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EXHIBIT D
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is made as of
February 28, 2001, among Harold's Stores, Inc., an Oklahoma corporation (the
"COMPANY"), and the investors set forth on the Schedule of Investors attached
hereto (the "INVESTORS").
RECITALS
WHEREAS, the Company and the Investors are entering into a Series
2000-A Preferred Stock Purchase Agreement of even date herewith (the "PREFERRED
PURCHASE AGREEMENT"), whereby the Company will sell, and the Investors will
purchase, 300,000 shares of Series 2000-A Preferred Stock, $.01 par value (the
"Preferred Stock"), of the Company (the "FINANCING"); and
WHEREAS, the Preferred Purchase Agreement requires, as a condition to
closing the Financing, that the parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1.
REGISTRATION RIGHTS
1.1 Certain Definitions. For purposes of this Agreement:
(a) "AMEX" means the American Stock Exchange, Inc.
(b) "COMMISSION" means the Securities and Exchange
Commission or any other U.S. federal agency at the time administering the
Securities Act and the Exchange Act;
(c) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar U.S. federal statute enacted hereafter, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time;
(d) "FORM S-3" means such form under the Securities Act
as in effect on the date hereof or any successor form under the Securities Act;
(e) "HOLDER" means any person, including the Investors,
owning or having the right to acquire Registrable Securities or any assignee
thereof in accordance with Section 1.11 of this Agreement.
(f) "INITIATING GROUP" means Investors who, in the
aggregate, hold more than 50% of the Registrable Securities then outstanding;
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(g) "PERMITTED TRANSFEREE" shall mean any of the
following: (1) an immediate family member of the Holder (the Holder's spouse,
parents, siblings, children or grandchildren), (2) a trust established solely
for the benefit of the Holder and/or the Holder's immediate family members or
(3) a corporation, partnership or other entity the voting stock, partnership
interests or other ownership rights of which are beneficially owned solely by
the Holder and/or the Holder's immediate family members.
(h) "PERSON" means an individual, partnership,
corporation, limited liability company, trust or unincorporated organization, or
a government or agency or political subdivision thereof, or any other entity of
any kind;
(i) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement or document by the Commission.
(j) "REGISTRABLE SECURITIES" means (i) the shares of the
Company's common stock, $.01 par value per share (the "COMMON STOCK"), issuable
or issued upon conversion of the Preferred Stock, and (ii) any other shares of
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
the shares listed in (i); provided, however, that the foregoing definition shall
exclude in all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not assigned.
Notwithstanding the foregoing, Common Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (A) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof or Rule 144 promulgated thereunder so that all transfer
restrictions, and restrictive legends with respect thereto, if any, are removed
upon the consummation of such sale.
(k) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(l) "REGISTRATION STATEMENT" means any registration
statement of the Company which includes any of the Registrable Securities
pursuant to this Agreement, including the prospectus included or deemed included
in the Registration Statement and all amendments and supplements to the
Registration Statement or the prospectus, including post-effective amendments,
and all exhibits to, and all materials incorporated by reference in, such
registration statement;
(m) "RULE 144" means Rule 144 promulgated under the
Securities Act or any successor provision;
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(n) "SELLING HOLDER" means a Holder who chooses to sell
Shares in a registered offering pursuant to the terms of this Agreement;
All other capitalized terms used herein but not otherwise
defined shall have the meanings ascribed to them in the Preferred Purchase
Agreement.
1.2 Demand Registration.
(a) At any time after the Closing, members of an
Initiating Group may demand that the Company effect registration under the
Securities Act of all or a portion of the Registrable Securities. The Initiating
Group shall provide notice to the Company of such demand in writing, which
notice shall set forth (i) the aggregate number of Registrable Securities to be
included, (ii) the names of the Selling Holders and the number of Securities to
be sold by each such Selling Holder, and (iii) the proposed manner of sale. Upon
receipt of such request, the Company shall use commercially reasonable efforts
to file a Registration Statement on Form S-3 (or such other form as the Company
may at such time be eligible to use) with the Commission not later than 30 days
from the date of such request and, thereafter, to effect promptly such
registration. There is no limit to the number of demand registrations that may
be requested pursuant to this Section 1.2(a).
(b) If the members of the Initiating Group intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 1.2(a). The underwriter will be selected by the Company and
must be approved by the Initiating Group, and such approval shall not be
unreasonably withheld. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Group and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Group in writing that market factors require a limitation
of the number of shares to be underwritten, then the Initiating Group shall so
advise all Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable Securities
that may be included in the underwriting shall be allocated among all Holders
thereof, including members of the Initiating Group, in proportion (as nearly as
practicable) to the amount of Registrable Securities of the Company owned by
each Holder; provided, however, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to the Holders requesting a registration statement pursuant to this
Section 1.2 a certificate signed by the President or Chief Executive Officer of
the Company stating that the board of directors of the Company has determined in
good faith that it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for
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a period of not more than 60 days after its receipt of the request of the
Initiating Group; provided, however, that the Company may not utilize this right
more than once in any 12-month period nor more than twice during the term of
this Agreement.
(d) In addition and without limitation of Section 1.14
hereof, the Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 1.2 during the period starting
with the date 60 days prior to the Company's good faith estimate of the date of
filing of, and ending on a date 180 days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith its best efforts to cause such Registration
Statement to become effective.
1.3 Piggyback Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company employee benefit plan, an
offering or sale of securities pursuant to a Form S-4 (or successor form)
registration statement, or a registration in which the only stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within 20 days after receipt of such notice by such Holder, the
Company shall, subject to the provisions of Section 1.7, cause to be registered
under the Securities Act all of the Registrable Securities that each such Holder
has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and use all commercially
reasonable efforts to cause such Registration Statement to become declared
effective by the Commission, and, to keep such Registration Statement effective
for up to 180 days after the effective date of the Registration Statement,
subject to adjustment as provided in Section 1.8; provided, that before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company will furnish to counsel for the Selling Holders covered by such
Registration statement and the underwriters, if any, copies of all such
documents proposed to be filed (excluding exhibits, unless any such Person shall
specifically request exhibits), which documents will be subject to the review of
such counsel and underwriters. The Company agrees that it will not file such
Registration Statement or any amendment thereto or any prospectus or any
supplement thereto (including any documents incorporated by reference therein)
with the Commission if the information in such Registration Statement or
prospectus concerning any Selling Holder has changed and a Selling Holder or the
underwriters, if any, shall reasonably object; provided, that the Company may
file and amend the Registration Statement under this Section 1.4(a) if it
corrects or removes any incorrect or outdated information from the Registration
Statement before such filing or amendment.
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(b) Prepare and file with the Commission such amendments
and post-effective amendments to such Registration Statement as may be necessary
to keep such Registration Statement effective during the period referred to in
Section 1.4(a) and to comply with the provisions of the Securities Act with
respect to the disposition of all securities during such period that are covered
by such Registration Statement, and cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed with the
Commission pursuant to Rule 424 under the Securities Act.
(c) Furnish to the Selling Holders such number of copies
of such Registration Statement, each amendment thereto, the prospectus included
in such Registration Statement (including each preliminary prospectus), each
supplement thereto and such other documents as the Selling Holders may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Selling Holders.
(d) Use its commercially reasonable efforts to register
and qualify the securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering (and each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement), and enter into such other customary
agreements and take all such other actions as the Holders of the Registrable
Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities.
(f) Notify each Holder of Registrable Securities covered
by such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue until the earlier of (i) the sale of all
Registrable Securities registered pursuant to the registration statement of
which such prospectus forms a part or (ii) withdrawal of such registration
statement, and, with the assistance of such Holders, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) Make available for inspection by the Selling Holders,
any underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by any such
Selling Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors, employees and independent accountants of the Company to supply all
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information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement.
(h) Promptly notify the Selling Holders and the
underwriters, if any, of the following events and (if requested by any such
Person) confirm such notification in writing: (1) the filing of the prospectus
or any prospectus supplement and the Registration Statement and any amendment or
post-effective amendment thereto with the Commission and any state securities
commission and, with respect to the Registration Statement or any post-effective
amendment thereto, the declaration of the effectiveness of such documents, by
the Commission or any state securities commission, (2) any requests by the
Commission or any state securities commission for amendments or supplements to
the Registration Statement or the prospectus or for additional information, (3)
the issuance or threat of issuance by the Commission or any state securities
commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose and (4) the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threat of initiation of any proceeding for such purpose.
(i) Cooperate with the Selling Holders and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold without any
restrictive legends, and enable such Registrable Securities to be in such lots
and registered in such names as the underwriters may request at least two
business days prior to any delivery of Registrable Securities to the
underwriters.
(j) Cause all such Registrable Securities registered
pursuant to this Agreement to be listed or quoted on the AMEX and any other
exchange or market on which similar securities issued by the Company are then
listed or quoted.
(k) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(l) Furnish on the date that such Registrable Securities
are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding
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itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Holder's Registrable Securities.
1.6 Expenses of Registration.
(a) Expenses of Demand Registration. All expenses other
than underwriting discounts and commissions (but only such discounts and
commissions incurred with respect to the Registrable Securities sold by the
Selling Holders) incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees, costs and
disbursements of one (1) counsel for the selling Holders selected by them with
the approval of the Company, which approval shall not be unreasonably withheld,
shall be borne by the Company. The Company shall not, however, be required to
pay for expenses of any registration proceeding begun pursuant to Section 1.2,
the request of which has been subsequently withdrawn by the Initiating Holders
unless the withdrawal is based upon material adverse information concerning the
Company or its business or operations of which the Initiating Holders were not
aware at the time of such request. If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the holders of securities
(including Registrable Securities) requesting such registration in proportion to
the number of shares for which registration was requested.
(b) Expenses of Piggyback Registration. All expenses
other than underwriting discounts and commissions (but only such discounts and
commissions incurred with respect to the Registrable Securities sold by the
Selling Holders) incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to Section 1.3 for each Holder
(which right may be assigned as provided in Section 1.11), including (without
limitation) all registration, filing, and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one (1) counsel for the selling Holder or
Holders selected by them with the approval of the Company, which approval shall
not be unreasonably withheld, shall be borne by the Company.
1.7 Underwriting Requirements. In connection with an offering
involving an underwriting of shares of the Company's capital stock pursuant to
Section 1.3, the Company shall not be required under Section 1.3 to include any
of the Holders' securities in such underwriting unless they accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters), and
then only in such quantity as the underwriters determine in their sole
discretion will not materially interfere with the underwriters' ability to
effectuate the offering on behalf of the Company. If the total amount of
securities, including Registrable Securities, requested by all selling
shareholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion may permit them to effectuate the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their sole
discretion will not materially interfere with the underwriters' ability to
effectuate the offering (the securities so included to be apportioned pro rata
among all of the Selling Holders according to the total amount of securities
entitled to be included therein (without regard to the number of securities
actually requested to be included therein) owned by
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each selling shareholder or in such other proportions as shall mutually be
agreed to by all of such selling shareholders) but in no event shall the amount
of securities of the Selling Holders included in the offering be reduced below
25% of the total amount of securities included in such offering. For purposes of
the preceding parenthetical concerning apportionment, for any selling
shareholder which is a Holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder" and any pro rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
1.8 Suspension of Disposition of Registrable Securities. The
Investors agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 1.4(e), such Holder will
forthwith discontinue disposition of Registrable Securities until such Holder's
receipt of copies of a supplemented or amended prospectus contemplated by
Section 1.4(e), or until it is advised in writing (the "ADVICE") by the Company
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, such Holder will deliver to the
Company (at the expense of the Company) all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods mentioned in
Section 1.4(a) shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 1.4(e)
to and including the date when the selling Holder of Registrable Securities
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 1.4(e) or the Advice, whichever is later.
1.9 Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any "underwriter" (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained in such Registration Statement or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, (iii) the omission or alleged
omission to state in any preliminary prospectus or final prospectus a material
fact necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or (iv) any violation or alleged violation
by the Company of the Securities Act, the Exchange
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Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law; and the Company
will pay to each such Holder, underwriter or controlling person, as incurred,
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 1.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Holder, underwriter or controlling person for any such
loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person. The
indemnity agreement contained in this paragraph shall not apply to the extent
that any loss, claim, damage, liability, or action results from the fact that a
current copy of the Registration Statement or prospectus was not sent or given
to a proposed transferee asserting any such loss, claim, damage, liability, or
action, at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such person if it is determined that the Company
provided such Registration Statement or prospectus to such Selling Holder in a
timely manner prior to such sale and it was the responsibility of the Selling
Holder under the Securities Act to provide the prospective transferee with a
current copy of the Registration Statement or prospectus and such Registration
Statement or prospectus would have cured in whole the defect giving rise to such
loss, claim, damage, liability or action.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such Registration Statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Section 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 1.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld);
provided further, that in no event shall any indemnity under this Section 1.9(b)
exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to
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assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one (1) separate counsel, with the reasonable
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 1.9, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.9.
(d) If the indemnification provided for in this Section
1.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, liability,
claim, damage or expense as well as any other relevant equitable considerations;
provided, that in no event shall any contribution by a Holder under this Section
1.9(d) exceed the net proceeds from the offering received by such Holder. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1.9, and otherwise. No
indemnifying party, in the defense of any such loss, claim, change, liability or
action, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as a
provision thereof, the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such loss, claim, damage,
liability or action.
1.10 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to (i) any
affiliate of a Holder; (ii) any Permitted Transferee; or (iii) any transferee or
assignee who acquires at least 1% of the Registrable Securities (computed on an
as-if-converted basis with respect to any Registrable Securities attributable to
the conversion of shares of Preferred Stock); provided, however, (i) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee and the
securities with respect to which such registration rights are being transferred
and (ii) such transferee shall agree to be subject to all restrictions set forth
in this Agreement and to execute and deliver this Agreement to the Company.
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1.11 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of all of the Holders of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which (a) would allow such holder or prospective holder to include
such securities in any registration filed under Sections 1.2 or 1.3 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of its securities will not reduce the amount of the Registrable
Securities of the Holders which is included, (b) in any registration filed under
Section 1.3 hereof, would not require that such securities be reduced prior to a
reduction of the Registrable Securities in such registration in the event of a
limitation on the total number of shares that may be included in such
registration, or (c) would grant any registration rights to any such holder or
prospective holder that would be superior to, or would limit in any way, the
registration rights of the Holders hereunder.
1.12 Reports under the Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the Commission that may at any time permit a Holder to sell
securities of the Company to the public pursuant to a registration on Form S-3
or without registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the offering
of its securities to the general public so long as the Company remains subject
to the periodic reporting requirements under Sections 13 or 15(d) of the
Exchange Act;
(b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(c) furnish to any Holder, so long as accurate and so
long as the Holder owns any Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(or any successor form that provides for short-form registration), (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company with the Commission, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the Commission which permits the selling of any such
securities without registration or pursuant to such form.
1.13 Termination of Registration Rights. All registration rights
granted under this Section 13 shall terminate and be of no further force and
effect with respect to any Holder when all Registrable Securities held by and
issuable to such Holder (and its affiliates, partners, former partners, members
and former members) may be sold without restriction pursuant to Rule 144(k).
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SECTION 2.
MISCELLANEOUS
2.1 Enforceability/Severability. The parties hereto agree that
each provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision of this Agreement
shall nonetheless be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
2.2 Remedies. Each party hereto will be entitled to enforce its
rights under this Agreement, specifically, to recover damages by reason of any
breach of any provision hereof, and to exercise all other rights existing in its
favor. Each party hereto agrees and acknowledges that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and that
each holder may, in its sole discretion, apply for specific performance and
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
2.3 No Assignment; Parties Benefited.
(a) Except as otherwise provided in this Agreement, no
party may assign its rights, duties or obligations under this Agreement without
the express written consent of the other parties hereto. Any attempted
assignment without such written consent shall be null and void. Notwithstanding
the foregoing, a Holder hereunder may transfer its rights hereunder to a
Permitted Transferee or other person in accordance with the provisions of
Section 1.10 hereunder.
(b) The Company may transfer its rights and obligations
under this Agreement to any Person who acquires all or substantially all of the
Company's business, whether by sale of stock, sale of assets, merger or
otherwise.
(c) Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations or
liabilities.
2.4 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.
2.5 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.
2.6 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
2.7 Notices. Any notice required or permitted hereunder shall be
given in writing and shall be conclusively deemed effectively given upon
personal delivery, delivery by overnight courier or telecopy (with confirmation
of receipt), or five (5) days after deposit in the United States mail, by
registered or certified mail, postage prepaid, addressed:
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if to the Company, to: Harold's Stores, Inc.
765 Asp
Xxxxxx, Xxxxxxxx 00000
Attn: _________________
Telecopy: (405) ___-_____
with a copy to: Xxxxx & Xxxxxxx
0000 Mid-America Tower
00 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
and if to an Investor, to such Investor's address as set forth on the Schedule
of Investors, or at such other address as the parties may designate by written
notice to the other parties, with a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
2.8 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by the Company and the Investors holding
at least two-thirds of the Registrable Securities then outstanding.
2.9 Waiver of Agreement. Except as otherwise expressly provided,
the obligations of the Company and the rights of the Holders under this
Agreement may be waived only with the written consent of the Investors holding
at least two-thirds of the Registrable Securities then outstanding.
2.10 Additional Investors. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Preferred
Stock pursuant to the Stock Purchase Agreement, any purchaser of such shares of
Preferred Stock may become a party to this Agreement by executing and delivering
an additional counterpart signature page to this Agreement and shall be deemed
an "Investor" hereunder.
2.11 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto relative to the subject matter hereof and
supersedes any previous agreement among the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above set forth.
"COMPANY"
Harold's Stores, Inc.
By: /s/ H. Xxxxxx Xxxxxx
----------------------------------------
Name: H. Xxxxxx Xxxxxx
--------------------------------------
Title: President
-------------------------------------
"INVESTORS"
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------------------
Title: Attorney-in-Fact
-------------------------------------
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Signature Page to Investor Rights Agreement
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SCHEDULE OF INVESTORS
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SCHEDULE OF INVESTORS
Investor Name and Address Number of Shares Aggregate Purchase Price
------------------------- ---------------- ------------------------
INTER-HIM, N.V. 300,000 $6,000,000
Switzerland Representative Office
Im Xxxxxxxxx 00
Xxxxxxxx
XX - 0000 Xxxxx
Xxxxxxx
Attn.: Xx. Xxxxxx Xxxxxxxxxx
Telecopy: x00 00 000 0000