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EXHIBIT C
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") is made and
entered into as of February 28, 2001, by and among Harold's Stores, Inc., an
Oklahoma corporation (the "Company"), the investors set forth on the Schedule of
Investors attached hereto (collectively, the "Investors"), and each of the
persons set forth on the Schedule of Family Shareholders attached hereto
(collectively, the "Family Shareholders").
RECITALS
WHEREAS, the Company and the Investors have entered into a Series
2001-A Preferred Stock Purchase Agreement (the "Preferred Purchase Agreement"),
whereby the Company will sell, and the Investors will purchase, 300,000 shares
of Series 2001-A Preferred Stock, $.01 par value per share (the "Preferred
Stock"), of the Company (the "Financing");
WHEREAS, the Preferred Purchase Agreement requires, as a condition to
closing the Financing, that the parties hereto enter into this Agreement; and
WHEREAS, the Family Shareholders desire to induce the Investors to
consummate the Financing.
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.
RIGHT OF FIRST REFUSAL
1.1 General. Before any shares of the $.01 par value common stock
of the Company (the "Common Stock") held by any of the Family Shareholders,
excluding any shares acquired after the date of this Agreement in open market
purchases in the public securities markets or pursuant to the Company's 1993
Employee Stock Purchase Plan, or upon the exercise of options granted under the
Company's 1993 Performance and Equity Incentive Plan (the "Family Shares") may
be sold or otherwise transferred, including any act of selling, assigning,
transferring, pledging, encumbering, giving and any other form of conveying,
whether voluntary or by operation of law (each a "transfer"), the holders of the
Company's outstanding Preferred Stock and of any shares of Common Stock into
which the Preferred Stock is converted, excluding any shares that have been sold
in the public securities markets pursuant to an effective registration statement
or a valid exemption from such registration (the "Series A Holders"), shall have
rights of first refusal to purchase such Family Shares on the terms and
conditions set forth herein.
1.2 Notice of Proposed Transfer. If a Family Shareholder (a
"Selling Holder") proposes to transfer any Family Shares, such Selling Holder
shall deliver to the Company and the
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Series A Holders a written notice (the "Notice") stating: (i) the Selling
Holder's bona fide intention to transfer Family Shares; (ii) the name of each
proposed transferee, if in connection with a transfer of shares other than into
the public securities markets (a "Private Sale"); (iii) the number of Family
Shares to be transferred to each proposed transferee if the transfer is a
Private Sale and the consideration, if any, for which the Selling Holder
proposes to transfer the Family Shares; (iv) if the transfer is to be made into
the public securities markets (a "Public Sale"), the number of shares to be
sold, the manner and timing of the intended individual sales, the anticipated
timing (not to exceed 90 days) of the sale of all such shares to be sold in the
proposed Public Sale and the Average Market Price (defined below) of the shares
to be sold; and (v) the deadline for submission of the Initial Purchase Notice
in accordance with the time limits set forth in Section 1.3 below. If the
proposed sale is by an "affiliate" of the Company, or is of "restricted
securities," each as defined in Rule 144 promulgated under the Securities Act of
1933, as amended (the "Securities Act"), then the Notice shall be accompanied by
an opinion of counsel reasonably acceptable to the Company that the proposed
sale would be exempt from registration under the Securities Act, or would be
sold pursuant to an effective registration statement under the Securities Act
1.3 Exercise of Right of First Refusal.
(a) After receipt of the Notice, the Series A Holders
may, by giving written notice to the Selling Holder (the "Initial Purchase
Notice"), elect to purchase all, but not less than all, of the Family Shares
proposed to be transferred, at the purchase price determined in accordance with
Section 1.4 below. If the total number of Shares that the Series A Holders elect
to purchase exceeds the number of Family Shares that the Selling Holder proposes
to transfer, each Series A Holder electing to purchase (each a "Purchasing
Shareholder") shall be entitled to purchase such holder's Pro Rata Share (as
defined in Section 1.3(d)), of the Family Shares to be transferred. The Initial
Purchase Notice shall be given to the Selling Holder within twenty (20) days
after receipt of the Notice, in the case of a proposed Private Sale, and within
fifteen (15) days after receipt of the Notice, in the case of a proposed Public
Sale.
(b) If the Series A Holders do not choose to purchase all
of the available Family Shares, the Selling Holder shall promptly give written
notice (the "Second Notice") to the Series A Holders who have elected to
purchase (the "Purchasing Shareholders"), which shall set forth (i) the number
of Family Shares elected to be purchased by the Purchasing Shareholders and the
identity of the Purchasing Shareholders so electing and number of Family Shares
so elected to be purchased by each of them, (ii) the number of Family Shares
remaining available for purchase, if the Purchasing Shareholders have not
elected to purchase all of the available Family Shares, and (iii) the deadline
for submission of the Second Purchase Notice in accordance with the time limits
set forth in this Section 1.3. The Purchasing Shareholders may then elect by
giving written notice to the Selling Holder (the "Second Purchase Notice") to
purchase the remaining available Family Shares at the purchase price determined
in accordance with Section 1.4 below, as to each Purchasing Shareholder in
accordance with its Pro Rata Share. The Second Purchase Notice shall be given to
the Selling Holder within ten (10) days after receipt of the Second Notice, in
the case of a proposed Private Sale or a proposed Public Sale.
(c) Notwithstanding the foregoing, the Family
Shareholders may, as to not more than 30,000 shares in the aggregate for all
Family Shareholders during any three-month
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period, provide for an expedited Public Sale pursuant to the terms of this
Section 1.3(c). In such event, the Notice will specify in bold letters at the
top that it is being submitted pursuant to this Section 1.3(c) for an expedited
sale pursuant to the terms of this Section (an "Expedited Sale"). The procedures
applicable to a Public Sale shall apply to an Expedited Sale, except that the
Purchasing Shareholders will respond to the Notice within five (5) business days
after receipt of the Notice, and no Second Notice need be given. For purposes of
this Section 1.3(c), the term "business day" means any day, other than a
Saturday or Sunday, or any other day on which national banks in the City of
Atlanta are authorized to close.
(d) For purposes of this Agreement, a Purchasing
Shareholder's "Pro Rata Share" is a fraction, the numerator of which is the
number of shares of Common Stock held by such holder (assuming conversion of all
shares of Preferred Stock into shares of Common Stock), and the denominator of
which is the total number of shares of Common Stock held by all Purchasing
Shareholders. If the Purchasing Shareholders do not elect to purchase all of the
available Family Shares following receipt of the Notice, then as to the
remaining available Family Shares, the Pro Rata Shares of Purchasing
Shareholders electing to purchase such available shares shall be proportionately
increased to reflect a fraction, the numerator of which is the number of shares
of Common Stock held by each such holder (assuming conversion of all shares of
Preferred Stock into shares of Common Stock), and the denominator of which is
the total number of shares of Common Stock held by all Purchasing Shareholders
electing to purchase such available shares. If any Purchasing Shareholder does
not elect to purchase its full entitlement, it may convey its unused right to
purchase to any other Purchasing Shareholder(s).
1.4 Purchase Price. The purchase price for the Family Shares
purchased by the Purchasing Shareholders shall be the same price as the price
offered to the proposed transferee, subject to the following:
(a) If such price includes consideration other than cash,
or if the Common Stock is no longer traded on a securities exchange or on the
over-the-counter market, the cash equivalent value of the non-cash consideration
or the value of the shares to be purchased shall be determined by the mutual
consent of the Selling Holder and a majority-in-interest of the Purchasing
Shareholders or, in the absence of such agreement, by a third party appraiser
mutually agreed upon by such holder and a majority-in-interest of the Purchasing
Shareholders; provided that the fees and expenses of such appraiser shall be
paid by the Company.
(b) In the context of a proposed Public Sale, and in the
context of a proposed transfer for no consideration while the Common Stock is
traded on a securities exchange or on the over-the-counter market, the price
shall be equal to the following applicable average market price (the "Average
Market Price") of the Common Stock to be transferred as of the trading day
immediately preceding the date of the Notice, or such other price as may be
agreed by the Selling Holder and a majority-in-interest of the Purchasing
Shareholders:
(i) If traded on a securities exchange, the
value shall be deemed to be the average of the closing prices of the Common
Stock on such exchange over the twenty (20) trading day period ending on the
trading day prior to the date of the Notice, adjusted appropriately for any
stock splits, stock dividends or similar changes in capitalization occurring
during such period;
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(ii) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid prices over the
twenty (20) trading day period ending on the trading day prior to the date of
the Notice, adjusted appropriately for any stock splits, stock dividends or
similar changes in capitalization occurring during such period.
1.5 Payment. Payment of the purchase price shall be made in cash
(by wire transfer or check) within (a) 15 days after delivery of the Initial
Purchase Notice or, if applicable, the Second Purchase Notice, in the case of a
proposed Private Sale; provided that if the proposed Private Sale involves
consideration other than cash, or no consideration, payment shall be made within
15 days after the consideration to be paid by the Purchasing Shareholders is
determined pursuant to Section 1.4(a); or (b) 5 days after delivery of the
Initial Purchase Notice or, if applicable, the Second Purchase Notice, in the
case of a proposed Public Sale. The Purchasing Shareholders' obligation to
consummate such purchase shall be conditioned upon the Selling Holder's delivery
of original share certificates representing the Family Shares to be sold,
together with customary representations and warranties and instruments of
conveyance, so that the Purchasing Shareholders take title to such shares free
of all liens and encumbrances. The Family Shareholders will cooperate in good
faith with the Purchasing Shareholders to provide such deliveries and otherwise
to consummate the transactions contemplated hereby.
1.6 Family Shareholder's Right to Transfer. If all of the Family
Shares proposed in the Notice to be transferred are not purchased by the Series
A Holders within the time frames provided herein, the Selling Holder may
transfer all of such Family Shares in accordance with the terms described in the
Notice, provided that such transfer (i) is consummated within 90 days after the
date of the Notice, (ii) is in accordance with all of the terms of this
Agreement and all other agreements between or among such Family Shareholder, the
Series A Holders and the Company and (iii) is effected in accordance with any
applicable securities laws. Any Family Shares transferred pursuant to this
Section 1.6 in connection with a Public Sale shall no longer be subject to the
restrictions of this Agreement, but in connection with any transfer pursuant to
a Private Sale, the transferee shall agree in writing to be bound by the
restrictions set forth in this Agreement as to the transferred Family Shares as
a "Family Shareholder" hereunder unless such Private Sale is a bona fide sale to
a person or entity that is neither a Family Shareholder nor an affiliate of a
Family Shareholder (in which case such shares shall no longer be subject to the
restrictions in this Agreement). If the Family Shares described in the Notice
are not transferred in accordance with the terms described in the Notice within
such period, a new Notice shall be given to the Series A Holders and the
Company, and the Series A Holders shall again be offered a right of first
refusal pursuant to this Agreement, before any Family Shares held by the Family
Shareholders may be sold or otherwise transferred.
1.7 Certain Limitations. Except as may otherwise be expressly
agreed by a majority-in-interest of the Series A Holders, no Family Shareholder
may submit an additional Notice with respect to another proposed transfer for so
long as the period during which the Series A Holders may exercise their first
refusal rights pursuant to Section 1.3 and acquire shares pursuant to Section
1.5 remains open as to a prior Notice submitted by that Family Shareholder.
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SECTION 2.
LIMITATIONS ON RIGHT OF FIRST REFUSAL
2.1 Non-applicable Transfers. The restrictions on transfers set
forth in Section 1 of this Agreement shall not apply where the transfer of
securities by a selling Family Shareholder is:
(a) to such selling Family Shareholder's "immediate family" (for
purposes of this Agreement, such Family Shareholder's spouse, parents and
siblings, and children, grandchildren or other lineal descendants, whether
natural or adopted, and the spouses of any of them), or to a custodian, trustee
or other fiduciary for the account of the selling Family Shareholder or members
of the selling Family Shareholder's immediate family in connection with an
estate planning transaction, or a distribution by any trustee of shares to a
selling Family Shareholder or a member of the selling Family Shareholder's
immediate family;
(b) pursuant to sales permitted by and effected in compliance with
Rule 144 promulgated under the Securities Act, or pursuant to transfers to
charitable institutions or other gifts involving a bona fide donative intent;
provided, however, that the amount of Family Shares transferred by all Family
Shareholders under this Section 2.1(b) shall not exceed the greater of either of
the following limitations: (1) in any consecutive three-month period, 1% of the
total number of shares of Common Stock outstanding (without regard to any
securities that may be convertible into, or exercisable or exchangeable for,
Common Stock), or (2) in any consecutive three-month period, 25% of the average
weekly trading volume of the Common Stock on the American Stock Exchange or such
other principal exchange or market upon which the Common Stock is then listed or
quoted for the four calendar weeks immediately preceding the proposed sale;
(c) by operation of law, or pursuant to a bequest or inheritance,
in connection with the distribution of the estate of a deceased Family
Shareholder upon his or her death;
(d) to one or more Series A Holders;
(e) to a corporation or other entity that would be considered an
"affiliate" (as defined in the Securities Act) of such Family Shareholder;
(f) pursuant to a public offering registered under the Securities
Act; or
(g) to a bona fide pledgee reasonably acceptable to a
majority-in-interest of the Investors in connection with the granting of a
security interest with respect to the pledged shares (and a U.S. FDIC-insured
commercial bank or savings bank with assets in excess of $100 million shall be
deemed to be reasonably acceptable to the Investors);
provided that, except in the case of transfers pursuant to subsections (b), (d)
and (f), as to which this Agreement shall cease to apply to the transferee, the
transferee agrees in writing to be bound by the restrictions set forth in this
Agreement as to such transferred Family Shares as a "Family Shareholder"
hereunder.
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2.2 Termination. This Agreement shall terminate immediately upon
the date that the Series A Holders no longer hold, beneficially or of record,
shares of Common Stock (including shares of Common Stock issuable upon the
conversion of the outstanding Preferred Stock) representing at least 10% of the
Company's outstanding Common Stock (treating the outstanding Common Stock and
shares of Common Stock issuable upon the conversion of the Preferred Stock as
outstanding in the aggregate).
2.3 Legends; Transfer.
(a) Each certificate representing the Family
Shareholders' shares, other than certificates that are as of the date of this
Agreement issued in "street name" and under which the Family Shareholders
beneficially own shares, and any certificates issued to their successors and
assigns who remain bound by this Agreement, shall be endorsed by the Company
with a legend reading substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO,
AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, AN AGREEMENT
AMONG THE COMPANY, THE HOLDER OF THESE SECURITIES AND CERTAIN
OTHER HOLDERS OF THE COMPANY'S STOCK, WHICH INCLUDES RIGHTS OF
FIRST REFUSAL, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY."
(b) The Company shall not transfer any of the Family
Shares on its books without first ascertaining compliance with all of the
applicable provisions of this Agreement with respect to such transfer.
SECTION 3.
MISCELLANEOUS
3.1 Successors and Assigns. 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 permitted assigns of the parties.
3.2 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.
3.3 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.
3.4 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
3.5 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
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overnight courier, or delivery via telecopy (with confirmation of receipt), or
five (5) days after deposit in the United States mail, by registered or
certified mail, postage prepaid, addressed: (i) if to the Company, as follows:
Harold's Stores, Inc.
765 Asp
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
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
(ii) if to a Family Shareholder, to such Family Shareholder's address as set
forth on the Schedule of Family Shareholders attached hereto, (iii) if to an
Investor, to such Investor's address as set forth on the Schedule of Investors
attached hereto, or at such other address as the parties may designate by ten
(10) days advance 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
and
Xxxxxx Xxxxxxxx Consulting LLC
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and (iv) if to Series A Holders other than the Investors, at such address as
such Series A Holders provide to the Company from time to time for purposes of
the notices provision of this Agreement.
3.6 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by the Company, the Family Shareholders
holding a majority of the
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then outstanding shares of Common Stock held by the Family Shareholders, and a
majority-in-interest of the Series A Holders.
3.7 Status of Shares Purchased by Company. Shares of Common Stock
purchased by the Company pursuant hereto shall not be deemed to be outstanding,
and shall revert to authorized, and unissued shares.
3.8 Entire Agreement. This Agreement constitutes the entire
agreement between the Family Shareholders, the Investors and the Company
relative to the subject matter hereof and supersedes any previous agreements or
negotiations among the parties.
[Signatures Appear on Following Pages]
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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
-------------------------------------
"FAMILY SHAREHOLDERS"
/s/ H. Xxxxxx Xxxxxx, Attorney-in-fact
-------------------------------------------
Xxxxxx X. Xxxxxx, individually and as
Trustee under the Xxxxxx X. Xxxxxx Family
Revocable Trust, UA dated 9/7/93, and under
the Xxxxxx X. Xxxxxx Revocable Trust dated
9/8/93
/s/ H. Xxxxxx Xxxxxx, Attorney-in-fact
-------------------------------------------
Xxxx X. Xxxxxx, individually and as Trustee
under the Xxxxxx X. Xxxxxx Revocable Trust
dated 9/8/93
/s/ Xxxxxxx Xxxxxx Xxxxx
-------------------------------------------
Xxxxxxx Xxxxxx Xxxxx, individually and as
custodian for Xxxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx and Xxxxx X. Xxxxx under the Texas
UGMA
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx, individually and as
Trustee under the H. Xxxxxx Xxxxxx and Xxxx
X. Xxxxxx 1997 Irrevocable Trust
/s/ H. Xxxxxx Xxxxxx, Attorney-in-fact
-------------------------------------------
H. Xxxxxx Xxxxxx, individually and as
custodian for Xxxxxxxxx X. Xxxxxx and Xxxx
X. Xxxxxx under the Oklahoma UTMA
/s/ Xxxx X. Xxxxxx
-------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxx Xxxxxx Xxxx
-------------------------------------------
Xxxx Xxxxxx Xxxx, individually and as
custodian for Miles X. Xxxx, Xxxxxxx X. Xxxx
and Xxxxxx X. Xxxx under the Texas UGMA
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/s/ Xxxx X. Xxxx
-------------------------------------------
Xxxx X. Xxxx
Arvest Trust Company, N.A., as Trustee*
By: Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------
Title: Sr. Vice President
-------------------------------------
*Executed as Trustee with respect to:
Xxxxxxxxx X. Xxxxxx Trust A
Xxxxxxxxx X. Xxxxxx Trust B
Signature Page to Right of First Refusal Agreement
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"INVESTORS"
INTER-HIM, N.V.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
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SCHEDULE OF INVESTORS
INTER-HIM, N.V.
Switzerland Representative Office
Im Xxxxxxxxx 00
Xxxxxxxx
XX - 0000 Xxxxx
Xxxxxxx
Attn.: Xx. Xxxxxx Xxxxxxxxxx
Telecopy: x00 00 000 0000
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SCHEDULE OF FAMILY SHAREHOLDERS
Xxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxxxx Xxxxx
0000 Xxxxxxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx
0000 Xxxxxxxxxx
Xxxxxx, XX 00000
H. Xxxxxx Xxxxxx
0000 Xxx Xxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx
0000 Xxx Xxx Xxxxxx
Xxxxxx, XX 00000
Xxxx Xxxxxx Xxxx
0000 Xxxxxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxx
0000 Xxxxxxxxx
Xxxxxx, XX 00000
Arvest Trust Company, N.A., as Trustee
000 Xxxx Xxxx Xxxxxx
X.X. Xxxxxx 000
Xxxxxx, XX 00000