013548.00013:946207.04
SECOND AMENDED AND RESTATED PARTICIPATION AGREEMENT
This SECOND AMENDED AND RESTATED PARTICIPATION AGREEMENT
(this "Agreement") is made this 24th day of January, 2006, by and
between XXXXX FARGO RETAIL FINANCE II, LLC, a Delaware limited
liability company formerly known as Xxxxx Fargo Retail Finance,
LLC (together with its successors and assigns "WFRF"), having an
office at Xxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 Attention: Xxxx Xxxxxxxx, and RONHOW, LLC, a Georgia
limited liability company ("Participant"), having an office at
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000,
Attention: Xxx Xxxxxxxx.
WHEREAS, WFRF has entered into certain secured financing
arrangements with the following corporations and limited
partnerships (each a "Borrower" and, collectively, the
"Borrowers"): HAROLD'S STORES, INC., an Oklahoma corporation,
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, and HAROLD'S OF JACKSON, INC.,
a Mississippi corporation, pursuant to which WFRF has made and
may hereafter make loans to, and has provided and may hereafter
provide financial accommodations for the benefit of, Borrowers;
WHEREAS, Participant originally acquired from WFRF a
$2,000,000 ongoing participation interest in WFRF's Transactions
(as defined below) with Borrowers pursuant to that certain
Participation Agreement, dated as of July 10, 2003, between WFRF
and Participant (the "Original Participation Agreement");
WHEREAS, the Original Participation Agreement was amended,
restated and superseded in all respects by that certain Amended
and Restated Participation Agreement, dated as of April 29,
2004, between WFRF and Participant (as so amended and restated,
the "Existing Participation Agreement"), pursuant to which the
Participant acquired an additional participation interest in
WFRF's Transactions (as defined below) with Borrowers such that
as of the date of this Agreement Participant owns an aggregate
participation interest in such Transactions in the amount of
$4,000,000;
WHEREAS, Participant desires to acquire from WFRF, and WFRF
desires to sell to Participant, an additional $3,000,000 ongoing
participation interest in WFRF's Transactions (as defined below)
with Borrowers, for a total aggregate participation of
$7,000,000, upon the terms and conditions set forth in this
Agreement; and
WHEREAS, in order to facilitate the foregoing, WFRF and
Participant have agreed to amend, restate and replace in all
respects the Existing Participation Agreement with this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements hereinafter set forth, it is hereby agreed as
follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Advances" All loans, advances, or other financial
accommodations made, or to be made, by WFRF to, or on behalf of,
Borrowers pursuant to the Loan Agreement, and all other items
(other than interest or other compensation) chargeable to
Borrowers pursuant to the Loan Agreement or any other Loan
Document.
"Affiliate" As applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" means the possession, directly or
indirectly, of the power to direct the management and policies of
a Person, whether through the ownership of capital stock, by
contract, or otherwise.
"Collateral" All property, security interests and
intercreditor agreements received by WFRF or Participant pursuant
to the Loan Documents or otherwise acquired by WFRF or
Participant in connection with the Transactions.
"Collections" All monies received by WFRF from
Borrowers or from other sources on account of the Obligations or
as a result of the exercise of any right or remedy (including any
right of set-off) by WFRF, Participant or any of their respective
Affiliates, including without limitation, any and all proceeds of
the Collateral.
"Loan Agreement" The Loan and Security Agreement, dated
as of February 5, 2003, by and among, on the one hand, the
lenders identified on the signature pages thereof (including
their respective successors and assigns), WFRF as collateral
agent and administrative agent for such lenders and any other
holder of the Obligations thereunder and, on the other hand, the
Borrowers, as amended by each of the following and as the same
may be further amended, supplemented, restated or renewed from
time to time: (a) Amendment No. 1 to Loan and Security
Agreement, dated July 10, 2003, by and among WFRF, as a lender,
collateral agent and administrative agent and the respective
Borrowers, (b) Amendment No. 2 to Loan and Security Agreement,
dated April 29, 2004, by and among WFRF, as a lender, collateral
agent and administrative agent and the respective Borrowers and
(c) Amendment No. 3 to Loan and Security Agreement, dated January
24, 2006, by and among WFRF, as a lender, collateral agent and
administrative agent and the respective Borrowers.
"Loan Documents" The Loan Agreement and the Bank
Product Agreements, the Cash Management Agreements, the Credit
Card Agreements, all Control Agreements, the Disbursement Letter,
the Guaranty, the Letters of Credit, any and all Mortgages, each
Perfection Certificate, the Copyright Security Agreement, the
Stock Pledge Agreement, the Trademark Security Agreement, the
Intercompany Subordination Agreement, any Bank Product Agreement,
any certificates (including without limitation, the Borrowing
Base Certificate and the Compliance Certificate) from time to
time delivered by a Borrower pursuant to the Loan Agreement or
any other Loan Document, any note or notes executed by a Borrower
in connection with the Loan Agreement and payable to a member of
the Lender Group, and any other agreement entered into, now or in
the future, by any Borrower and the Lender Group in connection
with the Loan Agreement.
"Major Change" Any amendment to, or any consent or
waiver with respect to, the Loan Agreement or any of the other
Loan Documents that would amend Sections 2.4(c) or 2.11(d) of the
Loan Agreement; provided; however, nothing in this herein shall
limit or impair the ability of Agent or WFRF to increase, or
impose additional, Reserves in accordance with the Loan Agreement
without regard to the impact of such increased or additional
Reserves upon Excess Availability or the ability of Borrowers to
repay the Obligations in accordance with the terms of the Loan
Agreement.
"Participant's Commitment" Participant's obligation to
WFRF to purchase a portion of WFRF's outstanding Advances in an
aggregate principal amount of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000) in accordance with Section 2 below, which obligation
is inclusive of prior purchases under the Original Participation
Agreement and the Existing Participation Agreement.
"Participant's Investment" Participant's aggregate
purchase price paid to WFRF pursuant to this Agreement, the
Existing Participation Agreement and the Original Participation
Agreement, in the aggregate amount of SEVEN MILLION AND NO/100
Dollars ($7,000,000), plus all additional sums paid by
Participant to WFRF hereunder from and after the date hereof,
plus accrued but unpaid interest in respect of the Restricted
Advance calculated at the rates and otherwise in accordance with
the Loan Documents (to the extent the Borrowers shall be
obligated to accrue and pay such amounts to WFRF pursuant to the
Loan Documents and applicable law), less all principal and
interest payments sent to Participant in respect of the
Restricted Advance.
"Transactions" All actions taken and to be taken by
WFRF, Borrowers, and/or any other party in connection with the
Loan Documents from and after the date hereof.
"WFRF's Investment" All Obligations owing by one or
more Borrowers to WFRF under the Loan Documents (inclusive of
principal, interest, fees, expenses and any amounts paid to any
person by WFRF in respect of any letters of credit), less the
Participant's Investment.
1.2 Other Defined Terms. Capitalized terms used in
this Agreement that are defined in the Loan Agreement shall be
construed and defined as set forth from time to time in the Loan
Agreement.
1.3 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural
include the singular, references to the singular include the
plural, the term "including" is not limiting, and the term "or"
has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, subsection,
clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this
Agreement to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions
on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein to any
Person shall be construed to include such Person's successors and
assigns.
2. SALE OF PARTICIPATION
2.1 WFRF hereby agrees to sell to Participant, and
Participant hereby agrees to purchase, a portion of WFRF's
Advances to Borrowers in an aggregate principal amount equal to
SEVEN MILLION AND NO/100 DOLLARS ($7,000,000) (inclusive of prior
purchases made by Participant pursuant to the Original
Participation Agreement and the Existing Participation Agreement)
at a purchase price equal to one hundred percent (100%) of the
stated principal amount thereof on or before the date hereof.
All purchases made by Participant, shall be made by wire transfer
of good funds to WFRF in accordance with the following wire
transfer instructions:
JPMorgan Chase Bank
New York, New York*
ABA# 000000000
Credit to: Xxxxx Fargo Foothill, Inc.
Account No. 323-266193
Re: Harold's Stores, Inc.
Advise: Xxxx Xxxxxxxx 617.854.7247
2.2 Except as otherwise expressly provided in (a)
Section 3.5 of this Agreement as to (i) accrued but unpaid
interest in respect of Participant's Investment and (ii) payments
of the extension fee as set forth in Section 2.11(d) of the Loan
Agreement and (b) Section 2.4(c) of the Loan Agreement, all
Collections (including amounts received, or deemed received, upon
the issuance of capital stock), payments of principal, interest,
fees and any other sums payable by Borrowers or any other party
in respect to the Obligations shall be allocated as follows:
FIRST: all payments made by or on behalf of the
Borrowers shall be received and retained by WFRF, for WFRF's
account and in repayment of WFRF's Investment (including
payment of Lender Group Expenses and similar items), until
such time as the entire amount of WFRF's Investment has been
indefeasibly paid in full in cash and WFRF has no further
obligation to make Advances to, or for the account of,
Borrowers; and
SECOND: all payments thereafter received by WFRF shall
be sent to Participant for Participant's account and in
repayment of the Participant's Investment from time to time
remaining outstanding.
Participant expressly acknowledges and agrees that in
the event WFRF's Investment shall have been reduced to zero but
WFRF's obligation to make Advances to, or for the benefit of,
Borrowers has not been terminated, then any Collections or other
amounts received in respect of the Obligations may, at WFRF's
option, be retained by WFRF as cash collateral for the
Obligations (including expressly contingent Obligations, Lender
Group Expenses or future Advances) pursuant to the Loan Documents
or returned to Borrowers. At such time as (i) WFRF's Investment
(other than indemnification rights stated in the Loan Agreement
to survive termination of the Loan Agreement if no claims that
could give rise to such rights shall be pending, or have been
threatened, against WFRF or Borrowers) shall have been
indefeasibly paid in full, in cash (including payment of any
applicable termination fees and premiums and cash
collateralization of any outstanding Letters of Credit in
accordance with the Loan Agreement), (ii) no further agreement of
WFRF to make Advances to, or for the benefit of, Borrowers shall
be continuing, and (iii) Borrowers and Participant shall have
released WFRF from all liabilities in respect of the Loan
Agreement, the Loan Documents, this Agreement (in the case of
Participant only) and the Transactions pursuant to a written
release in form acceptable to WFRF, WFRF shall, at the written
request of Participant, assign to Participant (without
representation, recourse or warranty) all WFRF's right, title and
interest in the Loan Documents, subject to provisions requiring
the re-assignment of such interest to WFRF in the event any
portion of the Collections received and applied in reduction of
WFRF's Investment shall be required to be to disgorged to any
person.
3. PROCEDURES
3.1 WFRF will keep records of all Obligations and
Collateral that are in its possession, appropriately marked to
show the interest of Participant therein; and Participant or its
designees may inspect or copy same at reasonable times during
normal business hours, at Participant's sole expense. WFRF will,
from time to time, at the request of Participant furnish
Participant with copies of future Loan Documents, and with such
additional information with respect to the Loan Documents, the
Transactions, the Collateral and/or the financial condition and
operations of Borrower as Participant may reasonably request and
WFRF may possess and in its sole discretion may deem appropriate
to provide to Participant; provided, however, that (a) the
foregoing provisions shall not entitle Participant to obtain
copies of WFRF's internal analyses, credit memoranda, appraisals
or other information not otherwise provided to Borrowers and (b)
WFRF shall not be liable to Participant for any damages resulting
from any inaccuracy or incompleteness of any information or
documentation provided to Participant pursuant to this Agreement
or otherwise.
3.2 Upon the written request of Participant (but not
more frequently than monthly) during the term of this Agreement,
WFRF promptly will deliver statements to Participant showing the
status of the Transactions and the Obligations as of the last day
of the preceding month and the activity during such preceding
month. Any accounting rendered by WFRF to Participant shall be
deemed correct and binding unless Participant notifies WFRF by
certified mail, return receipt requested, to the contrary, within
thirty (30) days after the date when each such accounting is
mailed or otherwise delivered to Participant (including delivery
by electronic mail). Promptly following the written request of
Participant, but without any representation or warranty as to the
accuracy or completeness thereof, and subject to the proviso at
the end of Section 3.1 hereof, WFRF will deliver to Participant
copies of all financial statements, reports, and officers'
certificates reasonably requested by Participant and that have
been delivered by Borrowers to WFRF pursuant to the Loan
Agreement.
3.3 Participant acknowledges that WFRF has not made,
and does not make, any representations or warranties, express or
implied, as to any of the following: (a) Borrowers' financial
condition; (b) the validity, enforceability or collectibility of
the Obligations, any liens purportedly securing the same or any
provision(s) of the Loan Documents; or (c) the perfection or
priority of any liens purportedly securing all or any portion of
the Obligations. Participant hereby represents and warrants that
Participant is fully familiar with, and has made its own
independent evaluation and determination of the foregoing matters
and is not relying upon WFRF in connection with any such
evaluation and determination.
3.4 All Collections will be applied to Borrowers'
account with WFRF at such time and in such manner as is provided
in the applicable Loan Documents. All payments shall be made by
wire transfer according to wiring instructions delivered by each
party to the other party hereto from time to time.
3.5 On a monthly basis, WFRF shall remit to
Participant out of funds actually received by WFRF in respect of
interest on the Advances, compensation on the outstanding amount
of Participant's Investment at the annual rate of interest paid
by Borrowers to WFRF in respect of the Restricted Advance, said
rate to be accrued from and after the date of WFRF's making of
the Restricted Advance to Borrowers and calculated (including
changes thereto) in accordance with the Loan Agreement. Further,
on a monthly basis, WFRF shall remit to Participant 100% of funds
actually received by WFRF in respect of the extension fee set
forth in Section 2.11(d) of the Loan Agreement if and to the
extent no other amounts then due and payable to WFRF under the
Loan Agreement or the other Loan Documents shall remain unpaid.
Nothing herein shall entitle Participant to receive, demand or
xxx for payment of any amounts to the extent such amounts are not
actually received by WFRF, and such rights are hereby waived and
released. Notwithstanding the foregoing provisions of this
Section 3.5, during the continuation of an Event of Default (as
defined in the Loan Agreement), WFRF may elect to suspend the
forwarding of payments contemplated by this Section 3.5 to
Participant (any amounts not paid to Participant due to the
continuation of an Event of Default are referred to herein as
"Suspense Amounts"), and such Suspense Amounts shall not accrue
interest during the period retained by WFRF as a result of the
continuation of an Event of Default. To the extent WFRF shall
elect to waive or accept cure of such Event of Default prior to
the acceleration of the Obligations (or the deemed acceleration
of the Obligations under the Loan Agreement, whether or not
enforceable against the Borrowers under applicable bankruptcy
laws), promptly following such acceptance of cure or waiver, WFRF
shall forward the Suspense Amounts to Participant in accordance
with this Agreement. For purposes of this Agreement, an "Event
of Default" shall be deemed to be continuing at all times during
which an Overadvance is continuing under the applicable Loan
Documents and, similarly, the entry into any between Borrowers
and WFRF of a forbearance or similar arrangement shall not be
deemed to be a waiver or cure of any Event of Default unless
specifically so provided in any written agreement relating to
such forbearance or similar agreement. To the extent the
Obligations shall be accelerated (or shall be deemed to be
accelerated under the Loan Agreement, whether or not enforceable
against the Borrowers under applicable bankruptcy laws) as a
result of such Event of Default, WFRF may apply all Suspense
Amounts, together with any other amounts payable to Participant
pursuant to this Section 3.5 from and after the date of such
acceleration (or deemed acceleration), in reduction of WFRF's
Investment, and no such amounts shall be payable to Participant
and there shall be no accrual of such amounts as part of
Participant's Investment. Participant acknowledges and agrees
that, pursuant to the Loan Documents and this Agreement: (a)
WFRF may apply any amounts received by WFRF first to outstanding
fees and reimbursement obligations owing by Borrowers to WFRF in
accordance with the Loan Agreement notwithstanding any contrary
requests or designations by Borrowers; and (b) WFRF may apply
any amounts received in respect of accrued but unpaid interest
comprising part of WFRF's Investment prior to any remittance of
payments to Participant pursuant to this Section 3.5.
Participant hereby consents to such application in lieu of
application in respect of Participant's Investment (it being
expressly understood and acknowledged by Participant that, at
WFRF's option, all outstanding fees and reimbursement obligations
and interest in respect of all Obligations, other than the
Restricted Advance, may be received and applied for the account
of WFRF before interest accrued in respect of the Restricted
Advance shall be paid for application in respect of Participant's
Investment). Participant shall not be entitled to any
compensation based upon any float or any similar charges provided
under the Loan Agreement or attributable to the ordinary course
processing of WFRF, nor shall Participant share in any servicing
fees, amendment fees, waiver fees, collateral maintenance, early
termination, commitment or other fees (other than the extension
fee expressly addressed in this Section 3.5) paid, or payable, by
Borrowers to WFRF. Participant shall not share in any financial
examination, documentation or appraisal fees paid to WFRF.
Participant shall not share in recovery by WFRF of any other
out-of-pocket expenses incurred by WFRF and reimbursable by
Borrowers; provided, however, WFRF hereby acknowledges and agrees
that Participant shall have no obligation to make any further
advances to WFRF in respect of any such expenses.
3.6 Participant acknowledges and understands that (a)
the annual interest rate charged by WFRF to Borrowers floats in
accordance with the Loan Agreement and accordingly may increase
or decrease as therein provided and (b) the contemplated maturity
date of the Restricted Advance is February 5, 2010.
3.7 In the event that WFRF is required, for any
reason, to repay Borrowers or any other person all or any portion
of any payment which was remitted to Participant pursuant to this
Agreement, Participant shall remit to WFRF one hundred percent
(100%) of any such amount required to be repaid by WFRF without
reduction, offset or withholding and Participant's Investment
shall be adjusted accordingly.
3.8 WFRF shall not have, and does not assume, any
liability to Participant for the repayment of all or any portion
of Participant's Investment to the extent that such funds are not
actually received by WFRF from Borrowers. All Collections that
are to be applied in respect of Participant's Investment in
accordance with this Agreement shall be held in trust for
Participant.
3.9 WFRF shall bear all costs and expenses of managing
and servicing the Transactions, and WFRF hereby acknowledges and
agrees that Participant shall have no obligation to make any
further advances to WFRF in respect of any such costs and
expenses. As between WFRF and Participant and except as
otherwise expressly provided by Section 6.5 below, each party
hereto shall bear its respective costs and expenses incurred in
connection with this Agreement, the Loan Documents and the
transactions contemplated hereby and thereby; provided, however,
nothing in this sentence shall limit or prohibit WFRF from
seeking reimbursement of its costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby from Borrowers in accordance with the Loan Documents.
4. MANAGEMENT
4.1 All of the Obligations and other Transactions
shall be made and conducted in WFRF's name, and all of the
Collateral and Collections shall be held by or on behalf of WFRF
in its sole name. WFRF shall have the exclusive right to
administer the Loan Documents, to perform and enforce the terms
thereof (including before and after an Insolvency Proceeding), to
exercise all privileges and rights exercisable or enforceable by
WFRF under the Loan Documents, and to manage any accounts of
Borrowers maintained with WFRF in connection therewith, according
to WFRF's discretion and in the exercise of its normal business
judgment. WFRF hereby expressly appoints Participant as WFRF's
agent for the purposes of perfecting WFRF's security interest in
any of the Collateral that may at any time come into the
possession of Participant. Except as provided below with respect
to Major Changes, WFRF shall have the sole and continuing right
without the consent or other participation of Participant to (i)
enter into and agree to supplements, amendments, modifications,
substitutions or releases of, or with respect to, the Loan
Agreement and the Loan Documents, (ii) release any Collateral or
accept any substitutions thereof, (iii) conduct any liquidation
of Collateral or take other actions against the Borrowers or
their respective properties, (iv) waive any Default or Event of
Default, (v) compromise the amount of, or release the Borrowers
from all or any portion of their liability with respect to, all
or any portion of the Obligations (including expressly all or any
portion of the Restricted Advance) or (vi) otherwise administer
the Transaction as if the Participant did not participate
therein. The foregoing notwithstanding, WFRF shall not agree to
any Major Change without first obtaining the consent of
Participant (which consent shall not be unreasonably withheld or
delayed). WFRF shall not be liable to Participant for any action
taken or omitted or for any error in judgment, except for its own
bad faith, gross negligence, or willful misconduct.
Notwithstanding the foregoing Section 4.1(v), WFRF agrees to
provide Participant with 15 days' prior written notice in the
event WFRF elects to compromise in writing the amount of the
Obligations pursuant to Section 4.1(v) preceding; provided,
however, Participant agrees (a) the failure to deliver such
notice shall not limit the authority of WFRF to effect such
compromise, (b) no notice shall be required in connection with
compromises made in the ordinary course of business, including
releases in respect of refunded fees, overcharges, disputed
portions of the Obligations or other similar amounts, and (c) no
notices are required in connection with the determination of
amounts required, or agreed, to be credited to the Obligations in
respect of sales or releases of Collateral, whether through
foreclosure or at the request of Borrower(s) or in exchange for
release of such Collateral from Liens therein.
4.2 To the extent of Participant's Investment, WFRF is
and shall be Participant's agent, but WFRF is not, and shall not
under any circumstances be deemed to be, a fiduciary for
Participant in administering and servicing the Loan Documents or
in any other capacity. Participant shall not be deemed to be a
"Lender" for purposes of the Loan Agreement or any other Loan
Documents, it being understood that the interest herein sold and
bought is a participation interest pursuant to Section 14(e) of
the Loan Agreement and not an assignment of all or any portion of
the Obligations, the Loan Documents or the Transactions, all of
which rights are expressly retained exclusively by WFRF. Nothing
contained herein shall confer upon either WFRF or Participant any
proprietary interest in, or subject either of them to any
liability for or with respect to, the business, assets, profits,
losses, or obligations of the other, except only as to the
Obligations and other Transactions to the extent of the
participation hereby created.
4.3 Participant shall not sell, pledge, assign, sub-
participate, or otherwise transfer directly or indirectly
(including expressly any such sale, assignment or transfer
effected through the admission or one or more additional members
of Participant) all or any part of its interest hereunder without
WFRF's prior written consent. Participant acknowledges that W.
Xxxxxx Xxxxxx, an individual, and Xxxxxx Xx Xxxx, an individual,
own, directly, or indirectly, 100% of the membership interests in
Participant and acknowledges and agrees that neither W. Xxxxxx
Xxxxxx or Xxxxxx Xx Xxxx shall sell, pledge, assign, or otherwise
transfer all or any part of their respective interests in and to
Participant without WFRF's prior written consent. WFRF may
participate or otherwise transfer or assign its interest at any
time, subject to the rights of Participant granted herein. WFRF
may sell, pledge, or assign additional participations in the
Obligations without Participant's consent. WFRF agrees to notify
Participant of any change in its interest in the Obligations;
provided, however, the failure to timely provide such notice
shall not limit or invalidate any such change in WFRF's interest
in the Obligations.
5. TERMINATION
5.1 Either WFRF or Participant may, upon not less than
thirty (30) days prior written notice to the other, voluntarily
terminate the participation hereby created as of the termination
date designated in such written notice (the "Termination Date").
5.2 If WFRF shall have exercised the option to
termination this Agreement pursuant to Section 5.1, on the
specified Termination Date WFRF shall pay to Participant the
outstanding balance of Participant's Investment. In the event
Participant shall have exercised the option to terminate this
Agreement pursuant to Section 5.1, on the specified Termination
Date Participant shall (a) pay in cash to WFRF the outstanding
balance of WFRF's Investment (including any early termination
premium applicable under the Loan Agreement as of the Termination
Date, an amount sufficient to cash collateralize any outstanding
Letters of Credit in accordance with the Loan Documents and all
fees, costs and expenses incurred by WFRF and otherwise subject
to reimbursement by Borrowers) and (b) deliver a written
termination of the Loan Documents in form acceptable to WFRF duly
executed by Borrowers pursuant to which (i) Borrowers shall
terminate all obligations of WFRF to provide Advances to, or for
the benefit of, Borrowers and (ii) release WFRF from any and all
liabilities in respect of the Loan Documents and/or the
Transactions. Upon fulfillment of the foregoing obligations, as
applicable, each party shall thereupon be relieved of any
liability to the other party in connection herewith. WFRF may
make and enter into additional obligations and other transactions
with Borrowers after the Termination Date, and such additional
obligations and other transactions shall be for WFRF's own
account, and Participant shall have no rights or interests
therein or liability therefor.
5.3 WFRF and Participant acknowledge and agree that,
pursuant to the Option Agreement, Participant may elect to
acquire certain preferred stock in one or more Borrowers, and in
connection with such acquisition of preferred stock, Participant
may elect to terminate this Agreement. In order to facilitate
such termination of this Agreement, WFRF and Participant hereby
agree that Participant may terminate this Agreement and WFRF
shall credit the Obligations of Borrowers with an amount equal to
the Participant Investment upon fulfillment of the following
conditions:
(a) all consideration for such termination shall
be the issuance of additional shares of the Series
2003-A Preferred Stock or Series 2006-A Preferred
Stock of Parent on the terms and conditions set forth
in the Option Agreement as in effect on the date of
Amendment No. 3.
(b) WFRF shall receive notice of such repayment
at least 10 days prior to the date of such
termination;
(c) WFRF shall receive from Participant and
Borrowers, on or prior to the date of such
termination, such fully authorized and executed
documents or instruments as WFRF, in its Permitted
Discretion, deems necessary and appropriate to
evidence the full or partial satisfaction of the
Obligations in an amount equal to the Participant's
Investment and corresponding changes to the Loan
Agreement;
(d) the representations and warranties contained
in this Agreement, the Loan Agreement and the other
Loan Documents shall be true and correct in all
material respects on and as of the date of such
termination, as though made on and as of such date
(except to the extent that such representations and
warranties relate solely to an earlier date or
violations have been disclosed to WFRF in writing and
approved in writing by WFRF);
(e) no Default or Event of Default under the Loan
Agreement or any Loan Document shall have occurred and
be continuing on the date of such termination, nor
shall either result from the making thereof; and
(f) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or
indirectly, such repayment (or the attendant payment
of such amounts to Participant by WFRF) shall have
been issued and remain in force by any Governmental
Authority against any Borrower or WFRF.
6. GENERAL
6.1 All notices provided for herein shall be in
writing and (a) mailed to the respective parties at the addresses
first set forth above, or at such other addresses as either of
them shall have specified to the other in writing or (b) sent by
facsimile transmission to the attention of the respective persons
named above at the following facsimile numbers 617.523.4027, in
the case of WFRF or 678.553.4001, in the case of Participant, or
in either case such other facsimile number as may be provided to
the other in accordance with this section.
6.2 This Agreement: (a) shall be binding upon and
inure to the benefit of the parties hereunder and their
respective legal representatives, successors, and permitted
assigns; (b) shall be governed, construed, and interpreted in all
respects in accordance with the laws of the Commonwealth of
Massachusetts; and (c) may not be modified, amended, terminated,
or otherwise changed orally or by any course of dealing or in any
manner except by an agreement in writing signed by the duly
authorized officer of the party to be charged.
6.3 EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING, AND PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT, WRIT, PROCESS, OR OTHER PAPERS
MAY BE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PARTY TO
BE SERVED AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT
TO SECTION 6.1 HEREOF.
6.4 Except as permitted by Borrowers, or otherwise
required by applicable law or regulation, as amended, or by court
order or the requirements of other competent authority and except
in connection with any legal proceeding to which WFRF and/or
Participant is a party, Participant shall not disclose any
financial or other information of Borrowers (except for any
information available to the public from any governmental office)
to any third party (other than its auditors, attorneys,
affiliates, WFRF, or other participants) for a period of five (5)
years after the termination of the Loan Agreement.
6.5 If any action at law or equity is brought to
enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover actual attorneys'
fees, which may be determined by the court in the same action or
in a separate action brought for that purpose, in addition to any
other relief to which that party may be entitled.
6.6 No term or provision contained in this Agreement,
and no other agreement between the parties hereto, is intended to
be, or shall it be construed to be, the formation of a
partnership or joint venture between WFRF and Participant.
6.7 It is understood and agreed that WFRF and
Participant, or any affiliate of either thereof may, from time to
time, lend money to or otherwise generally engage in any business
with the Borrowers and any affiliate of Borrowers, and nothing
herein shall limit the ability of either party hereto to enter
into such transactions for its own account.
6.8 This Agreement and the duties and obligations
contained herein shall be solely for the benefit of the parties
hereto, their affiliates, and future participant; no third party
(including any Borrower) shall have any rights hereunder as a
third party beneficiary or otherwise.
6.9 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which counterparts taken
together shall constitute one and the same Agreement. Delivery
of an executed copy of this Agreement by facsimile transmission
shall have the same effect as delivery of an originally executed
copy of this Agreement, whether an originally executed copy shall
be delivered subsequent thereto.
6.10 Participant and WFRF hereby acknowledge and agree
that this Agreement constitutes, and is intended to constitute, a
true "back-end" participation arrangement between Participant
and WFRF. Separate and apart from this Agreement, Participant
has entered into the Option Agreement (as defined in the Loan
Agreement) with the Parent (as defined in the Loan Agreement),
pursuant to which Participant may elect to acquire certain shares
of preferred stock from Parent in exchange for (a) releasing WFRF
from any obligation hereunder to remit payments to Participant in
respect of all or a portion of the Participant's Investment
hereunder and (b) WFRF's corresponding reduction in the
outstanding principal amount of the Obligations. The Option
Agreement has been provided by Parent directly to Participant as
an inducement to Participant to acquire the Participant's
Investment hereunder. WFRF is not, and shall not be deemed to
be, a party to such Option Agreement or a holder of any such
investment in Parent. Participant has acquired its interest
hereunder directly from WFRF, and will pay WFRF directly for its
interest hereunder. Participant has not made any advances
directly to Borrowers. Participant's right to receive payments
hereunder are contingent upon WFRF's receipt of payments from
Borrowers in accordance with the Loan Documents in all instances,
and the failure of Borrowers to make such payments does not
result in any enforcement right or remedy exercisable by the
Participant against any of the Borrowers. Except to the extent
of its rights to enforce the terms of this Agreement against WFRF
(but not the Borrowers), Participant is not a party to, or
beneficiary of, the Loan Agreement or the Loan Documents for any
purpose. Participant has no legal recourse directly against
Borrowers in respect of Participant's Investment or the
transactions contemplated by this Agreement, and all such rights
and remedies are vested exclusively in WFRF. Participant
acknowledges and agrees that that Participant may not maintain
any independent action against Borrowers to recover all or any
portion of the Participant's Investment.
6.11 Participant hereby agrees to indemnify, defend,
and hold harmless WFRF and any of its employees, officers,
representatives, and agents (each, an "Indemnified Party") of and
from any claim brought or threatened against any Indemnified
Party (including reasonable attorneys' fees and expenses incurred
in connection with the foregoing) arising out of WFRF's
relationship with Participant.
6.12 This Agreement amends, restates, modifies and
replaces, but does not extinguish the obligations under, the
Existing Participation Agreement, which in turn amended and
restated the terms of the Original Participation Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have caused these presents
to be executed by their duly authorized officer affixed the day
and year first above-written.
WFRF:
XXXXX FARGO RETAIL FINANCE II,
LLC
By:
Name:
Title:
PARTICIPANT:
RONHOW, LLC
By: Ronus, Inc., a Georgia
corporation
By:
Name:
Title:
