EXHIBIT 10.1
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                                OPTION AGREEMENT

         This Option Agreement ("AGREEMENT") is made effective this 4th day of
January, 2007, by and between RonHow, LLC, a Georgia limited liability company
("RONHOW"), and Harold's Stores, Inc., an Oklahoma corporation ("COMPANY") with
reference to the following circumstances:

                  A. RonHow and the Company have entered into that certain
         Subordinated Loan Agreement dated August 31, 2006 (the "SUBORDINATED
         LOAN AGREEMENT") pursuant to which the Company and certain of its
         subsidiaries (collectively, the "BORROWERS") may borrow an aggregate
         principal amount of up to $10,000,000.

                  B. The Company has authorized a Series of 2006-B Preferred
         Stock under the terms of the Certificate of Designation of the Series
         2006-B Preferred Stock filed with the Secretary of State of the State
         of Oklahoma on August 31, 2006 (the "CERTIFICATE").

                  C. On August 31, 2006, pursuant to the terms of the
         Subordinated Loan Agreement, RonHow made an initial advance in the
         amount of $5,000,000 (the "INITIAL ADVANCE"), which is convertible into
         shares of the Company's Series 2006-B Preferred Stock at the Purchase
         Price Per Share (as defined in the Initial Option Agreement) in
         exchange for RonHow's the forgiveness of any outstanding principal or
         accrued but unpaid interest resulting from the Initial Advance (the
         "INITIAL OPTION AGREEMENT").

                  D. On the date hereof, RonHow is making an additional advance
         pursuant to the terms of the Subordinated Loan Agreement in the amount
         of $2,000,000 (the "SECOND ADVANCE").

                  E. The Company has agreed to grant the option set forth in
         this Agreement to enable RonHow to convert, in whole or in part, the
         principal balance and any accrued but unpaid interest due relating to
         the Second Advance into shares of the Company's Series 2006-B Preferred
         Stock.

                  F. The existing holders of the Company's outstanding Amended
         Series 2001-A Preferred Stock, Series 2002-A Preferred Stock, Series
         2003-A Preferred Stock and 2006-A Preferred Stock have all consented to
         the transactions contemplated by this Agreement and the Subordinated
         Loan Agreement and waived their preemptive rights with respect to the
         right to acquire shares of Series 2006-B Preferred Stock by reason of
         their prior approval of the Subordinated Loan Agreement.

         In consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1.       OPTION TO PURCHASE SHARES OF SERIES 2006-B PREFERRED STOCK.

                  1.1 OPTION. Subject to the terms and conditions of this
         Agreement, the Company grants to RonHow an option (the "OPTION") to
         purchase at a price per share ("PURCHASE PRICE PER SHARE") of One
         Thousand Dollars ($1,000.00), up to 2,000 shares,
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         plus such additional shares as may be purchased in exchange for
         forgiveness of accrued but unpaid interest pursuant to the Second
         Advance (the "2006-B SHARES"), of authorized but unissued shares of its
         Series 2006-B Preferred Stock which may be exercised at any time prior
         to the repayment in full of the Subordinated Loan Agreement; provided,
         however, that for the purposes of Option granted pursuant to this
         Agreement only, any repayment by the Company of any outstanding
         principal amount and accrued interest due under the terms of the
         Subordinated Loan Agreement shall be deemed to have been paid (i)
         first, on any outstanding principal amount and accrued interest due
         under the terms of the Second Advance; and (ii) second, to the extent
         such payment by the Company exceeds the amount contemplated by Section
         1.1(i), to any amounts due under the terms of the Initial Advance.
         RonHow may purchase from the Company such number of 2006-B Shares as is
         equal to the principal amount outstanding, plus any accrued but unpaid
         interest deemed by this Section 1.1 to be due under the terms of the
         Second Advance, at the date of Closing divided by the Purchase Price
         Per Share. RonHow may exercise the Option in whole or in part at any
         time after the date hereof and prior to the repayment in full by the
         Company of amounts deemed due under the Second Advance by giving
         written notice of exercise to the Company. If the Company intends to
         repay all or any part of the principal balance deemed due under the
         Second Advance, it shall give at least ten (10) days' written notice to
         RonHow and during such ten (10) day period, RonHow may exercise the
         Option in whole or in part. Payment of the Purchase Price for the
         2006-B Shares which RonHow purchases by any exercise of the Option will
         be paid by RonHow by forgiving such portion of the Second Advance
         principal amount and accrued but unpaid interest deemed to be pursuant
         to such advance equal to the purchase price of the 2006-B Shares
         purchased. RonHow will execute and deliver such documents and
         instruments to evidence such forgiveness as the Company may request.

                  1.2 CONVERSION PRICE. The Conversion Price (as defined in the
         Certificate) of the 2006-B Shares acquired upon any exercise of the
         Option shall be equal to the 20 day average of the closing bid 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 $0.4055 per share. The Conversion
         Price shall be subject to adjustment as provided in the Certificate.
         All other terms of the 2006-B Shares shall be governed by the
         Certificate.

                  1.3 CLOSING. The closing of the purchase and sale of the
         2006-B Shares (the "CLOSING") upon any exercise of the Option shall
         occur within ten (10) business days after the date of the Option
         exercise date. At the Closing, the Company shall deliver to RonHow
         certificates representing the 2006-B Shares that RonHow is purchasing
         against payment of the Purchase Price therefore as provided above. At
         the Closing, the Company and RonHow shall enter into an amendment (the
         "IRA AMENDMENT") to the Investor Rights Agreement dated as February 28,
         2001 by and between the Company and Inter-Him, N.V. ("INTER-HIM"), as
         amended, in order to cause the 2006-B Shares to be considered covered
         by such agreement. The obligation of the Company to close the sale of
         the 2006-B Shares shall be subject to the satisfaction or waiver of any
         conditions for such sale under the Subordinated Loan Agreement.

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         2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to RonHow that:

                  2.1 ORGANIZATION AND GOOD STANDING. The Company is a
         corporation duly organized and validly existing under the laws of the
         state of Oklahoma and is in good standing under such laws. The Company
         has all requisite corporate power and authority to own and operate its
         property and assets, and to carry on its business as presently
         conducted and as currently proposed to be conducted.

                  2.2 CORPORATE POWERS. The Company has all requisite legal and
         corporate power and authority to execute and deliver this Agreement, to
         sell and issue the 2006-B Shares hereunder, to issue any additional
         shares of Series 2006-B Preferred Stock to be issued in satisfaction of
         dividends on the 2006-B Shares (the "DIVIDEND STOCK") and to issue the
         Common Stock issuable upon conversion of the 2006-B Shares and the
         Dividend Stock as set forth in the Certificate (the "UNDERLYING COMMON
         STOCK").

                  2.3 VALID ISSUANCE OF STOCK. The 2006-B Shares, when issued,
         sold and delivered in compliance with the provisions of this Agreement,
         will be duly and validly issued, fully paid and non-assessable and
         issued in compliance with all applicable state and federal securities
         law. The Dividend Stock and the Underlying Common Stock have been duly
         and validly reserved and, when issued, will be duly and validly issued,
         fully paid and non-assessable and issued in compliance with all
         applicable state and federal securities laws.

                  2.4 AUTHORIZATION. All corporate action on the part of the
         Company necessary for the authorization, execution, delivery and
         performance of this Agreement and the IRA Amendment by the Company, the
         authorization, sale, issuance (or reservation of issuance) and delivery
         of the 2006-B Shares and Dividend Stock and the Underlying Common Stock
         with respect thereto and the performance of all of the Company's
         obligations hereunder and under the IRA Amendment have been taken prior
         to the date hereof. This Agreement constitutes and the IRA Amendment,
         when executed will constitute, valid and legally binding obligations of
         the Company, enforceable in accordance with their respective terms,
         subject to the laws of general application relating to bankruptcy,
         insolvency and the relief of debtors and the rules of law governing
         specific performance, injunctive relief or other equitable remedies.

         3.       REPRESENTATIONS AND WARRANTIES OF RONHOW. RonHow represents
and warrants to the Company as follows:

                  3.1 INVESTMENT EXPERIENCE. RonHow is capable of evaluating the
         merits and risks of its investment in the Company and has the capacity
         to protect its own interests. RonHow is an "accredited investor" as
         defined in Rule 501 of Regulation D promulgated under the Securities
         Act. RonHow is able to bear the economic risk of losing its entire
         investment in the Company.

                  3.2 INVESTMENT. If the Option is exercised, RonHow will
         acquire the 2006-B Shares for investment for RonHow's own account, not
         as a nominee or agent, and not

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         with the view to, or for resale in connection with, any distribution
         thereof. RonHow understands that the 2006-B Shares and the Dividend
         Stock and the Underlying Common Stock with respect thereto have 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 of 1933 ("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.

                  3.3 RULE 144. RonHow is aware of the provisions of Rule 144
         promulgated under the Securities Act which permit limited resale of
         shares purchased in a private placement subject to the satisfaction of
         certain conditions, which may include, among other things, the
         existence of a public market for the shares, the availability of
         certain current public information about the Company, the resale
         occurring not less than one year after a party has purchased and paid
         for the security to be sold, the sale being effected through a
         "broker's transaction" or in transactions directly with a "market
         maker" and the number of shares being sold during any three (3) month
         period not exceeding specified limitations.

                  3.4 ACCESS TO INFORMATION. RonHow has had an opportunity to
         discuss the Company's management, business plan and financial condition
         with the Company's management. RonHow understands that any purchase of
         the 2006-B Shares involves a high degree of risk, and there can be no
         assurance that the Company's business objectives will be obtained.

                  3.5 AUTHORIZATION. RonHow has all requisite legal power and
         authority to execute and deliver this Agreement and the IRA Amendment
         and to carry out and perform its obligations under the terms of this
         Agreement and the IRA Amendment and the transactions contemplated
         hereby and thereby. This Agreement and the IRA Amendment, when executed
         and delivered by RonHow, will each constitute a valid and legally
         binding obligation of RonHow, enforceable in accordance with its terms,
         subject to laws of general application relating to bankruptcy,
         insolvency and the relief of debtors and rules of law governing
         specific performance, injunctive relief or other equitable remedies.

                  3.6 LEGENDS. It is understood that each certificate
         representing the 2006-B Shares and the Dividend Stock and the
         Underlying Common Stock with respect thereto shall bear a legend to the
         following effect:

                  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.

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         4.       COVENANTS OF THE COMPANY.

                  4.1 RESERVATION OF SHARES. The Company shall at all times
         reserve and keep available out of its authorized but unissued shares
         (i) such number of shares of Series 2006-B Preferred Stock as shall
         from time to time be sufficient to permit the exercise of the Option
         and to permit payment of dividends on the 2006-B Shares and Dividend
         Stock and (ii) such number of shares of Underlying Common Stock as
         shall from time to time be sufficient to effect the conversion of all
         outstanding shares of the Series 2006-B Preferred Stock; and if at any
         time the number of authorized but unissued shares of Series 2006-B
         Preferred Stock or Common Stock shall not be sufficient to effect the
         payment of dividends or conversion of all then outstanding shares of
         the Series 2006-B Preferred Stock, in addition to such other remedies
         as shall be available to the holders of such Series 2006-B Preferred
         Stock, the Company will take such corporate action as may, in the
         opinion of its counsel, be necessary to increase the authorized but
         unissued shares to such number of shares as shall be sufficient for
         such purposes.

         5.       MISCELLANEOUS.

                  5.1 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 at the Closing and from time to time after
         the Closing, 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.

                  5.2 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
         and the Subordinated Loan Agreement constitute the entire agreement
         between the Company and RonHow relative to the subject matter hereof
         and supersede any previous agreement between the Company and RonHow
         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.

                  5.3 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.

                  5.4 COUNTERPARTS. This Agreement may be executed in any number
         of counterparts (including by means of facsimile or other electronic
         media) with the same effect as if all parties hereto had signed the
         same document; however, this Agreement shall not become operative until
         all parties have signed a counterpart hereof. All counterparts shall be
         construed together and shall constitute one Agreement.

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                  5.5 HEADINGS. The section headings of this Agreement are for
         convenience and shall not by themselves determine the interpretation of
         this Agreement.

                  5.6 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 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
                                        Norman, Oklahoma 73070
                                        Attn: Chief Financial Officer
                                        Telecopy: (405) 366-2538

                  if to RonHow:         RonHow, LLC
                                        3290 Northside Parkway, Suite 250
                                        Atlanta, Georgia, 30302
                                        Attn: Robert Anderson

                  5.7 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.

                  5.8 AMENDMENT OF AGREEMENT. Any provision of this Agreement
         may be amended by a written instrument signed by the Company and
         RonHow.

                  5.9 FINDERS' FEES. The Company and RonHow 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.

                       [Signature page follows this page]

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         This Option Agreement is executed and delivered by the undersigned to
be effective as of the date first above written.

"COMPANY"                              HAROLD'S STORES, INC., an Oklahoma
                                       corporation


                                       By:  /s/ Jodi Taylor
                                          --------------------------------------
                                            Jodi Taylor, Chief Financial Officer
                                            & Secretary


"RONHOW"                               RonHow, LLC, a Georgia limited liability
                                       company



                                       By: Ronus, Inc., a Georgia corporation,
                                           Managing Member



                                           By: /s/ Robert L. Anderson
                                               ---------------------------------
                                               Robert L. Anderson, President


                      [Signature Page to Option Agreement]











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