EXHIBIT 10.9
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STOCK PURCHASE WARRANT
This STOCK PURCHASE WARRANT ("Warrant") is issued this 31st day of
August, 2006, by Harold's Stores, Inc., an Oklahoma corporation (the "Company"),
to RonHow, LLC, a Georgia limited liability company ("RonHow") having an office
at 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, 00000, Attention: Xxxxxx
Xxxxxxxx. RonHow and any subsequent assignee or transferee hereof are
hereinafter referred to collectively as "Holder" or "Holders").
1. Issuance of Warrant; Term. For and in consideration of RonHow making
a loan to the Company in an amount of Five Million and no/100ths Dollars
($5,000,000.00) pursuant to the terms of a secured promissory note of even date
herewith (the "Note") and related subordinated loan agreement of even date
herewith (the "Subordinated Loan Agreement"), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company hereby grants to Holder the right to purchase up to 1,032 shares of the
Company's Series 2006-B Preferred Stock (the "Series 2006-B Preferred Stock").
The shares of 2006-B Preferred Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." The Conversion Price (as defined in the
Certificate) of the 2006-B Shares acquired upon any exercise of the Warrant
shall be equal to the 20 day average of the closing prices of the Company's
Common Stock as quoted on the Over-the-Counter Bulletin Board for the twenty
(20) trading days ending on the day before the date of this Agreement, or $0.43
per share. The Conversion Price shall be subject to adjustment as provided in
the Certificate of Designation of the Series 2006-B Preferred Stock filed with
the Secretary of State of the State of Oklahoma (the "Certificate"). All other
terms of the 2006-B Shares shall be governed by such Certificate of Designation.
This Warrant shall be exercisable at any time and from time to time from the
date hereof until September 30, 2016.
2. Exercise Price. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01) per share, for an aggregate exercise price
of $10.32.
3. Exercise; Vesting. This Warrant may be exercised by the Holder
hereof (but only on the conditions hereinafter set forth) in whole or in part as
to the Vested Shares (defined below) that may be acquired hereunder, from time
to time after the earlier to occur of (a) satisfaction in full of all amounts
due under the Subordinated Loan Agreement or (b) an Event of Default under the
Subordinated Loan Agreement, by delivery of written notice of intent to exercise
to the Company in the manner at the address of the Company set forth in Section
7.6 hereof, together with this Warrant and payment to the Company of the
aggregate Exercise Price of the Shares so purchased. The Shares shall vest
ratably from the date of this Warrant through May 31, 2010, provided that no
further vesting shall occur after the payment in full of the Note; and the whole
shares as to which this Warrant has vested from time to time are referred to
herein as the "Vested Shares." The Exercise Price shall be payable in cash or by
check (which need not be certified). Upon exercise of this Warrant, the Company
shall, as promptly as practicable, and in any event within fifteen (15) days
thereafter, execute and deliver to the Holder of this Warrant
a certificate or certificates for the total number of whole Shares for which
this Warrant is being exercised in such names and denominations as are requested
by such Holder. If this Warrant shall be exercised with respect to less than all
of the Vested Shares, the Holder shall be entitled to receive a new Warrant
covering the number of Vested Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other respects be identical
to this Warrant. The Company covenants and agrees that it will pay when due any
and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any Shares upon exercise of this
Warrant.
4. Covenants and Conditions. The above provisions are subject to the
following:
4.1. Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act"), or any
state securities laws ("Blue Sky Laws"). This Warrant has been acquired
for investment purposes and not with a view to distribution or resale
and may not be sold or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and
such applicable Blue Sky Laws, or (ii) an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company and
its counsel, that registration is not required under the Securities Act
or under any applicable Blue Sky Laws. Transfer of the Shares and any
additional shares of Series 2006-B Preferred Stock issued as dividends
on any Shares (the "Dividend Shares") and any shares of Common Stock
issued on any conversion of the Shares (the "Underlying Common Stock")
shall be restricted in the same manner and to the same extent as the
Warrant and the certificates representing such Shares, Dividend Shares
or underlying Common Stock shall bear substantially the following
legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT OR THE AVAILABILITY OF
AN EXEMPTION THEREFROM.
The Holder hereof and the Company agree to execute such other documents
and instruments as counsel for the Company reasonably deems necessary
to effect the compliance of the issuance of this Warrant and any
Shares, Dividend Shares or Underlying Common Stock with applicable
federal and state securities laws.
4.2. The Company covenants and agrees that all Shares,
Dividend Shares and Underlying Common Stock which may be issued upon
exercise of this Warrant or as dividends on the Shares or on conversion
of the Shares will, upon issuance and payment therefor (if any), be
legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The
Company shall at all times reserve and keep available for issuance upon
the exercise of this Warrant such number of authorized but unissued
shares of Series 2006-B Preferred Stock as will be sufficient to permit
the exercise in full of this Warrant and issuance of any Dividend
Shares, as well as an
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adequate number of shares of the Company's common stock to permit
conversion of such Series 2006-B Preferred Stock into Underlying Common
Stock.
5. Transfer of Warrant. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. Warrant Holder Not Shareholder. This Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company.
7. Miscellaneous.
7.1. Good Faith; Cooperation; Further Assurances. The parties
will in good faith undertake to perform their obligations in this
Agreement, to satisfy all conditions and to cause the transactions
contemplated by this Agreement to be carried out promptly in accordance
with its terms. The parties will cooperate fully with each other and
their respective representatives in connection with any actions
required to be taken as part of their respective obligations under this
Agreement. Each party will deliver to the other such further
instruments necessary or desirable, in the reasonable opinion of the
requesting party and at the expense of the requesting party, to
consummate or document the transactions contemplated by this Agreement.
7.2. Entire Agreement; Successors and Assigns. This Agreement
and the Subordinated Loan Agreement constitute the entire agreement
between the Company and the Holder relative to the subject matter
hereof and supersede any previous agreement between the Company and the
Holder regarding such subject matter. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective executors, administrators, heirs, successors and assigns of
the parties.
7.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma without
regard to the conflicts of laws principles thereof.
7.4. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
7.5. Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of
this Agreement.
7.6. Notices. Any notice required or permitted hereunder shall
be given in writing and shall be conclusively deemed effectively given
upon personal delivery, or by delivery by overnight courier, or
telecopy (with confirmation of receipt), or five (5) days
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after deposit in the United States mail, by registered or certified
mail, postage prepaid, addressed:
if to the Company: Harold's Stores, Inc.
765 Asp
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
and if to the Holder, to the Holder's address as set forth in the first
paragraph of this Agreement
7.7. Survival of Warranties. The representations and
warranties of the parties contained in or made pursuant to this
Agreement shall survive for a period of one (1) year from the date of
the Closing.
7.8. Amendment of Agreement. Any provision of this Agreement
may be amended by a written instrument signed by the Company and the
Holder.
7.9. Finders' Fees.8. The Company and the Holder will
indemnify each other against all liabilities incurred by one party with
respect to claims related to investment banking or finders' fees in
connection with the transactions contemplated by this Agreement,
arising out of arrangements between the party asserting such claims and
the indemnifying party, and all costs and expenses (including
reasonable fees of counsel) of investigating and defending such claims.
[signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"COMPANY"
HAROLD'S STORES, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Chief Financial Officer & Secretary
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"RONHOW"
RONHOW, LLC, a Georgia limited liability company
By: Ronus, Inc., a Georgia corporation, Managing Member
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
[Signature Page to Stock Purchase Warrant]
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