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EXHIBIT 99.K
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this "Agreement") is made and entered into
as of May 1, 2001, by and among Harold's Stores, Inc., an Oklahoma corporation
(the "Company"), Inter-Him N.V., a Netherlands Antilles corporation
("Inter-Him"), and W. Xxxxxx Xxxxxx, an individual resident of the State of
California ("Xxxxxx").
RECITALS
WHEREAS, Inter-Him has acquired 300,000 shares of Series 2001-A
Preferred Stock (the "Preferred Stock") of the Company, pursuant to a Series
2001-A Preferred Stock Purchase Agreement dated February 23, 2001 (the
"Preferred Stock Purchase Agreement"), which transaction closed on February 28,
2001; and
WHEREAS, effective as of the date of this Agreement, Inter-Him is
transferring to Xxxxxx 37,500 shares of Preferred Stock; and
WHEREAS, Inter-Him and Xxxxxx (individually, an "Investor" and
collectively, the "Investors") desire to enter into this Agreement to provide
for rights of first refusal in the event that any of them wish to transfer any
of their shares of Preferred Stock and to enter into certain agreements relating
to the voting of their shares of Preferred Stock;
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 Preferred Stock held by any of
the Investors 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 other Investors shall have rights of first refusal to purchase such shares
on the terms and conditions set forth herein.
1.2 Notice of Proposed Transfer. If an Investor (a "Selling
Investor") proposes to transfer any shares of Preferred Stock, such Selling
Investor shall deliver to the other Investors (the "Non-Selling Investors") a
written notice (the "Notice") stating: (i) the Selling Investor's bona fide
intention to transfer shares of Preferred Stock; (ii) the name of each proposed
transferee; (iii) the number of shares of Preferred Stock to be transferred to
each proposed transferee and the consideration, if any, for which the Selling
Investor proposes to transfer the shares of Preferred Stock; and (iv) the
deadline for submission of the Initial Purchase Notice in
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accordance with the time limits set forth in Section 1.3 below. The Notice shall
be accompanied by an opinion of reputable legal counsel that the proposed
transfer would be exempt from registration under the Securities Act of 1933, as
amended (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 Non-Selling
Investors may, by giving written notice to the Selling Investor (the "Initial
Purchase Notice"), elect to purchase all, but not less than all, of the shares
of Preferred Stock proposed to be transferred, at the purchase price determined
in accordance with Section 1.4 below. If the total number of shares that the
Non-Selling Investors elect to purchase exceeds the number of shares of
Preferred Stock that the Selling Investor proposes to transfer, each Non-Selling
Investor electing to purchase (each a "Purchasing Investor") shall be entitled
to purchase such holder's Pro Rata Share (as defined in Section 1.3(d)), of the
shares of Preferred Stock to be transferred. The Initial Purchase Notice shall
be given to the Selling Investor within twenty (20) days after receipt of the
Notice.
(b) If the Purchasing Investors do not choose to purchase
all of the available shares of Preferred Stock, the Selling Investor shall
promptly give written notice (the "Second Notice") to the Purchasing Investors,
which shall set forth (i) the number of shares of Preferred Stock elected to be
purchased by the Purchasing Investors and the identity of the Purchasing
Investors so electing and number of shares of Preferred Stock so elected to be
purchased by each of them, (ii) the number of shares of Preferred Stock
remaining available for purchase, if the Purchasing Investors have not elected
to purchase all of the available shares of Preferred Stock, 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 Investors may then
elect by giving written notice to the Selling Investor (the "Second Purchase
Notice") to purchase the remaining available shares of Preferred Stock at the
purchase price determined in accordance with Section 1.4 below, as to each
Purchasing Investor in accordance with its Pro Rata Share. The Second Purchase
Notice shall be given to the Selling Investor within ten (10) days after receipt
of the Second Notice.
(c) For purposes of this Agreement, a Purchasing
Investor's "Pro Rata Share" is a fraction, the numerator of which is the number
of shares of Preferred Stock held by such holder, and the denominator of which
is the total number of shares of Preferred Stock held by all Purchasing
Investors. If the Purchasing Investors do not elect to purchase all of the
available shares of Preferred Stock following receipt of the Notice, then as to
the remaining available shares of Preferred Stock, the Pro Rata Shares of
Purchasing Investors electing to purchase such available shares shall be
proportionately increased to reflect a fraction, the numerator of which is the
number of shares of Preferred Stock held by each such holder, and the
denominator of which is the total number of shares of Preferred Stock held by
all Purchasing Investors electing to purchase such available shares. If any
Purchasing Investor does not elect to purchase its full entitlement, it may
convey its unused right to purchase to any other Purchasing Investor(s).
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1.4 Purchase Price. The purchase price for the shares of Preferred
Stock purchased by the Purchasing Investors 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 Company's common stock (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 Investor and a
majority-in-interest of the Purchasing Investors 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 Investors; provided that the fees and
expenses of such appraiser shall be proportionately shared by the Selling
Investor and the Purchasing Investors.
(b) 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
into which the Preferred Stock to be transferred may be converted, as of the
trading day immediately preceding the date of the Notice, or such other price as
may be agreed by the Selling Investor and a majority-in-interest of the
Purchasing Investors:
(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;
(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 15 days after delivery of the Initial
Purchase Notice or, if applicable, the Second Purchase Notice. The Purchasing
Investors' obligation to consummate such purchase shall be conditioned upon the
Selling Investor's delivery of original share certificates representing the
shares of Preferred Stock to be sold, together with customary representations
and warranties and instruments of conveyance, so that the Purchasing Investors
take title to such shares free of all liens and encumbrances. The Selling
Investors will cooperate in good faith with the Purchasing Investors to provide
such deliveries and otherwise to consummate the transactions contemplated
hereby.
1.6 Selling Investor's Right to Transfer. If all of the shares of
Preferred Stock proposed in the Notice to be transferred are not purchased by
the Non-Selling Investors within the time frames provided herein, the Selling
Investor may transfer all of such shares of Preferred Stock in accordance with
the terms described in the Notice, provided that such transfer (i) is
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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 Selling Investor, the Non-Selling Investors and the Company and (iii)
is effected in accordance with any applicable securities laws. As a condition of
any transfer of shares of Preferred Stock pursuant to this Section 1.6, the
transferee shall agree in writing to be bound by the restrictions set forth in
this Agreement as to the transferred shares of Preferred Stock as an "Investor"
hereunder. If the shares of Preferred Stock 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 Non-Selling Investors, and the
Non-Selling Investors shall again be offered a right of first refusal pursuant
to this Agreement, before any shares of Preferred Stock held by the Selling
Investors may be sold or otherwise transferred.
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 an Investor is:
(a) to such Investor's "immediate family" (for purposes
of this Agreement, such Selling Investor'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 Investor or members of the Investor's immediate family in
connection with an estate planning transaction, or a distribution by any trustee
of shares to an Investor or a member of the Investor's immediate family;
(b) by operation of law, or pursuant to a bequest or
inheritance, in connection with the distribution of the estate of a deceased
Investor upon his or her death;
(c) to one or more other Investors;
(d) to a corporation or other entity that would be
considered an "affiliate" (as defined in the Securities Act) of such Investor;
(e) pursuant to a public offering registered under the
Securities Act; or
(f) 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 subsection (e), 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 shares of Preferred Stock as an "Investor" hereunder.
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2.2 Legends; Transfer.
(a) Each certificate representing the Investors' shares
of Preferred Stock, 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 shares of
Preferred Stock on its books without first ascertaining compliance with all of
the applicable provisions of this Agreement with respect to such transfer.
SECTION 3.
VOTING AND PROXIES
3.1 Voting Agreement. Each Investor hereby agrees to cast all
votes entitled to be cast by the shares of Preferred Stock held by such
Investor, whether in connection with a vote of shareholders of the Company
generally or any matter as to which the shares of Preferred Stock are entitled
to vote as a separate class, in the manner determined by holders of a majority
of the outstanding shares of Preferred Stock. The Investors shall execute and
deliver one or more irrevocable proxies, together with any and all other
agreements, documents or instruments deemed necessary or desirable by any of
them, to vote their shares of Preferred Stock in accordance with this Section
3.1.
3.2 Irrevocable Proxy is Coupled With an Interest. Any irrevocable
proxies granted pursuant to this Agreement are and shall be coupled with an
interest sufficient in law to support an irrevocable proxy, and are and shall be
granted in consideration of and as an inducement to cause the Investors to enter
into this Agreement.
3.3 Revocation of Prior Proxies. Except for any proxies that may
be granted pursuant to Section 3.1 hereof, (i) the proxies granted hereunder
shall revoke all other proxies granted by such person at any time with respect
to the shares of capital stock of the Company and (ii) no subsequent proxies
will be given with respect thereto by such person (except for other proxies that
may be granted from time to time to any of the holders of the Preferred Stock).
3.4 Filings with Securities and Exchange Commission. In the event
that the Investors or their counsel determine that the execution and delivery of
this Agreement or the giving of any proxies as provided herein shall constitute
or form a "group," as such term is defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
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and regulations promulgated thereunder, and for as long as such group is deemed
to exist, each such person that the Investors or their counsel determine to be
members of such group shall agree to:
(a) furnish to the Investors or their counsel such
information regarding such person or the shares of Common Stock beneficially
owned by such person as the Investors or their counsel shall request in order to
prepare all necessary or appropriate reports, schedules or other filings with
the Securities and Exchange Commission (the "Commission"), including any
amendments thereto;
(b) execute and deliver all filings, joint filing
agreements, powers of attorney, or other agreements, documents or instruments as
the Investors or their counsel shall request in order to prepare, file or cause
to be filed with the Commission the documents described in Section 3.4(a);
(c) agree to file such reports, schedules or other
filings jointly with the Investors if so requested by the Investors or their
counsel; and
(d) do or cause to be done all things necessary, proper
or advisable to effectuate the purpose and intent of this Section 3.4 and to
cooperate fully with the Investors and their counsel and other agents or
representatives in connection with any steps required to be taken as part of
such person's obligations hereunder.
SECTION 4.
MISCELLANEOUS
4.1 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.
Notwithstanding the foregoing, this Agreement shall terminate, and shall no
longer be applicable, as to any shares of Common Stock acquired upon the
conversion of shares of Preferred Stock.
4.2 Representations of Investors. Each Investor represents to each
other Investor that such Investor (a) is an "accredited investor" as defined in
Rule 501 of Regulation D promulgated under the Securities Act; (b) is acquiring
or has acquired the Preferred Stock for investment for the Investor's own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof; and (c) understands that the
Preferred Stock has not been, and will not be when issued, registered under the
Securities Act or any state securities laws by reason of specific exemptions
from the registration provisions of the Securities Act and such state laws, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the representations as expressed
herein.
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4.3 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.
4.4 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.
4.5 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
4.6 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 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
and (ii) 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
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Telecopy: (000) 000-0000
4.7 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by Investors holding a majority of the
then outstanding shares of Preferred Stock held by the Investors.
4.8 Entire Agreement. This Agreement constitutes the entire
agreement between 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 Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above set forth.
Harold's Stores, Inc.
By: /s/ Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx
Chief Financial Officer
Inter-Him N.V.
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxxx
Managing Director
/s/ W. Xxxxxx Xxxxxx
-------------------------------------
W. Xxxxxx Xxxxxx
Signature Page to Shareholders Agreement
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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
W. Xxxxxx Xxxxxx
c/o Williams-Sonoma, Inc.
0000 Xxx Xxxx Xxx.
Xxx Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
