Document:

EXHIBIT 4.3
                                                                     -----------

                           CERTIFICATE OF DESIGNATION
                                     OF THE
                          SERIES 2006-B PREFERRED STOCK
                                ($0.01 PAR VALUE)
                                       OF
                              HAROLD'S STORES, INC.

        Pursuant to Section 1032 of the Oklahoma General Corporation Act

         The undersigned, the interim Chief Executive Officer of Harold's
Stores, Inc., an Oklahoma corporation (the "Corporation"), does hereby certify
that the following resolution was duly adopted by the Board of Directors of the
Corporation on August 28, 2006, pursuant to the provisions of Section 1032.A of
the Oklahoma General Corporation Act:

         RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors by the provisions of the Certificate of Incorporation of
the Corporation (the "Certificate of Incorporation"), the issuance of a series
of the preferred stock, par value $0.01 per share, of the Corporation to be
designated "Series 2006-B Preferred Stock," which shall consist of 25,000 shares
of preferred stock that the Corporation now has authority to issue, be, and the
same hereby is, authorized, and the powers, designations, preferences and
rights, and the qualifications, limitations or restrictions of the shares of
such series (in addition to the rights and limitations set forth in the
Certificate of Incorporation that may be applicable to the Series 2006-B
Preferred Stock) are fixed as follows:

         1. Dividends.

                  (a) The holders of the Series 2006-B Preferred Stock (the
         "Series 2006-B Preferred") shall be entitled to receive, out of any
         assets legally available therefor, prior and in preference to any
         declaration or payment of any dividend (payable other than in common
         stock, par value $.01 per share ("Common Stock"), of the Corporation or
         other securities and rights convertible into or entitling the holder
         thereof to receive, directly or indirectly, additional shares of Common
         Stock of the Corporation) on the Common Stock or any other securities
         issued by the Corporation that are junior to the Series 2006-B
         Preferred ("Junior Securities"), an amount equal to eight percent (8%)
         of the Stated Value (as defined below) per annum, subject to adjustment
         as set forth below (the "Dividend Rate"). Dividends shall accrue daily
         after issuance and shall be payable quarterly on the first day of
         January, April, July and October (each a "Dividend Date") commencing on
         the first of such dates after the date of issuance of the shares (the
         "Original Issue Date"). Dividends not paid on a Dividend Date shall
         cumulate. Cumulated dividends shall compound annually on January 1 of
         each year. Dividends payable on July 1 and October 1 shall be payable
         in additional shares of Series 2006-B Preferred. Dividends payable on
         January 1 and April 1 shall be payable in cash. After one year from the
         Original Issue Date as to any shares of Series 2006-B Preferred,
         dividends shall be payable in either cash or in additional shares of
         Series 2006-B Preferred, or a combination thereof, at the option

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         of the holder as provided to the Corporation by written notice not less
         than ten (10) days prior to the applicable Dividend Date. In the
         absence of a specific election by a holder, dividends shall be paid in
         cash. For purposes of determining the number of shares of Series 2006-B
         Preferred to be issued in connection with the payment of any dividend
         in such shares, the shares of Series 2006-B Preferred to be issued
         shall be valued at the Stated Value. No scrip or fractional shares of
         Series 2006-B Preferred shall be issued. In lieu of any fractional
         shares to which the holder would otherwise be entitled, the Corporation
         shall pay cash equal to such fraction multiplied by the Stated Value.

                  (b) No dividend will be declared or paid or set apart for
         payment on preferred stock of any series ranking as to dividends on a
         parity with the Series 2006-B Preferred unless full cumulative
         dividends have been or contemporaneously are declared and paid or
         declared and a sum sufficient for the payment thereof set apart for
         such payment on the Series 2006-B Preferred for all dividend payment
         periods terminating on or prior to the date of payment of such
         dividend. When dividends are not paid in full upon the Series 2006-B
         Preferred and any other preferred stock ranking as to dividends on a
         parity with the Series 2006-B Preferred, all dividends declared upon
         shares of the Series 2006-B Preferred and any other preferred stock
         ranking on a parity as to dividends will be declared pro rata.

                  (c) If the Corporation's operating income for any fiscal year
         ending after the Original Issue Date exceeds $4,750,000, as reflected
         in its audited financial statements for such year, the Dividend Rate
         will be reduced to six percent (6%) per annum effective as of the first
         day of the following fiscal year. The Corporation will give written
         notice of any such adjustment to the Dividend Rate to the holders of
         the Series 2006-B Preferred within ten (10) days following the issuance
         of an audit opinion by the Corporation's independent public accountant.

                  (d) The "Stated Value" of the Series 2006-B Preferred shall be
         One Thousand Dollars ($1,000.00).

         2.       Liquidation Preference.

                  (a) Preferential Amounts. In the event of any liquidation,
         dissolution or winding up of the affairs of the Corporation, whether
         voluntary or involuntary (a "Liquidation Event"), the holders of the
         Series 2006-B Preferred shall be entitled to receive, prior and in
         preference to any distribution of any of the assets or surplus funds of
         the Corporation to the holders of Common Stock or any other Junior
         Securities, an amount per share equal to the Stated Value for each such
         share of Series 2006-B Preferred then so held (as adjusted for any
         stock dividends, combinations, recapitalizations, splits or otherwise
         on such shares), plus a further amount equal to all accrued but unpaid
         dividends (which shall include all cumulated dividends) on such shares.
         All of the preferential amounts to be paid to the holders of the Series
         2006-B Preferred under this Section 2 shall be paid or declared and set
         apart for payment before the payment or setting apart for payment of
         any amount for, or the distribution of any

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         assets or funds of the Corporation to, the holders of the Common Stock
         or any other Junior Securities in connection with such Liquidation
         Event. Neither the merger nor consolidation of the Corporation with or
         into any other corporation, nor the merger or consolidation of any
         other corporation into or with the Corporation, nor a sale or transfer
         of all or any part of the assets of the Corporation, shall without a
         contemporaneous liquidation, dissolution or winding up, be deemed to be
         a Liquidation Event.

                  (b) Insufficient Assets. If, upon a Liquidation Event, the
         assets and funds of the Corporation are insufficient to provide for the
         payment of the full aforesaid preferential amount to the holders of the
         Series 2006-B Preferred and the full preferential amount due to the
         holders of any preferred stock ranking as to liquidation on a parity
         with the Series 2006-B Preferred, such assets and funds as are
         available shall be distributed ratably among the holders of the Series
         2006-B Preferred and the holders of any such preferred stock ranking as
         to liquidation on a parity with the Series 2006-B Preferred in
         proportion to the full preferential amount each such holder is
         otherwise entitled to receive.

                  (c) No Further Participation. After the payment or the setting
         apart of payment of the full preferential amount to the holders of the
         Series 2006-B Preferred, the holders of the Series 2006-B Preferred
         shall not be entitled to any further participation in any distribution
         of assets by the Corporation in connection with a Liquidation Event.

                  (d) Non-cash Distribution. If any of the assets of the
         Corporation are to be distributed other than in cash under this Section
         2 or for any purpose, then the Board of Directors of the Corporation
         shall promptly engage an independent appraiser to determine the value
         of the assets to be distributed to the holders of the Series 2006-B
         Preferred, the Series 2006-A Preferred Stock (the "Series 2006-A
         Preferred"), the Series 2003-A Preferred Stock (the "Series 2003-A
         Preferred"), the Series 2002-A Preferred Stock (the "Series 2002-A
         Preferred"), the Amended Series 2001-A Preferred Stock (the "Amended
         Series 2001-A Preferred") and the Common Stock. The Corporation shall,
         upon receipt of such appraiser's valuation, give prompt written notice
         to each holder of Series 2006-B Preferred, Series 2006-A Preferred,
         Series 2003-A Preferred, 2002-A Preferred, Amended Series 2001-A
         Preferred and Common Stock of the appraiser's valuation.
         Notwithstanding the above, any securities to be distributed to the
         shareholders shall be valued as follows (the "Average Market Price"):

                           (i) if traded on a securities exchange, the value
                  shall be deemed to be the average of the closing prices of the
                  securities on such exchange over the twenty (20) trading day
                  period ending on the trading day prior to the closing of the
                  transaction, 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 closing of the transaction, adjusted

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<PAGE>

                  appropriately for any stock splits, stock dividends or similar
                  changes in capitalization occurring during such period; and

                           (iii) if there is no active public market, the value
                  shall be the fair market value thereof, as mutually determined
                  by the Corporation and the holders of a majority of the total
                  combined outstanding shares of the Series 2006-B Preferred,
                  the Series 2006-A Preferred, the Series 2003-A Preferred, the
                  Series 2002-A Preferred and the Amended Series 2001-A
                  Preferred, provided that if the Corporation and the holders of
                  a majority of the total combined outstanding shares of the
                  Series 2006-B Preferred, the Series 2006-A Preferred, the
                  Series 2003-A Preferred, the Series 2002-A Preferred and the
                  Amended Series 2001-A Preferred are unable to reach agreement,
                  then by independent appraisal by an investment banker hired
                  and paid by the Corporation but acceptable to the holders of a
                  majority of the total combined outstanding shares of the
                  Series 2006-B Preferred, the Series 2006-A Preferred, the
                  Series 2003-A Preferred, the Series 2002-A Preferred and the
                  Amended Series 2001-A Preferred.

                  3. Voting Rights. Except as set forth herein or as otherwise
         required by law, the holder of each share of Series 2006-B Preferred
         shall be entitled to that number of votes allotted by law and hereunder
         equal to the number of shares of Common Stock into which such share of
         Series 2006-B Preferred could be converted at the record date for
         determination of the shareholders entitled to vote on such matters, or,
         if no such record date is established, at the date such vote is taken
         or any written consent of shareholders is solicited, such votes to be
         counted together with all other shares of capital stock of the
         Corporation having general voting power and not counted separately as a
         class, except as set forth in this Certificate or as otherwise required
         by law. The holders of the Series 2006-B Preferred shall be entitled to
         vote as a single class for the election of a number of members of the
         board of directors of the Corporation such that the number of directors
         so elected by the holders of the Series 2006-B Preferred represents a
         percentage of the total membership of the Corporation's board of
         directors that equals, as nearly as practicable, the percentage of the
         Corporation's outstanding Common Stock (treating the outstanding Common
         Stock and shares of Common Stock issuable upon the conversion of the
         Series 2006-B Preferred, the Series 2006-A Preferred, the Series 2003-A
         Preferred, the Series 2002-A Preferred and the Amended Series 2001-A
         Preferred as outstanding in the aggregate) represented by the
         outstanding Series 2006-B Preferred on an as-converted basis, rounded
         up or down to the nearest whole number. For so long as such percentage
         rounds to zero, the holders of the Series 2006-B Preferred shall not be
         entitled, voting together as a class, to elect any directors. In the
         event the holders of the Amended Series 2001-A Preferred and the Series
         2002-A Preferred (voting together) and the Series 2003-A Preferred
         (voting separately) and the Series 2006-A Preferred (voting separately)
         no longer have the right to designate the Chairman of the Board and/or
         the Vice-Chairman of the Board as described in the Certificates of
         Designation establishing such series of preferred stock, then one such
         director elected by the holders of the Series 2006-B Preferred shall
         serve as Chairman of the Board and one such director shall serve as
         Vice-Chairman of the Board, provided that if the holders of the Series
         2006-B Preferred, voting

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         together as a class, are entitled to elect only one director, that
         director shall serve as Chairman of the Board. This voting right of the
         Series 2006-B Preferred shall not limit the right of the holders of the
         Series 2006-B Preferred to vote their shares of Series 2006-B Preferred
         or any other voting shares of the Corporation held by any of such
         holders, as to any other matter as to which the shareholders of the
         Corporation are entitled to vote, including in connection with a
         shareholder vote for the election of directors generally. The holders
         of Series 2006-B Preferred shall be entitled to notice of any
         shareholders' meeting in accordance with the Bylaws of the Corporation.

         4. Conversion. The holders of the Series 2006-B Preferred have
conversion rights as follows (the "Conversion Rights"):

                  (a) Right to Convert. Each share of Series 2006-B Preferred
         shall be convertible, at the option of the holder thereof, at any time
         after the date of issuance of such share, into such number of fully
         paid and nonassessable shares of Common Stock as is determined by
         dividing the Stated Value for such share by the applicable conversion
         price (each a "Conversion Price"), as follows:

                           (i) for the shares of Series 2006-B Preferred
                  issuable pursuant to any option or other right to acquire
                  shares of Series 2006-B Preferred, the Conversion Price shall
                  equal the Average Market Price of the Common Stock as of the
                  twenty (20) trading days ending on the trading day next
                  preceding the date such option or other right is granted (the
                  "Stated Value Conversion Price"); and

                           (ii) for the shares of Series 2006-B Preferred issued
                  in satisfaction of any dividend, and for all such shares
                  accrued from the last Dividend Date through the date of
                  conversion of any Series 2006-B Preferred into Common Stock,
                  the Conversion Price shall be equal to the Average Market
                  Price of the Common Stock as of the twenty (20) trading days
                  ending on the trading day next preceding such Dividend Date,
                  adjusted appropriately for any stock splits, stock dividends
                  or similar changes in capitalization occurring during such
                  period (the "Dividend Conversion Price"); and

                           (iii) for any other shares of Series 2006-B Preferred
                  that may be issued by the Corporation, the Conversion Price
                  shall be established by separate resolution of the Board of
                  Directors of the Corporation.

         No fractional shares of Common Stock shall be issued upon conversion of
         Series 2006-B Preferred. In lieu of any fractional shares to which the
         holder would otherwise be entitled, the Corporation shall pay cash
         equal to such fraction multiplied by the applicable Average Market
         Price of a whole share used for purposes of computing the Conversion
         Price.

                  (b) Mechanics of Conversion. Any holder of Series 2006-B
         Preferred electing to convert shares of Series 2006-B Preferred into
         full shares of Common Stock and to

                                       -5-
<PAGE>

         receive certificates therefor shall surrender the certificate or
         certificates representing the shares of Series 2006-B Preferred to be
         converted, if such share certificates have been issued by the
         Corporation, duly endorsed, at the office of the Corporation or of any
         transfer agent for the Series 2006-B Preferred, and shall give written
         notice to the Corporation at such office that it elects to convert the
         certificated shares surrendered with the notice of conversion and any
         other shares as to which share certificates have not been issued by the
         Corporation. The Corporation shall, as soon as practicable thereafter,
         issue and deliver at such office to such holder of Series 2006-B
         Preferred, a certificate or certificates for the number of shares of
         Common Stock to which it shall be entitled as aforesaid and a check
         payable to the holder in the amount of any cash amounts payable as the
         result of a conversion into fractional shares of Common Stock. Such
         conversion shall be deemed to have been made immediately prior to the
         close of business on the date of delivery to the Corporation of the
         holder's written notice of conversion, and the person or persons
         entitled to receive the shares of Common Stock issuable upon such
         conversion shall be treated for all purposes as the record holder or
         holders of such shares of Common Stock on such date.

                  (c) Reservation of Preferred and Common Stock. The Corporation
         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
         as shall from time to time to be sufficient to permit the issuance of
         such shares pursuant to any option or other right to acquire shares of
         Series 2006-B Preferred or for payment of dividends on the Series
         2006-B Preferred in additional shares of Series 2006-B Preferred; and
         (ii) such number of its shares of Common Stock as shall from time to
         time be sufficient to effect the conversion of all outstanding shares
         of the Series 2006-B Preferred; and if at any time the number of
         authorized but unissued shares of Series 2006-B Preferred 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 as contemplated by this Section 4(c), in addition to such
         other remedies as shall be available to the holder of such Series
         2006-B Preferred, the Corporation will take such corporate action as
         may, in the opinion of its counsel, be necessary to increase its
         authorized but unissued shares to such number of shares as shall be
         sufficient for such purposes.

                  (d) Adjustments to Conversion Price.

                           (i) Adjustments for Stock Dividends, Subdivisions,
                  Combinations or Consolidations of Common Stock. In the event
                  the outstanding shares of Common Stock shall be subdivided (by
                  stock dividends, splits, or otherwise) into a greater number
                  of shares of Common Stock, each Conversion Price then in
                  effect shall, concurrently with the effectiveness of such
                  subdivision, be proportionately decreased. In the event the
                  outstanding shares of Common Stock shall be combined or
                  consolidated, by reclassification or otherwise, into a lesser
                  number of shares of Common Stock, each Conversion Price then
                  in effect shall, concurrently with the effectiveness of such
                  combination or consolidation, be proportionately increased.

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<PAGE>

                           (ii) Adjustments for Other Distributions. In the
                  event the Corporation at any time or from time to time makes
                  or fixes a record date for the determination of holders of
                  Common Stock entitled to receive any distribution payable in
                  securities or assets of the Corporation other than shares of
                  Common Stock, in each such event provision shall be made so
                  that the holders of Series 2006-B Preferred shall receive upon
                  conversion thereof, in addition to the number of shares of
                  Common Stock receivable thereupon, the amount of securities or
                  assets of the Corporation which they would have received had
                  their Series 2006-B Preferred been converted into Common Stock
                  on the date of such event and had they thereafter, during the
                  period from the date of such event to and including the date
                  of conversion, retained such securities or assets receivable
                  by them as aforesaid during such period, subject to all other
                  adjustments called for during such period under this Section 4
                  with respect to the rights of the holders of the Series 2006-B
                  Preferred.

                           (iii) Adjustments for Reclassification, Exchange and
                  Substitution. If the Common Stock issuable upon conversion of
                  the Series 2006-B Preferred shall be changed into the same or
                  a different number of shares of any other class or classes of
                  stock, whether by capital reorganization, reclassification or
                  otherwise (other than a subdivision or combination of shares
                  provided for above), then in each such event the holder of
                  each share of Series 2006-B Preferred shall have the right
                  thereafter to convert such share into the kind and amount of
                  shares of stock and other securities and property receivable
                  upon such reorganization or reclassification or other change
                  by holders of the number of shares of Common Stock that would
                  have been subject to receipt by the holders upon conversion of
                  the Series 2006-B Preferred immediately before such change,
                  all subject to further adjustment as provided herein.

                           (iv) No Impairment. Without the prior written consent
                  of the holders of at least a majority of the outstanding
                  Series 2006-B Preferred, the Corporation will not, by
                  amendment of its Certificate of Incorporation or through any
                  reorganization, transfer of assets, consolidation, merger,
                  dissolution, issuance or sale of securities or any other
                  voluntary action, avoid or seek to avoid the observance or
                  performance of any of the terms to be observed or performed
                  hereunder by the Corporation but will at all times in good
                  faith assist in the carrying out of all the provisions of
                  Section 4 and in the taking of all such action as may be
                  necessary or appropriate in order to protect the Conversion
                  Rights of the holders of the Series 2006-B Preferred against
                  impairment.

                           (v) Certificate as to Adjustments. Upon the
                  occurrence of each adjustment or readjustment of the
                  Conversion Price pursuant to Section 4, the Corporation at its
                  expense shall promptly compute such adjustment or readjustment
                  in accordance with the terms hereof and furnish to each holder
                  of Series 2006-B Preferred a certificate setting forth such
                  adjustment or readjustment

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<PAGE>

                  and showing in detail the facts upon which such adjustment or
                  readjustment is based. The Corporation shall, upon the written
                  request at any time of any holder of Series 2006-B Preferred,
                  furnish or cause to be furnished to such holder a like
                  certificate setting forth (i) such adjustments and
                  readjustments, (ii) each Conversion Price at the time in
                  effect, and (iii) the number of shares of Common Stock and the
                  amount, if any, of other property which at the time would be
                  received upon the conversion of Series 2006-B Preferred.

         5. Redemption.

                  (a) Commencing at any time on or after three (3) years from
         the Original Issue Date, the Corporation, at its option, may redeem the
         Series 2006-B Preferred. Unless otherwise agreed by any affected holder
         and only with respect to such holder's shares of Series 2006-B
         Preferred, the Corporation shall not redeem less than all of the Series
         2006-B Preferred held by any holder.

                  (b) The Corporation shall redeem to the extent it may legally
         do so the Series 2006-B Preferred by paying a price per share equal to
         the Stated Value for such shares plus all accrued but unpaid dividends
         (including cumulated dividends) on each such share. After the
         Corporation has given written request that the Series 2006-B Preferred
         be redeemed in accordance with this Section 5, no shares of the capital
         stock of the Corporation (other than shares of Series 2006-B Preferred)
         shall be redeemed prior to the redemption of the Series 2006-B
         Preferred.

                  (c) At least six (6) months and one (1) week prior to the
         redemption date, or such lesser period as the holders of at least a
         majority of the Series 2006-B Preferred may agree, written notice shall
         be mailed, first class postage prepaid, to each holder of record (at
         the close of business on the business day immediately preceding the day
         on which notice is given) of the Series 2006-B Preferred, at the
         address last shown on the records of the Corporation for such holder,
         specifying the number of shares to be redeemed from each holder, the
         redemption price, the place at which payment may be obtained and
         calling upon such holder to surrender to the Corporation, in the manner
         and at the price designated, its certificate or certificates
         representing such holder's shares to be redeemed (the "Redemption
         Notice"). On or after the redemption date, such holder of Series 2006-B
         Preferred to be redeemed shall surrender to the Corporation the
         certificate or certificates representing such shares, in the manner and
         at the price designated in the Redemption Notice, and thereupon the
         redemption price of such shares shall be payable to the order of the
         person whose name appears on such certificate or certificates as the
         owner thereof and each surrendered certificate shall be canceled.

                  (d) From and after the redemption date, unless there shall
         have been a default in payment of the redemption price, all rights of
         the holders of shares of Series 2006-B Preferred designated for
         redemption in the Redemption Notice (except the right to receive the
         redemption price without interest upon surrender of their certificate
         or certificates) shall cease with respect to such shares at such time,
         and such shares shall not thereafter be

                                       -8-
<PAGE>

         transferred on the books of the Corporation or be deemed to be
         outstanding for any purpose whatsoever. If the funds of the Corporation
         legally available for redemption of shares of Series 2006-B Preferred
         on the redemption date are insufficient to redeem the total number of
         shares of Series 2006-B Preferred to be redeemed, those funds that are
         legally available will be used to redeem the maximum possible number of
         such shares ratably among the holders of such shares to be redeemed
         based upon their holdings of Series 2006-B Preferred. The shares of
         Series 2006-B Preferred not redeemed shall remain outstanding and
         entitled to all the rights and preferences provided herein. At any time
         thereafter when additional funds of the Corporation are legally
         available for the redemption of shares of Series 2006-B Preferred, such
         funds will immediately be used to redeem the balance of the shares that
         the Corporation has become obligated to redeem on the redemption date.

         6. Protective Provisions. For so long as the shares of Common Stock
issuable upon the conversion of the outstanding Series 2006-B Preferred
represent in the aggregate at least ten percent (10%) of the Corporation's
outstanding Common Stock (treating the outstanding Common Stock and shares of
Common Stock issuable upon the conversion of the Series 2006-B Preferred, the
Series 2006-A Preferred, the Series 2003-A Preferred, the Series 2002-A
Preferred and the Amended Series 2001-A Preferred as outstanding in the
aggregate), the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of at least a majority of the outstanding
shares of Series 2006-B Preferred, voting together as a single class on an
as-converted to Common Stock basis:

                  (a) amend, repeal or waive any provision of the Corporation's
         Certificate of Incorporation or Bylaws;

                  (b) alter or change the rights, preferences or privileges of
         the Series 2006-B Preferred;

                  (c) redeem any shares of the Corporation's capital stock
         (except for the Series 2006-B Preferred in accordance with Section 5
         hereof);

                  (d) authorize or issue any class or series of capital stock,
         other than the issuance of Series 2006-B Preferred, Series 2006-A
         Preferred, Series 2003-A Preferred, Series 2002-A Preferred and Amended
         Series 2001-A Preferred in satisfaction of dividends or pursuant to
         existing conversion rights or options or warrants granted to persons to
         acquire shares of Series 2006-A Preferred or Series 2006-B Preferred,
         provided that the Corporation may issue options and other stock-based
         awards (and the shares upon exercise thereof) pursuant to the following
         Subsection (e);

                  (e) adopt, amend or modify (including modification by the
         repricing of existing awards, except and only to the extent resulting
         from a stock split or similar transaction) any stock option plan or
         employee stock ownership plan or issue any shares of capital stock of
         the Corporation to its or its subsidiaries' employees or directors,
         except

                                       -9-
<PAGE>

         pursuant to the Corporation's 1993 or 2002 Performance and Equity
         Incentive Plan and 1993 Employee Stock Purchase Plan, each as amended;

                  (f) pay or declare any dividend or other distribution on
         Junior Securities, except as provided herein;

                  (g) authorize, or take any action to effect, or otherwise
         permit a sale or other disposition of all or substantially all of the
         assets of the Corporation or any subsidiary, or a merger, acquisition,
         recapitalization, other corporate reorganization or sale of control of
         the Corporation or any subsidiary, or a license of a substantial
         portion of the assets of the Corporation or any subsidiary;

                  (h) undertake or effect any liquidation, dissolution or
         winding up of the Corporation or any material subsidiary, any
         assignment for the benefit of creditors, or any bankruptcy or similar
         filing;

                  (i) create any new subsidiary of the Corporation or permit any
         subsidiary of the Corporation to sell or otherwise issue any capital
         stock or any right to acquire any of its capital stock to any party
         other than the Corporation;

                  (j) change the size of the Corporation's board of directors;

                  (k) take any action which results in the Corporation making,
         or permitting any subsidiary to make, any loan to, or investment in,
         another entity, other than a subsidiary of the Corporation;

                  (L) take any action to incur or assume more than $1,000,000 of
         indebtedness, either individually or on a cumulative basis, in excess
         of the amount of the Corporation's existing indebtedness and
         availability at such time under credit facilities that exist as of the
         Original Issue Date, excluding the extension of trade credit in the
         ordinary course of business consistent with past practices;

                  (m) take any action which results in the Corporation and its
         subsidiaries making, or becoming obligated to make, any capital
         expenditures in excess of $4,000,000 in the aggregate in any fiscal
         year;

                  (n) enter into, or permit any subsidiary to enter into, any
         agreement, contract, arrangement or transaction, whether oral or
         written, with or for the benefit of any of its or any subsidiary's
         officers, directors or shareholders, any individual or entity that is
         an "affiliate" of the Corporation within the meaning of the rules
         promulgated under the Securities Exchange Act of 1934, as amended, or
         any individual related by blood, marriage, or adoption to any such
         individual or entity, unless such agreement, contract, arrangement or
         transaction is entered into in the ordinary course of business and on
         terms no less favorable to the Corporation than those the Corporation
         would have been

                                      -10-
<PAGE>

         reasonably likely to obtain as the result of arms-length negotiations
         with an unrelated third party;

                  (o) approve any material change in any line of business of the
         Corporation or any subsidiary; or

                  (p) enter into any acquisition or series of related
         acquisitions, directly or through a subsidiary, involving an aggregate
         transaction value in excess of $500,000.

         7. Limitations on Reissuance. No share or shares of Series 2006-B
Preferred acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.

         8. Preemptive Rights. Except for the issuance of stock (a) as payment
of dividends on the Series 2006-B Preferred, the Series 2006-A Preferred, the
Series 2003-A Preferred, the Series 2002-A Preferred and the Amended Series
2001-A Preferred and the issuance of Common Stock on conversion of the Series
2006-B Preferred, the Series 2003-A Preferred, the Series 2002-A Preferred and
the Amended Series 2001-A Preferred, or (b) pursuant to existing conversion
rights or options or warrants granted to persons to acquire shares of Series
2006-A Preferred or Series 2006-B Preferred, the Corporation shall not issue,
sell or exchange, agree or obligate itself to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, any (i) shares of Common
Stock, (ii) any other equity security of the Corporation, including without
limitation, shares of Series 2006-B Preferred, Series 2006-A Preferred, Series
2003-A Preferred, Series 2002-A Preferred or Amended Series 2001-A Preferred,
(iii) any debt security of the Corporation (other than debt with no equity
feature) including without limitation, any debt security which by its terms is
convertible into or exchangeable for any equity security of the Corporation,
(iv) any security of the Corporation that is a combination of debt and equity,
or (v) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any such equity security or any such debt security of the
Corporation, except for the issuance of options and other awards, and shares
issuable thereon, pursuant to the Corporation's 1993 or 2002 Performance and
Equity Incentive Plan and 1993 Employee Stock Purchase Plan, each as amended, or
any other employee incentive plan approved in accordance with Section 6 hereof,
unless in each case the Corporation shall have first offered to sell such
securities (the "Offered Securities") to the holders of the Series 2006-B
Preferred as follows: the Corporation shall offer to sell to such holders that
portion of the Offered Securities as the number of shares of Common Stock
(treating the outstanding Common Stock and shares of Common Stock issuable upon
the conversion of the Series 2006-B Preferred, the Series 2006-A Preferred, the
Series 2003-A Preferred, the Series 2002-A Preferred and the Amended Series
2001-A Preferred as outstanding in the aggregate) then held by each such holder
bears to the total number of shares of Common Stock so determined as are then
outstanding on such date, at a price and on such other terms as shall have been
specified by the Corporation in a writing delivered to such holder (the
"Offer"), which Offer by its terms shall remain open and irrevocable for a
period of thirty (30) days from the date of the Offer. The price and other terms
included in any Offer shall be no less favorable to the holders of the Series
2006-B Preferred than those offered to any prospective third party purchaser.

                                      -11-
<PAGE>

         9. Ranking. The Series 2006-B Preferred shall rank for purposes of
dividends and distribution of assets on liquidation of the Corporation prior to
all existing shares of capital stock of the Corporation, including the Series
2006-A Preferred, the Series 2003-A Preferred, the Series 2002-A Preferred, the
Amended Series 2001-A Preferred, any other series of preferred stock which does
not specifically state that it ranks prior to or on a parity with the Series
2006-B Preferred for such purposes, and the Common Stock, all of which shall be
Junior Securities for purposes of this Certificate of Designation.

                        SIGNATURE PAGE FOLLOWS THIS PAGE.

                                      -12-
<PAGE>

         IN WITNESS WHEREOF, Harold's Stores, Inc. has caused this certificate
to be duly executed on its behalf by the undersigned, Leonard Snyder, interim
Chief Executive Officer, and attested by Jodi L. Taylor, its Secretary, this
31st day of August, 2006.

                                            HAROLD'S STORES, INC.

                                            By: /s/ Leonard Snyder
                                                -------------------------
                                                Leonard Snyder
                                                Interim Chief Executive Officer

Attest:

/s/ Jodi L. Taylor
--------------------------
Jodi L. Taylor, Secretary

                                      -13-Exhibit 10.1
                                                                    ------------
                 AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT
                 ----------------------------------------------

         This AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is entered into as of August 31, 2006 (the "Effective Date"), by and among, on
the one hand, the lender identified on the signature page hereof (such lender,
together with its successors and assigns, is referred to hereinafter as the
"Lender"), WELLS FARGO RETAIL FINANCE II, LLC, as collateral agent and
administrative agent (the "Agent") for the Lender and any other holder of
Obligations (as defined in the Loan Agreement referred to below) and, on the
other hand, HAROLD'S STORES, INC., an Oklahoma corporation ("Parent"), HAROLD'S
FINANCIAL CORPORATION, an Oklahoma corporation ("Harold's Finance"), HAROLD'S
DIRECT, INC., an Oklahoma corporation ("Harold's Direct"), HAROLD'S STORES OF
TEXAS, L.P., a Texas limited partnership ("Harold's Texas"), and HAROLD'S OF
JACKSON, INC., a Mississippi corporation ("Harold's Mississippi", and
collectively with Harold's Texas, Harold's Direct, Harold's Finance and Parent,
the "Borrowers" and each, a "Borrower").

                                   BACKGROUND

         FACT ONE: Lender, Agent, the Borrowers, and Harold's Stores of Georgia,
L.P., a Georgia limited partnership ("Harold's Georgia"), entered into that
certain Loan and Security Agreement, dated as of February 5, 2003, as amended by
each of the following amendments (as so amended, the "Loan Agreement"): (A) that
certain Amendment No. 1 to Loan and Security Agreement dated July 10, 2003, by
and among Lenders, Agent, Borrowers, and Harold's Georgia; (B) that certain
Amendment No. 2 to Loan and Security Agreement dated April 29, 2004, by and
among Lenders, Agent, the Borrowers and Harold's Georgia; (C) that certain
Amendment No. 3 to Loan and Security Agreement dated January 26, 2006, by and
among Lenders, Agent, the Borrowers and Harold's Georgia; and (D) that certain
Amendment No. 4 to Loan and Security Agreement, dated as of June 1, 2006, by and
among Lenders, Agent and the Borrowers.

         FACT TWO: Pursuant to the Loan Agreement Lender has agreed to make
loans and other financial accommodations to, or for the benefit of, Borrowers on
the terms and otherwise subject to the conditions and limitations contained
therein.

         FACT THREE: Borrowers have requested that Lender and Agent agree to
modify certain terms and conditions set forth in the Loan Agreement in the
manner set forth in this Amendment in order to permit the Borrowers to incur
certain subordinated indebtedness subject to the conditions and limitations
contained in the Loan Agreement, as amended by this Amendment.

         FACT FOUR: Lender and Agent have agreed to modify certain terms and
conditions set forth in the Loan Agreement in the manner set forth in this
Amendment, subject in all cases to the fulfillment of the conditions set forth
in this Amendment.

         NOW, THEREFORE, Lender, Agent and the Borrowers hereby modify,
supplement and amend the Loan Agreement as follows:
<PAGE>
1.       INCORPORATION OF DEFINITIONS. Capitalized terms used in this Amendment,
to the extent not otherwise defined herein, have the meanings assigned to such
terms in the Loan Agreement, as amended hereby.

2.       AMENDMENTS AND ADDITIONS TO LOAN AGREEMENT.

         2.1  ADDITIONAL DEFINITIONS. As of the Effective Date, Section 1.1 of
the Loan Agreement is hereby amended by the addition of the following
definition, in the appropriate alphabetical order:

              "'Amendment No. 5' means Amendment No. 5 to Loan and Security
         Agreement, dated as of August 31, 2006, by and among the Lenders, Agent
         and Borrowers."

              "'Intercreditor Agreement' means that certain Subordination and
         Intercreditor Agreement, dated of even date with Amendment No. 5, by
         and among Agent, Lender and Subordinated Lender, as the same may be
         amended, modified and supplemented through writings signed by each
         party thereto."

              "'Qualified De-registration Transaction' means a restructuring or
         reorganization of Parent on terms acceptable to Agent for the primary
         purpose of eliminating Parent's obligation to maintain any registration
         with the SEC pursuant to Section 12(g) of the Securities Exchange Act
         of 1934; provided, that each of the following conditions shall be
         fulfilled to the satisfaction of Agent and Lenders: (a) such
         transaction shall have been approved by the Board of Directors of
         Parent; (b) Agent shall have received, and be entitled to rely upon, a
         written opinion acceptable to Agent that any such transaction,
         including the payments to be made thereunder to shareholders of Parent,
         is made in compliance with the Oklahoma General Corporation Act and
         applicable laws regarding fraudulent conveyances; (c) no Default or
         Event of Default (for purposes hereof the existence or creation of any
         Overadvance shall be deemed to be a Default hereunder) shall have
         occurred and be continuing at the time of such transaction (or any
         portion thereof to the extent effected through multiple transactions)
         or shall result therefrom; (d) the aggregate costs and expenses
         incurred in connection with such transaction (whether in respect of
         payments to shareholders or fees, costs and expenses paid to
         professionals or other Persons in connection with the evaluation and
         analysis of such transaction) shall not exceed $300,000; and (e) Agent
         shall have received evidence that no portion of the payments (whether
         in respect of payments to shareholders or fees, costs and expenses paid
         to professionals or other Persons in connection with the evaluation and
         analysis of such transaction) to be made in connection with such
         transaction are to be funded through an advance under this Agreement.

              "'Subordinated Indebtedness' means Indebtedness incurred by
         Borrowers and certain Guarantors pursuant to the Subordinated Loan
         Documents."

              "'Subordinated Lender' means RonHow, LLC, a Georgia limited
         liability company, together with its successors and assigns, in each
         instance to the extent permitted pursuant to the Intercreditor
         Agreement."

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 2
----------------------------------------------
<PAGE>
              "'Subordinated Loan Documents' means each of the following, in
         each case dated of even date with Amendment No. 5 unless otherwise
         noted: (a) that certain Subordinated Loan Agreement by and between
         Parent and Subordinated Lender; (b) that certain Subordinated Secured
         Promissory Note executed by Parent and payable to the order of
         Subordinated Lender in the stated principal amount of up to
         $10,000,000; (c) that certain Subordinated Guaranty executed by certain
         Subsidiaries of Parent for the benefit of Subordinated Lender; (d) that
         certain Subordinated Security Agreement, contemplated to be entered
         into by Parent and certain of its Subsidiaries as of the date of
         Amendment No. 5 or promptly thereafter, for the purpose of securing the
         obligations of Parent and certain of its Subsidiaries pursuant to the
         aforementioned Subordinated Loan Agreement, Subordinated Secured
         Promissory Note and Subordinated Guaranty, as applicable; and (e) all
         other instruments, documents, agreements, certificates from time to
         time delivered pursuant to, in connection with, or otherwise securing
         obligations under any of the foregoing."

         2.2  REVISION TO EXISTING DEFINITIONS. As of the Effective Date, the
definition of the term "Solvent" set forth in Section 1.1 of the Loan Agreement
is hereby deleted in its entirety and the definitions of the terms "Permitted
Lien" and "Preferred Permitted Payments" are hereby amended and restated to read
in their entirety as follows:

              "Permitted Liens" means (a) Liens held by Agent for the benefit of
         Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are
         not yet delinquent, or (ii) do not constitute an Event of Default
         hereunder and are the subject of Permitted Protests, (c) Liens set
         forth on Schedule P-1, (d) the interests of lessors under operating
         leases, (e) purchase money Liens or the interests of lessors under
         Capital Leases to the extent that such Liens or interests secure
         Permitted Purchase Money Indebtedness and so long as such Lien attaches
         only to the asset purchased or acquired and the proceeds thereof, (f)
         Liens arising by operation of law in favor of warehousemen, landlords,
         carriers, mechanics, materialmen, laborers, or suppliers, incurred in
         the ordinary course of business and not in connection with the
         borrowing of money, and which Liens either (i) are for sums not yet
         delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
         arising from deposits made in connection with obtaining worker's
         compensation or other unemployment insurance, (h) Liens or deposits to
         secure performance of bids, tenders, or leases incurred in the ordinary
         course of business and not in connection with the borrowing of money,
         (i) Liens granted as security for surety or appeal bonds in connection
         with obtaining such bonds in the ordinary course of business, (j) Liens
         resulting from any judgment or award that is not an Event of Default
         hereunder, (k) Liens with respect to the Real Property Collateral that
         are exceptions to the commitments for title insurance issued in
         connection with the Mortgages, as accepted by Agent, (l) with respect
         to any Real Property that is not part of the Real Property Collateral,
         easements, rights of way, and zoning restrictions that do not
         materially interfere with or impair the use or operation thereof and
         (m) Liens securing the Subordinated Indebtedness permitted to be
         incurred and maintained in accordance with the limitations set forth at
         Section 7.1(g) and that are subordinated to all Liens for the benefit
         of Agent or the Lenders pursuant to the Intercreditor Agreement."

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 3
----------------------------------------------
<PAGE>
              "Preferred Permitted Payments' means the payment of dividends in
         respect of the Series 2002-A Preferred Stock of Parent, the Amended
         Series 2001-A Preferred Stock, the Series 2003-A Preferred Stock, the
         Series 2006-A Preferred Stock and the Series 2006-B Preferred Stock of
         Parent (in each case when issued in whole or part as contemplated by
         Schedule 5.8) to the extent each of the following conditions precedent
         is met at the time such dividends are declared and at the time such
         dividends are paid: (a) such dividends are made at the times, in the
         amounts and otherwise in accordance with the applicable Certificate of
         Designation as in effect on the Closing Date (or in the case of the
         Series 2006-A Preferred Stock on January 24, 2006 or the case of the
         Series 2006-B the applicable certificate of designation applicable to
         such shares as filed in connection with the transactions contemplated
         by Amendment No. 5), or in such lesser amount as may be required
         thereunder pursuant to any amendment or modification of such
         certificates of designation; (b) no Default or Event of Default shall
         have occurred and be continuing as of either of such dates; and (c) no
         Default or Event of Default shall result from the payment or
         declaration of such dividend."

         2.3  AMENDMENTS TO SECTIONS 5.12, 7.1, 7.3(a), 7.8, 7.11 AND 8.11. As
of the Effective Date, the following referenced Sections of the Loan Agreement
are hereby amended as set forth below:

              (a) SECTION 5.12 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:

              "5.12. Fraudulent Transfer. No transfer of property is being made
         by any Borrower and no obligation is being incurred by any Borrower in
         connection with the transactions contemplated by this Agreement or the
         other Loan Documents with the intent to hinder, delay, or defraud
         either present or future creditors of Borrowers."

              (b) SECTION 7.1(E) and SECTION 7.1(F) are hereby amended and
restated in their entirety to read as follows and a new SECTION 7.1(G) is hereby
added to read in its entirety as follows:

                  "(e) Indebtedness composing Permitted Investments;

                           (f) Indebtedness composing trade payables incurred in
         the ordinary course of Borrowers' business that are repayable in
         accordance with customary trade practices and which remain unpaid more
         than 30 days past their originally specified due dates, to the extent
         the aggregate amount of such trade payables do not exceed an amount
         equal to 30% of all trade payable incurred by Borrowers' in the
         ordinary course of their business; and

                           (g) Subordinated Indebtedness in an aggregate
         principal amount not to exceed $10,000,000 at any time outstanding and
         to the extent (i) such Indebtedness shall be evidenced by Subordinated
         Loan Documents in form and substance satisfactory to Agent; and (ii)
         such Indebtedness, and any Liens securing the same, shall be
         subordinated to the Obligations, and any Liens securing the same,
         pursuant to the Intercreditor Agreement."

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 4
----------------------------------------------
<PAGE>
                   (c) SECTION 7.3(A) is hereby amended and restated to read in
it entirety as follows:

                           "(a) Other than in connection with a Qualified
         De-registration Transaction, enter into any merger, consolidation,
         reorganization, or recapitalization, or reclassify its Stock or
         otherwise change any Borrower's type of organization, jurisdiction of
         organization or other legal or corporate structure (other than mergers
         of one or more Borrowers with and into another Borrower)."

              (d) A new SECTION 7.8(C) is hereby added to the Loan Agreement to
read in its entirety as follows:

                           "(c) Make any payment on account of Indebtedness
         (including any portion of the Subordinated Indebtedness) that has been
         contractually subordinated in right of payment to the Obligations if
         such payment is not permitted at such time under the subordination
         terms and conditions (including the terms of the Intercreditor
         Agreement with respect to the Subordinated Indebtedness)."

              (e) SECTION 7.11 is hereby amended and restated to read in its
entirety as follows:

              "7.11. Distributions. Except for Permitted Preferred Payments or
         payments made in connection with a Qualified De-registration
         Transaction in an aggregate amount not to exceed $300,000, make or
         permit any other Borrower to, directly or indirectly (i) declare,
         order, pay or make any Restricted Payment or (ii) set aside any sum or
         property therefor or exercise any set-off or similar rights of any
         Borrower, if any, with respect to any indebtedness that is the subject
         of an intercreditor and subordination agreement."

              (f) SECTION 8.11 is hereby amended and restated to read in its
entirety as follows:

              "8.11 If any Borrower or any of their respective Subsidiaries (a)
         makes any payment on account of Indebtedness (including any portion of
         the Subordinated Indebtedness) that has been contractually subordinated
         in right of payment to the payment of the Obligations, except to the
         extent such payment is permitted by the terms of the subordination
         provisions applicable to such Indebtedness or (b) there shall occur any
         default or event of default (including the occurrence of any event or
         circumstance that with the giving of notice or the passage of time or
         both would result in the occurrence of a default or event of default)
         however denominated in respect of any Indebtedness (including the
         Subordinated Indebtedness) that has been contractually subordinated in
         right of payment to the Obligations;"

         2.4  ADDITION OF SECTION 6.19. As of the Effective Date, a new Section
6.19 is hereby added to the Loan Agreement to read in its entirety as follows:

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 5
----------------------------------------------
<PAGE>

              "6.19. Incurrence of Additional Subordinated Indebtedness. Parent
         shall deliver to Agent written notice of its intention to incur
         additional Subordinated Indebtedness (which additional Indebtedness
         shall remain within the limitations set forth at Section 7.1(g)) at
         least ten (10 ) days prior to the incurrence of such additional
         Subordinated Indebtedness; provided, however, such 10-day notice shall
         not be required in the event an advance under the Subordinated
         Indebtedness is permitted without such notice pursuant to the
         Intercreditor Agreement."

         2.5  WAIVER OF EVENTS OF DEFAULT. Agent and Lender have been informed
that one or more Events of Default may have occurred and be continuing as a
result of the violation of the Borrowers' representation set forth at Section
5.12(a) (representing that the Borrowers are Solvent) of the Loan Agreement as
in effect immediately prior to this Amendment. Any such Event of Default
resulting from the violation of Borrowers' representation pursuant to Section
5.12(a) of the Loan Agreement prior to and for the period through the Effective
Date, is hereby waived. The waiver agreed to in this Section 2.5 (a) is strictly
limited to the referenced Events of Default, and except as expressly set forth
herein, all the other terms, provisions and conditions of the Loan Agreement
shall remain in full force and effect, (b) shall not extend nor be deemed to
extend to any other Default or Event of Default that may now exist or hereafter
arise under the Loan Agreement or any of the other Loan Documents, whether
similar or dissimilar to the provision waived herein, (c) shall not impair,
restrict or limit any right or remedy of Agent or any Lender with respect to any
other Default or Event of Default that may now exist or hereafter arise under
the Loan Agreement or any of the other Loan Documents, and (d) shall not
constitute any course of dealing or other basis for altering any obligation of
any Borrower or any right, privilege or remedy of Agent or any Lender under the
Loan Agreement or any of the other Loan Documents.

         2.6  UPDATE OF SCHEDULE 5.8 TO LOAN AGREEMENT. As of the Effective
Date, Schedules 5.8(b) and 5.8(c) to the Loan Agreement are hereby combined,
amended and restated in their entirety to read as set forth hereto as Schedule
5.8 attached hereto and incorporated herein, and from and after the Effective
Date all references to either Schedule 5.8(b) or Schedule 5.8(c) shall be to
such combined, amended and restated schedule.

3.       RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.

         3.1  RATIFICATIONS. Except as expressly amended and supplemented by
this Amendment, the terms and provisions of the Loan Agreement are ratified and
confirmed and continue in full force and effect. The Borrowers hereby agree that
the Loan Agreement, as amended hereby, continues to be legal, valid, binding and
enforceable against Borrowers in accordance with its terms and hereby reaffirm
each covenant and agreement set forth therein.

         3.2  REPRESENTATIONS AND WARRANTIES. In order to induce Agent and
Lender to enter into this Amendment, each Borrower makes the following
representations and warranties to Lender as to itself:

              (a) the execution, delivery and performance of this Amendment and
         any and all other Loan Documents executed and/or delivered in
         connection herewith have been authorized by all requisite corporate or
         limited partnership power, as appropriate, on the

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 6
----------------------------------------------
<PAGE>
         part of the Borrower and will not violate any of its constituent
         documents (including, as applicable, its articles of incorporation,
         certificate of incorporation, by-laws, partnership agreement and
         certificate of limited partnership) or any other agreement to which
         Borrower is a party or by which its properties may be bound;

              (b) the representations and warranties contained in the Loan
         Agreement, as amended hereby, and any other Loan Document are true and
         correct in all material respects on and as of the date hereof as though
         made on and as of the date hereof (except to the extent that such
         representations and warranties relate solely to an earlier date or
         violations have been disclosed to Agent in writing and approved in
         writing by Agent); and

              (c) no Default or Event of Default (other than those waived
         pursuant to Section 2.5 of this Amendment) has occurred or is
         continuing under the Loan Agreement, and no Default or Event of Default
         will result from the execution, delivery or performance of this
         Amendment or the consummation of the transactions herein authorized by
         Lender.

4.       FURTHER ASSURANCES.

          The Borrowers hereby agree, upon Agent's request (i) to deliver to
Agent such fully authorized and executed agreements and instruments, including,
but not limited to, any amendments to Loan Documents, within 10 days of such
request, and (ii) to take such actions as Agent, in its Permitted Discretion,
deems necessary and appropriate in connection with the transactions contemplated
by this Amendment.

5.       CHOICE OF LAW.

         THE VALIDITY OF THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY THEREIN), THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.

6.       GENERAL PROVISIONS.

         6.1  EFFECTIVENESS. The effectiveness of this Amendment and the
enforceability of the terms hereof against Borrowers, Agent and Lender are
subject to fulfillment of each of the following conditions precedent:

              (a) Lender's execution of this Amendment and receipt of one or
         more counterparts of this Amendment duly executed by each Borrower; and

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 7
----------------------------------------------
<PAGE>
              (b) Lender's receipt of a consent and reaffirmation of the
         obligations of each Guarantor under the Continuing Guaranty and
         Security Agreement, in form acceptable to Lender; and

              (c) Lender's receipt of copies of any and all documents and
         instruments executed in connection with the incurrence of the
         Subordinated Indebtedness, which documents shall be in each instance
         acceptable to Agent and Lender in their sole discretion.

         6.2  SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Amendment.

         6.3  SEVERABILITY OF PROVISIONS. Each provision of this Amendment will
be severable from every other provision of this Amendment for the purpose of
determining the legal enforceability of any specific provision.

         6.4  COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, will be deemed to be
an original, and all of which, when taken together, will constitute but one and
the same Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile will be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also will deliver an original executed
counterpart of this Amendment but the failure to deliver an original executed
counterpart will not affect the validity, enforceability, and binding effect of
this Amendment. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.

         6.5  INTEGRATION. This Amendment, the Loan Agreement and the other Loan
Documents contain the entire agreement between the parties relating to the
transactions contemplated hereby. All prior or contemporaneous understandings,
representations, statements and agreements, whether written or oral, are merged
herein and superseded by this Agreement. THIS WRITTEN AMENDMENT, THE LOAN
AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

         6.6  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made herein and in the Loan Agreement, as amended hereby, will
survive the execution and delivery of this Amendment, and no investigation by
Agent or Lender or any closing shall affect the representations and warranties
or the right of Agent or Lender to rely upon them.

         6.7  REFERENCE TO LOAN AGREEMENT. The Loan Agreement, as amended
hereby, and all other agreements, documents or instruments now or hereafter
executed and delivered pursuant to the terms thereof are hereby amended so that
any reference in the Loan Agreement or such

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 8
----------------------------------------------
<PAGE>
other agreements, documents and instruments will mean a reference to the Loan
Agreement, as amended hereby.

         6.8  EXPENSES OF LENDER. The Borrowers agree to pay on demand all
reasonable costs and expenses incurred by Lender in connection with the
preparation, negotiation and execution of this Amendment, including, without
limitation, the reasonable costs and fees of Agent's or Lender's legal counsel.
In addition, the Borrowers agree to pay on demand: (a) all costs and expenses
incurred by Agent or Lender in connection with the enforcement or preservation
of any rights under the Loan Agreement, as amended hereby, or any agreement,
document or instrument executed in connection therewith, including without
limitation this Amendment; and (b) all reasonable costs and expenses incurred by
Agent or Lender in connection with the preparation, negotiation and
administration of this Amendment, including the reasonable fees and costs of
Agent's and Lender's legal counsel.

         6.9  SUCCESSORS AND ASSIGNS. This Amendment is binding upon and will
inure to the benefit of Agent, Lender and each Borrower and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations hereunder without the prior written consent of Agent.

         6.10 RELEASE. EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT) OR TO SEEK
AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT, LENDER AND THEIR
RESPECTIVE PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES,
EMPLOYEES AND REPRESENTATIVES, SUCCESSORS AND ASSIGNS. EACH BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT, LENDER AND
THEIR RESPECTIVE PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES,
EMPLOYEES AND REPRESENTATIVES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING
IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH
BORROWER MAY NOW OR HEREAFTER HAVE AGAINST AGENT, LENDER AND THEIR RESPECTIVE
PREDECESSORS, OFFICERS, DIRECTORS, MEMBERS, AFFILIATES, EMPLOYEES AND
REPRESENTATIVES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY
SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT),
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE MAXIMUM RATE, THE EXERCISE OF
ANY RIGHTS AND REMEDIES UNDER

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 9
----------------------------------------------
<PAGE>
THE LOAN AGREEMENT OR ANY AGREEMENT, DOCUMENT OR INSTRUMENT ENTERED INTO IN
CONNECTION THEREWITH.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Page 10
----------------------------------------------
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.

                                                BORROWERS:

                                                HAROLD'S STORES, INC.

                                                By /s/ Leonard M. Snyder
                                                  --------------------------
                                                Name:  Leonard M. Snyder
                                                Title: Interim CEO

                                                HAROLD'S FINANCIAL CORPORATION

                                                By:/s/ Leonard M. Snyder
                                                   -------------------------
                                                Name:  Leonard M. Snyder
                                                Title: Interim CEO

                                                HAROLD'S DIRECT, INC.

                                                By:/s/ Leonard M. Snyder
                                                   -------------------------
                                                Name:  Leonard M. Snyder
                                                Title: Interim CEO

                                                HAROLD'S STORES OF TEXAS, L.P.

                                                By:  HSTX, Inc., General Partner

                                                     By: Leonard M. Snyder
                                                         -------------------
                                                     Name:  Leonard M. Snyder
                                                     Title: Interim CEO

                                                HAROLD'S OF JACKSON, INC.

                                                By: /s/ Leonard M. Snyder
                                                    ------------------------
                                                Name:   Leonard M. Snyder
                                                Title:  Interim CEO

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Signature Page
----------------------------------------------
<PAGE>

                                                AGENT AND LENDER:

                                                WELLS FARGO RETAIL
                                                FINANCE II, LLC,
                                                AS AGENT AND LENDER

                                                By: /s/ Lynn Whitmore
                                                   ------------------------
                                                   Lynn Whitmore, Vice President

AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT - Signature Page
----------------------------------------------
<PAGE>
                                  SCHEDULE 5.8
<TABLE><CAPTION>
<S>                        <C>        <C>               <C>        <C>         <C>             <C>       <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
                                    Aug. 31,
                                      2006
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                                 Authorized Stock                               Outstanding Stock           Reserved for Options/
                                 ----------------                               -----------------           Conversions/Warrants/
                                                                                                            Dividends(1)
Company                      Common              Preferred         Common                  Preferred        Common(2)      Preferred
-------                      ------              ---------         ------                  ---------        ---------      ---------
------------------------------------------------------------------------------------------------------------------------------------
Harold's Stores, Inc.      25,000,000  Series 2001-A     500,000    6,223,508    Series 2001-A    342,653                    157,437
------------------------------------------------------------------------------------------------------------------------------------
                                       Series 2002-A     300,000                 Series 2002-A    231,550                     68,450
------------------------------------------------------------------------------------------------------------------------------------
                                       Series 2003-A     100,000                 Series 2003-A     56,742                     43,258
------------------------------------------------------------------------------------------------------------------------------------
                                       Series 2006-A      75,000                 Series 2006-A     25,000                     50,000
------------------------------------------------------------------------------------------------------------------------------------
                                       Series 2006-B      25,000                 Series 2006-B         --                     25,000
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Harold's Financial
Corporation                    20,000                    180,000       20,000                     180,000
------------------------------------------------------------------------------------------------------------------------------------
Harold's Direct, Inc.          50,000                        N/A       50,000                         N/A
------------------------------------------------------------------------------------------------------------------------------------
Harold's Limited Partners,
Inc.                           50,000                        N/A          500                         N/A
------------------------------------------------------------------------------------------------------------------------------------
Harold's DBO, Inc.             50,000                        N/A        1,000                         N/A
------------------------------------------------------------------------------------------------------------------------------------
HSTX, Inc.                     50,000                        N/A        1,000                         N/A
------------------------------------------------------------------------------------------------------------------------------------
Harold's of Jackson, Inc.      50,000                     50,000       50,000                      50,000
------------------------------------------------------------------------------------------------------------------------------------
The Corner Properties, Inc.    50,000                        N/A       50,000                         N/A
------------------------------------------------------------------------------------------------------------------------------------
Harold's of White Flint,
Inc.                           10,000                        N/A       10,000                         N/A
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Harold's Stores of Texas, L.P.- owned by HSTX, Inc. (1%) and Harold's Limited Partners, Inc. (99%)
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
(1) Holders of Preferred stock have rights to receive dividends in kind and RonHow LLC has rights to various series of Preferred
Stock pursuant to conversion of indebtedness or exercise of warrants
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
(2) All remaining shares of Common Stock are reserved for issuance pursuant to outstanding options under the Company's Stock Option
Plan or upon conversion of Preferred Stocks
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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