than a Senior Payment Default),
or any condition or event that, after notice or lapse of time or both,
would constitute such an Event of Default (other than a Senior Payment
Default) if that condition or event were not cured or removed within
any applicable grace or cure period set forth therein.
"SENIOR DEBT" shall mean all obligations, liabilities and
indebtedness of every nature of the Parent and the Guarantors from time
to time owed to the Senior Creditor under the Senior Debt Documents and
any indebtedness arising pursuant to debtor-in-possession financing
arrangements or pursuant to financing arrangements entered into in
connection with the confirmation of a plan of reorganization under the
Bankruptcy Code, including in each instance, without limitation, the
principal amount of all debts, claims and indebtedness, accrued and
unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and
from time to time hereafter owing, due or payable, whether before or
after the filing of a Proceeding
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under the Bankruptcy Code together with (a) any amendments,
modifications, renewals, increases, or extensions thereof, and (b) any
interest accruing thereon after the commencement of a Proceeding,
without regard to whether or not such interest is an allowed claim.
Senior Debt shall be considered to be outstanding whenever any loan
commitment under the Senior Debt Documents is outstanding.
"SENIOR DEBT DOCUMENTS" shall mean the Senior Loan Documents
and, after the consummation of any Permitted Refinancing, the Permitted
Refinancing Senior Debt Documents.
"SENIOR DEFAULT" shall mean any Senior Payment Default or
Senior Covenant Default.
"SENIOR DEFAULT NOTICE" shall mean a written notice from or on
behalf of the Senior Creditor to the Subordinated Creditor pursuant to
which the Subordinated Creditor is notified of the occurrence of a
Senior Default.
"SENIOR GUARANTY" shall mean that certain Continuing Guaranty
and Security Agreement dated as of February 5, 2003, by and among
Guarantors, certain other subsidiaries of Parent and Agent, as the same
may be amended, modified, restated and supplemented from time to time.
"SENIOR LOAN AGREEMENT" shall mean that certain Loan and
Security Agreement, dated as of February 5, 2003, by and among Parent,
certain of the Guarantors, Agent and Lender, as the same may be
amended, modified, restated and supplemented from time to time.
"SENIOR LOAN DOCUMENTS" shall mean the Senior Loan Agreement,
the Senior Security Documents, and all other agreements, documents and
instruments evidencing or securing the Senior Loan Agreement, as the
same may be amended, modified, restated and supplemented from time to
time.
"SENIOR PAYMENT DEFAULT" shall mean (a) any "Event of Default"
under the Senior Debt Documents resulting from the failure of any
Obligor to pay, on a timely basis, any principal, interest, fees or
other obligations under the Senior Debt Documents including, without
limitation, any default in payment of Senior Debt after acceleration
thereof, or any condition or event that, after notice or lapse of time
or both, would constitute such an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure
period set forth therein and (b) the existence or continuation of any
"Overadvance" pursuant to the Senior Debt Documents as in effect from
time to time, whether or not such "Overadvance" shall exist with the
consent or approval of Senior Creditor or otherwise be the subject of
an agreed forbearance or similar arrangement with Parent or any other
Person.
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"SENIOR SECURITY DOCUMENTS" shall mean all security documents
securing the Senior Debt and all security documents securing any
Permitted Refinancing, as the same may be amended, modified, restated
and supplemented from time to time.
"SUBORDINATED DEBT" shall mean all of the obligations of any
Obligor to the Subordinated Creditor evidenced by or incurred pursuant
to the Subordinated Debt Documents (including, without limitation, each
future advance made pursuant to such Subordinated Debt Documents),
together with any amounts that may be advanced to, or for the benefit
of, any Obligor following the commencement of any Proceeding.
"SUBORDINATED DEBT DOCUMENTS" shall mean, collectively, the
Subordinated Loan Agreement, the Subordinated Note, and the
Subordinated Security Documents, and all other documents, agreements
and instruments now existing or hereinafter entered into evidencing or
securing all or any portion of the Subordinated Debt.
"SUBORDINATED DEBT DEFAULT" shall mean a default in the
payment of the Subordinated Debt or in the performance of any term,
covenant or condition contained in any of the Subordinated Debt
Documents or any other occurrence permitting the Subordinated Creditor
to accelerate the payment of, or cause a mandatory payment on or the
redemption of, all or any portion of the Subordinated Debt.
"SUBORDINATED DEBT DEFAULT NOTICE" shall mean a written notice
from the Subordinated Creditor or the Parent to the Senior Creditor
pursuant to which the Senior Creditor is notified of the occurrence of
a Subordinated Debt Default, which notice incorporates a reasonably
detailed description of such Subordinated Debt Default.
"SUBORDINATED LOAN AGREEMENT" shall mean that certain
Subordinated Loan Agreement, dated as of even date herewith, entered
into by and between Subordinated Creditor and Parent, as the same may
be amended, modified, restated and supplemented from time to time.
"SUBORDINATED GUARANTY" shall mean that certain Subordinated
Guaranty, dated as of even date herewith, made by Guarantors for the
benefit of the Subordinated Creditor, as the same may be amended,
modified, restated and supplemented from time to time.
"SUBORDINATED NOTE" shall mean that certain Subordinated
Secured Promissory Note, dated of even date herewith, made by Parent to
the order of Subordinated Creditor, in the face principal amount of
$10,000,000, as the same may be amended, modified, restated and
supplemented from time to time.
"SUBORDINATED SECURITY DOCUMENTS" shall mean the Subordinated
Guaranty and all other security documents now or hereafter securing the
Subordinated Debt, as the same may be amended, modified, restated and
supplemented from time to time.
2. SUBORDINATION.
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2.1 SUBORDINATION OF SUBORDINATED DEBT TO SENIOR DEBT. Subordinated
Creditor (and each transferee of all or any portion of the Subordinated Debt by
its acceptance of the Subordinated Debt Documents or upon transfer or
assignment) hereby covenants and agrees, notwithstanding anything to the
contrary contained in any of the Subordinated Debt Documents, that the payment
of any and all of the Subordinated Debt shall be subordinate and subject in
right and time of payment, to the extent and in the manner hereinafter set forth
herein, to the prior indefeasible payment in full in cash of all Senior Debt.
Each holder of Senior Debt, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, shall be deemed to have acquired the Senior
Debt in reliance upon the provisions contained in this Agreement. Parent and
each Guarantor acknowledge and agree to the subordination herein provided and
further covenant and agree that each of same shall abide by the terms and
provisions hereof.
2.2 LIQUIDATION, DISSOLUTION, BANKRUPTCY. In the event of any
Proceeding involving any Obligor:
(a) All Senior Debt shall first be indefeasibly paid in full
in cash and all commitments to lend under the Senior Debt Documents
shall be terminated before any Distribution, whether in cash,
securities or other property, shall be made to the Subordinated
Creditor on account of any Subordinated Debt.
(b) Any Distribution, whether in cash, securities or other
property, which would otherwise, but for the terms hereof, be payable
or deliverable in respect of the Subordinated Debt shall be paid or
delivered directly to the Senior Creditor or to an agent or trustee
acting on behalf of the Senior Creditor in accordance with the terms of
the Senior Debt Documents) until all Senior Debt is indefeasibly paid
in full in cash and all commitments to lend under the Senior Debt
Documents shall have been terminated. The Subordinated Creditor
irrevocably authorizes, empowers and directs any debtor, debtor in
possession, receiver, trustee, liquidator, custodian, conservator or
other Person having authority, to pay or otherwise deliver all such
Distributions to the Senior Creditor or to an agent or trustee acting
on behalf of the Senior Creditor. The Subordinated Creditor also
irrevocably authorizes and empowers the Senior Creditor, or any agent
or trustee acting on behalf of the Senior Creditor, in the name of the
Subordinated Creditor, to demand, xxx for, collect and receive any and
all such Distributions.
(c) The Subordinated Creditor agrees not to initiate,
prosecute or participate in any claim, action or other proceeding
challenging the enforceability, validity, perfection or priority of the
Senior Debt or any liens and security interests of the Senior Security
Documents.
(d) The Subordinated Creditor (i) agrees to execute, verify,
deliver and file any proofs of claim in respect of the Subordinated
Debt requested by the Senior Creditor and indicating that all such
claims are junior and subordinate to claims of the Senior Creditor on
the terms set forth herein and may be voted by such Senior Creditor or
its agent, or any agent or trustee acting on behalf of the Senior
Creditor, in connection with any such Proceeding and (ii) hereby
irrevocably authorizes, empowers and appoints the
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Senior Creditor, or any agent or trustee acting on behalf of the Senior
Creditor, its agent and attorney-in-fact to take any of the following
actions: (x) execute, verify, deliver and file such proofs of claim
upon the failure of the Subordinated Creditor promptly to do so prior
to 30 days before the expiration of the time to file any such proof of
claim; and (y) vote any claim filed by or on behalf of Subordinated
Creditor in any such Proceeding; provided such Person shall have no
obligation to execute, verify, deliver, file and/or vote any such proof
of claim. In the event that the Senior Creditor, or any agent or
trustee acting on behalf of the Senior Creditor, votes any claim in
accordance with the authority granted hereby, the Subordinated Creditor
shall not be entitled to change or withdraw such vote.
(e) The Senior Debt shall continue to be treated as Senior
Debt and the provisions of this Agreement shall continue to govern the
relative rights and priorities of the Senior Creditor and the
Subordinated Creditor even if all or part of the Senior Debt or the
liens security interests of the Senior Security Documents are
subordinated, set aside, avoided, invalidated or disallowed in
connection with any such Proceeding, and this Agreement shall be
reinstated if at any time any payment of any of the Senior Debt is
rescinded or must otherwise be returned by the Senior Creditor.
2.3 SUBORDINATED DEBT PAYMENT RESTRICTIONS.
(a) Notwithstanding the terms of the Subordinated Debt
Documents, each Obligor hereby agrees that it may not make, and the
Subordinated Creditor hereby agrees that it will not accept, any
Distribution with respect to the Subordinated Debt until the Senior
Debt is indefeasibly paid in full in cash and all commitments to lend
under the Senior Debt Documents have terminated; PROVIDED, HOWEVER,
that the Parent may make, and the Subordinated Creditor may accept,
Permitted Subordinated Debt Payments unless at the time of any such
payment:
(i) a Senior Payment Default exists and such Senior
Payment Default shall not have been cured or waived to the
satisfaction of Senior Creditor; or
(ii) (A) the Parent and the Subordinated Creditor
shall have received a Senior Default Notice stating that a
Senior Covenant Default exists or would be created by the
making of such payment, and (B) such Senior Covenant Default
shall not have been cured or waived to the satisfaction of
Senior Creditor.
(b) The Parent may resume Permitted Subordinated Debt Payments
(and may make any Permitted Subordinated Debt Payments missed due to
the application of paragraph (a) of this Section 2.3) in respect of the
Subordinated Debt upon a cure or waiver in writing of all Senior
Defaults then existing subject to the limitations of Section 2.3(a)
above.
(c) No Senior Default shall be deemed to have been waived for
purposes of this Section 2.3 unless and until the Parent shall have
received a written waiver thereof from the Senior Creditor or an agent
or trustee acting on behalf of the Senior Creditor.
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(d) Notwithstanding the provisions of Section 2.3(a) preceding
and the continuation of a Senior Default, Subordinated Creditor may
receive and retain the following deemed payments in respect of the
Subordinated Debt so long as such payments do not involve any cash
payment by any Obligor to, or for the benefit of, Subordinated
Creditor: (i) the payment of the Subordinated Debt deemed to be made
upon conversion of all, or a portion of, the Subordinated Debt into
common stock (as defined in the Senior Loan Agreement) of Parent or
preferred stock of Parent if the terms of such preferred stock have
been approved by Senior Creditor; and (ii) the payment of Subordinated
Debt deemed to be made as a result of an additional advance of
Subordinated Debt for the account Parent as a result of Parent's
failure to make a scheduled interest payment in respect of the
Subordinated Debt when due and payable.
2.4 SUBORDINATED DEBT STANDSTILL PROVISIONS. Until the Senior Debt is
indefeasibly paid in full in cash and all commitments to lend under the Senior
Debt Documents shall have been terminated, the Subordinated Creditor shall not,
without the prior written consent of the Senior Creditor, take any Enforcement
Action with respect to the Subordinated Debt. Notwithstanding the foregoing, the
Subordinated Creditor may file proofs of claim against the Company in any
Proceeding involving the Company, subject to the provisions of Section 2.2
hereof. Any Distributions or other proceeds of any Enforcement Action obtained
by the Subordinated Creditor shall in any event be held in trust by it for the
benefit of the Senior Creditor and promptly paid or delivered to the Senior
Creditor in the form received until all Senior Debt is indefeasibly paid in full
in cash and all commitments to lend under the Senior Debt Documents shall have
been terminated.
2.5 INCORRECT PAYMENTS. If any Distribution on account of the
Subordinated Debt not permitted to be made by an Obligor or accepted by the
Subordinated Creditor under this Agreement is made and received by the
Subordinated Creditor, such Distribution shall not be commingled with any of the
assets of the Subordinated Creditor, shall be held in trust by the Subordinated
Creditor for the benefit of the Senior Creditor and shall be promptly paid over
to the Senior Creditor for application (in accordance with the Senior Debt
Documents ) to the payment of the Senior Debt then remaining unpaid, until all
of the Senior Debt is paid in full in cash and all commitments to lend under the
Senior Debt Documents shall have been terminated.
2.6 SUBORDINATION OF LIENS AND SECURITY INTERESTS; AGREEMENT NOT TO
CONTEST; AGREEMENT TO RELEASE LIENS; PHYSICAL DELIVERY.
(a) Until the Senior Debt has been indefeasibly paid
in full in cash and all lending commitments under the Senior Debt
Documents have terminated, any liens and security interests of the
Subordinated Creditor arising under the Subordinated Security Documents
or otherwise in respect of any property of any Obligor, including any
liens and security interests which may exist in breach of Subordinated
Creditor's agreement pursuant to this Agreement, shall be and hereby
are subordinated and made junior in priority for all purposes and in
all respects to the liens and security interests of the Senior Creditor
arising under the Senior Security Documents, regardless of the time,
manner or order of perfection of any such liens and security interests.
The Subordinated Creditor agrees that it will not at any time, and will
not join with any other Person to,
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contest the validity, perfection, priority or enforceability of the
Senior Debt, the Senior Debt Documents, or the liens and security
interests of the Senior Security Documents. In connection with any sale
or other disposition of any property of any Obligor subject to the
Subordinated Security Documents or any other liens or security
interests of the Subordinated Creditor in any property of an Obligor,
whether such sale or other disposition is being effected voluntarily by
the Obligor or pursuant to the exercise by the Senior Creditor of any
rights or remedies pursuant to the Senior Security Documents or
otherwise, the Subordinated Creditor shall, promptly upon request of
the Senior Creditor and confirmation that proceeds of such sale or
disposition are to be applied against the Senior Debt or Subordinated
Debt, or both, or paid to any other Person having a Lien thereon or
otherwise lawfully entitled thereto pursuant to rights therein superior
to those of the Subordinated Creditor, or made available to the Obligor
for use in its business, execute and deliver to the Senior Creditor
such termination statements and releases as the Senior Creditor shall
request to effect the release of the liens and security interests of
the Subordinated Creditor in any such property being so sold or
disposed of. In furtherance of the foregoing, the Subordinated Creditor
hereby irrevocably appoints the Senior Creditor its attorney-in-fact,
with full authority in the place and stead of the Subordinated Creditor
and in the name of the Subordinated Creditor or otherwise, to execute
and deliver any document or instrument which the Subordinated Creditor
may be required to deliver pursuant to this Section 2.6.
(b) Senior Creditor and Subordinated Creditor agree
that, until the indefeasible payment in full in cash of all Senior
Debt, Senior Creditor shall (i) hold or control all of the collateral
for the Senior Debt or the Subordinated Debt as to which the security
interest therein is perfected by obtaining possession or dominion and
control, as applicable, of such collateral (the "Controlled
Collateral") and (ii) for so long as the Controlled Collateral forms a
part of the collateral for the Subordinated Debt, Senior Creditor shall
be deemed to hold or control as bailee for the Subordinated Creditor
all of the Controlled Collateral pledged to the Subordinated Creditor
pursuant to the Subordinated Loan Documents. To the extent permitted by
applicable law, Senior Creditor shall deliver such Controlled
Collateral possessed by it to the Subordinated Creditor at such time as
the Senior Debt is indefeasibly paid in full in cash.
(c) Senior Creditor, Subordinated Creditor, Parent
and each Guarantor acknowledge and agree that, on the date of this
Agreement, an amount equal to $300,000 shall be funded by Subordinated
Creditor as a portion of the Subordinated Debt shall be deposited into
a deposit account maintained by Parent that is not swept to pay amounts
due under the Senior Loan Documents, as contemplated by the
Subordinated Loan Agreement (the "Delisting Fund"). The Delisting Fund
shall constitute a portion of the Controlled Collateral but,
notwithstanding the requirements of the Senior Loan Agreement to the
contrary, shall not be applied against the Senior Debt as required by
the Senior Debt Documents until such time as an Event of Default shall
have occurred under the Senior Debt Documents and the indebtedness
thereunder shall have been accelerated. The Delisting Fund shall be
used by Parent solely for the purposes of funding expenses incurred in
connection with a Qualified De-registration Transaction (as defined in
the Senior Loan Agreement); provided, however, if Parent shall elect
not to pursue a
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Qualified De-registration Transaction, any amounts remaining in the
Delisting Fund shall be applied immediately by Parent in repayment of
the Senior Debt as would have been required by the Senior Loan
Agreement but for this Section 2.6(c).
2.7 SALE, TRANSFER OR OTHER DISPOSITION OF SUBORDINATED DEBT.
(a) The Subordinated Creditor shall not sell, assign, pledge,
dispose of or otherwise transfer all or any portion of the Subordinated
Debt or any Subordinated Debt Document: (i) without giving prior
written notice of such action to the Senior Creditor and receiving the
prior written consent of Senior Creditor (which consent shall not be
unreasonably withheld), (ii) unless, prior to the consummation of any
such action, the transferee thereof shall execute and deliver to the
Senior Creditor an agreement substantially identical to this Agreement,
providing for the continued subordination of the Subordinated Debt to
the Senior Debt as provided herein and for the continued effectiveness
of all of the rights of the Senior Creditor arising under this
Agreement and (iii) unless, following the consummation of any such
action, there shall be no more than two holders of the Subordinated
Debt.
(b) Notwithstanding the failure of any transferee to execute
or deliver an agreement substantially identical to this Agreement, the
subordination effected hereby shall survive any sale, assignment,
pledge, disposition or other transfer of all or any portion of the
Subordinated Debt, and the terms of this Agreement shall be binding
upon the successors and assigns of the Subordinated Creditor, as
provided in Section 9 hereof.
2.8 LEGENDS. Until the termination of this Agreement in accordance with
Section 15 hereof, the Subordinated Creditor will cause to be clearly,
conspicuously and prominently inserted on the face of the Subordinated Loan
Agreement and the Subordinated Note, as well as any renewals or replacements
thereof, the following legend:
"THIS [LOAN AGREEMENT/NOTE] AND THE RIGHTS AND OBLIGATIONS EVIDENCED
HEREBY, INCLUDING THE RIGHT TO DEMAND PAYMENT HEREUNDER AND TO ENFORCE
ANY INSTRUMENTS SECURING THIS NOTE, ARE MADE EXPRESSLY SUBJECT AND
SUBORDINATE TO CERTAIN RIGHTS OF THE HOLDER(S) OF THE INDEBTEDNESS AND
OTHER OBLIGATIONS OWING FROM TIME TO TIME BY HAROLD'S STORES, INC. AND
CERTAIN OF ITS SUBSIDIARIES PURSUANT TO A LOAN AND SECURITY AGREEMENT
ENTERED INTO AS OF FEBRUARY 5, 2003, BETWEEN HAROLD'S STORES, INC. AND
CERTAIN OF ITS SUBSIDIARIES AND XXXXX FARGO RETAIL FINANCE II, LLC, AS
THE SAME MAY BE AMENDED, MODIFIED, RESTATED AND SUPPLEMENTED FROM TIME
TO TIME, ALL AS MORE PARTICULARLY PROVIDED PURSUANT TO THE TERMS OF THE
SUBORDINATION AND INTERCREDITOR AGREEMENT ENTERED INTO IN AUGUST 2006,
AMONG HAROLD'S STORES, INC. AND CERTAIN OF ITS SUBSIDIARIES, RONHOW,
LLC AND XXXXX FARGO RETAIL FINANCE II, LLC, AS THE SAME
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MAY BE AMENDED, MODIFIED, RESTATED AND SUPPLEMENTED FROM TIME TO TIME,
THE TERMS OF WHICH SUBORDINATION AND INTERCREDITOR AGREEMENT BY THIS
REFERENCE ARE MADE A PART OF THIS [LOAN AGREEMENT/NOTE]. PAYEE AND EACH
OTHER HOLDER, ASSIGNEE OR TRANSFEREE OF THIS [LOAN AGREEMENT/NOTE], BY
ACCEPTANCE HEREOF, AGREE TO BE BOUND BY SUCH SUBORDINATION AND
INTERCREDITOR AGREEMENT.
2.9 CONTINUING SUBORDINATION. The subordination effected by this
Agreement is a continuing subordination, and the Subordinated Creditor hereby
unconditionally waives notice of the incurring of any of the Senior Debt and any
notice of reliance by any Senior Creditor upon the subordination effected by
this Agreement. The Subordinated Creditor acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to the Senior Creditor, whether the Senior Debt was created
or acquired before or after the incurrence or creation of any Subordinated Debt,
and whether such Senior Creditor is now known or hereafter becomes known, and
each Senior Creditor shall be conclusively deemed to have relied upon such
subordination provisions in acquiring and holding, or in continuing to hold,
such Senior Debt and shall be entitled to enforce the provisions of this
Agreement directly as if it were a party to this Agreement.
2.10 JUDGMENTS. If at any time the Subordinated Creditor obtains a
judgment against any Obligor in respect of the Subordinated Debt, the
enforcement and collection of such judgment shall be subject to the
subordination provisions of this Agreement and to the rights of the Senior
Creditor to the same extent as provided with respect to payment of the
Subordinated Debt under this Agreement.
3. MODIFICATIONS.
3.1 MODIFICATIONS TO SENIOR DEBT DOCUMENTS. Except as otherwise
provided in the Senior Debt Documents, the Senior Creditor may, at any time and
from time to time, without the consent of or notice to the Subordinated
Creditor, without incurring liability to the Subordinated Creditor and without
impairing or releasing the obligations of the Subordinated Creditor under this
Agreement, change the manner or place of payment or extend the time of payment
of or renew or alter any of the terms of the Senior Debt, or amend in any manner
any Senior Debt Document (other than this Agreement), including any increase in
the amount of the Senior Debt or any interest, fees, or other amounts payable in
respect thereof, any change, release, or non-perfection of any liens and
security interests on any property of any Obligor, and any amendment or waiver
of or consent to the departure from any agreements evidencing the obligations of
third parties in respect of any Obligor, or the Senior Debt.
3.2 MODIFICATIONS TO SUBORDINATED DEBT DOCUMENTS; FUTURE ADVANCE. Until
the Senior Debt has been indefeasibly paid in full in cash and all lending
commitments under the Senior Debt Documents have terminated, and notwithstanding
anything to the contrary contained in the Subordinated Debt Documents, the
Subordinated Creditor shall not, without the prior written consent of Agent,
agree to any amendment, modification or supplement to the
11
Subordinated Debt Documents the effect of which is to (a) increase the maximum
principal amount of the Subordinated Debt or rate of interest on any of the
Subordinated Debt, (b) change the dates upon which payments of principal or
interest on the Subordinated Debt are due, (c) change or add any event of
default or any covenant with respect to the Subordinated Debt, (d) change any
redemption or prepayment provisions of the Subordinated Debt, (e) alter the
subordination provisions with respect to the Subordinated Debt, including,
without limitation, subordinating the Subordinated Debt to any other
indebtedness, (f) take any liens or security interests in any assets of an
Obligor, other than pursuant to the Subordinated Security Documents, or (g)
change or amend any other term of the Subordinated Debt Documents if such change
or amendment would result in a Senior Default, increase the obligations of any
Obligor or confer additional material rights on the Subordinated Creditor in a
manner adverse to any Obligor or the Senior Creditor. Subordinated Creditor
will, or will cause Parent to, notify Senior Creditor of additional advances
pursuant to the Subordinated Debt Documents as required pursuant to the Senior
Loan Agreement (provided however prior notice shall not be required in the event
an advance of Subordinated Debt is made to pay interest then due and payable in
respect of the Subordinated Debt as permitted pursuant to Section 2.3(d) above),
and Subordinated Creditor covenants and agree to limit the aggregate principal
amount of the Subordinated Debt to not more than $10,000,000 in aggregate
principal amount from time to time outstanding (but any increase above such
amount shall continue to be subordinated under the terms hereof).
4. REPRESENTATIONS AND WARRANTIES.
4.1 REPRESENTATIONS AND WARRANTIES OF SUBORDINATED CREDITOR. The
Subordinated Creditor hereby represents and warrants to the Senior Creditor that
as of the date hereof: (a) the Subordinated Creditor is a limited liability
company duly formed and validly existing under the laws of the State of Georgia;
(b) the Subordinated Creditor has the power and authority to enter into,
execute, deliver and carry out the terms of this Agreement, all of which have
been duly authorized by all proper and necessary action; (c) the execution of
this Agreement by the Subordinated Creditor will not violate or conflict with
the organizational documents of the Subordinated Creditor, any material
agreement binding upon the Subordinated Creditor or any law, regulation or order
or require any consent or approval which has not been obtained; (d) this
Agreement is the legal, valid and binding obligation of the Subordinated
Creditor, enforceable against the Subordinated Creditor in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by equitable principles; (e) the Subordinated
Creditor is the sole owner, beneficially and of record, of the Subordinated Debt
Documents and the Subordinated Debt; and (f) except for security provided by the
Subordinated Security Documents, the Subordinated Debt is, and at all times
prior to the termination of this Agreement shall remain, an unsecured debt
obligation of the Company.
4.2 REPRESENTATIONS AND WARRANTIES OF SENIOR CREDITOR. The Senior
Creditor hereby represents and warrants to the Subordinated Creditor that as of
the date hereof: (a) the Senior Creditor is a limited liability company duly
formed and validly existing under the laws of the State of Delaware; (b) the
Senior Creditor has the power and authority to enter into, execute, deliver and
carry out the terms of this Agreement, all of which have been duly authorized by
all proper and necessary action; (c) the execution of this Agreement by the
Senior Creditor will not
12
violate or conflict with the organizational documents of the Senior Creditor,
any material agreement binding upon the Senior Creditor or any law, regulation
or order or require any consent or approval which has not been obtained; and (d)
this Agreement is the legal, valid and binding obligation of the Senior
Creditor, enforceable against the Senior Creditor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles.
5. SUBROGATION.
Subject to the prior indefeasible payment in full in cash of all Senior
Debt and the termination of all lending commitments under the Senior Debt
Documents, the Subordinated Creditor shall be subrogated to the rights of the
Senior Creditor to receive Distributions with respect to the Senior Debt until
the Subordinated Debt is paid in full. The Subordinated Creditor agrees that in
the event that all or any part of a payment made with respect to the Senior Debt
is recovered from the Senior Creditor in a Proceeding or otherwise, any
Distribution received by the Subordinated Creditor with respect to the Senior
Debt or the Subordinated Debt at any time after the date of the payment that is
so recovered, whether pursuant to the right of subrogation provided for in this
Agreement or otherwise, shall be deemed to have been received by the
Subordinated Creditor in trust as property of the Senior Creditor, and the
Subordinated Creditor shall forthwith deliver the same to the Senior Creditor
for application to the Senior Debt until the Senior Debt is paid in full in
cash. A Distribution made pursuant to this Agreement to the Senior Creditor
which otherwise would have been made to the Subordinated Creditor is not, as
between the Parent and the Guarantors and the Subordinated Creditor, a payment
by the Parent or any Guarantor to or on account of the Senior Debt.
6. MODIFICATION.
Any modification or waiver of any provision of this Agreement, or any
consent to any departure by any party from the terms hereof, shall not be
effective in any event unless the same is in writing and signed by Senior
Creditor and the Subordinated Creditor, and then such modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose given. Any notice to or demand on any party hereto in any event not
specifically required hereunder shall not entitle the party receiving such
notice or demand to any other or further notice or demand in the same, similar
or other circumstances unless specifically required hereunder.
7. FURTHER ASSURANCES.
Each party to this Agreement promptly will execute and deliver such
further instruments and agreements and do such further acts and things as may be
reasonably requested in writing by any other party hereto that may be necessary
or desirable in order to effect fully the purposes of this Agreement.
8. NOTICES.
13
Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be given to
or served upon any of the parties by any other party, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing, signed by the party or
parties giving such notice, request, election or demand, and shall be delivered
personally, by facsimile notice, by recognized overnight courier service, or, if
mailed, sent by certified United States Mail, postage prepaid, to the other
party at the following address, as applicable:
If to Xxxxx Fargo Retail Finance II, LLC, as the Senior Creditor:
Xxxxx Fargo Retail Finance II, LLC
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy Number: 000-000-0000
If to RonHow, LLC, as the Subordinated Creditor:
RonHow, LLC
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Telecopy Number:
with copies to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Pile, Esq.
Telecopy Number: 000-000-0000
If to the Parent or any Guarantor:
Harold's Stores, Inc.
000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopy Number: 000-000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. The effective date of any such
notice shall be the sooner to occur of the date of actual receipt, regardless of
the method of delivery, or the date which is four (4) business days after the
date on which the notice is postmarked by the United States Postal Service.
Rejection or other
14
refusal to claim or accept, or the inability to deliver because of a changed
address of which no notice was given as prescribed herein shall not affect the
effective date of such notice, request, election, demand, or other communication
sent as aforesaid. Delivery to a party or to any officer, partner, agent or
employee of such party at the designated address shall constitute effective
delivery for purposes hereof.
9. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of, and shall be binding
upon, the respective successors and assigns of the Senior Creditor, the
Subordinated Creditor and the Parent and each Guarantor. The Senior Creditor
may, from time to time, without notice to the Subordinated Creditor, assign or
transfer any or all of the Senior Debt or any interest therein to any Person
and, notwithstanding any such assignment or transfer, or any subsequent
assignment or transfer, the Senior Debt shall, subject to the terms hereof, be
and remain Senior Debt for purposes of this Agreement, and every assignee or
transferee of any of the Senior Debt or of any interest therein shall, to the
extent of the interest of such permitted assignee or transferee in the Senior
Debt, be entitled to rely upon and be the third party beneficiary of the
subordination provided under this Agreement and shall be entitled to enforce the
terms and provisions hereof to the same extent as if such assignee or transferee
were initially a party hereto.
10. RELATIVE RIGHTS.
This Agreement shall define the relative rights of the Senior Creditor
and the Subordinated Creditor. Nothing in this Agreement shall (a) impair, as
between the Parent and the Guarantors and the Subordinated Creditor, the
obligation of the Parent and the Guarantors with respect to the payment of the
Subordinated Debt, or as between the Senior Creditor and the Parent and the
Guarantors, the obligation of the Parent and the Guarantors with respect to the
payment of the Senior Debt, all in accordance with their respective terms, or
(b) affect the relative rights of the Senior Creditor or the Subordinated
Creditor with respect to any other creditors of the Parent or the Guarantors.
11. CONFLICT.
In the event of any conflict between any term, covenant or condition of
this Agreement and any term, covenant or condition of any of the Subordinated
Debt Documents, the provisions of this Agreement shall control and govern.
12. HEADINGS.
The paragraph headings used in this Agreement are for convenience only
and shall not affect the interpretation of any of the provisions hereof.
13. COUNTERPARTS.
This Agreement 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.
15
14. SEVERABILITY.
In the event that any provision of this Agreement is deemed to be
invalid, illegal or unenforceable by reason of the operation of any law or by
reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.
15. CONTINUATION OF SUBORDINATION; TERMINATION OF AGREEMENT.
This Agreement shall remain in full force and effect until the
indefeasible payment in full in cash of the Senior Debt and the termination of
all lending commitments under the Senior Debt Documents after which this
Agreement shall terminate without further action on the part of the parties
hereto. The liability and obligations of the Subordinated Creditor hereunder
shall be reinstated and revived, and the Senior Creditor's rights shall
continue, with respect to any amount at any time paid on account of the Senior
Debt which shall thereafter be required to be restored, disgorged or otherwise
returned by Senior Creditor in, or as a result of, any Proceeding or with
respect to any fraudulent transfer or conveyance law, all as though such amount
had not been paid.
16. MISCELLANEOUS PROVISIONS.
(a) The Subordinated Creditor hereby consents and agrees that the
Senior Creditor shall be under no obligation with respect to marshaling
collateral security for the Senior Debt in favor of the Subordinated Creditor or
in payment of indebtedness of any Obligor to Senior Creditor.
(b) This Agreement is intended to be enforceable as a subordination
agreement under Bankruptcy Code section 510 notwithstanding the commencement of
any bankruptcy or other insolvency proceeding by or against any Obligor and, to
the full extent permitted by law, shall apply with full force and effect to any
indebtedness arising pursuant to debtor-in-possession financing arrangements or
pursuant to financing arrangements entered into in connection with the
confirmation of a plan of reorganization under the Bankruptcy Code.
(c) This Agreement is solely for the benefit of the Senior Creditor
(including any lenders pursuant to a Permitted Refinancing) and the Subordinated
Creditor, and their respective successors and assigns, and neither the Parent
nor any other Obligor is intended to be a third party beneficiary hereunder or
to have any right, benefit, priority or interest under, or because of the
existence of, or to have any right to enforce, this Agreement. The Senior
Creditor and the Subordinated Creditor shall have the right to modify or
terminate this Agreement at any time without notice to or approval of the Parent
or any other Person. Nothing in this Agreement is intended to or shall impair,
as between the Parent and Guarantors and the Subordinated Creditor, the
obligation of the Parent or any Guarantor, which obligation is absolute and
unconditional, to pay the Subordinated Debt as and when the same shall become
due and payable in accordance with its terms.
16
17. GOVERNING LAW; CONSENT TO JURISDICTION.
(a) THIS AGREEMENT 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 NEW YORK.
(b) The Subordinated Creditor hereby irrevocably and unconditionally
submits, for itself and its property, to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York, and of any
state court of the State of New York and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or thereby, or for recognition or enforcement
of any judgment, and each of the parties hereto irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York state court or, to the extent permitted by
applicable law, such Federal court; provided, however, that the foregoing
submission shall not be deemed to waive or restrict any right to seek the
removal of any such suit, action, or proceeding from any such state court to
such Federal district court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in any jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Senior Debt Document
shall affect any right that Agent or Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Senior Debt
Document against the Subordinated Creditor or its properties in the courts of
any jurisdiction.
(c) The Subordinated Creditor irrevocably and unconditionally waives
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding described in paragraph (b) of this Section and
brought in any court referred to in paragraph (b) of this Section. Each of the
parties irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
Each party to this Agreement irrevocably consents to the service of process in
the manner provided for notices in Section 8. Nothing in this Agreement or in
any other Senior Debt Document will affect the right of any party hereto to
serve process in any other manner permitted by law.
18. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). THE SUBORDINATED CREDITOR (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
17
AND (B) ACKNOWLEDGES THAT THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER SENIOR DEBT DOCUMENTS BY, AMONG OTHER THINGS,
THE WAIVERS AND CERTIFICATIONS IN THIS SECTION.
[signature page follows]
18
IN WITNESS WHEREOF, the undersigned Subordinated Lender has executed
this Agreement as of the date first above written.
SUBORDINATED LENDER:
RONHOW, LLC, a Georgia limited liability company
By: Ronus, Inc., a Georgia corporation,
Managing Member
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx, President
IN WITNESS WHEREOF, the undersigned Senior Creditor has executed this
Agreement as of the date first above written.
SENIOR CREDITOR:
XXXXX FARGO RETAIL FINANCE II, LLC, a Delaware
limited liability company
By: /s/ Xxxx Xxxxxxxx
-------------------------
Xxxx Xxxxxxxx, Vice President
IN WITNESS WHEREOF, the undersigned Parent and Guarantors have executed
this Agreement as of the date first above written.
PARENT:
HAROLD'S STORES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
GUARANTORS:
HAROLD'S FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HAROLD'S DIRECT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HAROLD'S STORES OF TEXAS, L.P.
By: HSTX, Inc., General Partner
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HAROLD'S OF XXXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
THE CORNER PROPERTIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HAROLD'S DBO, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HAROLD'S LIMITED PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
HSTX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Interim CEO
