EXHIBIT 10.5
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THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY,
INCLUDING THE RIGHT TO DEMAND PAYMENT HEREUNDER AND TO ENFORCE ANY INSTRUMENTS
SECURING THIS SECURITY AGREEMENT, 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 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 SECURITY AGREEMENT. PAYEE AND EACH OTHER HOLDER, ASSIGNEE OR TRANSFEREE OF
THIS SECURITY AGREEMENT, BY ACCEPTANCE HEREOF, AGREE TO BE BOUND BY SUCH
SUBORDINATION AND INTERCREDITOR AGREEMENT.
SUBORDINATED SECURITY AGREEMENT
THIS SUBORDINATED SECURITY AGREEMENT (this "SECURITY AGREEMENT") is
made and entered into as of August 31, 2006 by HAROLD'S STORES, INC., an
Oklahoma corporation ("PARENT") and 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 LIMITED PARTNERS, INC., an Oklahoma corporation, HAROLD'S DBO, INC., a
Texas corporation and HSTX, INC., a Texas corporation (collectively, the
"GUARANTORS"; Parent and Guarantors are referred to herein individually and
collectively as "DEBTOR"), in favor of RONHOW, LLC, a Georgia limited liability
company ("SECURED PARTY").
SECTION 1. GRANT OF SECURITY INTEREST. For valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and in order to secure
the payment and performance of the "OBLIGATIONS" (as hereinafter defined), each
Debtor hereby grants to Secured Party a continuing security interest in all of
such Debtor's estate, right, title and interest in and to the following
property, wherever located and whether now existing or hereafter arising or
acquired (collectively, the "COLLATERAL"):
(a) Accounts,
(b) Chattel Paper,
(c) DDAs (other than the Excluded DDAs, to the extent Debtor
is not permitted to xxxxx x Xxxx in such Excluded DDA pursuant to
applicable law),
(d) Documents,
(e) General Intangibles,
(f) Goods (including, without limitation, Inventory and
Equipment),
(g) Instruments,
(h) Investment Property,
(i) Letter of Credit Rights,
(j) The Commercial Tort Claims set forth on Schedule A,
(k) Money or other assets of Debtor that now or hereafter come
into the possession, custody, or control of Secured Party, and
(l) Any and all proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance
covering any or all of the foregoing, and any and all Accounts, Books,
General Intangibles, (Goods, including, without limitation, Equipment
and Inventory), Investment Property, Negotiable Collateral, money,
DDAs, or other tangible or intangible property resulting from the sale,
exchange, collection or other disposition of any of the foregoing, or
any portion thereof or interest therein, and the proceeds thereof.
The following capitalized terms when used herein shall have the meaning set
forth below:
"Accounts" means all of Debtor's now owned or hereafter acquired right,
title, and interest with respect to "accounts" (as such term is defined from
time to time in the Code), and any and all supporting obligations in respect
thereof.
"Books" means all of Debtor's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of each Debtor's or its Subsidiaries' Records related to its or their
business operations or financial condition, and all of its or their goods of
General Intangibles related to such information.
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"Chattel Paper" means all of Debtor's now owned or hereafter acquired
right, title, and interest with respect to "chattel paper," including, without
limitation, "tangible chattel paper" and "electronic chattel paper," as such
terms are defined from time to time in the Code, and any and all supporting
obligations in respect thereof.
"Code" means the Uniform Commercial Code, as in effect from time to
time in the State of Georgia.
"Commercial Tort Claim" means any now existing or hereafter arising
"commercial tort claim," as such term is defined from time to time in the Code.
"DDA" means any checking or other "deposit account" (as such term is
defined from time to time in the Code) maintained by any Debtor.
"Documents" means all of Debtor's now owned or hereafter acquired
right, title, and interest with respect to any "document" as such term is
defined in the Code, and any and all supporting obligations in respect thereof.
"Equipment" means all of Debtor's now owned or hereafter acquired
right, title, and interest with respect to "equipment" (as such term is defined
from time to time in the Code), fixtures and vehicles (including motor
vehicles), including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"General Intangibles" means all of Debtor's now owned or hereafter
acquired right, title, and interest with respect to "general intangibles" (as
such term is defined from time to time in the Code), and any and all supporting
obligations in respect thereof.
"Goods" means all of Debtor's now owned or hereafter acquired right,
title, and interest with respect to "goods," as that term is defined from time
to time in the Code, including, without limitation, any and all Inventory and
Equipment.
"Instruments" means all of Debtor's now owned or hereafter acquired
right, title, and interest with respect to "instruments," including, without
limitation, any "promissory notes," as such terms are defined from time to time
in the Code, and any and all supporting obligations in respect thereof.
"Investment Property" means all of Debtor's now owned or hereafter
acquired right, title, and interest with respect to "investment property," as
such term is defined from time to time in the Code, and any and all supporting
obligations in respect thereof.
"Inventory" means all Debtor's now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Debtor as lessor, goods that are furnished by a
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Debtor under a contract of service, and raw materials, work in process, or
materials used or consumed in a Debtor's business.
"Letter of Credit Rights" means all of Debtor's now owned or hereafter
acquired right, title, and interest with respect to "letter of credit rights,"
as that term is defined from time to time in the Code, and any and all
supporting obligations in respect thereof.
"Negotiable Collateral" means all of Debtor's now owned or hereafter
acquired right, title, and interest with respect to letters of credit,
Instruments, Documents and Goods covered by Documents, Chattel Paper and all
supporting obligations of the foregoing.
SECTION 2. OBLIGATIONS. The security interest granted hereunder shall
secure the following obligations (the "OBLIGATIONS"):
(a) the payment and performance of all obligations of Debtor,
whether now existing or hereafter arising, under that certain
Subordinated Loan Agreement, dated as of even date herewith, entered
into by and between Parent and Secured Party (the "LOAN AGREEMENT") and
that certain Subordinated Secured Promissory Note, dated of even date
herewith, made by Parent to the order of Secured Party, in the
principal face amount of $10,000,000 (the "NOTE") (as each may be
amended, supplemented, modified, extended or restated from time to
time), and
(b) the payment and performance of all obligations of
Guarantors, whether now existing or hereafter arising, under that
certain Subordinated Guaranty, dated as of even date herewith, made by
Guarantors for the benefit of Secured Party (the "GUARANTY") (as the
same may be amended, supplemented, modified, extended or restated from
time to time).
SECTION 3. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party on the date hereof that the following statements are
correct and complete:
(A) TITLE TO COLLATERAL. Except for (i) any security interest granted
in favor of Senior Lender (as defined in Section 7(N) below) or Secured Party or
(ii) adverse claims, interests, liens or encumbrances permitted under the Senior
Loan Agreement (as defined in Section 7(N) below), Debtor has good and
marketable title to the Collateral, free of all adverse claims, interests, liens
or encumbrances.
(B) VALIDITY OF SECURITY AGREEMENT; AUTHORITY. This Security Agreement
is the legally valid and binding obligation of Debtor, enforceable against
Debtor in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and general principles of equity.
Debtor has the power and authority to execute, deliver, perform its obligations
under, and to grant the security interest provided for in, this Security
Agreement and all related documents, and has taken all
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necessary action to authorize the execution, delivery and performance of, and
grant of a security interest pursuant to, this Security Agreement and all
related documents.
(C) STATE OF INCORPORATION OF DEBTOR. Parent and each Guarantor are
incorporated or formed under the laws of the state indicated after its name in
the first paragraph of this Security Agreement.
(D) LOCATION OF INVENTORY AND EQUIPMENT. Except as set forth on
Schedule B, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party. The Inventory and Equipment are located only at
the locations identified on Schedule B or at a location designated for use in
connection with a Warehouse Sale. Debtor shall (a) notify Secured Party of the
location of each Warehouse Sale at least thirty days prior to the date on which
any Inventory shall arrive at such location; and (b) take such action as is
requested by Secured Party to ensure Secured Party's access to such site
throughout the duration of such Warehouse Sale, including providing any
financing statements, fixture filings or other documents necessary to perfect
and continue the perfection of Secured Party's liens on such assets, and upon
Secured Party's request, also provide to Secured Party a bailee acknowledgement
or collateral access agreement, if and as applicable.
SECTION 4. COVENANTS. Until payment is made in full on the Obligations,
Debtor will comply with all covenants in this Section 4, unless Debtor has
received the written consent of Secured Party:
(A) TITLE TO COLLATERAL. Debtor shall not create or permit the
existence of claims, interests, liens, or other encumbrances against any of the
Collateral, except claims, interest, liens or encumbrances of the type permitted
under the Senior Loan Agreement (as defined in Section 7(N) below). Upon
obtaining knowledge thereof, Debtor shall provide prompt written notice to
Secured Party of any future claims, interest, liens or encumbrances against any
of the Collateral, and shall defend diligently Debtor's and Secured Party's
interests (including the priority of such interests) in all Collateral.
(B) CHANGE IN LOCATION, NAME, ETC. Debtor agrees not to (i) change the
location of its place of business or chief executive office; or (ii) change its
name, identity, employer identification number, state organizational number or
state of incorporation or organization, unless it shall have given Secured Party
thirty (30) days' prior written notice of its intention to take any action
described in clauses (i) through (ii), and executed and delivered to Secured
Party all financing statements and financing statement amendments which Secured
Party may request in connection therewith and, if requested by Secured Party,
prior to the date on which Debtor proposes to take any such action, Debtor will,
at its own cost and expense, cause to be delivered to Secured Party an opinion
of counsel, in form and content satisfactory to Secured Party, as to the
continued perfection and priority of the security interests created hereunder.
(C) FURTHER ASSURANCES. Upon the request of Secured Party, Debtor shall
do all acts and things as Secured Party may from time to time deem necessary or
advisable to enable Debtor
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to grant a security interest in the Collateral and to perfect, maintain and
continue the perfection and priority of the security interest of Secured Party
in the Collateral, or to facilitate the exercise by Secured Party of any rights
or remedies granted to Secured Party hereunder or provided by law. Without
limiting the foregoing, Debtor agrees to give Secured Party prompt written
notice of any Commercial Tort Claim not specifically identified in this Security
Agreement, any Letter of Credit Right and all reports of new patentable,
copyrightable or trademarkable materials provided to the Senior Lender (as
defined in Section 7(N) below), and execute, in form and substance satisfactory
to Secured Party, such financing statements, continuation statements, amendments
thereto, supplemental agreements, assignments, notices of assignments, and other
instruments and documents as Secured Party may from time to time request. In
addition, in the event the Collateral or any part thereof consists of
instruments, documents, tangible chattel paper or money (whether or not proceeds
of the Collateral), Debtor shall, upon the request of Secured Party, deliver
possession thereof to Secured Party (or to a designee of Secured Party retained
for that purpose), together with any appropriate endorsements and/or
assignments; in the event the Collateral or any part thereof consists of
letter-of-credit rights, investment property, deposit accounts or electronic
chattel paper, Debtor shall, upon the request of Secured Party, take such steps
necessary for the Secured Party to obtain "control" thereof (as such terms are
defined in the Code with corresponding provisions thereof defining what
constitutes "control" for such items of Collateral). Secured Party shall use
reasonable care in the custody and preservation of any Collateral in its
possession or control, but shall not be required to take any steps necessary to
preserve rights against prior parties. All costs and expenses incurred by
Secured Party to establish, perfect, maintain, determine the priority of, or
release the security interest granted hereunder (including the cost of all
filings, recordings, and taxes thereon and the fees and expenses of any designee
of Secured Party) shall become part of the obligations secured hereby and be
paid by Debtor on demand.
(D) INSURANCE. Debtor shall maintain such insurance with such insurance
companies, in such amounts, and covering such risks, as are usually carried by
companies engaged in the same business and similarly situated.
(E) RECEIVABLES. Debtor shall preserve, enforce, and collect all
accounts, chattel paper, instruments, documents and general intangibles, whether
now owned or hereafter acquired or arising (the "RECEIVABLES"), in a diligent
fashion and, if a Default shall have occurred and be continuing hereunder, upon
the request of Secured Party, Debtor shall execute an agreement in form and
content satisfactory to Secured Party by which Debtor shall direct all account
debtors and obligors on instruments to make payment to a lock box deposit
account under the exclusive control of Secured Party.
(F) CONDITION OF COLLATERAL. Debtor shall at all times hereafter, at
its own expense, maintain and preserve all such Collateral constituting property
necessary or useful in the conduct of its business and each and every part and
parcel thereof, in good repair, working order and condition, ordinary wear and
tear excepted.
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(G) CONDITION OF BOOKS AND RECORDS. Debtor shall maintain complete,
accurate and up-to-date books, records, accounts, and other information relating
to all Collateral in such form and in such detail as may be satisfactory to
Secured Party, and shall allow Secured Party or its representatives to examine
and copy such books, records, accounts and other information at any reasonable
time. Debtor shall furnish to Secured Party statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Secured Party may reasonably request, all in reasonable
detail.
(H) RIGHT OF INSPECTION. At all reasonable times upon the request of
Secured Party, Debtor shall allow Secured Party or its representatives to visit
any of Debtor's properties or locations so that Secured Party or its
representatives may confirm, inspect and appraise any of the Collateral.
SECTION 5. DEFAULT. The occurrence of an Event of Default under the
Loan Agreement, or any breach of the terms and conditions of this Security
Agreement shall constitute a "Default" hereunder.
SECTION 6. RIGHTS AND REMEDIES. Upon the occurrence of any Default
hereunder, Secured Party may declare all obligations secured hereby to be
immediately due and payable and, to the extent permitted by applicable law, may
exercise any and all rights and remedies of a secured party in the enforcement
of its security interest under the Code, this Security Agreement, or any other
applicable law. Without limiting the foregoing:
(A) DISPOSITION OF COLLATERAL. Secured Party may sell, lease, or
otherwise dispose of all or any part of the Collateral, in its then present
condition or following any commercially reasonable preparation or processing
thereof, whether by public or private sale or at any brokers' board, in lots or
in bulk, for cash, on credit or otherwise, with or without representations or
warranties, and upon such other terms as may be acceptable to Secured Party, and
Secured Party may purchase such Collateral at any public sale. To the extent
permitted by law, Debtor hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any law now existing or
hereafter adopted. At any time when advance notice of sale is required, Debtor
agrees that twenty (20) days' prior written notice shall be reasonable. In
connection with the foregoing, Secured Party may:
1. require Debtor to assemble the Collateral and all records
pertaining thereto and make such Collateral and records available to Secured
Party at a place to be designated by Secured Party which is reasonably
convenient to both parties;
2. enter the premises of Debtor or premises under Debtor's
control and take possession of the Collateral;
3. without charge by Debtor, use or occupy the premises of
Debtor or premises under Debtor's control, including, without limitation,
warehouse and other storage facilities;
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4. without charge by Debtor, use or sublicense the use of any
patent, trademark, service xxxx, trade name or other intellectual property or
technical process used by Debtor in connection with any of the Collateral, (and
such use or right of use shall inure to the benefit of all successors, assigns
and transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise);
5. rely conclusively upon the advice or instructions of any
one or more brokers or other experts selected by Secured Party to determine the
method or manner of disposition of any of the Collateral and, in such event, any
disposition of the Collateral by Secured Party in accordance with such advice or
instructions shall be deemed to be commercially reasonable; and
6. compromise and settle or sell, assign or transfer or ask,
collect, receive or issue any and all claims possessed by Debtor which
constitute a portion of the Collateral, all in the name of Debtor.
(B) COLLECTION OF RECEIVABLES. Secured Party may, but shall not be
obligated to, take all actions reasonable or necessary to preserve, enforce or
collect the Receivables, including, without limitation, the right to notify
account debtors and obligors on instruments to make direct payment to Secured
Party, to permit any extension, compromise or settlement of any of the
Receivables for less than face value, or to xxx on any Receivable, all without
prior notice to Debtor.
(C) PROCEEDS. Secured Party may collect and apply all proceeds of the
Collateral, and may endorse the name of Debtor in favor of Secured Party on any
and all checks, drafts, money orders, notes, acceptances, or other instruments
of the same or a different nature, constituting, evidencing, or relating to the
Collateral which may come into the possession of Secured Party. Secured Party
may receive and open all mail addressed to Debtor and remove therefrom any cash
or non-cash items of payment constituting proceeds of the Collateral.
(D) INSURANCE ADJUSTMENTS. Secured Party may adjust, settle, and cancel
any and all insurance covering any Collateral, endorse the name of Debtor on any
and all checks or drafts drawn by any insurer, whether representing payment for
a loss or a return of unearned premium, and execute any and all proofs of claim
and other documents or instruments of every kind required by any insurer in
connection with any payment by such insurer.
(E) APPOINTMENT OF RECEIVER. Secured Party shall have the right to the
appointment of a receiver for the properties and assets of Debtor and Debtor
hereby consents to such right and to such appointment and hereby waives any
objection Debtor may have thereto and hereby waives the right to have a bond or
other security posted by Secured Party or any other person in connection
therewith.
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The net proceeds of any disposition of the Collateral may be applied by Secured
Party, after deducting its reasonable expenses incurred in such disposition, to
the payment in whole or in part of the Obligations. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive, and the exercise
of any right and/or remedy shall not preclude the exercise of any other rights
or remedies, all of which are cumulative and non-exclusive.
SECTION 7. OTHER PROVISIONS.
(A) AMENDMENT AND WAIVER. Without the prior written consent of Secured
Party, no amendment or waiver of, or consent to any departure by Debtor from,
any provision hereunder shall be effective. Any such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No delay or failure by Secured Party to exercise any
remedy hereunder shall be deemed a waiver thereof or of any other remedy
hereunder. A waiver on any one occasion shall not be construed as a bar to or
waiver of any remedy on any subsequent occasion.
(B) COSTS AND ATTORNEYS' FEES. Except as prohibited by law, if at any
time Secured Party employs counsel in connection with the creation, perfection,
preservation, or release of the security interest of Secured Party in the
Collateral or the enforcement of any of Secured Party's rights or remedies
hereunder, all of Secured Party's reasonable attorneys' fees arising from such
services and all other reasonable expenses, costs, or charges relating thereto
shall become part of the obligations secured hereby and be paid by Debtor on
demand.
(C) REVIVAL OF OBLIGATIONS. To the extent Debtor or any third party
makes a payment or payments to Secured Party or Secured Party enforces its
security interest or exercises any right of set off, and such payment or
payments or the proceeds thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, and/or required to be repaid to a
trustee, receiver, or any other party under any bankruptcy, insolvency or other
law or in equity, then, to the extent of such recovery, the obligations secured
hereby or any part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment or payments had not
been made, or such enforcement or set off had not occurred.
(D) PERFORMANCE BY SECURED PARTY. Upon the occurrence of a Default
hereunder, Secured Party may, at its option and without notice to or demand upon
Debtor, without obligation and without waiving or diminishing any of its other
rights or remedies hereunder, fully perform or discharge any of such duties. All
costs and expenses incurred by Secured Party in connection therewith, together
with interest thereon at a rate of 18% per annum, shall become part of the
obligations secured hereby and be paid by Debtor upon demand.
(E) INDEMNIFICATION, ETC. Debtor hereby expressly indemnifies and holds
Secured Party harmless from any and all claims, causes of action, or other
proceedings, and from any and all liability, loss, damage, and expense of every
nature, arising by reason of Secured Party's enforcement of its rights and
remedies hereunder, or by reason of Debtor's failure to comply with any
applicable law or regulation, other than any such claim, cause of action or
other
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proceeding, liability, loss, damage or expense arising by reason of gross
negligence or willful misconduct on the part of Secured Party. In any suit,
proceeding or action brought by Secured Party under any account for any sum
owing thereunder, or to enforce any provisions of any account, Debtor will save,
indemnify and keep Secured Party harmless from and against all expense, loss or
damage suffered by reason of any defense, set off, counterclaim, recoupment or
reduction of liability whatsoever of the account debtor or any other obligor
thereunder, arising out of a breach by Debtor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such account debtor or obligor or its successors from Debtor
(except to the extent any such expense, loss or damage results from the gross
negligence or willful misconduct of Secured Party). The obligations of Debtor
under this Section 7(E) shall survive the termination of the other provisions of
this Security Agreement.
(F) POWER OF ATTORNEY. Debtor hereby constitutes and appoints Secured
Party or Secured Party's designee during the term of any obligations secured by
this Security Agreement as its attorney-in-fact, effective upon the occurrence
of a Default, which appointment is an irrevocable, durable agency, coupled with
an interest, with full power of substitution. This power of attorney and mandate
is for the purpose of taking, whether in the name of Debtor or in the name of
Secured Party, any action which Debtor is obligated to perform hereunder or
which Secured Party may deem necessary or advisable to accomplish the purposes
of this Security Agreement. The powers conferred upon Secured Party in this
Section are solely to protect its interest in the Collateral and shall not
impose any duty upon Secured Party to exercise any such powers. Secured Party
shall exercise its power of attorney only upon occurrence of a Default.
(G) CONTINUING EFFECT. This Security Agreement, the security interest
of Secured Party, in the Collateral, and all other documents or instruments
contemplated hereby shall continue in full force and effect until the
Obligations have been satisfied in full and the Loan Agreement, the Note and the
Guaranty have been terminated in accordance with their terms.
(H) BINDING EFFECT. This Security Agreement shall be binding upon and
inure to the benefit of Secured Party and its successors and assigns, and in the
event of an assignment of all or any of the obligations secured hereby, the
rights hereunder, to the extent applicable to the indebtedness so assigned, may
be transferred with such indebtedness. This Security Agreement shall be binding
upon and inure to the benefit of Debtor and its successor and assigns; provided,
that Debtor may not assign any of its rights or obligations hereunder without
the prior written consent of Secured Party.
(I) SECURITY AGREEMENT AS FINANCING STATEMENT. A photographic copy or
other reproduction of this Security Agreement may be used as a financing
statement.
(J) GOVERNING LAW. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without reference
to choice of law doctrine.
(K) NOTICES. All notices hereunder shall be in writing and shall be
deemed to be duly given upon delivery if hand delivered or sent by telegram or
facsimile transmission, or 3 days
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after mailing if sent by express, certified or registered mail, to the parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
If to Secured Party, as follows: If to Debtor, as follows:
RonHow, LLC Harold's Stores, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000 000 Xxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxx Attn: Xxxx Xxxxxx, Chief Financial Officer
Telecopy No.: 000-000-0000 Telecopy No.: 000-000-0000
with a copy to: with a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP Xxxxx & Xxxxxxx
000 Xxxxxxxxx Xx., XX, Xxxxx 0000 0000 Xxxxx XxXxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000 Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Pile Attention: Xxxx X. Xxxxxxxxx
Telecopy No.: 000-000-0000 Telecopy No.: 000-000-0000
(L) SEVERABILITY. The determination that any term or provision of this
Security Agreement is unenforceable or invalid shall not affect the
enforceability or validity of any other term or provision hereof.
(M) ENTIRE AGREEMENT. This Security Agreement, together with all
documents referred to herein, constitutes the entire agreement between Debtor
and Secured Party with respect to the matters addressed herein.
(N) SUBORDINATION. Debtor's obligations to Secured Party under the Loan
Agreement, the Note, the Guaranty and this Security Agreement are subordinated
to Debtor's obligations to Xxxxx Fargo Retail Finance II, LLC ("AGENT") and
certain other lenders, pursuant to the terms of that certain Subordination and
Intercreditor Agreement, dated as of even date herewith, by and among Secured
Party, Parent, Guarantors and Agent (the "INTERCREDITOR AGREEMENT"). The terms
"Senior Lender" and "Senior Loan Agreement" as used herein have the meanings
assigned to them in the Intercreditor Agreement. So long as the Intercreditor
Agreement remains in effect, Debtor's obligations under this Security Agreement
are subject to the terms of the Intercreditor Agreement, such that Debtor shall
not be obligated to take any action, and Secured Party shall not be entitled to
enforce any right hereunder, in any manner contrary to the requirements of the
Intercreditor Agreement.
[Signatures Follow on Next Page.]
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IN WITNESS WHEREOF, each of Debtor and Secured Party have caused this
Security Agreement to be executed and attested under seal and delivered by its
duly authorized officers as of the date shown above.
DEBTOR:
HAROLD'S STORES, INC., an Oklahoma corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HAROLD'S FINANCIAL CORPORA-TION, an Oklahoma
corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HAROLD'S DIRECT, INC., an Oklahoma corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HAROLD'S STORES OF TEXAS, L.P., a Texas limited
partnership
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HAROLD'S OF JACKSON, INC, a Mississippi corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Interim CEO
--------------------------
[Signature Page to Subordinated Security Agreement]
THE CORNER PROPERTIES, INC., an Oklahoma
corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: /s/ Interim CEO
--------------------------
HAROLD'S LIMITED PARTNERS, INC., an Oklahoma
corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HAROLD'S DBO, INC., a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
HSTX, INC., a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Its: Interim CEO
--------------------------
SECURED PARTY:
RONHOW, LLC, a Georgia limited liability company
By: Ronus, Inc., a Georgia corporation,
Managing Member
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx, President
[Signature Page to Subordinated Security Agreement]
SCHEDULE A
TO
SUBORDINATED SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
None.
SCHEDULE B
TO
SUBORDINATED SECURITY AGREEMENT
LOCATION OF INVENTORY AND EQUIPMENT
See attached.
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1 - NORMAN 7 - JACKSON 13 - LENOX 19 - HOUSTON I (Xxxxxx
Xxxxxx)
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Campus Xxxxxx Xxx Xxxxx Xxxxx Xxxxxx Xxxxxxxx Xxxxxxx
329 Xxxx Xxxx 4450 I-55 North 0000 Xxxxxxxxx Xxxx XX, 0000 Xxxxxxxxxx
Xxxxxx, XX 00000 (1948) Xxxxxxx, XX 00000 #3091 Xxxxxxx, XX 00000
(000) 000-0000 (1980) Xxxxxxx, XX 00000 (1992)
Fax: (000) 000-0000 (000) 000-0000 (1988/1997) (000) 000-0000
*Xxxxx Xxxxxx Fax: (000) 000-0000 (000) 000-0000 Fax: (000) 000-0000
*Xxxxxx XxXxx Fax: (000) 000-0000 *Xxxxxx XxXxxx
FLL & FLM * Xxxxx Xxxx
FLL FLL & FLM
FLL & FLM
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2 - DOWNTOWN 8 - FORT WORTH 14 - MONTGOMERY 20 - OMAHA
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University Park Village The Shoppes at EastChase One Pacific Place
CLOSED 3/26/99 0000 X. Xxxxxxxxxx Xxxxx, 0000 XxxxXxxxx Xxxxxxx 00000 Xxxxxxx Xxxxxx
#000 Xxxxxxxxxx XX 00000 Xxxxx, XX 00000 (6/93)
Xxxx Xxxxx, XX 00000 (334) 396 5701 (000) 000-0000
(1986/1997) Fax: (000) 000 0000 Fax: (000) 000-0000
(000) 000-0000 *Xxxxxx Xxxxx *Xxxxxxxx Xxxxxx
Fax: (000) 000-0000
*Xxxxxxx Xxxxxx Opening 3/23
FLL & PM FLL
FLL & FLM
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3 - 50 PENN 9 - XXXXXXXX 00 - XXXXXX XXXX 00 - XXXXXX XXXX
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50 Penn Place The Galleria Xxxxxxxx Xxxxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxx
XX 1900 Expressway Street 00000 Xxxxxx Xxxxxxx, Xxxxx 000 Xxxxx University 000-00 Xxxx 00xx Xxxxxx
Xxxxx 000X 1650 Avenue Ste. 120 Kansas City, MO 64112
Xxxxxxxx Xxxx, XX 00000 Xxxxxx, XX 00000 (1985) Xxxxxx Xxxx, XX 00000 (11/93)
(1976) (000) 000-0000 (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000 *Xxxxxxxx Higgenbothen Fax: (000) 000-0000
Fax: (000) 000-0000 *Xxxxxxx Xxxx *Xxxxxx Xxxxxx
*Xxxxxxxx Xxxxxxx
FLL
FLL & FLM FLL & FLM FLL & FLM
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4 - THE FARM 10 - LUBBOCK 16 - AUSTIN BARN 22 - NASHVILLE
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The Farm Shopping Center Kingsgate Center 8611 N. Mopac Expressway 0000 Xxxxxx Xxxxxx Xxxx
0000 Xxxxx Xxxxxxxx 0000 Xxxxxx Xxx., Xxxx 000 Xxxxxx, XX 00000 (1991) Xxxxx 000
Xxxxx, XX 00000 (1973) Xxxxxxx, XX 00000 (512) 794-9036 Xxxxxxxxx, XX 00000
(000) 000-0000 (1992) Fax: (000) 000-0000 (12/93)
Fax: (000) 000-0000 (000) 000-0000 *Xxxxxx Xxxxxxxx (615) 298-3959
*Xxxxx Xxxx Fax: (000) 000-0000 Fax (000) 000-0000
*Xxxxxx Xxxxxxx *Xxxxxx Xxxxxx
FLL & FLM FLL & FLM
FLL & FLM FLL & FLM
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5 - UTICA 00 - XXX XXXXXX 00 - XXXXX XXXXX 00 - XXXXXXXXX
(Previously Perimeter)
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Utica Square Shopping Center North Point Village Specialty Shops on the Park
0000 Xxxxx Xxxxxx CLOSED 5/7/01 0000 Xxxxx Xxxxx Xxxxxxx 0000 Xxxxxxxx Xxxx., Xxxxx
Xxxxx, XX 00000 suite 103 4-A
(1980/7-99) Xxxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
(000) 000-0000 (4-27-06) (7/94)
Fax: (000) 000-0000 (000)000-0000 (000) 000-0000
*Xxx Xxxxx Fax: (000) 000-0000 Fax: (000) 000-0000
* Xxxxxxxxx Xxxxxx *Xxxxxxxx Xxxxxx
FLL & FLM FLL
FLL
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6 - HIGHLAND PARK 12 - MEMPHIS III (POPLAR) 18 - SAN ANTONIO 24 - PLANO
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Highland Xxxx Xxxxxxx Xxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxxxxxx
00 Highland Park Village 518 Perkins Extended CLOSED 1/29/99 0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000 (1977) Xxxxxxx, XX 00000 Xxxxx, XX 00000 (10/94)
(000) 000-0000 (11/18/99) (000) 000-0000
Fax: (000) 000-0000 (000) 000-0000 Fax: (000) 000-0000
*Xxxxxxxx Xxxxxxxx Fax: (000) 000-0000 *Xxxxx Xxxxxxx
*Xxxxxxxx Xxxxxxx
FLL & FLM FLL & FLM
FLL & FLM
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25 - AUSTIN ARBORETUM 31 - LEAWOOD
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Arboretum Market Shopping Xxxx Xxxxxx Xxxxx
Xxx 0000 Xxxx 000xx Xxxxxx,
0000 Xxxxx Xxxxx Xxxxx, #0000
Xxxxx 000 Xxxxxxx, XX 00000
Xxxxxx, XX 00000 (5/96)
(9/94) (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000 * Xxxxx Xxxxx
*Xxxxxxx Xxxxxx
FLL & FLM
FLL & FLM
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26 - PHOENIX 32 - GREENVILLE
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---------------------------- -----------------------------
0000 Xxxxxxxx Xxxx
XXXXXX 0/00/00 Xxxxx 0000
Xxxxxxxxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
*Xxxxx Xxxxxx
FLL
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27 - ST. LOUIS 33 - TYSON'S
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Plaza Frontenac Tyson's Galleria
0000 X. Xxxxxxxxx Xxxx., 0000-X Xxxxxxxxxxxxx Xxxxx
Xxxxx 000 XxXxxx, XX 00000 (8/96)
Xx. Xxxxx, XX 00000 (703) 506-9224
(3/31/95) Fax: (000) 000-0000
(000) 000-0000 *Xxxxx Xxxxxxx
Fax: (000) 000-0000
*Xxxxx Xxx
FLL & FLM
FLL
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28 - LOUISVILLE 34 - RALEIGH
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Mall St. Xxxxxxxx Xxxxxxxx Valley Mall
0000 Xxxxxxxxxxx Xx., #00 0000 Xxxxxxxx Xxx., #0000
& 144 Raleigh, NC 27612
Xxxxxxxxxx, XX 00000 (6/96)
(9/95) (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000 *Xxxxxx Xxxxxxxxx
*Xxxxxx Xxxxxxx
FLL & FLM
FLL & FLM
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29 - HILLSBORO 35 - HOUSTON II (Xxxxxx
Xxxxxx )
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Town and Country Village
CLOSED 3/2/03 000 X. Xxx Xxxxxxx Xxxx.,
#000
Xxxxxxx, XX 00000
(11/96)
(000) 000-0000
Fax: (000) 000-0000
*Xxxxx Xxxxxx
FLL &FLM
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30 - BATON ROUGE 36 - DENVER
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CitiPlace Market Center Park Xxxxxxx Mall
2531 CitiPlace Court, 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000 Xxxxx Xxxxx 0000
Baton Rouge, LA 70808 Xxxxxxxxx, XX 00000
(11/95) (10/96)
(000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
*Xxxxxx Xxxxxxx *Xxxx XxXxxx
FLL & FLM
FLL & FLM
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08-24-06
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37 - NORMAN OUTLET 43 - BIRMINGHAM II 49 - XXXXXXXXX 00 - XXX XXXXX, XX
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Summit Retail Shopping Southlake Town Square
000 X. Xxxxxxxxxx Xxxx. Center 000 Xxxxx Xxxxxx XXXXXX 0/0/00
Xxxxxx, XX 00000 (1/97) 000 Xxxxxx Xxxx., Xxxxx 000 Xxxxxxxxx, XX 00000
(000) 000-0000 Xxxxxxxxxx, XX 00000 (3/99)
Fax: (000) 000-0000 (10/97) (000) 000-0000
*Cash Xxxxxxxxx (000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000 *Xxxx Xxxxxxxx
FLL & FLM *Xxxxxxx Xxxx
FLL & FLM
FLL & FLM
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38 - MEMPHIS II 00 - XXXX XXXX XXXX 00 - XXXXX 00 - XXXXXXXXXXXX
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Trolley Square Center
CLOSED 4/27/03 000 Xxxxxxx Xxxxxx CLOSED 5/25/03 CLOSED 5/31/02
Xxxx Xxxx Xxxx, XX
00000 (11/98)
(000) 000-0000
Fax: (000) 000-0000
*Xxxxxx Xxxxxxxx
FLL & FLM
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39 - WICHITA 45 - XXXXXX XXXXXX 51 - HOUSTON III (Xxxxxx 57 - DAWSONVILLE
OUTLET Xxxxxx)
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Xxxxxxx Fair Shopping Center Champions Forest Plaza
0000 X. Xxxx Xxxx, Xxxxx 000 CLOSED 3/04 0000 XX 0000 Xxxx XXXXXX 0/0/00
Xxxxxxx, XX 00000 (5/97) Xxxxxxx, XX 00000
(000) 000-0000 (5/99)
Fax: (000) 000-0000 (000) 000-0000
*Xxxxxx Xxxxxxx Fax: (000) 000-0000
*Xxxxx Xxxxxxx
FLL & FLM
FLL & FLM
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40 - SAN XXXXXXX XX 46 - PALO ALTO 52 - INDIANAPOLIS 58 - SAN MARCOS
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Alamo Quarry Market Stanford Shopping Center Keystone Fashion Mall
000 Xxxx Xxxxx Xxxx, Xxxxx 000 Stanford Shopping Center 0000 Xxxxxxxx Xxxxxxxx Xxxx. CLOSED 3/2/03
000 Xxxxx X000 Xxxxx 000
Xxx Xxxxxxx, XX 00000 Xxxx Xxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
(3/98) (2/99) (7/9/99)
(000) 000-0000 (000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000 Fax: (000) 000-0000
*Xxxxxx Xxxxxxxxx * Xxxxxx Xxxxx *Xxxx Xxxxxxxxx
FLL FLL
FLL & FLM
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00 - XXXXXXXX 00 - XXX XXXXX 00 - XXXXXXX XXX
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Oak Brook Center The Avenue East Xxxx
CLOSED 4/28/02 000 Xxxxxxxx Xxxxxx 0000 Xxxxxxx Xxxx, Xxxxx
Xxx Xxxxx, XX 00000 1510
(11/98) Xxxxxxxx, XX 00000
(000) 000-0000 (8/12/99)
Fax: (000) 000-0000 (000) 000-0000
*Xxx Matter Fax: (000) 000-0000
*Xxxxx Xxxxxx
FLL
FLL & FLM
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42 - RICHMOND 48 - XXX XXXXXXX 00 - XXXX XX XXXXXXX
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River Road Shopping Center
0000 Xxxxx Xxxx, Xxxx A CLOSED 7/26/03 CLOSED 1/14/01
Xxxxxxxx, XX 00000
(10/97)
(000) 000-0000
Fax (000) 000-0000
*Xxxxxxx Xxxxxxx
FLL & FLM
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Northeast Consolidator
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Dynamic
000 Xxxxxxxxxxxx Xxxxxx
X. Xxxxxx, XX 00000
(000) 000-0000
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90 - CORPORATE OFFICE
DALLAS
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0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
(000) 000-0000
Fax: (000) 000-0000
Fax: (000) 000-0000
HR Fax: (000) 000-0000
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99- NORMAN OFFICE
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000 Xxx Xxxxxx
Xxxxxx, XX 00000
X.X. Xxxxxx 0000
Xxxxxx, XX 00000
(000) 000-0000
(000) 000-0000
Extra #'s:
Voice Mail 000-000-0000
Credit/Cust. Service
000-000-0000
000-000-0000
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Oklahoma City Clearance
Event
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Former Service Merchandise
0000 X.X. Xxxxxxxxxx
Xxxx Xxxxx, XX 00000
(000) 000-0000
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75-WAREHOUSE/DISTRIBUTION
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000 Xxxx Xxxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000 Upstairs
Fax: (000) 000-0000
Downstairs
**Both Fax Numbers Are New
Intercom @ Warehouse #407
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950 - NEW YORK OFFICE
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Harold's New York Xxxxxx
000 X. 00xx Xxxxxx - 00xx
Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
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08-24-06
