EXHIBIT 10.2
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THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED
HEREBY, INCLUDING
THE RIGHT TO DEMAND PAYMENT HEREUNDER AND TO ENFORCE ANY
INSTRUMENTS SECURING
THIS NOTE, ARE MADE EXPRESSLY SUBJECT AND SUBORDINATE TO CERTAIN
RIGHTS OF THE
HOLDER(S) OF THE INDEBTEDNESS AND OTHER OBLIGATIONS OWING FROM TIME
TO TIME BY
HAROLD'S STORES, INC. AND CERTAIN OF ITS SUBSIDIARIES PURSUANT TO A
LOAN AND
SECURITY AGREEMENT ENTERED INTO AS OF FEBRUARY 5, 2003, BETWEEN
HAROLD'S STORES,
INC. AND CERTAIN OF ITS SUBSIDIARIES AND WELLS FARGO RETAIL FINANCE
II, LLC, AS
THE SAME MAY BE AMENDED, MODIFIED, RESTATED AND SUPPLEMENTED FROM
TIME TO TIME,
ALL AS MORE PARTICULARLY PROVIDED PURSUANT TO THE TERMS OF THE
SUBORDINATION AND
INTERCREDITOR AGREEMENT ENTERED INTO IN AUGUST 2006, AMONG HAROLD'S
STORES, INC.
AND CERTAIN OF ITS SUBSIDIARIES, RONHOW, LLC AND WELLS FARGO RETAIL
FINANCE II,
LLC, AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED AND
SUPPLEMENTED FROM TIME
TO TIME, THE TERMS OF WHICH SUBORDINATION AND INTERCREDITOR
AGREEMENT BY THIS
REFERENCE ARE MADE A PART OF THIS PROMISSORY NOTE. PAYEE AND EACH
OTHER HOLDER,
ASSIGNEE OR TRANSFEREE OF THIS PROMISSORY NOTE, BY ACCEPTANCE
HEREOF, AGREES TO
BE BOUND BY SUCH SUBORDINATION AND INTERCREDITOR AGREEMENT.
AMENDED AND RESTATED SUBORDINATED SECURED PROMISSORY NOTE
$12,000,000
April 26, 2007
FOR VALUE RECEIVED, the undersigned, HAROLD'S STORES, INC., an
Oklahoma
corporation ("Maker"), promises to pay to the order of RONHOW, LLC,
a Georgia
limited liability company ("Payee"; Payee and any subsequent
holder[s] hereof
are hereinafter referred to collectively as "Holder"), at the
office of Payee at
3290 Northside Parkway, Suite 250, Atlanta, Georgia 30302, or at
such other
place as Holder may designate to Maker in writing from time to
time, the
principal amount of up to TWELVE MILLION AND NO/100THS DOLLARS
($12,000,000) or
so much thereof as is advanced hereunder, together with interest on
the
outstanding principal balance hereof calculated in accordance with
the
provisions of this Note and any interest which is added to the
outstanding
principal balance hereof in accordance with the provisions of this
Note.
This Note amends and restates the terms of, and is given in
substitution for and supersedes and replaces that certain
Subordinated Secured
Promissory Note, dated as of August 31, 2006, in the face principal
amount of
$10,000,000, made by Maker to the order of Payee (the "Original
Note"). This
Note is not delivered in extinguishment of the indebtedness
evidenced by the
Original Note and does not constitute a novation of the Original
Note. This Note
is made to evidence (i) indebtedness in the principal amount of
$7,078,750
outstanding as of the date hereof
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under the Tranche A Term Loan (as defined in the Loan Agreement
which is defined
below); (ii) indebtedness in the principal amount of $2,000,000
outstanding as
of the date hereof under the Tranche B Term Loan (as defined in the
Loan
Agreement); (iii) any additional indebtedness incurred under the
Tranche B Term
Loan on or after the date hereof; (iv) any accrued interest added
to the
principal amount outstanding under the Tranche A Term Loan or the
Tranche B Term
Loan in accordance with the terms hereof; and (iv) all accrued but
unpaid
interest on any of the foregoing.
The principal amount of, and accrued but unpaid interest on, this
Note
shall be paid in full no later than May 31, 2010 (the "Maturity
Date"), unless
repaid earlier pursuant to the provisions of this Note.
Interest on the outstanding principal balance of the Tranche A
Term
Loan shall accrue at the rate of thirteen and one-half percent
(13.5%) per annum
(computed on the basis of a 360-day year consisting of twelve 30
day months).
Interest on the outstanding principal balance of the Tranche B Term
Loan shall
accrue at the rate of eighteen percent (18%) per annum (computed on
the basis of
a 360-day year consisting of twelve 30 day months). Interest on the
outstanding
principal balance of the Loan shall be payable, in arrears, on the
first day of
each month or, if any such date shall not be a business day, on the
next
succeeding business day to occur after such date (each date on
which interest
shall be so payable, an "Interest Payment Date"), provided that,
(i) until such
time as the aggregate amount of interest accruing from and after
March 1, 2007,
under the Tranche A Term Loan and the Tranche B Term Loan equals
$1,000,000, on
each Interest Payment Date the accrued interest under the Tranche A
Term Loan
payable on such date shall be added to the principal balance
thereof and the
accrued interest under the Tranche B Term Loan payable on such date
shall be
added to the Tranche B Term Loan, in each case in lieu of cash
payment of such
accrued interest by Maker; and (ii) all accrued and unpaid interest
shall be due
and payable on the earlier of the Maturity Date and the date on
which the Holder
demands repayment pursuant to the terms hereof.
On each Interest Payment Date occurring after the aggregate amount
of
interest accrued hereunder that has been added to the principal of
the Tranche A
Term Loan and the Tranche B Term Loan equals $1,000,000, if any
interest accrued
hereunder is not actually paid in cash to Holder, at Holder's
option and in
Holder's sole discretion, the outstanding principal balance of this
Note shall
be increased by an amount equal to the difference between (i)
interest accruing
on the principal balance of such tranche during the period from and
including
the previous I
