SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File No. 1-
August 1, 1998 10892
HAROLD'S STORES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1308796
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
765 Asp Norman, Oklahoma 73069 (405) 329-4045
(Address of principal executive (Registrant's
offices) telephone number,
(Zip Code) including area
code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X . No .
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
As of September 10, 1998, the registrant had 6,073,958
shares of Common Stock outstanding.
Harold's Stores, Inc.
Index to
Quarterly Report on Form 10-Q
For the Period Ended August 1, 1998
Part I. - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets - August 1, 1998
(unaudited) and January 31, 1998 3
Consolidated Statements of Earnings -
Thirteen Weeks and Twenty-Six Weeks ended August 1,
1998 (unaudited) and August 2, 1997(unaudited) 5
Consolidated Statements of Stockholders' Equity -
Twenty-Six Weeks ended August 1, 1998 (unaudited)
and August 2, 1997 (unaudited) 6
Consolidated Statements of Cash Flows -
Twenty-Six Weeks ended August 1, 1998 (unaudited)
and August 2, 1997 (unaudited) 7
Notes to Interim Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security
Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
August 1, January 31,
1998 1998
(Unaudited)
Current assets:
Cash $ 50 130
Trade accounts receivable, less
allowance for doubtful accounts of 5,696 5,822
$235 in 1999 and $222 in 1998
Other accounts receivable 937 886
Merchandise inventories 30,583 31,440
Prepaid expenses 2,435 2,688
Prepaid income tax 277 961
Deferred income taxes
1,154 1,154
Total current assets 41,132 43,081
Property and equipment, at cost 30,772 28,533
Less accumulated depreciation and
amortization (11,824) (10,197)
Net property and equipment 18,948 18,336
Other receivables, non-current 1,991 2,084
Other assets 136 428
Total assets $ 62,207 63,929
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands Except Share Data)
August 1, January 31,
1998 1998
(Unaudited)
Current liabilities:
Current maturities of long-term debt $ 503 734
Accounts payable 4,738 4,789
Redeemable gift certificates 607 916
Accrued bonuses and payroll expenses 1,299 953
Accrued rent expense 71 259
Total current liabilities 7,218 7,651
Long-term debt, net of current maturities 17,547 19,708
Deferred income taxes 104 104
Stockholders' equity:
Preferred stock of $.01 par value
Authorized 1,000,000 shares; none issued - -
Common stock of $.01 par value
Authorized 25,000,000 shares; issued
and outstanding 6,069,981 in August, 61 60
6,044,105 in January
Additional paid-in capital 34,134 33,947
Retained earnings 3,143 2,459
Total stockholders' equity 37,338 36,466
Total liabilities and stockholders' $ 62,207 63,929
equity
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Share Data)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
(Unaudited)
Sales $27,714 26,826 61,255 55,234
Costs and expenses:
Cost of goods sold (including
occupancy and central buying
expenses, exclusive of items 18,226 18,510 40,543 37,256
shown separately below)
Selling, general and 7,893 8,163 17,205 16,615
administrative expenses
Depreciation and 943 881 1,861 1,719
amortization
Interest expense 196 233 423 394
27,258 27,787 60,032 55,984
Earnings (loss) before income
taxes and cumulative effect of 456 (961) 1,223 (750)
change in accounting principle
Provision for income taxes 183 (384) 489 (300)
Net earnings (loss) before
cumulative effect of change
in accounting principle 273 (577) 734 (450)
Cumulative effect of change
in accounting principle - - 50 -
Net earnings (loss) 273 (577) 684 (450)
Net earnings (loss) per common
share before cumulative effect
of change in accounting
principle: 0.05 (0.10) 0.12 (0.07)
Basic and diluted
Net earnings (loss) per common
share:
Basic and diluted 0.05 (0.10) 0.11 (0.07)
Weighted average number of
common shares 6,063,786 6,014,993 6,057,403 5,969,540
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
26 Weeks 26 Weeks
Ended Ended
August 1, August 2,
1998 1997
(Unaudited)
Common stock:
Balance, beginning of period $ 60 57
Employee Stock Purchase Plan 1 -
Balance, end of period $ 61 57
Additional paid-in capital:
Balance, beginning of period $ 33,947 31,548
Employee Stock Purchase Plan 187 226
Balance, end of period $ 34,134 31,774
Retained earnings:
Balance, beginning of period $ 2,459 4,430
Net earnings (loss) 684 (450)
Balance, end of period $ 3,143 3,980
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
26 Weeks 26 Weeks
Ended Ended
August 1, August 2,
1998 1997
(Unaudited)
Cash flows from operating activities:
Net earnings (loss) $ 684 (450)
Adjustments to reconcile net earnings
(loss) to net cash
provided by operating activities:
Depreciation and amortization 1,861 1,719
Gain on sale of assets (10) (2)
Shares issued under employee 188 226
incentive plan
Changes in assets and liabilities:
Increase in trade and other (64) (214)
accounts receivable
Decrease (increase) in 857 (5,569)
merchandise inventories
Decrease in other assets 292 220
Decrease (increase) in prepaid 253 (80)
expenses
Decrease (increase) in prepaid 684 (887)
income tax
(Decrease) increase in accounts (51) 1,376
payable
Decrease in income taxes payable - (942)
Decrease in accrued expenses (151) (1,120)
Net cash provided by (used in)
operating activities 4,543 (5,723)
Cash flows from investing activities:
Acquisition of property and (2,511) (3,898)
equipment
Proceeds from disposal of property 48 9
and equipment
Payment of principal on term loan
to others 232 140
Net cash used in investing activities (2,231) (3,749)
Cash flows from financing activities:
Advances on revolving line of 20,832 24,731
credit
Payments on revolving line of (22,280) (16,361)
credit
Borrowings of long-long term debt - 1,024
Payments of long-term debt (944) (111)
Net cash (used in) provided by
financing activities (2,392) 9,283
Decrease in cash and cash equivalents (80) (189)
Cash and cash equivalents at beginning
of period 130 433
Cash and cash equivalents at end of
period $ 50 244
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
August 1, 1998 and August 2, 1997
(Unaudited)
1. Unaudited Interim Periods
In the opinion of the Company's management, all
adjustments (all of which are normal and recurring) have been
made which are necessary to fairly state the financial position
of the Company as of August 1, 1998 and the results of its
operations and cash flows for the thirteen week period and
twenty-six week periods ended August 1, 1998 and August 2,
1997. The results of operations for the thirteen week period
and twenty-six week periods ended August 1, 1998 and August 2,
1997 are not necessarily indicative of the results of
operations that may be achieved for the entire fiscal year.
2. Definition of Fiscal Year
The Company has a 52-53 week fiscal year that ends on the
Saturday closest to January 31. The period from February 1,
1998 through January 30, 1999 has been designated as fiscal
1999.
3. Reclassifications
Certain comparative prior year amounts in the consolidated
financial statements have been reclassified to conform to the
current year presentation.
4. Net Earnings Per Common Share
Basic earnings per common share are based upon the
weighted average number of common shares outstanding during the
period restated for the five percent stock dividend in fiscal
1998. Diluted earnings per share reflect the potential
dilution that could occur if the Company's outstanding stock
options were exercised (calculated using the treasury stock
method).
13 Weeks 13 Weeks 26 Weeks 26 Weeks
ended ended ended ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
(Amounts in thousands, except per share
data)
Net earnings (loss) 273 (577) 684 (450)
applicable to common shares,
basic and diluted
Weighted average number of 6,064 6,015 6,057 5,970
common shares outstanding -
basic
Dilutive effect of potential
common shares issuable upon
exercise of employee stock 18 36 13 75
options
Weighted average number of
common shares outstanding - 6,082 6,051 6,070 6,045
diluted
Net earnings (loss) per
common share:
Basic and Diluted $ 0.05 $ (0.10) $ 0.11 $ (0.07)
5. Adoption of New Accounting Pronouncement
The Company elected early adoption of The American Institute
of Certified Public Accountants Statement of Position (SOP) 98-5
"Reporting on the Costs of Start-Up Activities" This SOP
requires that costs incurred during start-up activities,
including organization costs, be expensed as incurred. The
$83,000 effect ($50,000 net of tax) of this early adoption is
reported as the cumulative effect of a change in accounting
principle. Had the Company not elected early adoption of SOP 98-
5, net earnings for the twenty-six week period ended August 1,
1998 would have increased by $8,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth for the periods indicated,
the percentage of sales represented by items in the Company's
statement of earnings:
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1998
Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold
(including occupancy
and central buying (65.8) (69.0) (66.2) (67.4)
expenses, exclusive of
items shown
separately below)
Selling, general and (28.5) (30.4) (28.1) (30.1)
administrative expenses
Depreciation and (3.4) (3.3) (3.0) (3.1)
amortization
Interest expense (0.7) (0.9) (0.7) (0.7)
Earnings (loss) before
income taxes and 1.6 (3.6) 2.0 (1.3)
cumulative effect of
change in accounting
principle
Provision for income taxes (0.6) 1.4 (0.8) 0.5
Net earnings (loss) before
cumulative effect of 1.0 (2.2) 1.2 (0.8)
accounting principle
Cumulative effect of
change in accounting - - (0.1) -
principle
Net earnings (loss) 1.0% (2.2)% 1.1% (0.8)%
The following table reflects the sources of the increases
in Company sales for the periods indicated:
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
Store sales (000's) $ 26,015 24,995 56,480 50,624
Catalog sales (000's) $ 1,699 1,831 4,775 4,610
Sales (000's) $ 27,714 26,826 61,255 55,234
Total sales growth 3.3% 19.8% 10.9% 17.7%
Growth in comparable store (4.3)% (3.7)% (2.6)% (3.7)%
sales (52 week basis)
Growth in catalog sales (7.2)% 52.7% 3.6% 23.6%
Store locations:
Existing stores 42 37 41 36
New stores opened - 2 1 3
Total stores at end of 42 39 42 39
period
The Company relocated the Galleria mall store in Dallas,
Texas to a larger location during the thirteen weeks ended
August 1, 1998 (the second quarter), as compared to opening two
locations (Wichita, Kansas and Columbus, Ohio) in the
comparable period of the prior year. During the twenty-six
weeks ended August 1, 1998, the Company opened one new store
location (San Antonio, Texas), as compared to the opening of
three stores (Memphis, Tennessee; Wichita, Kansas and Columbus,
Ohio) in the same period of the prior year. The opening of new
stores and expansion of existing stores contributed to total
sales growth for the second quarter. Total sales growth for
the twenty-six weeks ended August 1, 1998 was derived from the
opening of new stores, expansion of existing stores and an
increase in catalog sales. Catalog sales declined during the
second quarter of fiscal 1999 as compared to the same period of
the prior year as a result of a strategic initiative to reduce
by 26% the total number of catalogs circulated during the
period.
Comparable stores sales declined during the second quarter
and twenty-six week period of fiscal 1999, as compared to the
same periods of fiscal 1998. The Company believes the decline
experienced in comparable store sales during the periods was
primarily attributable to the opening of a second store in
several key markets, including Birmingham, Alabama; Memphis,
Tennessee; San Antonio, Texas and Norman, Oklahoma.
The Company's gross margin was 34.2% for the second
quarter of fiscal 1999, as compared to 31.0% in the same period
of last year. The gross margin also increased for the twenty-
six week period ended August 1, 1998 to 33.8%, from a level of
32.6% in the same period of last year. The increase in gross
margin for both periods can be primarily attributed to improved
inventory planning, resulting in lower inventory levels and
reduced markdowns.
Selling, general and administrative expenses (including
advertising and catalog production costs) declined 1.9% of
sales from the second quarter of fiscal 1998 to the second
quarter of fiscal 1999 and 2.0% of sales for the twenty-six
weeks ended August 1, 1998 as compared to the same period of
the prior year. The reduction was principally the result of
reduced advertising and catalog production cost expenditures.
Advertising and catalog production costs were $1,731,000, or
6.2% of sales for the second quarter and $4,175,000, or 6.8% of
sales for the twenty-six weeks ended August 1, 1998, as
compared to $2,384,000, or 8.9% of sales in the same quarter
last year and $5,202,000, or 9.4% in the same twenty-six week
period of last year.
The average balance on total outstanding debt was
$17,400,000 for the second quarter ended August 1, 1998
compared to $17,516,000 for the second quarter of fiscal 1998.
This decrease in average balances resulted principally from
reductions in working capital needs. Average interest rates on
the Company's line of credit were approximately the same for
the quarter ended August 1, 1998 and the comparable quarter in
the prior fiscal year. As the Company's growth continues, cash
flow may require additional borrowed funds that may cause an
increase in interest expense.
Capital Expenditures, Capital Resources and Liquidity
Cash Flows From Operating Activities. For the twenty-six
weeks ended August 1, 1998, net cash provided by operating
activities was $4,543,000 as compared to net cash used in
operating activities of $5,723,000 for the same period of
fiscal 1998. The significant increase can be attributed to an
$857,000 decrease in the Company's inventories for the twenty-
six weeks ended August 1, 1998 as compared to an increase of
$5,569,000 for the same period of fiscal 1998. Management
expects the dollar amounts of the Company's merchandise
inventories to increase with the expansion of its product
development programs, private label merchandise and chain of
retail stores with related increases in trade accounts
receivable and accounts payable. Period to period differences
in timing of inventory purchases and deliveries will affect
comparability of cash flows from operating activities.
In addition, the difference in cash flows from operating
activities is partially due to (i) the timing of cash
disbursements as reflected in a decrease in accounts payable of
$51,000 for the twenty-six weeks ended August 1, 1998 as
compared to an increase in accounts payable of $1,376,000
during the same period of fiscal 1998 and (ii) a decrease in
accrued expenses of $151,000 for the twenty-six weeks ended
August 1, 1998 compared to a decrease in accrued expenses of
$1,120,000 during the same period of fiscal 1998.
Cash Flows From Investing Activities. For the twenty-six
weeks ended August 1, 1998, net cash used in investing
activities totaled $2,231,000 compared to $3,749,000 for the
same period in fiscal 1998. Capital expenditures were invested
in new stores, and remodeling and equipment expenditures in
existing operations.
Cash Flows From Financing Activities. During the twenty-
six weeks ended August 1, 1998, the Company made periodic
borrowings under its revolving long-term line of credit to
finance its inventory purchases, product development and
private label programs, store expansion, remodeling and
equipment purchases.
The Company has available a long-term line of credit with
its bank. This line had an average balance of $12,451,000 and
$15,283,000 for the twenty-six weeks ended August 1, 1998 and
August 2, 1997, respectively. During the twenty-six weeks
ended August 1, 1998, this line of credit had a high balance of
$15,036,000 and a high balance of 20,000,000 for the twenty-six
weeks ended August 2, 1997. The balance outstanding on August
1, 1998 was $13,588,000 compared to $19,555,000 on August 2,
1997.
Liquidity. The Company considers the following as
measures of liquidity and capital resources as of the dates
indicated:
January August 1, August 2,
31, 1998 1998 1997
Working capital (000's) $35,430 $33,914 $35,236
Current ratio 5.63:1 5.70:1 4.40:1
Ratio of working capital .55:1 .54:1 .52:1
to total assets
Ratio of total debt to .56:1 .48:1 .61:1
stockholders' equity
The Company's primary needs for liquidity are to finance
its inventories and revolving charge accounts and to invest in
new stores, remodeling, fixtures and equipment. Cash flow from
operations and proceeds from credit facilities represent the
Company's principal sources of liquidity. Management
anticipates these sources of liquidity to be sufficient in the
foreseeable future.
Seasonality
The Company's business is subject to seasonal influences,
with the major portion of sales realized during the fall season
(third and fourth quarters) of each fiscal year, which includes
the back-to-school and Holiday selling seasons. In light of
this pattern, selling, general and administrative expenses are
typically higher as a percentage of sales during the spring
season (first and second quarters) of each fiscal year.
Inflation
Inflation affects the costs incurred by the Company in its
purchase of merchandise and in certain components of its
selling, general and administrative expenses. The Company
attempts to offset the effects of inflation through price
increases and control of expenses, although the Company's
ability to increase prices is limited by competitive factors in
its markets. Inflation has had no meaningful effect on the
other assets of the Company.
Year 2000
The Year 2000 will have a broad impact on the business
environment in which the Company operates due to the
possibility that many computerized systems across all
industries will be unable to process information containing
dates beginning in the Year 2000. The Company has established
an enterprise-wide program to prepare its computer systems and
applications for the Year 2000 and is utilizing both internal
and external resources to identify, correct and test the
systems for Year 2000 compliance. The Company anticipates that
the majority of its reprogramming will be completed by December
31, 1998 and testing efforts will be substantially concluded by
March 31, 1999. Further validation through testing will be
conducted throughout calendar year 1999. The Company expects
that all mission-critical systems will be Year 2000 compliant
prior to the end of the 1999 calendar year.
Because third party failures could have a material impact
on the Company's ability to conduct business, questionnaires
will be sent to substantially all of the Company's vendors to
certify that plans are being developed to address the Year 2000
issue. The returned questionnaires will be assessed by the
Company, and categorized based upon readiness for the Year 2000
issues and prioritized in order of significance to the business
of the Company. To the extent that business-critical vendors
do not provide the Company with satisfactory evidence of their
readiness to handle Year 2000 issues, contingency plans will be
developed.
The Company anticipates that it will have substantially
completed an assessment of the Year 2000 compliance status of
all information technology and non-information technology
equipment by December 31, 1998, and will then address the Year
2000 compliance of such equipment.
Upgrades and replacements to the Company's information
systems and applications are expected to cost approximately $2
million from inception in calendar year 1998 through completion
in calendar year 1999. Approximately $1.5 million is expected
to be incurred in fiscal 1999 with the remaining $500,000 to be
incurred in fiscal 2000. All estimated costs have been
budgeted and are expected to be funded by cash flows from
operations.
The cost of the project and the date on which the Company
plans to complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing
numerous assumptions of future events including the continued
availability of certain resources, third party modification
plans, and other factors. Unanticipated failures by critical
vendors as well as the failure by the Company to execute its
own remediation efforts could have a material adverse effect on
the cost of the project and its completion date. As a result,
there can be no assurance that these forward-looking estimates
will be achieved and the actual cost and vendor compliance
could differ materially from those plans, resulting in material
financial risk.
PART II
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1998 Annual Meeting of Shareholders of the Company was
held on June 26, 1998. The following matters were submitted to
a vote of the Company's shareholders:
1. The election of eleven directors (constituting the entire
board of directors) for the ensuing year and until their
successors are duly elected and qualified. The results of the
election for each director were as follows:
Director Votes For Votes Withheld
Harold G. Powell 3,109,312 1,108,432
Rebecca Powell Casey 3,109,415 1,108,329
H. Rainey Powell 3,107,460 1,110,284
Kenneth C. Row 3,108,926 1,107,818
James R. Agar 3,064,734 1,153,010
Michael T. Casey 3,108,145 1,109,599
Robert B. Cullum, Jr. 3,065,387 1,152,357
Lisa Powell Hunt 3,107,672 1,110,072
W. Howard Lester 3,109,845 1,107,899
Gary C. Rawlinson 3,064,634 1,153,110
William F. Weitzel 3,065,028 1,152,716
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part of this
Form 10-Q:
No. Description Page
10.1 First Amendment to the Third Amended and Restated
Credit Agreement dated June 30, 1998 between N/A
Registrant and NationsBank.
10.2 First Amended and Restated Stockholders' Agreement N/A
Among Certain Stockholders of Registrant dated
June 15, 1998.
10.3 Lease Agreement dated June 30, 1998 by and between
Registrant and 329 Partners-II Limited N/A
Partnership. (Dallas Buying Office, Dallas,
Texas).
27.1 Financial Data Schedule N/A
(b) Reports on Form 8-K; There were no reports on Form 8-
K filed by the Company during the fiscal quarter ended August
1, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, hereunto duly
authorized.
HAROLD'S STORES, INC.
By:\s\H. Rainey Powell
H. Rainey Powell
President, Chief Operating Officer
By:\s\Jodi L. Taylor
Jodi L. Taylor
Chief Financial Officer
Date: September 15, 1998
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made effective June 30, 1998, by
and between HAROLD'S STORES, INC., an Oklahoma corporation
("Borrower"), and NATIONSBANK, N.A. ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into a Third
Amended and Restated Credit Agreement dated November 10, 1997
(the "Agreement");
WHEREAS, Borrower has requested that the Agreement be
amended to permit Borrower to increase the amount of the Letter
of Credit Note, to extend the maturity dates of the Loans and to
otherwise amend the terms of the Agreement; and
WHEREAS, Lender is willing to amend the Agreement to
increase the amount of the Revolving Loan and to extend the
maturity dates of the Loans upon the terms and conditions set
forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
1. Agreement Definitions.
1.1 Amended Definitions. The definitions of "Agreement,"
"Letter of Credit Note," "Revolving Loan Borrowing Base,"
"Revolving Loan Maximum Revolving Facility," "Revolving Note,"
"Tenant Improvement Note" and "Term Note" in the Agreement are
hereby deleted in their entirety and replaced with the following:
"Agreement" and such terms as "herein," "hereof," "hereto,"
"hereby," "hereunder" and the like shall mean and refer to this
Agreement, together with any and all exhibits attached hereto,
and any and all supplements, modifications or amendments to this
Agreement, including the First Amendment.
"Letter of Credit Note" shall mean that certain First
Amended and Restated Revolving Note (Letter of Credit) executed
by Borrower substantially in the form of Exhibit "C" to the First
Amendment, in the original principal amount of $5,700,000.00, as
the same may be extended, renewed, amended or modified from time
to time pursuant to the terms of the Agreement.
"Revolving Loan Borrowing Base" shall mean an amount equal
to the sum of (i) eighty percent (80%) of Eligible Accounts, plus
(ii) fifty percent (50%) of Eligible Inventory, plus (iii) fifty
percent (50%) of outstanding commercial Letters of Credit. This
amount shall not exceed $19,000,000.00, as reflected in the most
current Monthly Report.
"Revolving Loan Maximum Revolving Facility" shall mean the
maximum aggregate amount which Lender has agreed to consider as a
ceiling on the outstanding principal balance of the Revolving
Loan to be made to Borrower. The Revolving Loan Maximum
Revolving Facility shall be $19,000,000.00.
"Revolving Note" shall mean that certain Fifteenth Amended
and Restated Revolving Note executed by Borrower substantially in
the form of Exhibit "A" to the First Amendment, in the original
principal amount of $19,000,000.00, as same may be extended,
renewed, amended or modified from time to time pursuant to the
terms of this Agreement.
"Tenant Improvement Note" shall mean that certain First
Amended and Restated Revolving Note (Tenant Improvement) executed
by Borrower substantially in the form of Exhibit "B" to the First
Amendment, in the original principal amount of $3,000,000.00 as
same may be extended, renewed, amended or modified from time to
time pursuant to the terms of this Agreement.
"Term Note" shall mean that certain First Amended and
Restated Term Note in the original principal amount of
$2,194.177.96 executed by Borrower substantially in the form of
Exhibit "D" to the First Amendment, as the same may be extended,
renewed or modified from time to time pursuant to the terms of
this Agreement.
1.2 Added Definition. The definition of "First Amendment"
is hereby added to the Agreement as follows:
"First Amendment" shall mean that certain First Amendment to
Third Amended and Restated Credit Agreement dated effective June
30, 1998.
2. Revolving Loan.
2.1 Section 2.1.5 of the Agreement is hereby deleted in
its entirety and replaced with the following:
2.1.5 Payment. The unpaid principal balance of the
Revolving Loan shall be due and payable on the earlier of
June 30, 2000 or upon the occurrence of a Default. Accrued
interest shall be payable monthly in arrears beginning July
31, 1998 and on the last day of each month thereafter, upon
the date of any prepayment and at maturity. All interest
accrued shall be computed on the basis of a year of 360
days, and the actual number of days elapsed in the period in
which it accrues. Following the occurrence of a Default,
Borrower shall pay to Lender interest from the date of such
Default at the per annum rate of five percent (5%) in excess
of the then applicable annual rate on the outstanding
principal balance of the liabilities under the Revolving
Loan.
2.2 Section 2.1.6 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.2.1 Term. The Revolving Loan will mature on June
30, 2000, at which time all principal and accrued interest
shall be immediately due and payable. All of Lender's
rights and remedies under this Agreement shall survive such
maturity until all of the Liabilities under this Agreement
and the other Loan Documents have been paid in full. In
addition, this Agreement may be terminated as set forth in
Section 8.
3. Tenant Improvement Loan.
3.1 Section 2.2.2 of the Agreement is hereby deleted
in its entirety and replaced with the following:
2.2.2 Advances. Each request for advance
hereunder may be made by either the President or the
Chief Financial Officer on behalf of Borrower in
writing no later than 2:00 p.m. on the date on which an
advance is requested to be made, such request to be
made utilizing the form attached as Exhibit "J". Each
advance to Borrower shall be in immediately available
funds and deposited in Borrower's demand deposit
accounts with Lender.
3.2 Section 2.2.9 of the Agreement is hereby deleted
in its entirety and replaced with the following:
2.2.9 Payment. The unpaid principal balance
of the Tenant Improvement Loan shall be due and payable on
the earlier of June 30, 2000 or upon the occurrence of a
Default. Accrued interest shall be payable monthly in
arrears beginning July 31, 1998 and on the last day of each
month thereafter, upon the date of any prepayment and at
maturity. All interest accrued shall be computed on the
basis of a year of 360 days, and the actual number of days
elapsed in the period in which it accrues. Following the
occurrence of a Default, Borrower shall pay to Lender
interest from the date of such Default at the per annum rate
of five percent (5%) in excess of the then applicable annual
rate on the outstanding principal balance of the liabilities
under the Tenant Improvement Loan.
3.3 Section 2.2.10 of the Agreement is hereby deleted in
its entirety and replaced with the following:
2.2.10 Term. The Tenant Improvement Loan will mature
on June 30, 2000, at which time all principal and accrued
interest shall be immediately due and payable. All of
Lender's rights and remedies under this Agreement shall
survive such maturity until all of the Liabilities under
this Agreement and the other Loan Documents have been paid
in full.
4. Letter of Credit Note.
4.1 Section 2.3.1 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.3.1 Principal Amount. The Letter of Credit
Facility shall be in the original principal amount of
$5,700,000.00.
4.2 Section 2.3.3 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.3.3 Letters of Credit. (i) Lender agrees to
extend credit to Borrower at any time and from time to time
by issuing, extending, re-issuing or amending Letters of
Credit. (ii) Each of the Letters of Credit shall (a) be
issued by Lender pursuant to the Letter of Credit Note and
also evidenced by separate agreements with Borrower, (b)
contain such terms and provisions as required by Lender,
including payment of customary fees, (c) be for the account
of Borrower in favor of a beneficiary reasonably acceptable
to Lender, (d) expire not later than the expiration date set
forth respectively in each Letter of Credit, which shall not
be more than one hundred eighty (180) days from the date of
issuance, unless prior approval of Lender is obtained for a
longer period, but in no event shall any Letter of Credit
have an expiration date beyond June 30, 2000.
4.3 Section 2.3.4 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.3.4 Payment. The unpaid principal balance of
the Letter of Credit Facility shall be due and payable on
the earlier of demand or June 30, 2000. Accrued interest
shall be payable monthly in arrears beginning July 31, 1998
and on the last day of each month thereafter, upon the date
of any prepayment and at maturity. All interest accrued
shall be computed on the basis of a year of 360 days, and
the actual number of days elapsed in the period in which it
accrues. Following the occurrence of a Default, Borrower
shall pay to Lender interest from the date of such Default
at the per annum rate of five percent (5%) in excess of the
then applicable annual rate on the outstanding principal
balance of the liabilities under the Letter of Credit
Facility.
4.4 Section 2.3.5 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.3.5 Term. The Letter of Credit Facility will
mature on the earlier of demand or June 30, 2000, at which
time all principal and accrued interest shall be immediately
due and payable. All of Lender's rights and remedies under
this Agreement shall survive such maturity until all of the
Liabilities under this Agreement and the other Loan
Documents have been paid in full.
5. Term Note.
5.1 Section 2.4.1 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.4.1 Principal Amount. The Term Note shall be in
the original principal amount of $2,194,177.96.
5.2 Section 2.4.2 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.4.2 Repayment of Principal and Interest. Monthly
payments of principal and interest (subject to acceleration
upon the occurrence of an Event of Default under this
Agreement or termination of this Agreement) shall be due and
payable on the last day of each calendar month beginning
July 31, 1998 as follows:
2.4.2.1 Principal and interest shall be payable in
monthly installments of principal as due that month
from CMT pursuant to the CMT Loan plus accrued interest
at the rate set forth in Section 2.4.4, Borrower being
entitled to retain the difference, if any, between any
interest collected by Borrower from CMT and the
interest payable to Lender hereunder.
2.4.2.2 All monthly installment payments made
pursuant to Section 2.4.2 shall be applied first to the
unpaid interest accrued on the Term Note and then to
the principal balance thereof.
5.3 Section 2.4.6 of the Agreement is hereby deleted in its
entirety and replaced with the following:
2.4.6 Term. The Term Loan will mature on June 30,
2000, at which time all principal and accrued interest shall
be immediately due and payable. All of Lender's rights and
remedies under this Agreement shall survive such maturity
until all of the Liabilities under this Agreement and the
other Loan Documents have been paid in full.
5.4 Section 3.1 of the Agreement is hereby deleted in its
entirety and replaced with the following:
3.1 Monthly Reports. Borrower shall submit to Lender, not
later than the twenty-fifth (25th) day following the end of each
month, a monthly report ("Monthly Report"), accompanied by a
Borrowing Base certificate in the form attached as Exhibit "E" to
the First Amendment and a written summary of all outstanding
Letters of Credit, which shall be signed by the President, Chief
Financial Officer or other authorized officer of Borrower. Each
Monthly Report shall include, as of the closing day for the
preceding month: (i) a summary aged trial balance of Accounts
for Borrower ("Accounts Trial Balance"); (ii) calculation of the
current Borrowing Base; (iii) the amount of the outstanding
principal balance of the Liabilities; and (iv) a representation
by Borrower that no Default or Event of Default occurred during
such month or, if a Default or Event of Default has occurred
during such month, a description of such Default or Event of
Default and of the actions Borrower has taken or intends to take
to cure the same. Upon Lender's request therefor, Borrower shall
furnish with such specificity as is satisfactory to Lender,
concerning matters included, described or referred to in the
Monthly Report and any other documents in connection therewith
requested by Lender including, without limitation, but only if
specifically requested by Lender, copies of all invoices prepared
in connection with the Accounts. The Monthly Report shall
contain such additional information as Lender may reasonably
require.
5.5 Section 3.2 of the Agreement is hereby deleted in its
entirety and replaced with the following:
3.2 Quarterly Reports. Borrower shall submit to Lender not
later than the forty-fifth (45th) day following the end of each
fiscal quarter a Quarterly Report which shall be accompanied by a
Quarterly Borrowing Base and Compliance Certificate (the
"Quarterly Reports") in the form attached as Exhibit "F" to the
First Amendment and a written summary of all outstanding Letters
of Credit. Each Quarterly Report shall include, as of the
closing day of the preceding fiscal quarter: (i) calculations of
the current Borrowing Bases; (ii) the quarterly itemization of
Inventory described in Section 3.7; and (iii) evidence
satisfactory to Lender that each of the covenants set forth in
Section 7.9 has been complied with during such quarter.
6. Renumbering. Sections 6.16 and 10.17 of the Agreement are
hereby renumbered and designated as Sections 6.17 and 10.18,
respectively for all purposes. All references in the Agreement
or the other Loan Documents to such sections shall also be
renumbered accordingly.
7. Year 2000 Compliance. The following is hereby added to the
Agreement as a new Section 6.16:
6.16 Year 2000 Compliance.
6.16.1 Analysis and Plan. Borrower has (i) begun
analyzing the operations of Borrower, the Harold's
Subsidiaries and Borrower's other Affiliates that could be
adversely affected by failure to become Year 2000 compliant
(that is, that computer applications, imbedded microchips
and other systems will be able to perform date-sensitive
functions prior to and after December 31, 1999); and
(ii) developed a plan for becoming Year 2000 compliant in a
timely manner, the implementation of which is on schedule in
all material respects. Borrower reasonably believes that
Borrower will become Year 2000 compliant for Borrower's
operations and those of the Harold's Subsidiaries and
Borrower's other Affiliates on a timely basis except to the
extent that a failure to do so could not reasonably be
expected to have a material adverse effect upon the
financial condition of Borrower.
6.16.2 Suppliers and Vendors. Borrower has initiated
due diligence and inquiries to determine whether any
suppliers and vendors that are material to the operations of
Borrower, the Harold's Subsidiaries or Borrower's other
Affiliates will be Year 2000 compliant for their own
computer applications except to the extent that a failure to
do so could not reasonably be expected to have a material
adverse effect upon the financial condition of Borrower.
6.16.3 Notification of Lender. Borrower will promptly
notify Lender in the event Borrower determines that any
computer application which is material to the Borrower's
operations or the operations of the Harold's Subsidiaries or
Borrower's other Affiliates or any of Borrower's material
vendors or suppliers will not be fully Year 2000 compliant
on a timely basis, except to the extent that such failure
could not reasonably be expected to have a material adverse
effect upon the financial condition of Borrower.
8. Arbitration. The following is hereby added to the
Agreement as a new Section 10.17:
10.17 Arbitration.
10.17.1 Any controversy or claim among the parties
hereto including but not limited to those arising out of or
relating to this Agreement, the other Loan Documents or any
related instruments, agreements or documents, including any
claim based on or arising from an alleged tort, shall be
determined by binding arbitration in accordance with the
Federal Arbitration Act (or if not applicable, the
applicable state law), the rules of practice and procedure
for the arbitration of commercial disputes of
J.A.M.S./Endispute or any successor thereof ("J.A.M.S."),
and the "special rules" set forth below. In the event of
any inconsistency, the special rules shall control.
Judgment upon any arbitration award may be entered in any
court having jurisdiction. Lender or any other party may
bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or
claim to which this section applies in any court having
jurisdiction over such action.
10.17.2 Special Rules. The arbitration shall be
conducted in Oklahoma County, Oklahoma and administered by
J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is
unable or legally precluded from administering the
arbitration, then the American Arbitration Association will
serve. All arbitration hearings will be commenced within
ninety (90) days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted
to extend the commencement of such hearing for up to an
additional sixty (60) days.
10.17.3 Reservation of Rights. Nothing in this
arbitration provision shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this
Agreement or the other Loan Documents; or (ii) be a waiver
by Lender of the protection afforded to it by 12 U.S.C. 91
or any substantially equivalent state law; or (iii) limit
the right of Lender (a) to exercise self help remedies such
as (but not limited to) setoff, or (b) to foreclose against
any real or personal property Collateral, or (c) to obtain
from a court provisional or ancillary remedies such as (but
not limited to) injunctive relief, writ of possession or the
appointment of receiver. Lender may exercise such self help
rights, foreclose upon such property, or obtain such
provisional or ancillary remedies before, during or after
the pendency of any arbitration proceeding brought pursuant
to this Agreement or the other Loan Documents. Neither this
exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of
any party, including the claimant in any such action, to
arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
3. Definitions. Except as specifically defined in this
Amendment, capitalized terms used in this Amendment shall have
the same meanings ascribed to them in the Agreement.
4. No Default, Event of Default or Claims. No event has
occurred which constitutes a Default or Event of Default and the
Borrower has no and waives any claims, rights, setoff or defense
against the Lender under the Agreement, as amended by this
Amendment, or the other Loan Documents.
5. Miscellaneous.
5.1. Effect of Amendment. The Agreement, as amended,
modified and supplemented by this Amendment, shall continue in
full force and effect in accordance with its covenants and terms
and is hereby ratified, restated and reaffirmed in every respect
by the Borrower and the Lender, including any security interests
granted pursuant thereto, as of the date hereof. Each of the
Borrower's representations and warranties contained in the
Agreement and other Loan Documents are true and correct as of the
date hereof and with the same force and effect. To the extent
the terms of this Amendment are inconsistent with the terms of
the Agreement, this Amendment shall control and the Agreement
shall be amended, modified or supplemented so as to give full
effect to the transaction contemplated by this Amendment.
5.2 Descriptive Headings. The descriptive headings of the
sections of this Amendment are inserted for convenience only and
shall not be used in the construction or the content of this
Amendment.
5.3 Multiple Counterparts. This Amendment may be executed
in one or more counterparts, each of which shall, for all
purposes of this Amendment, be deemed an original, but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective the date shown above.
"BORROWER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President and
Chief Operating Officer
"LENDER":
NATIONSBANK, N.A.
By:
Kelly H. Sachs, Vice President
Exhibit "A"
FIFTEENTH AMENDED AND RESTATED REVOLVING NOTE
(Revolving Loan)
$19,000,000.00 June 30, 1998
Oklahoma City, Oklahoma
For value received, HAROLD'S STORES, INC., an Oklahoma
corporation ("Maker"), promises to pay to the order of
NATIONSBANK, N.A., P. O. Box 25189, 211 North Robinson Avenue,
Oklahoma City, Oklahoma, 73125-0189 ("Lender"), on or before June
30, 2000, the principal sum of NINETEEN MILLION AND NO/100
DOLLARS ($19,000,000.00), together with interest thereon from the
date of funding at the rates hereinafter specified, payable as
follows:
The unpaid principal amount from time to time
outstanding under this Note shall bear interest from the
date hereof at the following rates per annum: (a) prior to
maturity, at a rate equal to one and five-eighths of one
percent (1.625%) plus either the one (1) month or three (3)
month LIBOR Rate, as hereinafter defined, from time to time
in effect; and (b) after maturity of any installment,
whether by acceleration or otherwise, until paid at a rate
equal to the sum of (i) five percent (5%) plus (ii) the then
applicable annual rate then in effect.
"LIBOR Rate" shall mean the London Interbank Offered
Rate for either (i) one (1) month or (ii) three (3) months,
as published in The Wall Street Journal indicating the
average of interbank offered rates for dollar deposits in
the London market based on the quotation at five major
banks, as elected by Borrower on the 15th day of each month,
such election to be effective until the 15th day of the
following month. If the 15th day of a month falls on a date
when The Wall Street Journal is not published, then the one
(1) month or three (3) month LIBOR Rate published in the
following issue of The Wall Street Journal shall be the
basis of the applicable LIBOR Rate to be elected by
Borrower.
Accrued interest shall be payable monthly beginning
July 31, 1998 and on the last day of each month thereafter
until maturity, at which time all principal and accrued
interest shall become due and payable.
Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
Payments of both principal and interest are to be made in
the lawful money of the United States of America.
This Note is subject to the terms and provisions of that
certain Third Amended and Restated Credit Agreement dated
November 10, 1997, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement of even date herewith
(the "Credit Agreement"), by and between Maker and Lender, to
which reference is made for a statement of certain terms and
provisions, including, without limitation, those under which the
Maturity Date may be accelerated and the indebtedness evidenced
by this Note declared to be immediately due and payable. Unless
otherwise defined, the terms used herein have the meanings
provided in the Credit Agreement. This Note is secured pursuant
to the Credit Agreement and the other Loan Documents referred to
therein, and reference is made thereto for a statement of
additional terms and provisions regarding the security for
repayment of this Note.
This Note is an amendment and restatement of, and substitute
and replacement for, that certain Fourteenth Amended and Restated
Reducing Revolving Note dated November 10, 1997 in the original
principal amount of $21,500,000.00 payable to the order of Lender
(the "Prior Note"). The indebtedness of Maker originally
evidenced by the Prior Note is a continuing indebtedness all of
which is now evidenced by this Note and nothing contained herein
shall be construed to deem paid any portion of the outstanding
balance of the Prior Note that remains unpaid or to release or
terminate any mortgage, lien, pledge, assignment, security
interest or other encumbrance securing payment of the Prior Note.
Prior to the Maturity Date and subject to the Borrowing
Base, Maker may borrow, pay, reborrow and repay sums advanced in
respect of this Note, so long as Maker is not in violation of any
provision of this Note.
Maker shall have the right to prepay this Note in whole or
in part at any time and from time to time without premium or
penalty, but with interest to the date of payment on the amount
prepaid. All payments under this Note shall be applied first to
any accrued interest and then to principal.
Maker agrees that if, and as often as, this Note is placed
in the hands of an attorney for collection or to defend or
enforce any of the holder's rights hereunder, Maker shall pay to
the holder hereof its reasonable attorney's fees, together with
all court costs and other expenses incurred and paid by such
holder.
Maker, endorsers, sureties, guarantors and all other persons
who may become liable for all or any part of this obligation
severally waive presentment for payment, protest and notice of
nonpayment. Said parties consent to any extension of time
(whether one or more) of payment hereof, any renewal (whether one
or more) hereof, and any release of any party liable for payment
of this obligation. Any such extension, renewal or release may
be made without notice to such party and without discharging said
party's liability hereunder.
The failure of the holder of this Note to exercise any of
the remedies or options set forth in this Note or in any
instrument securing payment hereof, upon the occurrence of one or
more events of default, shall not constitute a waiver of the
right to exercise the same or any other remedy at any subsequent
time in respect to the same or any other event of default. The
acceptance of the holder hereof of any payment which is less than
the total of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any
subsequent time, or nullify any prior exercise of any such remedy
or option, without the express consent of the holder hereof,
except as and to the extent otherwise provided by law.
It is the intention of Maker and Lender to comply strictly
with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note, or
in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Note or other documents
require the payment or permit the collection of an aggregate
amount of interest in excess of the maximum amount permitted by
any laws which may apply to this transaction, including the laws
of the State of Oklahoma.
If any such excess of interest is contracted for, charged or
received under this Note or under the terms of any of the
documents securing payment hereof or otherwise relating hereto,
or if the maturity of the indebtedness evidenced by this Note is
accelerated in whole or in part, or if all or part of the
principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest (including
all amounts payable hereunder or in connection with the loan
evidenced hereby which are not denominated as interest but which
constitute interest under applicable laws) contracted for,
charged or received under this Note shall exceed the maximum
amount of interest permitted by the applicable usury laws, as now
or hereafter enacted, then in any such event (a) the provisions
of this paragraph shall govern and control, (b) neither Maker
hereof nor any other person or entity now or hereafter liable for
the payment hereof shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount
of interest permitted by the applicable usury laws, as now or
hereafter enacted, (c) any such excess interest which may have
been collected shall be either applied as a credit against the
then unpaid principal amount hereof or, if this Note shall have
been paid in full, refunded to Maker, and (d) the effective rate
of interest shall be automatically reduced to the maximum lawful
contract rate allowed under the applicable usury laws as now or
hereafter construed by the courts having jurisdiction thereof.
It is further agreed that without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged
or received under this Note or under such other documents which
are made for the purpose of determining whether such rate exceeds
the maximum lawful contract rate, shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating,
allocating and spreading in equal parts during the period of the
full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged or received from Maker or
otherwise by the holder or holders hereof in connection with such
loan.
Maker and Lender intend and believe that each provision in
this Note comports with all applicable local, state and federal
laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in
this Note is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if
such court should declare such portion, provision or provisions
of this Note to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of all parties
hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid
and enforceable, that the remainder of this Note shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interest of Maker
and Lender under the remainder of this Note shall continue in
full force and effect.
The records of the holder of this Note shall be prima facie
evidence of the amount owing on this Note. This Note may be
assigned by holder without the prior consent of Maker.
This Note is executed by Maker pursuant to a lending
transaction negotiated in, funded from, and to be performed in
Oklahoma City, Oklahoma County, Oklahoma. Maker expressly agrees
that all actions or proceedings arising hereunder may, at the
option of Lender, be litigated in any state or federal court in a
judicial district sitting in Oklahoma City, Oklahoma, and Maker
expressly consents to the jurisdiction of such court, and to the
venue of any proceeding therein. This Note is to be construed
according to the laws of the State of Oklahoma and all applicable
federal laws.
IN WITNESS WHEREOF, the undersigned Maker has executed this
instrument effective the date set forth above.
"MAKER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President
and Chief Operating Officer
Exhibit "B"
FIRST AMENDED AND RESTATED REVOLVING NOTE
(Tenant Improvement Loan)
$3,000,000.00 June 30, 1998
Oklahoma City, Oklahoma
For value received, HAROLD'S STORES, INC., an Oklahoma
corporation ("Maker"), promises to pay to the order of
NATIONSBANK, N.A., P. O. Box 25189, 211 North Robinson Avenue,
Oklahoma City, Oklahoma, 73125-0189 ("Lender"), on or before
June 30, 2000, the principal sum of THREE MILLION AND NO/100
DOLLARS ($3,000,000.00), together with interest thereon from the
date of funding at the rates hereinafter specified, payable as
follows:
The unpaid principal amount from time to time
outstanding under this Note shall bear interest from the
date hereof at the following rates per annum: (a) prior to
maturity at a rate per annum equal to the LIBOR Rate plus
the following amount, determined according to the current
calculation of Tangible Net Worth under Section 7.9(B) of
the Credit Agreement as hereinafter defined:
Tangible Net Worth Rate Differential
$35,800,000.00 plus 1.625%
$35,000,000.00 plus 1.875%
$34,000,000.00 plus 2.125%;
and (b) after maturity of any installment, whether by
acceleration or otherwise, until paid at a rate of (i) five
percent (5%) plus (ii) the then applicable annual rate then
in effect.
"LIBOR Rate" shall mean the London Interbank Offered
Rate for either (i) one (1) month or (ii) three (3) months,
as published in The Wall Street Journal indicating the
average of interbank offered rates for dollar deposits in
the London market based on the quotation at five major
banks, as elected by Borrower on the 15th day of each month,
such election to be effective until the 15th day of the
following month. If the 15th day of a month falls on a date
when The Wall Street Journal is not published, then the one
(1) month or three (3) month LIBOR Rate published in the
following issue of The Wall Street Journal shall be the
basis of the applicable LIBOR Rate to be elected by
Borrower.
Accrued interest shall be payable monthly beginning
July 31, 1998 and on the last day of each month thereafter
until maturity, at which time all principal and accrued
interest shall become due and payable.
Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
Payments of both principal and interest are to be made in
the lawful money of the United States of America.
This Note is subject to the terms and provisions of that
certain Third Amended and Restated Credit Agreement dated
November 10, 1997, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement of even date herewith
(as amended, the "Credit Agreement"), by and between Maker and
Lender, to which reference is made for a statement of certain
terms and provisions, including, without limitation, those under
which the maturity date may be accelerated and the indebtedness
evidenced by this Note may be declared to be immediately due and
payable. Unless otherwise defined, the terms used herein have the
meanings provided in the Credit Agreement. This Note is secured
pursuant to the Credit Agreement and the other Loan Documents
referred to therein, and reference is made thereto for a
statement of additional terms and provisions regarding the
security for repayment of this Note.
This Note is an amendment and restatement of, and substitute
and replacement for, that certain Revolving Note dated November
10, 1997 in the original principal amount of $3,000,000.00
payable to the order of Lender (the "Prior Note"). The
indebtedness of Maker originally evidenced by the Prior Note is a
continuing indebtedness all of which is now evidenced by this
Note and nothing contained herein shall be construed to deem paid
any portion of the outstanding balance of the Prior Note that
remains unpaid or to release or terminate any mortgage, lien,
pledge, assignment, security interest or other encumbrance
securing payment of the Prior Note.
Prior to the maturity date and subject to the Borrowing
Base, Maker may borrow, pay, reborrow and repay sums advanced in
respect of this Note, so long as Maker is not in violation of any
provision of this Note.
Maker shall have the right to prepay this Note in whole or
in part at any time and from time to time without premium or
penalty, but with interest to the date of payment on the amount
prepaid. All payments under this Note shall be applied first to
any accrued interest and then to principal.
Maker agrees that if, and as often as, this Note is placed
in the hands of an attorney for collection or to defend or
enforce any of the holder's rights hereunder, Maker shall pay to
the holder hereof its reasonable attorney's fees, together with
all court costs and other expenses incurred and paid by such
holder.
Maker, endorsers, sureties, guarantors and all other persons
who may become liable for all or any part of this obligation
severally waive presentment for payment, protest and notice of
nonpayment. Said parties consent to any extension of time
(whether one or more) of payment hereof, any renewal (whether one
or more) hereof, and any release of any party liable for payment
of this obligation. Any such extension, renewal or release may
be made without notice to such party and without discharging said
party's liability hereunder.
The failure of the holder of this Note to exercise any of
the remedies or options set forth in this Note or in any
instrument securing payment hereof, upon the occurrence of one or
more events of default, shall not constitute a waiver of the
right to exercise the same or any other remedy at any subsequent
time in respect to the same or any other event of default. The
acceptance of the holder hereof of any payment which is less than
the total of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any
subsequent time, or nullify any prior exercise of any such remedy
or option, without the express consent of the holder hereof,
except as and to the extent otherwise provided by law.
It is the intention of Maker and Lender to comply strictly
with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note, or
in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Note or other documents
require the payment or permit the collection of an aggregate
amount of interest in excess of the maximum amount permitted by
any laws which may apply to this transaction, including the laws
of the State of Oklahoma.
If any such excess of interest is contracted for, charged or
received under this Note or under the terms of any of the
documents securing payment hereof or otherwise relating hereto,
or if the maturity of the indebtedness evidenced by this Note is
accelerated in whole or in part, or if all or part of the
principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest (including
all amounts payable hereunder or in connection with the loan
evidenced hereby which are not denominated as interest but which
constitute interest under applicable laws) contracted for,
charged or received under this Note shall exceed the maximum
amount of interest permitted by the applicable usury laws, as now
or hereafter enacted, then in any such event (a) the provisions
of this paragraph shall govern and control, (b) neither Maker
hereof nor any other person or entity now or hereafter liable for
the payment hereof shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount
of interest permitted by the applicable usury laws, as now or
hereafter enacted, (c) any such excess interest which may have
been collected shall be either applied as a credit against the
then unpaid principal amount hereof or, if this Note shall have
been paid in full, refunded to Maker, and (d) the effective rate
of interest shall be automatically reduced to the maximum lawful
contract rate allowed under the applicable usury laws as now or
hereafter construed by the courts having jurisdiction thereof.
It is further agreed that without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged
or received under this Note or under such other documents which
are made for the purpose of determining whether such rate exceeds
the maximum lawful contract rate, shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating,
allocating and spreading in equal parts during the period of the
full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged or received from Maker or
otherwise by the holder or holders hereof in connection with such
loan.
Maker and Lender intend and believe that each provision in
this Note comports with all applicable local, state and federal
laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in
this Note is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if
such court should declare such portion, provision or provisions
of this Note to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of all parties
hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid
and enforceable, that the remainder of this Note shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interest of Maker
and Lender under the remainder of this Note shall continue in
full force and effect.
The records of the holder of this Note shall be prima facie
evidence of the amount owing on this Note. This Note may be
assigned by holder without the prior consent of Maker.
This Note is executed by Maker pursuant to a lending
transaction negotiated in, funded from, and to be performed in
Oklahoma City, Oklahoma County, Oklahoma. Maker expressly agrees
that all actions or proceedings arising hereunder may, at the
option of Lender, be litigated in any state or federal court in a
judicial district sitting in Oklahoma City, Oklahoma, and Maker
expressly consents to the jurisdiction of such court, and to the
venue of any proceeding therein. This Note is to be construed
according to the laws of the State of Oklahoma and all applicable
federal laws.
IN WITNESS WHEREOF, the undersigned Maker has executed this
instrument effective the date set forth above.
"MAKER": HAROLD'S STORES,
INC., an Oklahoma corporation
By:
H. Rainey Powell, President
and Chief Operating Officer
Exhibit "C"
FIRST AMENDED AND RESTATED REVOLVING NOTE
(Letter of Credit Facility)
$5,700,000.00 June 30, 1998
Oklahoma City, Oklahoma
For value received, HAROLD'S STORES, INC., an Oklahoma
corporation ("Maker"), promises to pay to the order of
NATIONSBANK, N.A., P. O. Box 25189, 211 North Robinson Avenue,
Oklahoma City, Oklahoma, 73125-0189 ("Lender"), on or before June
30, 2000, the principal sum of FIVE MILLION SEVEN HUNDRED
THOUSAND AND NO/100 DOLLARS ($5,700,000.00), together with
interest thereon from the date of funding at the rates
hereinafter specified, payable as follows:
The unpaid principal amount from time to time
outstanding under this Note shall bear interest from the
date hereof at the following rates per annum: (a) prior to
maturity on the average daily outstanding balance of the
liabilities under the Letter of Credit Facility at a rate
per annum equal to the LIBOR Rate plus two percent (2.00%);
and (b) after maturity of any installment, whether by
acceleration or otherwise, until paid at a rate of (i) five
percent (5%) plus (ii) the then applicable annual rate then
in effect.
"LIBOR Rate" shall mean the London Interbank Offered
Rate for either (i) one (1) month or (ii) three (3) months,
as published in The Wall Street Journal indicating the
average of interbank offered rates for dollar deposits in
the London market based on the quotation at five major
banks, as elected by Borrower on the 15th day of each month,
such election to be effective until the 15th day of the
following month. If the 15th day of a month falls on a date
when The Wall Street Journal is not published, then the one
(1) month or three (3) month LIBOR Rate published in the
following issue of The Wall Street Journal shall be the
basis of the applicable LIBOR Rate to be elected by
Borrower.
Accrued interest shall be payable monthly beginning
July 31, 1998 and on the last day of each month thereafter
until maturity, at which time all principal and accrued
interest shall become due and payable.
Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
Payments of both principal and interest are to be made in
the lawful money of the United States of America.
This Note is subject to the terms and provisions of that
certain Third Amended and Restated Credit Agreement dated
November 10, 1997, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement of even date herewith
(as amended, the "Credit Agreement"), by and between Maker and
Lender, to which reference is made for a statement of such terms
and provisions, including, without limitation, those under which
the maturity date may be accelerated and the indebtedness
evidenced by this Note declared to be immediately due and
payable. Unless otherwise defined, the terms used herein have the
meanings provided in the Credit Agreement. This Note is secured
pursuant to the Credit Agreement and the other Loan Documents
referred to therein, and reference is made thereto for a
statement of additional terms and provisions regarding the
security for repayment of this Note.
This Note is an amendment and restatement of, substitute and
replacement for, and increase in that certain Revolving Note
dated November 10, 1997 in the original principal amount of
$2,000,000.00 payable to the order of Lender (the "Prior Note").
The indebtedness of Maker originally evidenced by the Prior Note
is a continuing indebtedness all of which is now evidenced by
this Note and nothing contained herein shall be construed to deem
paid any portion of the outstanding balance of the Prior Note
that remains unpaid or to release or terminate any mortgage,
lien, pledge, assignment, security interest or other encumbrance
securing payment of the Prior Note.
Prior to the maturity date and subject to the Borrowing
Base, Maker may borrow, pay, reborrow and repay sums advanced in
respect of this Note, so long as Maker is not in violation of any
provision of this Note.
Maker shall have the right to prepay this Note in whole or
in part at any time and from time to time without premium or
penalty, but with interest to the date of payment on the amount
prepaid. All payments under this Note shall be applied first to
any accrued interest and then to principal.
Maker agrees that if, and as often as, this Note is placed
in the hands of an attorney for collection or to defend or
enforce any of the holder's rights hereunder, Maker shall pay to
the holder hereof its reasonable attorney's fees, together with
all court costs and other expenses incurred and paid by such
holder.
Maker, endorsers, sureties, guarantors and all other persons
who may become liable for all or any part of this obligation
severally waive presentment for payment, protest and notice of
nonpayment. Said parties consent to any extension of time
(whether one or more) of payment hereof, any renewal (whether one
or more) hereof, and any release of any party liable for payment
of this obligation. Any such extension, renewal or release may
be made without notice to such party and without discharging said
party's liability hereunder.
The failure of the holder of this Note to exercise any of
the remedies or options set forth in this Note or in any
instrument securing payment hereof, upon the occurrence of one or
more events of default, shall not constitute a waiver of the
right to exercise the same or any other remedy at any subsequent
time in respect to the same or any other event of default. The
acceptance of the holder hereof of any payment which is less than
the total of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any
subsequent time, or nullify any prior exercise of any such remedy
or option, without the express consent of the holder hereof,
except as and to the extent otherwise provided by law.
It is the intention of Maker and Lender to comply strictly
with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note, or
in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Note or other documents
require the payment or permit the collection of an aggregate
amount of interest in excess of the maximum amount permitted by
any laws which may apply to this transaction, including the laws
of the State of Oklahoma.
If any such excess of interest is contracted for, charged or
received under this Note or under the terms of any of the
documents securing payment hereof or otherwise relating hereto,
or if the maturity of the indebtedness evidenced by this Note is
accelerated in whole or in part, or if all or part of the
principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest (including
all amounts payable hereunder or in connection with the loan
evidenced hereby which are not denominated as interest but which
constitute interest under applicable laws) contracted for,
charged or received under this Note shall exceed the maximum
amount of interest permitted by the applicable usury laws, as now
or hereafter enacted, then in any such event (a) the provisions
of this paragraph shall govern and control, (b) neither Maker
hereof nor any other person or entity now or hereafter liable for
the payment hereof shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount
of interest permitted by the applicable usury laws, as now or
hereafter enacted, (c) any such excess interest which may have
been collected shall be either applied as a credit against the
then unpaid principal amount hereof or, if this Note shall have
been paid in full, refunded to Maker, and (d) the effective rate
of interest shall be automatically reduced to the maximum lawful
contract rate allowed under the applicable usury laws as now or
hereafter construed by the courts having jurisdiction thereof.
It is further agreed that without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged
or received under this Note or under such other documents which
are made for the purpose of determining whether such rate exceeds
the maximum lawful contract rate, shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating,
allocating and spreading in equal parts during the period of the
full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged or received from Maker or
otherwise by the holder or holders hereof in connection with such
loan.
Maker and Lender intend and believe that each provision in
this Note comports with all applicable local, state and federal
laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in
this Note is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if
such court should declare such portion, provision or provisions
of this Note to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of all parties
hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid
and enforceable, that the remainder of this Note shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interest of Maker
and Lender under the remainder of this Note shall continue in
full force and effect.
The records of the holder of this Note shall be prima facie
evidence of the amount owing on this Note. This Note may be
assigned by holder without the prior consent of Maker.
This Note is executed by Maker pursuant to a lending
transaction negotiated in, funded from, and to be performed in
Oklahoma City, Oklahoma County, Oklahoma. Maker expressly agrees
that all actions or proceedings arising hereunder may, at the
option of Lender, be litigated in any state or federal court in a
judicial district sitting in Oklahoma City, Oklahoma, and Maker
expressly consents to the jurisdiction of such court, and to the
venue of any proceeding therein. This Note is to be construed
according to the laws of the State of Oklahoma and all applicable
federal laws.
IN WITNESS WHEREOF, the undersigned Maker has executed this
instrument effective the date set forth above.
"MAKER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President
and Chief Operating Officer
Exhibit "D"
FIRST AMENDED AND RESTATED TERM NOTE
$2,194,177.96 June 30, 1998
Oklahoma City, Oklahoma
For value received, HAROLD'S STORES, INC., an Oklahoma
corporation ("Maker"), promises to pay to the order of
NATIONSBANK, N.A., P. O. Box 25189, 211 North Robinson Avenue,
Oklahoma City, Oklahoma, 73125-0189 ("Lender"), on or before
June 30, 2000 the principal sum of TWO MILLION ONE HUNDRED NINETY
FOUR THOUSAND ONE HUNDRED SEVENTY SEVEN AND 96/100 Dollars
($2,194,177.96), together with interest thereon from the date of
funding at the rates hereinafter specified, payable as follows:
The unpaid principal amount from time to time
outstanding under this Note shall bear interest from the
date hereof at the following rates per annum: (a) prior to
maturity at a rate per annum equal to the LIBOR Rate plus
the following amount, determined according to the current
calculation of Tangible Net Worth under Section 7.9(B) of
the Credit Agreement, as hereinafter defined:
Tangible Net Worth Rate Differential
$35,800,000.00 plus 1.625%
$35,000,000.00 plus 1.875%
$34,000,000.00 plus 2.125%;
and (b) after maturity of any installment, whether by
acceleration or otherwise, until paid at a rate of (i) five
percent (5%) plus (ii) the then applicable annual rate then
in effect.
"LIBOR Rate" shall mean the London Interbank Offered
Rate for either (i) one (1) month or (ii) three (3) months,
as published in The Wall Street Journal indicating the
average of interbank offered rates for dollar deposits in
the London market based on the quotation at five major
banks, as elected by Maker on the 15th day of each month,
such election to be effective until the 15th day of the
following month. If the 15th day of a month falls on a date
when The Wall Street Journal is not published, then the one
(1) month or three (3) month LIBOR Rate published in the
following issue of The Wall Street Journal shall be the
basis of the applicable LIBOR Rate to be elected by Maker.
Principal in an amount equal to the amount of principal
due to Maker from CMT pursuant to the CMT Loan, plus accrued
interest, shall be payable monthly beginning July 31, 1998
and on the last day of each month thereafter until maturity,
at which time all principal and accrued interest shall
become due and payable. Each monthly installment payment
made under this Note shall be applied first to the unpaid
interest accrued and then to the principal balance thereof.
Interest shall be computed on the actual number of days
elapsed on the basis of a 360 day year.
Payments of both principal and interest are to be made in
the lawful money of the United States of America.
This Note is subject to the terms and provisions of that
certain Third Amended and Restated Credit Agreement dated
November 10, 1997, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement of even date herewith
(as amended, the "Credit Agreement"), by and between Maker and
Lender, to which reference is made for a statement of such terms
and provisions, including, without limitation, those under which
the maturity date may be accelerated and the indebtedness
evidenced by this Note may be declared to be immediately due and
payable. Unless otherwise defined, the terms used herein have the
meanings provided in the Credit Agreement. This Note is secured
pursuant to the Credit Agreement and the other Loan Documents
referred to therein, and reference is made thereto for a
statement of additional terms and provisions regarding the
security for repayment of this Note.
This Note is an amendment and restatement of, and substitute
and replacement for, that certain Term Note dated November 10,
1997 in the original principal amount of $2,340,792.00 payable to
the order of Lender (the "Prior Note"). The indebtedness of
Maker originally evidenced by the Prior Note is a continuing
indebtedness all of which is now evidenced by this Note and
nothing contained herein shall be construed to deem paid any
portion of the outstanding balance of the Prior Note that remains
unpaid or to release or terminate any mortgage, lien, pledge,
assignment, security interest or other encumbrance securing
payment of the Prior Note.
Maker shall have the right to prepay this Note in whole or
in part at any time and from time to time without premium or
penalty, but with interest to the date of payment on the amount
prepaid. All payments under this Note shall be applied first to
any accrued interest and then to principal.
Maker agrees that if, and as often as, this Note is placed
in the hands of an attorney for collection or to defend or
enforce any of the holder's rights hereunder, Maker shall pay to
the holder hereof its reasonable attorney's fees, together with
all court costs and other expenses incurred and paid by such
holder.
Maker, endorsers, sureties, guarantors and all other persons
who may become liable for all or any part of this obligation
severally waive presentment for payment, protest and notice of
nonpayment. Said parties consent to any extension of time
(whether one or more) of payment hereof, any renewal (whether one
or more) hereof, and any release of any party liable for payment
of this obligation. Any such extension, renewal or release may
be made without notice to such party and without discharging said
party's liability hereunder.
The failure of the holder of this Note to exercise any of
the remedies or options set forth in this Note or in any
instrument securing payment hereof, upon the occurrence of one or
more events of default, shall not constitute a waiver of the
right to exercise the same or any other remedy at any subsequent
time in respect to the same or any other event of default. The
acceptance of the holder hereof of any payment which is less than
the total of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any
subsequent time, or nullify any prior exercise of any such remedy
or option, without the express consent of the holder hereof,
except as and to the extent otherwise provided by law.
It is the intention of Maker and Lender to comply strictly
with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note, or
in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Note or other documents
require the payment or permit the collection of an aggregate
amount of interest in excess of the maximum amount permitted by
any laws which may apply to this transaction, including the laws
of the State of Oklahoma.
If any such excess of interest is contracted for, charged or
received under this Note or under the terms of any of the
documents securing payment hereof or otherwise relating hereto,
or if the maturity of the indebtedness evidenced by this Note is
accelerated in whole or in part, or if all or part of the
principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest (including
all amounts payable hereunder or in connection with the loan
evidenced hereby which are not denominated as interest but which
constitute interest under applicable laws) contracted for,
charged or received under this Note shall exceed the maximum
amount of interest permitted by the applicable usury laws, as now
or hereafter enacted, then in any such event (a) the provisions
of this paragraph shall govern and control, (b) neither Maker
hereof nor any other person or entity now or hereafter liable for
the payment hereof shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount
of interest permitted by the applicable usury laws, as now or
hereafter enacted, (c) any such excess interest which may have
been collected shall be either applied as a credit against the
then unpaid principal amount hereof or, if this Note shall have
been paid in full, refunded to Maker, and (d) the effective rate
of interest shall be automatically reduced to the maximum lawful
contract rate allowed under the applicable usury laws as now or
hereafter construed by the courts having jurisdiction thereof.
It is further agreed that without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged
or received under this Note or under such other documents which
are made for the purpose of determining whether such rate exceeds
the maximum lawful contract rate, shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating,
allocating and spreading in equal parts during the period of the
full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged or received from Maker or
otherwise by the holder or holders hereof in connection with such
loan.
Maker and Lender intend and believe that each provision in
this Note comports with all applicable local, state and federal
laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in
this Note is found by a court of law to be in violation of any
applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if
such court should declare such portion, provision or provisions
of this Note to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of all parties
hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid
and enforceable, that the remainder of this Note shall be
construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interest of Maker
and Lender under the remainder of this Note shall continue in
full force and effect.
The records of the holder of this Note shall be prima facie
evidence of the amount owing on this Note. This Note may be
assigned by holder without the prior consent of Maker.
This Note is executed by Maker pursuant to a lending
transaction negotiated in, funded from, and to be performed in
Oklahoma City, Oklahoma County, Oklahoma. Maker expressly agrees
that all actions or proceedings arising hereunder may, at the
option of Lender, be litigated in any state or federal court in a
judicial district sitting in Oklahoma City, Oklahoma, and Maker
expressly consents to the jurisdiction of such court, and to the
venue of any proceeding therein. This Note is to be construed
according to the laws of the State of Oklahoma and all applicable
federal laws.
IN WITNESS WHEREOF, the undersigned Maker has executed this
instrument effective the date set forth above.
"MAKER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President
and Chief Operating Officer
Exhibit "E"
MONTHLY BORROWING BASE AND COMPLIANCE CERTIFICATE
HAROLD'S STORES, INC.
DATE: For Period Ending
NationsBank, N.A.
P. O. Box 25189
Oklahoma City, Oklahoma 73125-0189
ATTN: Kelly H. Sachs, Vice President
Dear Kelly:
This certificate is hereby submitted in compliance with the
requirements of that certain Third Amended and Restated Credit
Agreement entered into and effective November 10, 1997, as
amended by a First Amendment entered into and effective June 30,
1998 (as amended, the "Credit Agreement") by and between HAROLD'S
STORES, INC., an Oklahoma corporation ("Borrower"), and
NATIONSBANK, N.A. ("Lender").
By execution hereof, the undersigned duly authorized
officer, on behalf of Borrower certifies that: (1) no Default
and no Event of Default has occurred or is continuing under the
terms of any of the Financing Agreements or, if a Default or
Event of Default has occurred during such month, attached hereto
as Schedule "2" is a description of such Default or Event of
Default and of the actions Borrower has taken or intends to take
to cure the same, (2) all representations and warranties
contained in the Financing Agreements remain as true and correct
on this date as when they were originally submitted to the
Lender, and (3) the facts and information provided herein and in
the case of any accompanying request for disbursement on
Borrower's Revolving Note is true and correct. The following
information is a true and correct summary of all eligible
accounts receivable and inventory and the financial condition of
the Borrower. Attached hereto as Schedule "1" is a true and
correct summary of all trade accounts receivable and attached as
Schedule "2" is a separate summary of current outstanding Letters
of Credit.
A. The Borrowing Base is correctly computed below:
1. Accounts resulting from invoices to
retail customers of Borrower for
purchases billed to such customers'
accounts
$
(a) Less each Account subject to setoff ($ )
or other claim
(b) Less each Account where collection ($ )
is doubtful
(c) Less each Account if any minimum
portion is unpaid for more than 60 days ($ )
under any statement
(d) Less any Account where the account
debtor is insolvent or in receivership ($ )
(e) Less any affiliate, intercompany or
interstore accounts ($ )
(f) Less Accounts subject to liens in
favor of Persons other than Lender ($ )
(g) Eligible Accounts - Net
[1 - (a) - (b) - (c) - (d) - $
(e) - (f)]
2. Inventory (Estimated) $
3. Commercial Letters of Credit $
4. Borrowing Base Calculation
(a) multiply 1(g) by .80 $
(b) multiply 2 by .50 $
(c) multiply 3 by .50 $
(d) Enter the lesser of (i)
$19,000,000.00 or $
(ii) the sum of 3(a) plus 3(b)
plus 3(c)
(e) less amount funded on ($ )
Revolving Loan
(f) less Commercial L/Cs issued ($ )
under Letter
of Credit Facility
(g) less Standby L/Cs issued under ($ )
Letter
of Credit Facility
Borrowing Base Availability $
4(d) - (e) - (f) - (g)
B. The following are correct computations of Borrower's Total
Liabilities and Tangible Net Worth.
1. Borrower's Total Liabilities
Calculation
(a) All obligations of Borrower
which, in accordance with GAAP, would be
shown on Borrower's balance sheet as a $
liability
(b) All rental obligations under
leases required to be capitalized under $
GAAP
(c) All guarantees and other $
contingent liabilities
(d) Liabilities of others secured
by lien or security interest in $
Borrower's property
(e) Less debt expressly ($ )
subordinated to Lender
(f) Borrower's Total Liabilities
[(a) + (b) + (c) + (d) - (e)] $
2. Borrower's Tangible Net Worth
Calculation
(a) Stockholders' equity in $
Borrower
(b) Plus debt expressly $
subordinated to Lender
(c) Less General Intangibles ($ )
(d) Less receivables due from ($ )
shareholders
(e) Less receivables due from any
Affiliate or Subsidiary ($ )
(f) Borrower's Tangible Net Worth
[(a) + (b) - (c) - (d) - (e)] $
The Tangible Net Worth shall be no less than $34,000,000 at
all times.
C. The following ratio is correctly computed below (on a
Quarterly Basis):
1. Total Liabilities to Tangible Net
Worth Ratio
[calculated as 1(e) / 2(f)] :1
The Total Liabilities to Tangible Net Worth Ratio shall not
exceed 1.25:1.
D. New Stores openings scheduled for this month (list by date
and location):
1.
2.
3.
4.
Sincerely,
HAROLD'S STORES, INC.
By:
Title:
Exhibit "F"
QUARTERLY BORROWING BASE & COMPLIANCE CERTIFICATE
HAROLD'S STORES, INC.
DATE: For Period Ending
NationsBank, N.A.
P. O. Box 25189
Oklahoma City, Oklahoma 73125-0189
ATTN: Kelly H. Sachs, Vice President
Dear Kelly:
This certificate is hereby submitted in compliance with the
requirements of that certain Third Amended and Restated Credit
Agreement entered into and effective November 10, 1997, as
amended by a First Amendment entered into and effective June 30,
1998 (as amended, the "Credit Agreement") by and between HAROLD'S
STORES, INC., an Oklahoma corporation ("Borrower") and
NATIONSBANK, N.A. ("Lender").
By execution hereof, the undersigned duly authorized
officer, on behalf of Borrower certifies that: (1) all
representations and warranties contained in the Financing
Agreements remain as true and correct on this date as when they
were originally submitted to the Lender, and (2) the facts and
information provided herein and in the case of any accompanying
request for disbursement on Borrower's Revolving Note is true and
correct. The following information is a true and correct summary
of all eligible accounts receivable and inventory and the
financial condition of Borrower. Attached hereto as Schedule "1"
is a true and correct summary of all trade accounts receivable
and attached as Schedule "2" is a separate summary of current
outstanding Letter of Credit.
A.
The Borrowing Base is correctly computed below:
1. Eligible Accounts - Net (as
calculated on most recent monthly $
borrowing base certificate)
2. Inventory (as reported on most
recent 10Q filed with the Securities
and Exchange Commission):
(a) Raw Materials $
(b) Work In Process $
(c) Finished Goods
(d) Total Inventory owned by Borrower and
Harold's Subsidiaries and located at
Borrower's and Harold's Subsidiaries'
principal places of business
[2(a) + 2(b) + 2(c)] $
(e) Less Inventory that cannot or
will not be held for sale
to customers; and, specifically,
that Inventory which is damaged,
obsolete, or not readily saleable ($ )
(f) Less Inventory which is
subject to any rescission or
reclamation right ($ )
(g) Less Inventory which is ($ )
subject to any lien in favor
of any Person other than
Lender
(h) Eligible Inventory - Net
[2(d) - 2(e) - 2(f) - 2(g)] $
3. Commercial Letters of Credit $
4. Borrowing Base Calculation
(a) multiply 1 by .80 $
(b) multiply 2(h) by .50 $
(c) multiply 3 by .50 $
(d) Enter the lesser of (i) $19,000,000.00 $
or (ii) the sum of 3(a) plus
3(b) plus 3(c)
(e) less amount funded on Revolving Loan ($ )
(f) less Commercial L/Cs committed ($ )
(g) less Standby L/Cs issued ($ )
Borrowing Base $
4(d) - (e) - (f) - (g)
A. The following are correct computations of Borrower's
Total Liabilities and Tangible Net Worth to be tested
quarterly within 45 days of each fiscal quarter end.
1. Borrower's Total Liabilities Calculation
(a) All obligations of
Borrower which, in accordance with
GAAP, would be shown on Borrower's $
balance sheet as a liability
(b) All rental obligations
under leases required to be $
capitalized under GAAP
(c) All guarantees and $
other contingent liabilities
(d) Liabilities of others
secured by lien or security interest $
in Borrower's property
(e) Less debt expressly ($ )
subordinated to Lender
(f) Borrower's Total
Liabilities $
[(a) + (b) + (c) + (d) -(g)]
2. Borrower's Tangible Net
Worth Calculation
(a) Stockholders' equity $
in Borrower
(b) Plus debt expressly $
subordinated to Lender
(c) Less General Intangibles ($ )
(d) Less receivables due ($ )
from shareholders
(e) Less receivables due
from any Affiliate or Subsidiary ($ )
(g) Borrower's Tangible
Net Worth $
[(a) + (b) - (c) - (d) -(e)]
The Tangible Net Worth shall be no less than $34,000,000 at
all times.
A. The following ratio is correctly computed below and is
tested quarterly within forty-five (45) days of each company
quarter end:
Total Liabilities to Tangible Net
Worth Ratio
[calculated as 1(e) / 2(f)] :1
The Total Liabilities to Tangible Net Worth Ratio shall not
exceed 1.25:1.
Sincerely,
HAROLD'S STORES, INC.
By:
Title:
HAROLD'S STORES, INC.
FIRST AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS AGREEMENT is made as of this 15th day of June, 1998, among
the signatories, in order to amend and restate the Harold's
Stores, Inc., Stockholders' Agreement dated August 20, 1987.
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to promote their
mutual interests by imposing certain restrictions and obligations
on the voting and on the right to dispose of shares of common
stock, par value $0.01 per share, of Harold's Stores, Inc., an
Oklahoma corporation, owned by them, and accordingly desire to
enter into this Stockholders' Agreement;
NOW, THEREFORE, in consideration of the promises contained herein
and the benefits to be derived from the mutual observance of the
provisions of this Agreement, the parties agree as follows:
1. Definitions. When used in this Agreement, the following
terms shall, unless the context otherwise requires, have the
meaning specified in this Section.
1.1 Agreement. This First Amended and Restated
Stockholders' Agreement, including all exhibits
attached hereto, as amended from time to time.
1.2 Corporation. Harold's Stores, Inc., an Oklahoma
corporation, formerly Harold's Stores, Inc., a Delaware
corporation.
1.3 Original Agreement. The Harold's Stores, Inc.,
Stockholders' Agreement of August 20, 1987.
1.4 Representative. The Chairman of the Board of the
Corporation.
1.5 Stock. Any or all shares of common stock, par
value $0.01 per share, of the Corporation, owned by a
Stockholder as of the date of this Agreement or
hereafter acquired, all of which shares are subject to
this Agreement.
1.6 Stockholder. Any person who has executed this
Agreement, including a transferee who has executed a
notification of disposition in conformity with Section
5.3, or who is subject to this Agreement, and his or
her heirs, personal representatives, successors,
assigns and transferees to the extent this Agreement
provides that such persons shall be bound hereby.
2. Parties to This Agreement.
2.1 Initial Parties. The initial parties to this
Agreement shall be the Stockholders who are signatories
to this Agreement and named on Exhibit A attached
hereto.
2.2 Additional Parties. It is contemplated that other
persons who acquire Stock from any Stockholder by any
means or method of transfer, except those who acquire
stock pursuant to Sections 5.2(b) or (c), shall be
required to become parties to this Agreement. Any such
person so becoming an additional party hereto shall be
deemed a "Stockholder" as that term is used herein, and
shall be subject to all of the rights, obligations and
duties of a Stockholder under this Agreement. The
addition of such subsequent transferees to this
Agreement shall be governed by Section 5.3.
3. Term. The term of this Agreement shall exist for so long as
the Stock is owned by a Stockholder.
4. Voting. During the continuance in force of this Agreement,
the Stockholders shall vote, with respect to all corporate
matters (i) presented to a vote of stockholders at any
annual or special meeting of stockholders of the Company for
any purpose, or (ii) to which a stockholder is entitled to
express consent or dissent in writing, all shares of Stock
owned by them in accordance with the following procedures:
4.1 Majority Determination. Each Stockholder shall
vote his Stock in the manner determined by a vote of
those Stockholders holding a majority of the shares of
Stock subject to the Agreement. The Representative
shall be responsible for notifying each of the
Stockholders of such majority decision.
4.2 Irrevocable Proxy. In order to implement the
decisions of the majority as described in Section 4.1,
each Stockholder hereby irrevocably appoints the
Representative as his true and lawful attorney with
full power of substitution and resubstitution for him
and in his name to attend and vote, or to appoint
proxies, on his behalf all of his shares of Stock at
any special or annual meeting of the stockholders of
the Corporation, or to execute in his name and on his
behalf any consent relating to any matter submitted to
a vote of the stockholders of the Corporation, all in
accordance with the majority determination described
above and the other terms of this Agreement. The
Stockholders agree and acknowledge that this proxy is
coupled with an interest and, accordingly, is
irrevocable for the purpose and period contemplated in
this Agreement.
5. Restrictions Upon Disposition. No Stockholder shall be
permitted to dispose of any of his Stock except as provided
in this Section 5. The term "dispose" includes, without
limitation, the acts of selling, assigning, transferring,
pledging, encumbering, giving and any other form of
conveying, whether voluntary or by operation of law.
5.1 Permitted Dispositions.
(a) Permitted Dispositions. A Stockholder
may at any time dispose of all or any number of
the shares of Stock owned by such Stockholder (in
trust, custodianship or otherwise) to or for the
benefit of himself, his spouse, or any of his
parents, or natural or adopted descendants, or the
spouse of any such descendants; provided, however,
any transferee or transferees shall comply with
the provisions of Section 5.3 as a condition
precedent to the validity of any such disposition
by the Stockholder. A Stockholder may pledge or
encumber all or any portion of his Stock; provided
that in connection with the granting of a security
interest with respect to the Stock, such grantee
agrees that in the event of foreclosure of such
security interest respecting the Stock, such
grantee will comply or cause the compliance with
Section 5.3.
(b) Death of Stockholder. In the event of
death of any Stockholder, the duly appointed
personal representative of such Stockholder's
estate shall, for all purposes, succeed to all
rights and obligations of such deceased
Stockholder under this Agreement. Upon
distribution of the estate of any deceased
Stockholder, the heirs, distributees or legatees
receiving distribution of any shares of Stock
shall likewise succeed to all rights and
obligations of such deceased Stockholder under
this Agreement.
5.2 Restrictions Upon Sale.
(a) Right of First Refusal. During the
continuance in force of this Agreement, no
Stockholder shall be permitted to sell any shares
of Stock [except by means of a Permitted
Disposition under Section 5.1(a)] unless the
number of shares of Stock owned by the selling
Stockholder proposed to be sold shall have first
been offered in writing by the selling Stockholder
for sale to each of the nonselling Stockholders
who shall have a pre-emptive right to purchase a
Proportionate Percentage of the Stock offered for
sale at the same price and upon the same terms as
such proposed sale by accepting such offer in
writing within thirty (30) days from the date of
the delivery of such written offer. For the
purposes of this Section 5.2, the term
"Proportionate Percentage" means, for each
Stockholder, the percentage determined by dividing
the number of shares of Stock owned by such
nonselling Stockholder by the number of the shares
of Stock owned by all nonselling Stockholders. To
the extent one or more of the nonselling
Stockholders does not accept the offer to sell
(and those nonselling Stockholders shall notify
all other nonselling Stockholders of such decision
not to accept such offer within fifteen (15) days
after the date of delivery by the selling
Stockholder of such written offer to the
nonselling Stockholders), then each of those
nonselling Stockholders accepting the offer shall
have the right to purchase the percentage of the
remaining shares of Stock offered for sale by the
Selling Stockholder determined based on relative
Proportionate Percentages of each such nonselling
Stockholders.
The selling Stockholder shall not be
obligated to sell any of the shares of Stock to
the nonselling Stockholders unless all shares of
Stock offered for sale by the selling Stockholder
are purchased by the nonselling Stockholders.
(b) Right to Sell Stock. If all the Stock
offered for sale by the selling Stockholder is not
purchased by the nonselling Stockholders, as
provided in Section 5.2(a) (or if the nonselling
Stockholders have sooner waived in writing their
rights to accept such offer) the selling
Stockholder shall, subject to compliance with
Section 5.3, have the right for a period of thirty
(30) days from the date of expiration of the
thirty-day option granted in Section 5.2(a) to
sell the number of shares of Stock which had been
offered to the nonselling Stockholders in Section
5.2(a) at a price not less than and upon terms not
more favorable than offered to the nonselling
Stockholders. Any shares of Stock not sold within
such thirty-day period after there shall have been
compliance with this Section 5 shall again become
subject to the restrictions of this Agreement.
(c) Consent to Sale in Public Offering and
Other Sales. Notwithstanding the limitations
prescribed by Section 5.2(a) - (b), each
Stockholder agrees and acknowledges that sales of
no more than Five Thousand (5,000) shares of Stock
in any twelve (12) consecutive months by a
Stockholder to the public pursuant to an effective
registration statement filed under the Securities
Act of 1933, as amended, after the date hereof,
pursuant to Rule 144 shall not be subject to
Section 5.
5.3 Conditions Precedent to Disposition. Any
disposition of Stock, except pursuant to Section 5.1(b)
and Sections 5.2(b) or (c), shall be invalid unless (a)
there shall have been filed with the Secretary of the
Corporation a written and dated notification of such
disposition in form satisfactory to counsel for the
Corporation, executed and acknowledged by both the
Stockholder and the transferee containing the
acceptance by the transferee of all of the terms and
provisions of this Agreement, which shall have the same
effect as if the transferee had been an original
signatory to this Agreement, and (b) the Stock
transferred shall be represented by a certificate
bearing the legend described in Section 7.
6. Additional Acquisitions of Stock. If additional shares of
Stock or any other class of voting capital stock of the
Corporation are acquired in any manner by a Stockholder,
such shares of voting capital stock so acquired shall become
subject to this Agreement.
7. Endorsement of Stock Certificates. Immediately after
execution of this Agreement, each Stockholder shall deliver
to the Corporation the certificates representing all of the
shares of the Stock owned by each such Stockholder, and the
Corporation shall endorse on each such certificate a legend
reading substantially as follows:
Any transfer of the shares of stock represented by this
certificate is restricted by a First Amended and Restated
Stockholders' Agreement, dated June 15, 1998, and any amendments
thereto, copies of which are on file with the Secretary of
Harold's Stores, Inc. By acceptance of this certificate, the
holder hereof agrees to be bound by the terms of such Agreement.
A copy of this Agreement shall be filed with the Secretary
of the Corporation. During the term of this Agreement, the
foregoing legend shall be endorsed on each certificate
representing shares of Stock hereafter issued by the
Corporation to any transferee of a Stockholder whose Stock
shall be subject to the terms of this Agreement. No
Stockholder shall cause or permit the removal of the legend
from the certificates representing the shares of Stock owned
by such Stockholder.
8. Reorganization of the Corporation. The merger of the
Corporation into one or more corporations, or the
consolidation of the Corporation and one or more
corporations, whether or not the Corporation shall be the
surviving corporation, or the spin-off of the stock of a
corporation previously controlled by the Corporation
("Controlled Corporation"), or a recapitalization of the
Corporation shall have no effect upon the rights and duties
of the parties hereto. In the event of any such merger,
consolidation, spin-off or recapitalization, this Agreement
shall apply in all particulars to all shares of capital
stock of any surviving corporation, or in the case of a spin-
off, to the shares of capital stock of the Controlled
Corporation acquired by the Stockholders in connection
therewith, and all references to the Corporation herein
shall apply to any surviving corporation or Controlled
Corporation.
9. Amendment and Termination. This Agreement shall terminate
or may be amended at any time upon the affirmative vote of
Stockholders holding seventy-five percent (75%) of the Stock
subject to this Agreement or upon the bankruptcy or
receivership of the Corporation, or upon the dissolution of
the Corporation for purposes of terminating the business
operated by the Corporation. Upon termination of this
Agreement with respect to all of the Stock, the Secretary of
the Corporation shall, upon tender of the Certificates
representing the Stock, cause to be issued new certificates
without the legend provided in Section 7.
10. Specific Enforcement. The parties hereto hereby declare
that it is impossible to measure in money the damages which
will accrue to a party hereto or to his heirs, personal
representatives, or assigns by reason of a failure to
perform any of the obligations under this Agreement and
agree that the terms of this Agreement shall be specifically
enforceable. If any party hereto or his heirs, personal
representatives or assigns institutes any action or
proceeding to specifically enforce the provisions hereof,
any person against whom such action or proceeding is brought
hereby waives the claim or defense therein that such party
or such personal representative has an adequate remedy at
law, and such person shall not urge in any such action or
proceeding the claim or defense that such remedy at law
exists.
11. Original Agreement. The provisions of the Original
Agreement, and the parties' rights and duties thereunder,
are superseded by the terms and provisions of this
Agreement.
12. General.
12.1 Notices. All notices, offers, acceptances,
requests and other communications hereunder shall be in
writing and shall be sufficient if delivered personally
or if mailed by registered or certified mail, postage
prepaid, return receipt requested, to the Stockholders
at the addresses on Exhibit A, or at such other
addresses as the parties hereto may designate to the
others in writing. All notices shall be deemed
received when delivered personally or, if mailed,
within three (3) business days after being mailed.
12.2 Integrated Agreement. This Agreement constitutes
the entire agreement among the parties and supersedes
all prior agreements and understandings among the
parties relating to the subject matter hereof. All
exhibits attached hereto are hereby incorporated herein
and made a part of this Agreement. This instrument is
not intended to have any legal effect whatsoever, or to
be a legally binding agreement, or any evidence
thereof, until it has been signed by all parties.
12.3 Invalidity. If any one or more of the provisions
contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or
unenforceability shall not affect the remaining
provisions of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or
unenforceable provision or provisions had never been
contained herein.
12.4 Binding Effect. This Agreement shall be binding
upon the Stockholders, their respective heirs,
successors, assigns, transferees and legal
representatives, and shall also be binding upon any
person to whom any Stock is transferred in violation of
this Agreement.
12.5 Counterpart Execution. This Agreement may be
executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which
together shall constitute but one and the same
instrument.
12.6 Applicable Law. This Agreement shall be construed
and enforced in accordance with the laws of the State
of Oklahoma.
12.7 Section Headings. Section headings contained in
this Agreement are for reference purposes only, and
shall not affect in any way the meaning or
interpretation of this Agreement.
12.8 Number and Gender. Whenever herein a word is used
in the singular, the same shall include the plural
where appropriate, and words of one gender shall
include the other gender where appropriate.
12.9 Attorneys' Fees. In any action brought by any
party hereto to enforce the obligations of any other
party hereto, the prevailing party shall be entitled to
collect such party's reasonable attorneys' fees, court
costs and expenses in such action.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amended and Restated Stockholders' Agreement as of the day and
year first above written.
"REPRESENTATIVE"
_______________________________________
REBECCA P. CASEY
CHAIRMAN OF THE BOARD
"STOCKHOLDERS"
______________________________________
REBECCA POWELL CASEY
_______________________________________
MICHAEL T. CASEY
REBECCA POWELL CASEY, as
Custodian for Meredith M.
Casey, Under the Texas Uniform
Gifts to Minors Act
REBECCA POWELL CASEY, as
Custodian for Lindsey M.
Casey, Under the Texas Uniform
Gifts to Minors Act
REBECCA POWELL CASEY, as
Custodian for Bryan A. Casey,
Under the Texas Uniform Gifts
to Minors Act
MICHAEL T. CASEY, as Trustee
of the H. Rainey Powell and
Mary U. Powell 1997
Irrevocable Trust
HAROLD G. POWELL
H. RAINEY POWELL
MARY U. POWELL
H. RAINEY POWELL, as Custodian
for Elizabeth M. Powell, Under
the Oklahoma Uniform Transfers
to Minors Act
H. RAINEY POWELL, as Custodian
for Alex M. Powell, Under the
Oklahoma Uniform Transfers to
Minors Act
LISA POWELL HUNT
CLAY M. HUNT
LISA POWELL HUNT, as Custodian
for Miles M. Hunt, under the
Texas Uniform Gifts to Minors
Act
LISA POWELL HUNT, as Custodian
for Patrick M. Hunt, under the
Texas Uniform Gifts to Minors
Act
LISA POWELL HUNT, as Custodian
for Hayden Elizabeth Hunt,
under the Texas Uniform Gifts
to Minors Act
SECURITY NATIONAL BANK & TRUST
COMPANY OF NORMAN, Trustee of
the Elizabeth M. Powell Trust
A
By:
Title:
SECURITY NATIONAL BANK & TRUST
COMPANY OF NORMAN, Trustee of
the Elizabeth M. Powell Trust
B
By:
Title:
EXHIBIT A
to
HAROLD'S STORES, INC.
FIRST AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
As of April 30, 1998
STOCKHOLDERS AND STOCK SUBJECT TO AGREEMENT
Stockholder and Address Stock
Harold G. Powell 146,524
2516 Walnut Road
Norman, OK 73072
Rebecca Powell Casey 655,892
4230 McFarlin
Dallas, TX 75205
H. Rainey Powell 393,480
1926 Pin Oak Circle
Norman, OK 73072
Lisa Powell Hunt 301,097
3940 Marquette
Dallas, TX 75225
Michael T. Casey 321,432
4230 McFarlin
Dallas, TX 75205
Mary U. Powell 66,875
1926 Pin Oak Circle
Norman, OK 73072
Clay M. Hunt 35,041
3940 Marquette
Dallas, TX 75225
Stockholder and Address Stock
The Security National Bank and 90,298
Trust Company of Norman,
Trustee of Elizabeth M. Powell Trust A
200 East Main Street
P.O. Drawer 900
Norman, OK 73070
ATTN: Trust Department
The Security National Bank and 402,497
Trust Company of Norman,
Trustee of Elizabeth M. Powell Trust B
200 East Main Street
P.O. Drawer 900
Norman, OK 73070
ATTN: Trust Department
Rebecca Powell Casey, as Custodian 35,041
for Meredith M. Casey,
under the Texas Uniform Gifts to Minors Act
4320 McFarlin
Dallas, TX 75205
Rebecca Powell Casey, as Custodian 35,041
for Lindsey M. Casey,
under the Texas Uniform Gifts to Minors Act
4320 McFarlin
Dallas, TX 75205
Rebecca Powell Casey, as Custodian 35,041
for Bryan A. Casey,
under the Texas Uniform Gifts to Minors Act
4320 McFarlin
Dallas, TX 75205
H. Rainey Powell, as Custodian 36,091
for Elizabeth M. Powell,
under the Oklahoma Uniform Transfers to Minors Act
1926 Pin Oak Circle
Norman, OK 73072
H. Rainey Powell, as Custodian 36,091
for Alex M. Powell,
under the Oklahoma Uniform Transfers to Minors Act
1926 Pin Oak Circle
Norman, OK 73072
Lisa Powell Hunt, as Custodian 35,041
for Miles M. Hunt,
under the Texas Uniform Gifts to Minors Act
3940 Marquette
Dallas, TX 75225
Lisa Powell Hunt, as Custodian 35,041
for Patrick M. Hunt,
under the Texas Uniform Gifts to Minors Act
3940 Marquette
Dallas, TX 75225
Lisa Powell Hunt, as Custodian for 15,574
Hayden Elizabeth Hunt,
under the Texas Uniform Gifts to Minors Act
3940 Marquette
Dallas, TX 75225
Michael T. Casey, Trustee 42,000
of H. Rainey and Mary U. Powell
Family 1997 Irrevocable Trust
765 Asp
Norman, OK 73069
LEASE AGREEMENT
(MAPLE STREET DBO)
THIS AMENDED AND RESTATED LEASE AGREEMENT is made and
entered into this 30 day of June, 1998, by and between 329
PARTNERS-II LIMITED PARTNERSHIP, an Oklahoma Limited Partnership,
hereinafter called "Landlord," and HAROLD'S DBO, INC.,
hereinafter called "Tenant."
ARTICLE I
PREMISES
1.1 Agreement to Lease. In consideration of the rents,
covenants and agreements hereinafter reserved and contained on
the part of Tenant to be observed and performed, the Landlord
demises and leases to the Tenant, and Tenant rents from Landlord,
the following described real property situated in Dallas County,
Texas, described on Exhibit "A" (the "Premises"). As is shown by
the architect's drawing attached, as Exhibit "B," the Premises
contains 50,356 square feet.
ARTICLE II
TERM
2.1 Term of Lease. The term of this lease shall be for
twelve (12) years, beginning thirty (30) days after the
completion of the Landlord's Work or on the date Tenant first
occupies the Premises, as an office, whichever first occurs (the
"Commencement Date"), and terminating twelve (12) years
thereafter (the "Expiration Date"), unless sooner terminated as
herein provided.
ARTICLE III
RENT
3.1 Base Rent. Tenant shall pay Landlord as base rent
("Base Rent") for the Premises annually, without setoff or
deduction, and without any prior demand therefor, the following:
Month 1 through 36 $453,204.00
Month 37 through 77 $478,382.00
Month 73 through 108 $503,560.00
Month 107 through 144 $528,738.00
which said sums shall be payable in advance in equal monthly
installments on the first day of each and every month during the
lease term, the first of such monthly installments to be due and
payable on the Commencement Date.
3.2 Late Charges. If Tenant fails to make any
installment of Base Rent, or any other sum due Landlord
hereunder, within ten (10) days after such amount is due, then
the Landlord may make or assess a late charge of three percent
(3%) of the amount of each delinquent payment. Any assessment of
late charges by Landlord shall be considered for all purposes as
Additional Rent under the terms of this Lease, and shall be added
to and payable with the next maturing monthly rental installment
following such assessment. Assessment by Landlord of a late
charge as herein provided shall be without prejudice to any
remedies provided by law or under the provisions hereof. No
assessment, payment or acceptance of a late charge shall operate
as a waiver or estoppel of the right of Landlord to declare a
default hereunder, or to pursue any default remedies provided by
this Lease or by law. Such late charge shall be earned from the
day after the due date to the date paid.
ARTICLE IV
CONDITION OF PREMISES
4.1 Tenant's Acceptance of Premises. Neither Landlord
nor Landlord's agents have made any representations with respect
to the Premises or the land upon which it is erected, except as
expressly set forth herein, and no rights, easements or licenses
are acquired by Tenant by implication or otherwise, except as
expressly set forth in the provisions of this agreement. The
taking of possession of the Premises by Tenant shall be
conclusive evidence that Tenant accepts the Premises and that the
Premises were in good condition at the time possession was taken.
In no event shall Landlord be liable for any defects in the
Premises or for any limitation on its use. Landlord shall not be
responsible for any latent defect in the Premises, and the rent
hereunder shall in no case be withheld or diminished on account
of any defect in the Premises, any change in the condition
thereof, any damage occurring thereto, or the existence with
respect thereto of any violations of laws or regulations of any
governmental authority.
4.2 Landlord's Title. Landlord is leasing the Premises
and has the right to enter into this Lease, and the Premises are
accepted by Tenant subject to, and Tenant agrees to abide by, all
and singular, the easements, restrictions, covenants,
reservations, mineral reservations and other matters affecting
title to the Premises.
ARTICLE V
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
5.1 Landlord's Work. Prior to the Commencement Date,
Landlord shall remodel the Premises for Tenant's occupancy in
accordance with Plans and Specifications prepared by The McKinney
Partnership Architects which will include, but not be limited to,
the items described on Exhibit "C" to this Lease (the "Landlord's
Work"). Those matters listed on Exhibit "C," as not provided by
the Landlord, shall be installed by Tenant at its sole cost and
expense.
5.2 Improvements by Tenant. Except as provided on
Exhibit "C" or the Plans and Specifications referenced in Section
5.1, Tenant shall not make or allow to be made any alterations or
physical additions in or to the Premises without first having
obtained the written consent of Landlord. At such time as Tenant
requests such consent of Landlord, Tenant shall submit plans and
specifications for such alterations or additions, and comply with
any and all reasonable requirements of Landlord. Tenant may
remove "removable trade fixtures," provided (1) any such removal
is made prior to the termination of this agreement; (2) Tenant is
not in default of any of the obligations or covenants hereunder;
and (3) such removal may be effected without damages to the
Premises, and Tenant promptly repairs all damage caused by such
removal at its sole expense. All trade fixtures, merchandise,
equipment and signs of every description which are not removable
or not removed in accordance with the preceding, and any
alterations or additions to the Premises shall become the
property of Landlord, and shall remain upon and be surrendered
with the Premises as part thereof at the termination of this
Lease. Tenant hereby waives all rights to any payment or
compensation therefor. Removable trade fixtures shall include
signs, tables, chairs, desks, wall brackets, shelves, mirrors and
business machines (provided same are not permanently attached),
but shall not include ducts, conduits, wiring, pipes, paneling,
wall covering or floor covering or permanently attached fixtures
which cannot be removed without damage to the Premises. Upon
termination of this agreement, Tenant will, at its sole cost and
expense, if requested by Landlord, remove any and all
alterations, additions, fixtures, equipment and property
installed by Tenant in the Premises and restore the Premises to
the condition thereof at the time of tender of possession of the
Premises, ordinary wear and tear excepted.
5.3 Signs. Tenant will not place or suffer to be placed
or maintained on any exterior door, wall or window of the
Premises any sign, awning or canopy, or advertising matter, or
other thing of any kind, and will not place or maintain any
decoration, lettering or advertising matter on the glass of any
window or door of the Premises without first obtaining Landlord's
written approval and consent. Tenant further agrees to maintain
such sign, awning, canopy, decoration, lettering, advertising
matter or other thing as may be approved in good condition and
repair at all times. Tenant, upon vacation of the Premises or
the removal or alteration of its sign, for any reason, shall be
responsible for the repair, painting and/or replacement of the
building surface where the sign is attached.
ARTICLE VI
REPAIR AND MAINTENANCE
6.1 Tenant's Maintenance. Tenant shall at all times
keep the Premises (including maintenance of exterior entrances,
all glass and show window moldings) and all plate glass,
partitions, doors, fixtures, plumbing, electrical, and the
heating and air conditioning systems, in good order, condition
and repair (including repair of damage from burglary or attempted
burglary of the Premises and reasonably periodic painting and
maintenance of the air conditioning system as required by
Landlord). Tenant shall be responsible for all utility repairs
in ducts, conduits, pipes and wiring located in, under and above
the Premises. Tenant's maintenance responsibilities shall also
include maintenance of the parking lot, and Tenant shall keep the
sidewalks and parking areas adjoining the Premises free from
rubbish, dirt, garbage, snow and ice.
6.2 Landlord's Option to Make Tenant Repairs. If Tenant
refuses or neglects to repair the Premises within thirty (30)
days after receipt of Landlord's written demand, Landlord may
make such repairs without liability to Tenant for any loss or
damage that may accrue to Tenant's merchandise, fixtures or other
property, or to Tenant's business by reason thereof, and upon
completion thereof, Tenant shall pay Landlord's cost for making
such repairs, plus fifteen percent (15%) for overhead, upon
presentation of bills therefor, as Additional Rent.
6.3 Landlord's Maintenance. Landlord shall keep the
roof, exterior walls, foundations and building structure of the
Premises in a good state of repair; provided, however, if
Landlord is required to make repairs to structural portions by
reason of Tenant's negligent act or omission to act, Landlord
shall add the cost of such repairs, plus fifteen percent (15%)
for overhead, to the rent which shall thereafter become due.
6.4 Waste and Surrender. Tenant shall not commit or
allow any waste or damage to be committed on any portion of the
Premises, and upon expiration or sooner termination of the term
hereof, Tenant agrees to deliver up the Premises to Landlord in
the condition set out above, ordinary wear and tear excepted, and
Landlord shall have the right to re-enter and resume possession
of the Premises.
6.5 Surrender of Key. At the expiration of the tenancy
hereby created, Tenant shall surrender all keys for the Premises
to Landlord at the place then fixed for the payment of rent, and
shall inform Landlord of all combinations on locks, safes and
vaults, if any, in the Premises. Tenant shall not change locks
on the Premises without the prior written consent of the
Landlord.
ARTICLE VII
UTILITIES
7.1 Tenant Pays All Bills. Tenant shall pay all bills
for water, gas, electricity, fuel, light, heat and power
furnished to or used by Tenant on or about the Premises, and all
disposal or sewage service charges for the Premises, and all
telephone bills and other bills incurred by Tenant. Landlord
shall have no responsibility for such payments.
ARTICLE VIII
TAXES
8.1 Tenant's Responsibility. Tenant shall pay, in
addition to the rent specified above, all real estate taxes and
special assessments levied upon the Premises by any state, city,
school district or federal governmental authority. The payment
for real estate taxes shall be made to Landlord on or before
December 15 of each year during the lease term, commencing
December 15, 1996. For the final year of the lease term, the
amount of the taxes shall be prorated. All other taxes shall be
paid directly to the taxing authority on or before their due
date. In the event Landlord's lender requires the escrowing of
taxes, Tenant agrees to pay the monthly tax escrow to Landlord as
Additional Rent.
ARTICLE IX
INSURANCE AND INDEMNITY
9.1 Tenant's Liability Insurance Requirements. During
the entire lease term, the Tenant shall, at its own expense,
maintain adequate liability insurance with a reputable insurance
company or companies, with minimum amounts of $1,000,000.00
combined single limit for personal injuries and property damage,
to indemnify both Landlord and Tenant against any such claims,
demands, losses, damages, liabilities and expenses. Landlord
shall be named as an additional insured, and shall be furnished
with a certificate of such insurance, which shall bear an
endorsement that the same shall not be cancelled except upon not
less than thirty (30) days prior written notice to Landlord.
Tenant shall also, at its own expense, maintain, during the lease
term, insurance covering its furniture, fixtures, equipment, all
leasehold improvements, and merchandise in an amount equal to not
less than one hundred percent (100%) of the full replacement
value thereof, and insuring against fire and all risk perils
coverage as provided by a standard all risk coverage endorsement,
and the plate glass and all other glass which is the
responsibility of the Tenant in the event of breakage from any
cause. Tenant shall provide Landlord with copies of the policies
of insurance or certificates thereof. If Tenant fails to
maintain such insurance, Landlord may maintain the same on behalf
of Tenant. Any premiums paid by Landlord shall be deemed
Additional Rent and shall be due on the payment date of the next
installment of Base Rent hereunder.
9.2 Tenant's Fire and Extended Coverage Insurance.
During the entire lease term, the Tenant shall, at its own
expense, maintain a fire and extended coverage insurance policy
on the Premises, in an amount and with endorsements required by
Landlord's first mortgage lender; provided, however, if there be
no first mortgage lender, the coverage shall, at a minimum,
insure all structures and improvements for not less than eighty
percent (80%) of the full insurable replacement cost value
thereof, and shall contain such other endorsements as Landlord
may from time to time require.
9.3 Indemnity. Tenant agrees to indemnify Landlord and
save Landlord harmless from and against any and all claims,
actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from
or out of any occurrence in, upon or at the Premises, or the
occupancy or use by Tenant of the Premises, or any part thereof,
if occasioned wholly or in part by any act or omission of Tenant,
Tenant's agents, contractors, employees, servants, lessees or
concessionaires. In case Landlord shall, without fault on
Landlord's part, be made a party to any litigation commenced by
or against Tenant, then Tenant shall protect and hold Landlord
harmless, and shall pay all costs, expenses and reasonable
attorney's fees incurred or paid by Landlord in connection with
such litigation.
9.4 Waiver of Subrogation. As long as their respective
insurers so permit, Landlord and Tenant hereby mutually waive
their respective rights of recovery against each other for any
loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective
parties. Each party shall apply to their insurers to obtain such
waivers. Each party shall obtain any special endorsements, if
required by their insurer to evidence compliance with the
aforementioned waiver.
ARTICLE X
CASUALTY LOSS
10.1 Damage to Premises. If the Premises shall be
damaged by fire, the elements, unavoidable accident or other
casualty, but are not thereby rendered untenantable in whole or
in part, Landlord shall, at Landlord's expense, cause such damage
to be repaired, and the rent shall not be abated. If by reason
of such occurrence, the Premises shall be rendered untenantable
only in part, Landlord shall, at Landlord's expense, cause the
damage to be repaired, and the Base Rent meanwhile shall be
abated proportionately as to the portion of the Premises rendered
untenantable. If the Premises shall be rendered wholly
untenantable by reason of such occurrence, the Landlord shall, at
Landlord's expense, cause such damage to be repaired, and the
Base Rent meanwhile shall abate until the Premises have been
restored and rendered tenantable, or Landlord may, at Landlord's
election, terminate this Lease and the tenancy hereby created by
giving to Tenant, within thirty (30) days following the date of
said occurrence, written notice of Landlord's election to do so,
and in the event of such termination, rent shall be adjusted as
of such date.
ARTICLE XI
SUBORDINATION AND NON-DISTURBANCE
11.1 Subordination. This Lease shall be subordinate to
any mortgage or Deed of Trust that is now or may hereafter be
placed upon the Premises, and to any and all advances to be made
thereunder, and to the interest thereon, and to all renewals,
replacements and extensions thereof; provided that the Mortgagee
or holder of the Deed of Trust executes a Non-Disturbance
Agreement assuring tenant of its possession of the Premises
notwithstanding a default by Landlord on the Mortgage or Deed of
Trust, so long as Tenant is not in default under this Lease.
ARTICLE XII
ASSIGNMENT OR SUBLETTING
12.1 Prohibitions. Tenant will not assign this Lease,
in whole or in part, nor sublet all or any part of the Premises,
without the prior written consent of Landlord in each instance,
which consent shall not be unreasonably withheld. The consent of
Landlord to any assignment or subletting shall not constitute a
waiver of the necessity for such consent to any subsequent
assignment or subletting. Tenant shall not mortgage, pledge or
otherwise encumber its interest in this Lease or the Premises
without the prior written consent of Landlord. If this Lease be
assigned, or if the Premises or any part thereof be sublet or
occupied by anybody other than Tenant, Landlord may collect rent
from the assignee, subtenant or occupant, and apply the net
amount collected to the rent herein reserved, but no such
assignment, subletting, occupancy or collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant
herein contained. Notwithstanding any assignment or sublease,
Tenant shall remain fully liable on this Lease, and shall not be
released from performing any of the terms, covenants and
conditions of this Lease.
12.2 Landlord's Right to Transfer. Landlord shall have
the right to transfer and assign, in whole or in part, Landlord's
rights hereunder and in the Premises. In the event of the sale,
assignment or transfer by Landlord of Landlord's interest in the
Premises, Landlord shall thereupon be released or discharged from
all covenants and obligations of Landlord, and Tenant agrees to
look solely to such successor in interest of Landlord for
performance of such obligations. All covenants and obligations
of the Landlord shall run with the land and be binding upon each
new owner or successor of the Premises during their period of
ownership.
ARTICLE XIII
CONDEMNATION
13.1 Award of Damages. If the whole or any part of the
Premises shall be taken for any public or quasi-public purpose by
any lawful power or authority by the exercise of the right of
condemnation or eminent domain, Landlord and Tenant shall be
entitled to and shall receive all awards that may be made in any
such proceeding for the Premises.
13.2 Taking of All of Premises. If such proceedings
shall result in taking of the whole or substantially all of the
Premises, this Lease shall terminate from the date of such
taking, and all rent and other sums or charges provided herein to
be paid by Tenant shall be apportioned and paid to the date of
such taking. If less than substantially all of the Premises
shall be taken in such proceedings, this Lease shall terminate
only as to the portion of the Premises so taken, and this Lease
shall continue for the balance of its term as to the part of the
Premises remaining. In the event of a partial taking, the Base
Rent to be paid by Tenant after such taking shall be reduced pro
rata in proportion to which the space so taken bears to the
entire space in the Premises originally demised.
13.3 Taking of Less Than All of Premises. If less than
substantially all of the Premises shall be taken, Landlord shall
repair the remaining portion of the Premises so as to restore
same as a building complete in itself, but Landlord shall not be
obligated to expend thereon more than the sum allowed to Landlord
in such condemnation proceeding for damage to the Premises, less
expenses incurred by Landlord for such proceeding.
Notwithstanding the foregoing, if the expense of such restoration
would be greater than the sum allowed Landlord, less expenses in
the condemnation proceeding, then Landlord shall have the option,
for a period of thirty (30) days after such partial payment,
within which to terminate this Lease.
13.4 Tenant's Damages. Although the damages for
diminution in value of the leasehold or fee of the Premises
belong to Landlord, Tenant shall have the right to claim and
recover from the condemning authority such compensation as may be
separately awarded or recoverable by Tenant in Tenant's own right
on account of any and all damages to Tenant's business by reason
of the condemnation and for or on account of any cost or loss to
which Tenant might be put in removing Tenant's merchandise,
furniture, fixtures, leasehold improvements and equipment.
ARTICLE XIV
ACCESS AND EASEMENTS
14.1 Access. Landlord or Landlord's agents shall have
the right to enter the Premises at all times to examine the same,
and to show them to prospective purchasers or tenants of the
Premises, and to make such repairs, alterations, improvements or
additions as Landlord may deem necessary or desirable, and
Landlord shall be allowed to take all material into and upon the
Premises that may be required therefor, without the same
constituting an eviction of Tenant in whole or in part, and the
rent reserved shall in no way abate while said repairs,
alterations, improvements or additions are being made, by reason
of loss or interruption of business of Tenant, or otherwise.
During the six (6) months prior to the expiration of the term of
this Lease, Landlord may exhibit the Premises to prospective
tenants or purchasers, and place upon the Premises the usual
notices "For Lease" or "For Sale," which notices Tenant shall
permit to remain thereon without molestation. If Tenant shall
not be personally present to open and permit an entry into the
Premises, at any time, when for any reason an entry therein shall
be deemed necessary or permissible, Landlord or Landlord's agents
may enter the same by a master key, or may forcibly enter the
same, without rendering Landlord or such agents liable therefor,
and without in any manner affecting the obligations and covenants
of this lease. Nothing herein contained, however, shall be
deemed or construed to impose upon Landlord any obligation,
responsibility or liability whatsoever, for the care, maintenance
or repair of the Premises, or any part thereof, except as
otherwise herein specifically provided.
14.2 Structural Repairs. If an excavation or
construction shall be made upon land adjacent to the Premises, or
shall be authorized to be made, Tenant grants to the person
causing or authorized to cause such excavation or construction,
license to enter upon the Premises for the purpose of doing such
work as Landlord shall deem necessary to preserve the wall or the
building of which the Premises form a part from injury or damage,
and to support the same by proper foundations, without any claim
for damages or indemnification against Landlord, or diminution or
abatement of rent.
ARTICLE XV
TENANT'S PROPERTY
15.1 Tenant's Personal Property Taxes. Tenant shall be
responsible for and shall pay before delinquency all municipal,
county or state taxes assessed during the term of this Lease
against any leasehold interest or personal property of any kind,
owned by or placed in, upon or about the Premises by the Tenant.
15.2 Responsibility of Landlord. Landlord shall not be
liable for any damage to property of Tenant or of others located
on the Premises, nor for the loss of or damage to any property of
Tenant or of others by theft or otherwise. Landlord shall not be
liable for any injury or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity,
water, rain or snow, or leaks from any part of the Premises, or
from the pipes, appliances or plumbing works, or from the roof,
street or sub-surface, or from any other place, or by dampness,
or by any other cause of whatsoever nature. Landlord shall not
be liable for any such damage caused by occupants of adjacent
property, or the public, or caused by operations in construction
of any private, public or quasi-public work. All property of
Tenant kept or stored on the Premises shall be so kept or stored
at the risk of Tenant only, and Tenant shall hold Landlord
harmless from any claims arising out of damage to the same,
including subrogation claims by Tenant's insurance carrier,
unless such damage shall be caused by the willful act or gross
negligence of Landlord.
ARTICLE XVI
USE OF PREMISES
16.1 Tenant's Usage. Tenant agrees to use the Premises
for a commercial office and such other uses as may be permitted
by law. Tenant shall not occupy or use, or permit any portion of
the Premises to be occupied or used for any business or purpose
which, in Landlord's opinion, is unlawful, disreputable or deemed
to be extra hazardous on account of fire, or permit anything to
be done which would in any way increase the rate of fire
insurance coverage on the Premises and/or its contents.
16.2 Compliance with Laws, Covenants and Regulations.
Tenant shall at all times comply with all laws, ordinances,
orders, rules and regulations of governmental agencies having
jurisdiction of the Premises, and of all restrictive covenants
relating to the use, condition or occupancy of the Premises. In
the event such laws mandate alterations to the Premises, Tenant
agrees to promptly make such alterations at its sole cost and
expense.
16.3 Concessionaires. Tenant shall not permit any
business to be operated in or from the Premises by any
concessionaire or licensee without prior written consent of
Landlord.
ARTICLE XVII
PEACEFUL ENJOYMENT
17.1 Covenant of Landlord. Tenant shall, and may
peacefully have, hold and enjoy the Premises, subject to the
other terms hereof, providing Tenant pays the rentals herein
recited and performs Tenant's covenants and agreements herein
contained.
ARTICLE XVIII
DEFAULT AND REMEDIES
18.1 Tenant's Default. Any of the following, if not
cured by Tenant within ten (10) days after written notice to
Tenant of their occurrence, shall constitute events of default on
the part of Tenant:
A. Failure of Tenant to pay Base Rent,
Additional Rent, or any other rent or other payment
when due;
B. Failure of Tenant to comply with any covenant
or obligation of Tenant hereunder;
C. Abandonment or vacation of the Premises by
Tenant;
D. The filing of a voluntary or involuntary
petition in bankruptcy by or against Tenant, or any
guarantor hereof, under the National Bankruptcy Act,
or should Tenant, or any guarantor, make an
assignment for the benefit of their creditors, or
should a trustee, receiver or liquidator of Tenant,
or any guarantor hereof, of Tenant's or any
guarantor's property hereof, be appointed, or should
any governmental authority institute any proceeding
for the dissolution of Tenant, or any guarantor
hereof, or should Tenant's interest hereunder pass
by operation of law or otherwise;
E. Failure to provide estoppel certificates as
requested by Landlord.
18.2 Remedies. In addition to any other rights and
remedies provided in this Lease or by applicable law or equity,
on the occurrence of any event of default and after expiration of
any cure period, Landlord will have the following remedies, all
of which may be exercised without any further notice or demand on
Tenant:
(A) Past Due Rent. Landlord may collect from
Tenant all past due rent, including interest thereon
at twelve percent (12%) per annum and late charges,
and all other reasonable damages caused by Tenant's
default.
(B) Termination. Landlord may terminate this
Lease, in which event Tenant will immediately
surrender the Premises to Landlord, but if Tenant
fails to do so, Landlord may, without notice and
without prejudice to any other remedy Landlord might
have, enter and take possession of the Premises and
remove Tenant, anyone claiming under Tenant, and any
property therefrom without being subject to any
claim for damages therefor. Tenant shall be
obligated to pay to Landlord all costs reasonably
incurred by Landlord in any such action, including
the costs of taking possession of and repairing any
damage to the Premises, and all other reasonable
damages caused by Tenant's default. After default,
this Lease may be terminated only by written notice
from Landlord, and no other action or inaction by
Landlord after default shall constitute a
termination of this Lease.
(C) Reletting. If Landlord does not terminate
this Lease, then Landlord may, at its option,
reenter and remove any persons or property therein,
forcibly if necessary, without being guilty of
trespass and without the same constituting a
termination of this Lease, and may relet the
Premises or any part thereof for the benefit of
Tenant, in which event Tenant shall pay Landlord all
reasonable costs incurred by Landlord in taking such
action, including, without limitation, the costs of
taking possession of and repairing the Premises, the
reasonable cost of preparing the same for reletting,
attorneys' fees, brokerage commissions, and all
other damages caused by Tenant's default. Tenant
shall remain obligated to Landlord for the
difference between any rent received by Landlord as
a result of such reletting and the rent and other
sums for which Lessee is obligated hereunder. In
the event any such reletting results in payment of
rent thereunder to Landlord in excess of the rent
for which Tenant is obligated hereunder, Landlord
shall be entitled to retain such excess.
18.3 Landlord's Right to Cure. Should Tenant be in
default hereunder, Landlord may cure any such default on behalf
of Tenant, in which event Tenant shall reimburse Landlord for all
sums paid to effect compliance, together with interest at the
rate of eighteen percent (18%) per annum, from and after the date
of such expenditure, which shall be Additional Rent due
hereunder.
18.4 Landlord's Default. If Landlord fails to perform
any of Landlord's covenants hereunder, Landlord shall not be in
default unless: (1) Tenant gives Landlord written notice
thereof, setting forth in reasonable detail the nature and extent
of such failure, and (2) if such failure by Landlord is not cured
or attempted to be cured within thirty (30) days following the
delivery of such notice. If such failure cannot be reasonably
cured within thirty (30) days, the length of such period shall be
extended for a period reasonably required therefor if Landlord
commences curing such failure within the thirty (30) day period
and continues the curing thereof with reasonable diligence and
continuity.
ARTICLE XIX
OPTION TO PURCHASE
19.1 Terms of Option. So long as Lessee shall not be
in default hereunder, Lessee shall have the option to purchase
the Premises for the greater of (i) the Cost Basis at the time of
the exercise of the option or (ii) ninety percent (90%) of the
Appraised Value of the Premises at the time of the exercise of
the option. For the purposes hereof, "Cost Basis" shall be the
sum of all funds expended by Landlord in the acquisition,
remodeling, maintenance and financing of the Premises with
interest on all funds expended at the national prime rate
published by The Wall Street Journal from the date expended.
Landlord shall furnish Tenant with a statement of the Cost Basis
within thirty (30) days after receipt of a written request. For
the purposes hereof, "Appriased Value" shall mean the average of
two (2) MAI appraisals obtained by Landlord and Tenant within
ninety (90) days after Tenant notifies Landlord of its exercise
of the option. If Landlord and Tenant cannot agree on the two
(2) MAI appraisers, each of them, shall appoint one (1). Cost of
the appraisals shall be shared equally.
19.2 Means of Exercise of Option and Closing. In
order to exercise this option, Tenant shall give Landlord written
notice during the term of the Lease. In the event the option is
exercised, closing shall take place at a title company in Dallas,
Texas, selected by Landlord. At closing Landlord shall convey
title to Lessee by General Warranty Deed, subject only to those
encumbrances listed as exceptions in the Title Policy No. 009325
issued by First American Title Insurance Company; provided,
however, that all Mortgages or Deeds of Trust placed on the
Premises by Landlord shall be paid off and released at closing,
unless Tenant and the lender agree upon an assumption by Tenant,
in which event the amount of the loan will be deducted from the
purchase price. Landlord shall cause a new owner's title
insurance policy to be issued to Tenant at closing. The costs of
closing shall be allocated between the parties in accordance with
the customary allocation of such costs between buyer and seller
in similar transactions in Dallas, Texas.
ARTICLE XX
MISCELLANEOUS PROVISIONS
20.1 Amendment. This agreement may not be altered,
changed or amended, except by instrument in writing, signed by
all parties hereto.
20.2 Non-Waiver. Failure of Landlord to declare any
default immediately upon the occurrence thereof, or delay in
taking any action in connection therewith, or acceptance of
rental after same is due, shall not waive such default, but
Landlord shall have the right to declare any such default at any
time, and to take such action as may be lawful or authorized
hereunder, either at law or in equity.
20.3 Force Majeure. Neither Landlord nor tenant shall
be required to perform any term, condition or covenant in this
Lease so long as such performance is delayed or prevented by
force majeure, which shall mean acts of God, strikes, lock outs,
material or labor shortages, or restrictions by government
authorities and other causes which are not reasonably within the
control of either Landlord or Tenant, and which, by the exercise
of due diligence, Landlord or Tenant would be unable, wholly or
in part, to prevent or overcome. Provided, however, this
provision shall not apply to Tenant's obligation to pay Base Rent
and Additional Rent.
20.4 Interpretation. As used herein, the masculine or
neuter genders shall be deemed to include all genders and
singular, the plural, and vice versa, except where any such
construction would be unreasonable. This Lease shall be
construed under and in accordance with the laws of the State of
Texas, and all obligations of the parties hereunder are
performable in Dallas County, Texas. The paragraph headings are
inserted for convenience only, and shall not in any way vary the
provisions they identify. If any provision of this Lease or any
application thereof shall be invalid, illegal or unenforceable in
any respect, the validity, legality or enforceability of the
remaining provisions hereof and other applications thereof, shall
not in any way be affected or impaired thereby.
20.5 Covenants. All agreements, obligations and
undertakings of the parties shall be deemed to be covenants,
whether or not so denominated.
20.6 Notices. Except as may be otherwise specifically
provided herein, all notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered when
delivered personally, or when deposited with the United States
Postal Service, postage prepaid, registered or certified mail,
return receipt requested, addressed to the parties at the
respective addresses set forth hereunder, or at such other
address as may have been theretofore specified by written notice
delivered in accordance herewith.
20.7 Limitation of Landlord Liability. Any provisions
hereof to the contrary notwithstanding, Tenant hereby agrees that
no personal or partnership liability of any kind or character
whatsoever now attaches or at any time hereafter, under any
condition, shall attach to Landlord for payment of any amounts
payable under this agreement, or for the performance of any
obligations hereunder. The exclusive remedies of Tenant for the
failure of Landlord to perform any of its obligations under this
Lease shall be to proceed against the interest of Landlord in and
to the Premises.
20.8 Attorney's Fees. In the event Tenant defaults in
the performance of any of the terms, covenants, agreements or
conditions contained in this Lease and Landlord places the
enforcement of this Lease, or any part thereof, or the collection
of any rent due, or which may become due hereunder, or recovery
of the possession of the Premises, in the hands of an attorney,
or files suit upon same, Tenant agrees to pay to Landlord a
reasonable attorney's fee which is incurred by Landlord in such
enforcement, collection or recovery of possession.
20.9 Holding Over. In the event of holding over by
Tenant after the expiration or termination of this agreement
without the express written consent of Landlord, the Base Rent
shall be doubled for the entire holdover period. No holding over
by Tenant after the term of this Lease shall operate to extend
this Lease; and in the event of any unauthorized holding over,
Tenant shall indemnify Landlord from and against all claims for
damages by any other tenant to whom Landlord may have leased all
or any portion of the Premises, effective upon the termination of
this Lease. Any holding over with the consent of Landlord in
writing shall thereafter constitute this Lease a lease from month
to month.
20.10 Entire Agreement. This instrument constitutes the
entire agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties
hereto. Each party to this Lease acknowledges that no
representations, inducements, promises or agreements, oral or
otherwise, have been made by any party or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Lease shall
be valid or binding. This Lease may not be modified or amended
by oral agreement, but only by an agreement in writing, signed by
the parties hereto.
20.11 Recording. This Lease may not be recorded by
either party, but at the request of either party, Landlord and
Tenant shall execute a short form memorandum of this Lease, which
may be recorded for all purposes.
20.12 Indemnity. Tenant shall indemnify Landlord
against all liabilities, expenses and losses incurred by Landlord
as a result of: (1) failure by Tenant to perform any covenant
required hereunder; (2) any accident, injury or damage which
shall happen in or about the Premises; (3) failure to comply with
any requirement of any governmental authority; and (4) any
mechanic's lien or security agreement filed against the Premises,
any equipment therein, or any materials used in the construction
or alteration of the Premises. Landlord shall not be liable for
injury or damage to any person or property occurring on the
Premises unless caused by or resulting from the negligence of
Landlord.
20.13 Estoppel Certificates. At any time and from time
to time within twenty (20) days after Landlord shall request the
same, Tenant will execute, acknowledge and deliver to Landlord or
any party as may be designated by Landlord, a certificate in a
reasonably acceptable form, with respect to the matters required
by such party, and such other matters relating to this Lease or
the status or performance of obligations of the parties hereunder
as may be reasonably requested by Landlord. If Tenant fails to
provide such certificate within twenty (20) days after request by
Landlord, Tenant shall be deemed to have approved the contents of
any such certificate submitted to Tenant by Landlord, and
Landlord is hereby authorized to so certify.
20.14 Binding Effect. This Lease shall be binding upon
and inure to the benefit of the parties hereto, their respective
successors, permitted assigns, heirs and legal representatives,
as the case may be.
EXECUTED as of the day and year first above written.
"LANDLORD" 329
PARTNERS-II LIMITED
PARTNERSHIP, an Oklahoma
Limited Partnership
By:
329 HOLDING LLC, an Oklahoma
Limited Liability Company
By:_________________________________________
H. Rainey Powell, CEO-Manager
Address: 765 Asp Avenue
Norman, OK 73069
"TENANT" HAROLD'S
DBO, INC.
By:
_________________________________________
REBECCA P. CASEY, PRESIDENT
Address: 5919 Maple Avenue
Dallas, TX 75235
ACKNOWLEDGMENT
STATE OF OKLAHOMA )
) ss:
COUNTY OF CLEVELAND )
The foregoing instrument was acknowledged before me
this 30th day of June, 1998, by H. RAINEY POWELL, CEO-Manager of
329 HOLDING LLC, an Oklahoma Limited Liability Company, on behalf
of 329 PARTNERS-II LIMITED PARTNERSHIP, an Oklahoma Limited
Partnership.
Notary Public
My commission expires:
STATE OF OKLAHOMA )
) ss:
COUNTY OF CLEVELAND )
The foregoing instrument was acknowledged before me
this 30th day of June, 1998, by REBECCA P. CASEY, President of
HAROLD'S DBO, INC., a Texas Corporation, on behalf of said
corporation.
Notary Public
State of Oklahoma
My commission expires:
EXHIBIT A
to
LEASE AGREEMENT
LEGAL DESCRIPTION OF PREMISES
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> AUG-01-1998
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 5,931
<ALLOWANCES> 235
<INVENTORY> 30,583
<CURRENT-ASSETS> 41,132
<PP&E> 30,772
<DEPRECIATION> 11,824
<TOTAL-ASSETS> 62,207
<CURRENT-LIABILITIES> 7,218
<BONDS> 17,547
0
0
<COMMON> 6,069
<OTHER-SE> 37,277
<TOTAL-LIABILITY-AND-EQUITY> 62,207
<SALES> 61,255
<TOTAL-REVENUES> 61,255
<CGS> 40,543
<TOTAL-COSTS> 40,543
<OTHER-EXPENSES> 19,066
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 423
<INCOME-PRETAX> 1,223
<INCOME-TAX> 489
<INCOME-CONTINUING> 734
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 50
<NET-INCOME> 684
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
