HAROLDS STORES INC, S-2, 1996-05-20

HAROLDS STORES INC
S-2, 1996-05-20
FAMILY CLOTHING STORES

Previous: CUSA TECHNOLOGIES INC, 10QSB, 1996-05-20

Next: INTERNATIONAL META SYSTEMS INC/DE/, PRE 14A, 1996-05-20

As filed with the Securities and Exchange Commission on May 20, 1996

Registration No. 333_____

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
________________________

FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________________

HAROLD'S STORES, INC.
(Exact name of registrant as specified
in its charter)

Oklahoma 73-1308796
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

765 Asp Avenue
Norman, Oklahoma 73069
(405) 329-4045
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

H. Rainey Powell
President and Chief Financial Officer
Harold's Stores, Inc.
765 Asp Avenue Norman, Oklahoma 73069
(405) 329-4045
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copy to:

Lon Foster, III Lathan M. Ewers, Jr
Crowe & Dunlevy, Hunton & Williams
A Professional Corporation Riverfront Plaza
500 Kennedy Building 951 East Byrd Street
321 South Boston Richmond, Virginia 23219-4074
Tulsa, Oklahoma 74103-3313 (804) 788-820
(918) 592-9800

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. _____
If the Registrant elects to deliver its annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box: _____
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. _____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. _____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. _____

CALCULATION OF REGISTRATION FEE

Title of Each Class Amount Proposed Proposed Amount of
of Securities to to be Maximum Maximum Registration
be Registered Registered(1) Offering Aggregate Fee
Price Per Offering
Share(2) Price(2)

Common Stock, par value 672,750
$.01 per share shares $15.875 $10,679,907 $3,683

(1) Includes shares that may be sold by the Company and the Selling
Shareholders upon exercise of the Underwriter's over-allotment option.
(2) Pursuant to Rule 457(c), estimated solely for purposes of calculating the
registration fee at $15.875 per share, which is the average of the high and
low sale prices on May 14, 1996, on the American Stock Exchange.

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine

HAROLD'S STORES, INC.

CROSS REFERENCE SHEET

Pursuant to Item 1 of Form S-2, the following sets forth the
location in the Prospectus of the information called in Part I of Form S-2.

Item Number and Caption in Form S-2 Caption in Prospectus

1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Cover Page of Registration Statement;
Cross Reference Sheet;
Outside Front Cover Page of
Prospectus

2. Inside Front and Outside Back Cover
Page of Prospectus Inside Front Cover Page; Available
Information;
Outside Back Cover Page

3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges Prospectus Summary; Risk Factors

4. Use of Proceeds Use of Proceeds

5. Determination of Offering Price Not Applicable

6. Dilution Not Applicable

7. Selling Security Holders Selling Shareholders

8. Plan of Distribution Outside Front Cover Page;
Underwriting

9. Description of Securities to Be
Registered Description of Capital Stock

10. Interests of Named Experts
and Counsel Underwriting and Legal Matters

11. Information with Respect to the
Registrant Prospectus Summary; Capitalization;
Price Range of Common Stock and
Dividend Policy; Selected
Consolidated Financial Data;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations;
Business; Management and Directors;
Selling Shareholders; Description
of Capital Stock; Consolidated
Financial Statements

12. Incorporation of Certain
Information by Reference Incorporation of Certain Documents
By Reference

13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities Not Applicable

SUBJECT TO COMPLETION, DATED MAY ___, 1996

PROSPECTUS

585,000 SHARES
HAROLD'S
Harold's Stores, Inc.
COMMON STOCK

Of the 585,000 shares of Common Stock offered hereby (the "Shares"),
400,000 shares are being sold by Harold's Stores, Inc. ("Harold's" or the
"Company") and 185,000 shares are being sold by certain shareholders of the
Company (the "Selling Shareholders"). See "Selling Shareholders." The Company
will not receive any of the proceeds from the sale of the shares of Common
Stock by the Selling Shareholders.

The Common Stock is listed on the American Stock Exchange ("AMEX") under
the trading symbol HLD. On May 15, 1996, the last reported sale price of the
Common Stock on the AMEX was $16.50 per share. See "Price Range of Common Stock
and Dividend Policy."

See "Risk Factors" beginning on page 6 of this Prospectus for a discussion
of certain factors that should be considered by prospective investors before
purchasing any of the Shares offered hereby.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Proceeds to
Underwriting Proceeds to Selling
Price to Public Discounts(1) Company(2) Shareholders(2)

Per Share $_______ $_______ $_______ $_______
Total (3) $_______ $_______ $_______ $_______

(1) The Company and the Selling Shareholders have agreed to
indemnify the Underwriter against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses estimated to be $______, all of which will
be paid by the Company.

(3) The Company and the Selling Shareholders have granted the Underwriter
a 30-day option to purchase up to 87,750 additional shares of Common Stock on
the same terms as set forth above solely to cover over-allotments, if any. If
the option is exercised in full, the total Price to Public, Underwriting
Discounts, Proceeds to Company, and Proceeds to Selling Shareholders will be
$______, $______, $______, and $______, respectively. See "Underwriting."

The Shares being offered by this Prospectus are offered by the Underwriter,
subject to prior sale, when, as and if delivered to and accepted by the
Underwriter and subject to certain conditions. It is expected that certificates
for the shares of Common Stock will be available for delivery against payment
therefor on or about June __, 1996, at the offices of Scott & Stringfellow,
Inc., Richmond, Virginia.

Scott & Stringfellow, Inc.
The date of this Prospectus is May __, 1996.

The following legend will appear in the left margin of the immediately
preceding cover page of the Prospectus:

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Reports, proxy statements and information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Room 1024, Washington, D.C. 20549, and as its Regional Offices at Seven World
Trade Center, Suite 1300, New York, New York 10048 and at Citicorp Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611. Copies of
such materials also may be obtained at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Common Stock is listed on the American Stock
Exchange, and such reports, proxy statements and other information concerning
the Company may be inspected and copies at the offices of the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.

The Company has filed with the SEC a Registration Statement on Form S-2
(the "Registration Statement"), of which this Prospectus constitutes a part,
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Shares. This Prospectus does not contain all the information set
forth in or incorporated by reference in the Registration Statement and the
exhibits and schedules thereto in accordance with the rules and regulations
of the SEC. For further information with respect to the Company and the
Shares, reference is made to the Registration Statement and the exhibits and
schedules thereto. Copies of the Registration Statement and the exhibits
thereto are on file at the offices of the SEC and may be obtained upon
payment of a prescribed fee or may be examined without charge at the Public
Reference Section of the SEC, Washington, D.C. Statements contained in this
Prospectus concerning the provisions of documents filed with the
Registration Statement as exhibits are necessarily summaries of such
documents, and each such statement is qualified in its entirety by reference
to the copy of the applicable document filed with the SEC.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Incorporated by reference in this Prospectus as of the date of its filing,
and subject in such case to information contained in this Prospectus, is the
Company's Annual Report on Form 10-K for the fiscal year ended February 3, 1996,
which has been filed by the Company with the SEC pursuant to the 1934 Act.

The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated by reference in this Prospectus
(other than exhibits and schedules thereto, unless such exhibits or schedules
are specifically incorporated by reference into the information that this
Prospectus incorporates). Written or telephonic requests for such copies should
be directed to H. Rainey Powell, Harold's Stores, Inc., 765 Asp Avenue, Norman,
Oklahoma 73069, telephone (405) 329-4045.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements (including the Notes thereto) appearing elsewhere in this Prospectus.
All share and per share information set forth herein has been adjusted to
reflect the 5% stock dividend paid in fiscal 1996 and the 10% stock dividends
paid in fiscal 1995, fiscal 1994 and fiscal 1993. Unless otherwise indicated,
all information contained herein assumes no exercise of the Underwriter's over-
allotment option or of options granted pursuant to the Company's stock option
and equity incentive plan. See "Underwriting" and "Selling Shareholders".

The Company

Harold's Stores, Inc., through a 31-location store chain of women's and
men's specialty apparel stores in 15 states, offers high-quality, classically
inspired apparel to the upscale, quality-conscious consumer primarily in the 20
to 50 year old age group. The stores typically are strategically located in
shopping centers and malls with other top-of-the-line specialty retailers and
are enhanced by an eclectic mix of antiques, together with specially designed
fixtures and visual props, to create an appealing stage for presentation of the
Company's distinctive women's and men's apparel and accessories. More than 85%
of sales consist of the Company's controlled designs originated by Harold's
own stylists and designers and resourced by Harold's buyers from domestic,
European and Asian manufacturers. See "Business - Product Development and
Sourcing Programs." The remainder consists of branded merchandise selected
to complement Harold's merchandise presentation.

The Company's 31 stores are comprised of 12 full-line women's and men's
apparel stores, nine women's apparel stores which include a presentation of
men's sportswear featuring the Company's Old School Clothing brand, eight stores
featuring women's apparel only and two outlet stores to clear markdowns and
slow-moving merchandise. Retail stores range in size from about 2,100 to 14,000
square feet, with the typical store ranging from 4,000 to 6,000 square feet.
The Company's store occupancy costs were 7.3% of store sales in fiscal 1996 and
7.2% of store sales in fiscal 1995. Store occupancy costs include base and
percentage rent, common area maintenance expense, utilities and depreciation of
leasehold improvements.

The Company achieved comparable store sales growth of 8.7% in fiscal 1996
and 10.7% in fiscal 1995. The Company believes that this increase in comparable
store sales is attributable to Harold's product development and merchandising
and Harold's commitment to customer service through its sales associates. The
Company's average sales per square foot for stores open during the entire fiscal
year were $628 and $599 for fiscal 1996 and fiscal 1995, respectively, on a 52-
week basis.

The Company believes that its future success will be achieved by expanding
the number of its women's and men's apparel stores, maintaining sales momentum
at existing stores, and increasing circulation of its direct response catalog.
The Company recently embarked on an aggressive expansion program, adding in the
aggregate eight retail stores during fiscal 1995 and fiscal 1996 and thereby
increasing the chain store count by approximately 40%.

The Company's expansion plan has focused and will continue to focus
primarily on markets currently served by the Company and in new markets that
represent a geographical progression from existing markets. Thus far during
fiscal 1997, the Company has opened stores in Greenville, South Carolina, and
Leawood, Kansas (Kansas City metro) and plans to open four additional stores.
These four stores are planned for opening during the balance of fiscal 1997 in
regional shopping malls in Raleigh, North Carolina, Tyson's Corner (Northern
Virginia), Houston and Denver. All six stores will feature a full line of
women's merchandise, while four will include a full line of men's merchandise
and two will offer men's sportswear.

Beginning in 1990, the Company created a direct response catalog that, in
addition to contributing to sales, has provided market research and initial
promotion of new store openings. Catalog sales have increased from $620,000 in
fiscal 1992 to $9,384,000 in fiscal 1996. In fiscal 1996, the Company mailed six
issues of the catalog, averaging 48 pages, with aggregate circulation of
approximately 6.5 million issues.

The mailing address and telephone number of the Company's principal
executive offices are 765 Asp Avenue, Norman, Oklahoma 73069, (405) 329-4045.

The Offering
Common Stock Offered by (1)
The Company 400,000 shares
The Selling Shareholders 185,000 shares
Shares Outstanding
After this Offering (2) 5,365,245 shares
Use of Proceeds To reduce indebtedness, to finance
expansion of the Company's chain of stores
and its credit card receivables, and for
working capital.
AMEX symbol HLD
_______________________

(1) Assumes that the Underwriter's over-allotment option to purchase up
to 87,750 shares will not be exercised. See "Underwriting."

(2) Excludes 376,276 shares of Common Stock reserved for issuance
pursuant to outstanding stock options as of May 1, 1996.

Fiscal Years

The Company operates on a 52-53 week fiscal year which ends on the Saturday
closest to January 31. References herein to fiscal 1997, fiscal 1996, fiscal
1995, fiscal 1994, fiscal 1993 and fiscal 1992 refer to the years ended February
1, 1997, February 3, 1996, January 28, 1995, January 29, 1994, January 30, 1993
and February 1, 1992.
<TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following summary financial information is derived from the
consolidated financial statements of the Company for the fiscal years 1992
through 1996 and the first quarter of fiscal 1997.

<CAPTION>
Fiscal Year Fiscal Quarter Ended
1992 1993 1994 1995 1996 April 29, May 4,
1995 1996
(Dollar amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statments of Earnings Data:
Sales $40,553 $49,279 $60,940 $75,795 $94,264 $21,316 $
Gross profit on sales 12,990 16,303 20,349 26,407 34,433 7,448
Earnings before income taxes 1,148 1,875 2,783 3,539 4,645 811
Net earnings 647 1,052 1,612 2,088 2,787 486
Earnings per common share(1) $ 0.15 $ 0.25 $ 0.35 $ 0.42 $ 0.56 $ 0.10 $
Balance Sheet Data:
Working capital $ 8,732 $ 9,985 $12,540 $12,524 $21,829 $12,272 $
Total assets 20,085 21,947 26,441 34,661 42,609 35,759
Long-term debt(2) - 1,177 669 594 9,540 575
Stockholders' equity 14,302 15,366 19,996 22,260 25,299 22,819
Net book value per share(3) $ 3.36 $ 3.61 $ 4.07 $ 4.51 $ 5.10 $ 4.62 $
Other Operating Data:
Stores open at end of period(4) 15 18 21 25 29 26
Growth in comparable store
sales (52-53 week basis) 1.1% 8.1% 7.4% 10.7% 8.7% 7.8%

(1) Net earnings per common share are based on the weighted average
number of common shares outstanding during each period restated for the 5%
stock dividend in fiscal 1996 and the 10% percent stock dividends in fiscal
1995, fiscal 1994, and fiscal 1993, and include Common Stock equivalents of
53,181 shares in fiscal 1996.

(2) In fiscal 1996, the Company renewed its line of credit to be payable
at a fixed maturity rather than on demand which required the loan to
be reclassified as long-term debt.

(3) Net book value per share is based on the number of common shares
outstanding at the end of each fiscal year restated for the 5% percent stock
dividend in fiscal 1996 and the 10% percent stock dividends in fiscal 1995,
fiscal 1994 and fiscal 1993.

(4) The number of stores open at the end of the period has been restated
to reflect the consolidation of the stand alone "Old School Clothing Company"
into the 50 Penn Place Store in Oklahoma City.
</TABLE>

RISK FACTORS

Prospective investors should consider carefully the following factors
as well as the other information contained in this Prospectus before
purchasing any of the shares offered hereby:

Product Development; Merchandise Inventories. As a consequence of the
Company's product development programs, a substantial portion of the Company's
merchandise purchases are concentrated among a small number of vendors. The
Company believes that fewer vendor relationships advance the Company's product
development objectives of increasing control over design and manufacturing
processes, providing the Company enhanced control over the quality and cost of
the Company's inventory purchases. However, since the Company works with a
limited number of vendors, non-delivery or late delivery by any one of the
Company's principal vendors could adversely affect the Company's operations. In
the event of the termination of the relationship with the Company's principal
vendor, the Company believes that more than one new vendor would be required to
replace the loss of that vendor. Although management believes that replacement
vendors could be located if any buying relationship is terminated, until
replacement vendors are located, the operating results of the Company could be
materially adversely affected.

The Company's product development programs also require it to be involved
earlier in the process of creating merchandise and to make financial commitments
sooner than would otherwise be necessary were it relying solely on outside
vendor developed merchandise. The Company's investment in piece goods (fabric)
and work in process has increased significantly during the last fiscal year.
Since the Company, in most instances, purchases piece goods to be used in its
products direct from various mills, there is a relatively long lead time
involved in the manufacturing process and investment in piece goods before these
goods are cut and sewn. As a result, the Company is vulnerable to demand and
pricing shifts and to errors in selection and timing of merchandise purchases.
See "Business - Product Development and Sourcing Programs."

Expansion Plans. The Company has grown from 21 stores in 1994 to 31 stores
as of May 1, 1996 and its sales have grown significantly in the past several
years. The Company intends to continue to pursue its aggressive store opening
strategy. The continued growth of the Company is dependent, in large part, upon
the Company's ability to open new stores on a timely basis and to operate them
profitably. The Company plans to open approximately six new stores in fiscal
1997, two of which are already open. As of May 1, 1996, the Company had signed
leases with respect to three new stores and had reached an agreement in
principle with respect to one additional new store to open in fiscal 1997.
Successful expansion is subject to various contingencies, some of which are
beyond the Company's control. These contingencies include, among others, (i)
the Company's ability to hire, train and retain qualified managers and other
personnel, and to maintain good relations with all of its employees,
(ii) the availability of adequate inventory, capital resources and external
financing, (iii) the Company's ability to identify and secure suitable
store sites on a timely basis and on satisfactory terms and to complete
any necessary construction or refurbishment of these sites, (iv) the
successful integration of new stores into existing operations and
(v) the Company's ability to adjust its merchandise mix to accommodate
various consumer preferences and climates in markets where the Company has
not previously operated. There can be no assurance that the Company
will be able to achieve its targets for opening new stores, that its new stores
will be profitable or achieve net sales and profitability comparable to the
Company's existing stores, or that comparable store net sales increases will
continue. Furthermore, there can be no assurance that the Company will
anticipate all of the changing demands which its expanding operations will
impose on its systems and personnel. The Company's failure to expand internal
systems or to hire, train and retain qualified personnel as required by its
growth could adversely affect its future operating results. See "Business -
General."

Regulations and Foreign Currency Exchange. The Company purchased
approximately 13.4% of its merchandise based on cost in fiscal 1996 directly
from vendors located abroad, primarily in the United Kingdom, Italy, France, and
the Far East. In addition, the Company believes that a substantial portion of
the goods the Company purchases from domestic vendors are manufactured abroad.
These arrangements are subject to the risks of relying on products manufactured
abroad, including import duties and quotas, loss of "most favored nation"
trading status and currency risk associated with the purchase of merchandise.
The Company must continuously seek out buying opportunities from both its
existing suppliers and new sources, for which it competes with other apparel
retailers. Although the Company believes that its management has long standing
and excellent relationships with its suppliers, there can be no assurance that
the Company will be successful in maintaining a continuing and in light of the
anticipated addition of new stores, an increasing supply of quality merchandise
at attractive prices. See "Business and Properties-Retail Merchandising".
Substantially all of the Company's purchases from the Far East, including Hong
Kong, are priced in U.S. dollars. However, its European purchases are
denominated in local currency and, therefore, are subject to fluctuating
currency exchange rates. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Results of Operations".

Dependence Upon Key Personnel. The Company's success
depends to a significant extent upon the leadership and performance of its
senior management team, particularly Harold G. Powell, Chairman of the Board,
Rebecca Powell Casey, Vice Chairman of the Board and Chief Executive Officer, H.
Rainey Powell, President and Chief Operating and Financial Officer and Kenneth
C. Row, Executive Vice President. While the Company believes that its senior
management team has significant depth, the loss of services of any of the
executive officers of the Company could have a material adverse impact on the
Company. See "Management and Directors".

Control of the Company. Harold G. Powell, Chairman of the Board of the
Company, members of his family (including Rebecca Powell Casey and H. Rainey
Powell, officers of the Company) and certain trusts, the beneficiaries of which
are Powell family members, currently own beneficially approximately 54.1% of the
outstanding shares of Common Stock. After giving effect to this offering, the
aggregate beneficial ownership of members of the Powell family and certain
trusts will be reduced to approximately 46.6% of the outstanding shares of
Common Stock. Members of the Powell family may continue to effectively
control the business and affairs of the Company following completion of
this Offering. See "Description of Common Stock".

In the ordinary course of business, the Company engages in
transactions with entities owned by the Powell family. During fiscal 1996,
payments by the Company to these entities totaled approximately $362,000,
representing lease payments with respect to the Company's distribution and
receiving facility in Norman, Oklahoma, its Dallas, Texas buying and
administrative offices, and its Norman, Oklahoma retail store and related
facilities. See "Business - Merchandise Buying Office and Distribution
Center" and Notes to Consolidated Financial Statements - Note 8.

Competition and Other Business Factors. All aspects of the retail apparel
business are highly competitive. The Company competes primarily with better
department stores, specialty retailers and boutiques engaged in the retail sale
of better quality women's and men's apparel, many of which are larger and have
greater resources than the Company. Although the Company believes its emphasis
on classically inspired styles makes it less vulnerable to changes in fashion
trends than many other apparel retailers, the Company's sales and earnings
nevertheless depend to a significant extent upon its ability to respond to
changes in fashion. See "Business - Competition". The Company's future
performance will be subject to a number of factors beyond its control, including
economic downturns, cyclical variations in the retail market for better quality
apparel and rapid changes in fashion preferences. In addition, in order to
continue to grow at the rates achieved in recent years, the Company will have to
continue to open new stores. Such growth will be dependent upon general economic
and business conditions affecting consumer spending, the availability of
desirable locations and the negotiation of acceptable lease terms for new
locations. See "Business - General".

Seasonality and Quarterly Fluctuations. The Company has historically
experienced and expects to continue to experience seasonal fluctuations in its
sales, operating income and net income. The highest sales periods for the
Company are the early autumn and Christmas seasons falling in the third and
fourth fiscal quarters, respectively. A disproportionate amount of the
Company's sales, operating income and net income, are generally realized during
the fourth quarter. In anticipation of increased sales activity during these
months, the Company purchases substantial amounts of inventory and hires a
significant number of temporary employees to bolster its permanent store staff.
If, for any reason, the Company's sales were below seasonal norms during the
third and fourth fiscal quarters, including as a result of merchandise delivery
delays due to receiving or distribution problems, the Company's annual operating
results, particularly operating and income could be adversely affected.
Historically, net sales, operating income and net income have been weakest
during the first fiscal quarter, and the Company expects this trend to continue.
The Company's quarterly results of operations may also fluctuate significantly
as a result of a variety of factors, including the timing of new store openings,
the sales contributed by new stores, shift in the timing of certain holidays and
the merchandise mix. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Seasonality."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Shares are estimated
to be approximately ________(approximately $____ if the Underwriter's over-
allotment option is exercised in full). Substantially all of the net proceeds to
the Company will be used to reduce indebtedness, to finance the expansion of the
Company's chain of retail stores, to finance the Company's credit card
receivables and for working capital. Pending any such uses, the Company intends
to reduce borrowing under its working capital lines. See "Business - Catalog
Publication and Order Fulfillment and - Merchandise Inventory Replenishment and
Distribution," and Notes to Consolidated Financial Statements - Note 4.

The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Shareholders.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is listed on the American Stock Exchange under
the symbol "HLD." The table below presents the range of high and low sale
prices of the Common Stock for the periods indicated. The price per share
information contained in the following table is restated to reflect a 5% stock
dividend paid in fiscal 1996 and a 10% stock dividend paid in fiscal 1995.

Fiscal 1997 High Low
1st Quarter $18.00 $11.75
2nd Quarter (through 16.75 15.63
May 5, 1996)

Fiscal 1996 High Low
1st Quarter $10.60 $ 9.40
2nd Quarter 10.60 9.52
3rd Quarter 10.36 9.17
4th Quarter 11.79 9.40

Fiscal 1995 High Low
1st Quarter $ 8.66 6.39
2nd Quarter $12.34 8.01
3rd Quarter $10.71 7.58
4th Quarter $10.17 8.66

The last sale price of the Common Stock as reported on the American Stock
Exchange on May 15, 1996, was $16.50. As of May 1, 1996, there were 595 record
holders of the Company's Common Stock. The Company has never declared or paid
cash dividends on its Capital Stock and presently intends to retain all earnings
for the operation and expansion of its business for the foreseeable future. Any
future determination as to the payment of cash dividends will depend on the
Company's earnings, capital requirements, financial condition and other factors
as the Company's Board of Directors may deem relevant.

CAPITALIZATION

The following table sets forth the unaudited consolidated
capitalization of the Company as of the end of the Company's fiscal quarter on
May 4, 1996, and as adjusted to give effect to the sale by the Company of
400,000 shares of Common Stock offered hereby (excluding 60,000 shares issuable
upon exercise of the Underwriter's over-allotment option). This table should be
read in conjunction with the consolidated financial statements of the Company
and the notes thereto appearing elsewhere, or incorporated by reference, in this
Prospectus.

As of May 4, 1996
Actual As Adjusted
(In thousands)
Short-term obligations (includes
current portion of long-term debt) $ 75 $
Long-term obligations (excludes
current portion of long-term debt)(1) 9,418

Stockholder's equity :
Preferred Stock; $0.01 par value;
1,000,000 shares authorized; none
issued --
Common Stock; $0.01 par value;
7,500,000 shares authorized; 4,965,245
shares issued (5,365,245 shares as
adjusted)(2)(3) 50
Additional paid-in capital 20,673
Retained earnings ______ ______
Total stockholders' equity ______ ______
Total capitalization $_____ $_____

(1) See Notes to Consolidated Financial Statements - Note 4 for
information concerning long-term indebtedness of the Company.

(2) 5,425,245 shares if the Underwriter's over allotment option is
exercised in full.

(3) See Notes to Consolidated Financial Statements - Note 6.
Excludes approximately 376,276 shares of Common Stock reserved for
issuance pursuant to outstanding awards under the Company's stock
option and equity incentive plan as of May 4, 1996.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial information
are derived from the audited Consolidated Financial Statements
of the Company and should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and the notes thereto, appearing elsewhere
or incorporated by reference in this Prospectus.

Fiscal Years
1992 1993 1994 1995 1996
(In thousands, except store and per share data)
Statements of Earnings Data:
Sales $40,553 $49,279 $60,940 $75,795 $94,264
Percentage increase 6.8% 21.5% 23.7% 24.4% 24.4%

Gross profit on sales(1) $12,990 $16,303 $20,349 $26,407 $34,433
Percentage of sales 32.0% 33.1% 33.4% 34.8% 36.5%

Earnings before income
taxes $ 1,148 $ 1,875 $ 2,783 $ 3,539 $ 4,645
Percentage of sales 2.8% 3.8% 4.5% 4.7% 4.9%

Net earnings $ 647 $ 1,052 $ 1,612 $ 2,088 $ 2,787
Percentage of sales 1.6% 2.1% 2.6% 2.8% 3.0%

Earnings per common
share(2) $ 0.15 $ 0.25 $ 0.35 $ 0.42 $ 0.56

Other Operating Data:
Stores open at end of 15 18 21 25 29
period(3)
Growth in comparable
store sales 1.1% 8.1% 7.4% 10.7% 8.7%
(52-53 week basis)

Balance Sheet Data:
Working capital $ 8,732 $9,985 $12,540 $12,524 $21,829

Total assets 20,085 21,947 26,441 34,661 42,609

Long-term debt(4) - 1,177 669 594 9,540

Stockholders' equity 14,302 15,366 19,996 22,260 25,299

Net book value per
share(5) $ 3.36 $ 3.61 $ 4.07 $ 4.51 $ 5.10
_______________________

(1) In accordance with retail industry practice, gross
profit on sales is calculated by subtracting cost of goods sold (including
occupancy and central buying expenses) from sales.

(2) Net earnings per common share are based on the
weighted average number of shares of Common Stock outstanding during each period
restated for the 5% percent stock dividend in fiscal 1996 and the 10% stock
dividends in fiscal 1995, fiscal 1994, and fiscal 1993, and includes Common
Stock equivalents of 53,181 shares in fiscal 1996.

(3) The number of stores open at the end of the period
have been restated to reflect the consolidation of the stand alone "Old School
Clothing Company" into the 50 Penn Place Store in Oklahoma City.

(4) In fiscal 1996, the Company renewed its line of credit to be payable
at a fixed maturity rather than on demand which required the loan to be
reclassified as long-term debt.

(5) Net book value per share is based on the number of
shares of Common Stock outstanding at the end of each fiscal year restated for
the 5% stock dividend in fiscal 1996 and the 10% stock dividends in fiscal 1995,
fiscal 1994 and fiscal 1993.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table reflects items in the Company's statement of earnings
as a percentage of sales for the periods indicated:

Fiscal Year
1994 1995 1996

Sales 100.0% 100.0% 100.0%

Cost of goods sold (66.6) (65.2) (63.5)
Selling, general and
administrative expenses (19.8) (19.7) (20.5)
Advertising expense (6.5) (7.8) (8.3)
Depreciation and amortization (2.3) (2.3) (2.3)
Interest expense (0.3) (0.3) (0.5)

Earnings before income taxes 4.5 4.7 4.9
Provision for income taxes (1.9) (1.9) (1.9)

Net earnings 2.6% 2.8% 3.0%

The following table reflects the sources of the increases in Company sales
for the periods indicated:

Fiscal Year
1994 1995 1996

Store sales (000's) $55,504 $68,901 $84,880
Catalog sales (000's) 5,436 6,894 9,384

Sales (000's) $60,940 $75,795 $94,264

Total sales growth 23.7% 24.4% 24.4%
Growth in comparable
store sales
(52-53 week basis) 7.4 10.7 8.7
Growth in catalog sales 68.6 26.8 36.1

Store locations:
Existing stores beginning
of period 18 21 25
New stores opened during period 3 4 4
Total stores at end
of period 21 25 29

The opening of new stores, the expansion of existing
stores, as well as the increase in comparable store sales and the growth in
catalog sales, contributed to total sales growth for fiscal years 1994, 1995,
and 1996. New stores opened during fiscal 1996 included a 4,221 square foot
men's and ladies' store in St. Louis, Missouri opened in March 1995 (first
quarter); a 4,292 square foot ladies' and "Old School" store opened in
Louisville, Kentucky in September 1995 (third quarter); a 5,200 square foot
full-line men's and ladies' store opened in Baton Rouge, Louisiana in November
1995 (third quarter); and Harold's second outlet center, a 5,160 square foot
store in Hillsboro, Texas in December 1995 (fourth quarter).

New stores opened during fiscal year 1995 included a 4,000 square foot
ladies' and "Old School" store in Charlotte, North Carolina opened in July 1994
(second quarter); a 3,300 square foot ladies' store opened in Austin, Texas in
September 1994 (third quarter); a 5,500 square foot full-line men's and ladies'
store opened in Plano, Texas in October 1994 (third quarter); and a 5,000 square
foot ladies' and "Old School" store opened in Phoenix, Arizona in November 1994
(fourth quarter).

Significant increases in mail order catalog sales are the direct result of
the Company's expansion of this segment of the business. Since the 1989 test
market of Harold's first catalog, the Company has expanded its regular catalog
to include six seasonal issues each year. For fiscal 1996, the Company's
catalog averaged 48 pages per issue with an aggregate mailing (including
abridged issues) of approximately 6.5 million catalogs.

The Company's gross margin increased for fiscal 1996 compared to fiscal
1995 and fiscal 1994. This increase is the result of a combination of several
factors. Increased sales volume has enabled the Company to more easily meet the
minimums required in the purchase of piece goods and the manufacturing of
garments. This has resulted in a reduction of overbuys and markdowns.
Verticalization in product development has created opportunities for increases
in initial markups. Improved control of downflow of merchandise to the outlet
stores has contributed to the reduction in ultimate markdowns. Any increase in
net earnings as a percentage of sales will be the result of increasing sales
while controlling selling, general and administrative expenses and improvement
in gross profit on sales.

Selling, general and administrative expenses continue to
increase. Catalog production cost increased 38% and 51% in fiscal years 1996
and 1995, respectively. These increases in costs were due to the expansion of
catalog operations. In fiscal 1997, the Company plans to decrease the rate of
sales growth in the catalog division resulting in a decrease in catalog expenses
as a percentage of sales. Additionally, an increase of approximately 29% in
sales salaries is associated with the Company's efforts to improve the quality
of customer service in all stores. The Company anticipates a leveling of this
expense category as a percentage of sales. Management anticipates that selling,
general and administrative expenses will continue to increase as a result of the
Company's expansion plans to open six new stores in fiscal 1997 compared to four
new stores in fiscal 1996.

The average balance on total outstanding debt was $7,633,000 in fiscal 1996
compared to $3,668,000 for fiscal 1995. Average interest rates on the Company's
line of credit were higher in fiscal 1996, resulting in an increase in the
Company's cost of borrowed capital. As the Company's growth continues, cash
flow may require additional borrowed funds which may cause an increase in
interest expense.

The Company's purchases denominated in foreign currency
are of a short term nature. The Company does not hedge these foreign currency
transactions and it has not been adversely affected in the past. The Company
has no assurances that the impact in the future may not be material.

The Company's income tax rate of 42% in fiscal 1994 and
41% in fiscal 1995, decreased to 40% in fiscal 1996. This decreased tax rate is
attributable to the Company's estimation of higher tax rates on temporary
differences in fiscal 1994 and fiscal 1995 compared to the tax rates currently
estimated.

Capital Expenditures, Capital Resources and Liquidity

Cash Flows From Operating Activities. For fiscal 1996,
net cash provided by operating activities was $709,000 as compared to $569,000
for fiscal 1995. The significant increase in cash flows from operating
activities is partially attributable to the difference in timing of cash
disbursements as reflected in an increase in accounts payable of $242,000 for
fiscal 1996, as compared to an increase in accounts payable of $1,326,000 for
fiscal 1995. In addition, the difference in cash flows from operating
activities between the two fiscal periods is partially due to an increase of
$3,800,000 in the Company's merchandise inventories for fiscal 1996, as compared
to fiscal 1995, during which inventories increased by $5,200,000, as a result of
the change in the relationship with CMT Enterprises, Inc. (see "Liquidity").
Management expects the dollar amount of its merchandise inventories will
continue to increase as it expands its product development and private label
merchandise and expands its chain of retail stores and catalog operations, with
related increases in trade accounts receivable and accounts payable. Period-to-
period differences in timing of inventory purchases and deliveries will affect
comparability of cash flows from operating activities.

In addition, the increased net earnings from fiscal 1996 and fiscal 1995,
of $2,787,000 and $2,088,000, respectively, resulted in an increase in accrued
expenses of $642,000 as compared to $656,000 for fiscal 1996 and 1995,
respectively.

Cash Flows From Investing Activities. For fiscal 1996 net cash used in
investing activities was $4,857,000 as compared to $3,952,000 for fiscal
1995. Capital expenditures totaled $5,159,000 for fiscal 1996 and
$3,994,000 for fiscal 1995 and were invested in the new stores and in
remodeling and equipment expenditures in existing operations.

Cash Flows From Financing Activities. During fiscal 1996, the Company made
periodic borrowings under its revolving credit facility (see "Liquidity") to
finance its inventory purchases, store expansion, remodeling and equipment
purchases for the fiscal year.

The Company has available a long-term line of credit with its bank,(see
"Liquidity"). This line had an average balance of $7,000,000 and $2,961,000 for
the fiscal years 1996 and 1995, respectively. During fiscal 1996, this line of
credit had a high balance of $10,337,000 and a $9,021,000 balance as of February
3, 1996. The balance at March 29, 1996, was $9,817,000.

Liquidity. The Company considers the following as measures of liquidity
and capital resources as of the dates indicated:

Fiscal Year
1994 1995 1996
Working capital(000's) $12,540 $12,524 $21,829
Current ratio 3.23:1 2.08:1 3.89:1
Ratio of working capital to total assets .47:1 .36:1 .51:1
Ratio of long-term debt (including current
maturities) to stockholders' equity .11:1 .25:1 .38:1

In fiscal 1996, the Company renewed its line of credit to
be payable at a fixed maturity rather than on demand. As a
result the loan was reclassified as long-term debt rather than as a current
liability.

As a result of the change in fiscal 1995 in the relationship with CMT
Enterprises, Inc., the Company was required to increase its borrowings
approximately $5,200,000 to finance the purchase of raw materials and
manufacturing of finished goods. Previously, CMT sold finished goods to the
Company. Under the new arrangement, CMT acts as the Company's agent in the
purchase of raw materials (i.e. fabrics, linings, buttons, etc.) and supervises
the manufacturing process of the Company's merchandise with manufacturing
contractors. Increases in inventory because of the Company's expansion have
required increased borrowings under the Company's credit line.

The Company's primary needs for liquidity are to finance its inventories
and revolving charge accounts and to invest in new stores, remodeling, fixtures
and equipment.

Management believes cash flow from operations and its existing banking
arrangements should be sufficient to meet its operating needs and capital
expenditures through fiscal 1997. The Company's capital expenditures budget for
fiscal 1997 is approximately $3,700,000. Subsequent to February 3, 1996, the
Company increased the above line of credit to $15,000,000. Additionally, a
$3,000,000 line of credit was obtained from a separate banking institution for
the purpose of issuing letters of credit.

Management believes that cash flow from operations and its existing banking
arrangements should be sufficient to meet its operating needs and capital
requirements through the fiscal year ending February 1, 1997; however, in
order to take advantage of opportunities to finance the company's growth,
management believes it prudent to increase the equity capitalization of the
Company rather than finance this expansion through additional borrowings.

Seasonality

The Company's business is subject to seasonal influences, with the major
portion of sales realized during the fall season (third and fourth quarters) of
each fiscal year, which includes the back-to-school and the holiday selling
seasons. In light of this pattern, selling, general and administrative expenses
were typically higher as a percentage of sales during the spring seasons (first
and second quarters) of each fiscal year.

Inflation

Inflation affects the costs incurred by the Company in its purchase of
merchandise and in certain components of its selling, general and administrative
expenses. The Company attempts to offset the effects of inflation through price
increases and control of expenses, although the Company's ability to increase
prices is limited by competitive factors in its markets. Inflation has had no
meaningful effect on sales, or net earnings of the Company.

Impact of Pending Accounting Announcements

In March 1995, the Financial Accounting Standards Board
issued Statement 121, "Accounting for the Impairment of LongLived Assets to be
Disposed of" (Statement 121). Statement 121 is required to be adopted for
fiscal years beginning after December 15, 1995. Statement 121 establishes
accounting standards for impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used and for
long-lived assets and certain identifiable intangibles to be disposed of.

In October 1995, the Financial Accounting Standards Board issued Statement
123, "Accounting for Stock-Based Compensation" (Statement 123). Statement 123
is required to be adopted for fiscal years beginning after December 15, 1995.
Statement 123 establishes financial accounting and reporting standards for
stock- based employee compensation plans. The Company does not intend to
adopt the value based accounting measurements recommended by Statement 123.

Management believes that the adoption of Statements 121 and 123 will not
have a significant impact on the financial condition or the results of
operations of the Company.

BUSINESS

General

Harold's Stores, Inc., through a 31-location store chain of women's and
men's specialty apparel stores in 15 states, offers high-quality, classically
inspired apparel to the upscale, quality-conscious consumer primarily in the 20
to 50 year old age group. The stores typically are strategically located in
shopping centers and malls with other top-of-the-line specialty retailers and
are enhanced by an eclectic mix of antiques, together with specially designed
fixtures and visual props, to create an appealing stage for presentation of the
Company's distinctive women's and men's apparel and accessories. More than
85% of sales consist of the Company's controlled designs originated by Harold's
own stylists and designers and resourced by Harold's buyers from domestic,
European and Asian manufacturers. The remainder consists of branded merchandise
selected to complement Harold's merchandise presentation. See "Business -
Product Development and Sourcing Programs."

The Company's 31 stores are comprised of 12 full-line women's and men's
apparel stores, nine women's apparel stores which include a presentation of
men's sportswear featuring the Company's Old School Clothing brand, eight stores
featuring women's apparel only and two outlet stores to clear markdowns and
slow- moving merchandise. Retail stores range in size from about 2,100
to 14,000 square feet, with the typical store ranging from 4,000 to
6,000 square feet. The Company's store occupancy costs were 7.3% of store
sales in fiscal 1996 and 7.2% of store sales in fiscal 1995. Store
occupancy costs include base and percentage rent, common area maintenance
expense, utilities and depreciation of leasehold improvements.

The Company's expansion plan has focused and will continue to focus
primarily on markets currently served by the Company and in new markets that
represent a geographical progression from existing markets. Thus far during
fiscal 1997, the Company has opened stores in Greenville, South Carolina and
Leawood, Kansas (Kansas City metro) and plans to open four additional stores.
These four stores are planned for opening during the balance of fiscal 1997 in
regional shopping malls in Raleigh, North Carolina, Tyson's Corner (Northern
Virginia), Houston and Denver. All six stores will feature a full line of
women's merchandise while four will include a full line of men's merchandise and
two will offer men's sportswear.

Retail Merchandising

The Company's merchandise mix in women's' apparel includes coordinated
sportswear, dresses, coats, outerwear, shoes and accessories, all in updated
classic styles. A fundamental feature of the Company's marketing strategy is
the development of original exclusive and semi-exclusive apparel items. The
Company estimates that approximately 90% of its women's apparel sales are
attributable to the Company's product development and proprietary label
programs. In fiscal 1996, women's apparel accounted for approximately 80% of
sales.

The men's apparel product line includes tailored clothing, suits,
sportcoats, furnishings, sportswear, and shoes. The style is what is known
in the apparel trade as "updated traditional," classic styling with a
contemporary influence. The young executive and college markets account
for a substantial portion of the Company's men's store sales.
Branded lines, include Polo, Corbin, Alden, and Kenneth Gordon. In fiscal 1996
the Company's proprietary label apparel accounts for more than 80% of total
men's sales. The majority of the men's proprietary label sales are in the
Company's Old School Clothing line. In fiscal 1995, men's apparel accounted for
approximately 20% of sales.

The following table sets forth the approximate percentage of sales
attributable to the various merchandise categories offered by the Company in
the past three fiscal years:

Fiscal 1994 Fiscal 1995 Fiscal 1996
(Dollar amounts in thousands)
Women's Merchandise
Sportswear $38,943 63.9% 50,464 66.6% 65,009 69.0%
Shoes 3,270 5.4 3,914 5.2 5,196 5.5
Handbags, Belts and
Accessories 3,608 5.9 4,438 5.9 4,962 5.3

Men's Merchandise
Suits, Sportcoats,
Slacks and
Furnishings 4,904 8.1 5,338 7.0 6,493 6.9
Shoes 728 1.2 845 1.1 991 1.0
Sportswear &
Accessories 9,001 14.8 10,337 13.6 11,256 11.9

Other 486 0.8 459 0.6 357 0.4

Total $60,940 100.0% $75,795 100.0% $94,264 100.0%

Company Stores

The Company's 31 stores range in size from 2,100 to 14,000
square feet, with the typical store ranging from 4,000 to 6,000
square feet. The following table lists Harold's store locations with selected
information for each location. Product lines in the table are defined as
follows:

w/m Stores with the Company's full-line women's and men's apparel.
w/os Women's apparel stores also featuring the Company's
"Old School Clothing Company" concept.
w Stores featuring women's apparel only.

<S> <C> <C> <C> <C> <C>
Product Square
Metropolitan Area Location Type of Location Lines Footage

Atlanta, GA Lenox Square Regional Shopping Center w 2,446
Atlanta, GA Park Place Specialty Center w 3,413
Austin, TX Arboretum Market Place Specialty Center w 3,300
Austin, TX 8611 N. Mopac Expressway Free Standing* w/m 13,200
Baton Rouge, LA CitiPlace Market Center Regional Shopping Center w/m 5,200
Birmingham, AL Riverchase Galleria Regional Shopping Center w/os 2,713
Charlotte, N.C. Shops on the Park Specialty Center w/os 4,000
Dallas, TX Dallas Galleria Regional Shopping Center w 4,974
Dallas, TX Highland Park Village Specialty Center w/m 7,503
Ft. Worth, TX University Park Village Specialty Center w/m 4,863
Germantown, TN (Memphis Saddle Creek South Specialty Center w/os 3,909
metro)
Greenville, S.C. Greenville Mall Regional Shopping Center w/os 5,076
Hillsboro, TX Hillsboro Outlet Mall Outlet Mall* w/m 5,160
Houston, TX Highland Village Specialty Center w/m 6,189
Jackson, MS The Rogue Compound Free Standing w 2,100
Leawood, KS (Kansas City Town Center Plaza Regional Shopping Center w/m 5,000
metro)
Kansas City, MO Country Club Plaza Regional Shopping Center w 4,155
Kensington, MD (Washington, White Flint Mall Regional Shopping Center w/os 4,605
D.C. metro)
Louisville, KY Mall St. Matthews Regional Shopping Center w/os 4,292
Lubbock, TX 8201 Quaker Avenue Specialty Center w/os 3,897
Nashville, TN The Mall at Greenhills Regional Shopping Center w/m 5,975
Norman, OK Campus Corner Center Specialty Center w/m 5,350
Oklahoma City , OK 106 Park Avenue Street Location w/m 3,760
Oklahoma City, OK 50 Penn Place Specialty Center w/m 14,240
Omaha, NE One Pacific Place Specialty Center w 3,272
Phoenix. AZ Biltmore Fashion Park Regional Shopping Center w/os 5,033
Plano, TX (Dallas metro) Park and Preston Free Standing w/m 5,525
San Antonio, TX Broadway and Austin Free Standing w 3,312
Highway
St. Louis, MO Plaza Frontenac Regional Shopping Center w/os 4,221
Tulsa, OK Farm Shopping Center Specialty Center w/m 3,888
Tulsa, OK Utica Square Regional Shopping Center w/m 4,625
__________________

*Outlet Store
</TABLE>

The employee population of a typical full line
Harold's store consists of a store manager, two assistant
managers (ladies' and men's) one or two desk associates,
and 5 to 7 sales associates most of whom work on a flex-
time basis (20-25 hours per week). Sales associates are
paid a commission against a draw. Commissions range from
7 to 10% based on the type of product sold and the scale
of the associate. Store manager's are paid on a salary
plus a performance bonus based on attainment of sales
goals and expense control.

The Company's stores generally are open seven days
per week and evenings. In addition to the Company's own
"Harold's" credit card, the Company accepts VISA,
Mastercard and American Express cards.

Product Development and Sourcing Programs

The Company's product development and sourcing programs
enable it to offer exclusive and semi-exclusive items not
available in competing stores or catalogs. More than 85% of
sales is merchandise where the Company has created or
controlled the design, demonstrating the Company's commitment
to a unique product mix. The Company believes that this unique
product mix enables it to compete with, and differentiates it
from, larger apparel chains, by offering customers an exclusive
garment at a price below designers and similar open market
merchandise. Direct creation and control of merchandise also
enables the Company to improve its initial mark up.

The Company's merchandise consists of (i) items developed
by the Company and manufactured exclusively for the Company and
individual contractors, (ii) items developed by the Company and
manufactured on a semi-exclusive basis for the Company, and
(iii) vendor-developed, non-exclusive items to which the
Company's private labels are affixed.

An important component of the Company's product
development programs is market research of styles and fabrics.
The Company's buyers shop European and domestic markets for
emerging fashion trends, for new vendors, and for fabric,
artwork and samples for new garment designs. Through
sophisticated computer aided design technologies, the product
development staff adapts and develops fabric designs and
garment models These design models assist the Company in
sourcing and in negotiations with mills and vendors. The
Company's product development programs allow it to participate
directly in the design and manufacturing of an exclusive
product without investing in costly manufacturing equipment.
The Company's development program is complemented by
association with independent buying offices in New York and
Florence.

The Company's product development programs enable it to
offer new styles, often before similar merchandise is available
at other specialty or department stores or catalogs. The
Company imports a significant portion of its merchandise
directly from the United Kingdom, Italy, France and through
domestic importers from the Far East.

The Company's merchandisers travel to Europe, including
popular fashion meccas such as Paris and Milan, three to four
times each year, searching out new styles and collecting
vintage fabrics and antique wallpaper, and original art for
pattern development. In addition to purchasing original art
work created for pattern development, merchandisers have
ongoing contact with several art studios in Europe where
artists hand paint intricate patterns and prints exclusively
for the Company. The European development work helps the
Company spot emerging trends among fashion forward Europeans
for development into the Company's classically inspired
merchandise.

The Company merchandisers review the collected material,
analyze fashion directions and select the best pieces to
convert into prints and patterns for the next season. Once the
new patterns are selected, the team then "specs" out various
styles - detailing a garment's cut, fit, fabric, color and
trim. An advanced textile computer aided design system makes
designing new pieces much easier by providing color "proofs"
which allow the Company to correct inaccuracies in a design
before a working sample is made. This process reduces costs
and contributes to the inherent value of each item. After the
specs have been finalized, the piece goods - materials for
making the product - are ordered from domestic and
international fabric mills. The finished fabric is then
shipped to manufacturers who cut, sew and trim the completed
design.

The Company's line of leather goods is made by European
craftsmen, primarily in Italy. Shoes, belts, handbags, wallets
and other leather products are co-designed by the Company's
merchandisers and Italian artisans. Italian-made leather goods
are marketed under a variety of Company-owned labels and are
featured in all of the Company's stores and in its catalog.

Reflecting the Company's product development programs, a
substantial portion of the Company's merchandise purchases are
concentrated among a small number of vendors. The Company
believes that fewer vendor relationship advance the Company's
product development objectives by increasing control over the
design and manufacturing process. During fiscal 1995, the
Company entered into a new arrangement with its largest apparel
vendor, CMT Enterprises, Inc. ("CMT"). Previously, Harold's
controlled the design process and paid CMT for finished goods
when produced and manufactured. Under the new arrangement, the
process has become more verticalized. CMT acts as the
Company's agent in the purchase of raw materials (i.e. fabrics,
linings, buttons, etc.) and supervises the manufacturing
process of the Company's merchandise with manufacturing
contractors. The Company purchases raw materials directly from
suppliers and pays for the manufacturing process as costs are
incurred. CMT is paid a commission based on actual cost of the
finished goods. This change has resulted in a cost savings, but
has also resulted in an increase in the Company's inventory of
piece goods and work in process. The Company believes its new
relationship with CMT permits the Company to control the
quality and cost of the Company's inventory purchases. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations and -
Liquidity" and "Risk Factors."

Catalog Publication and Order Fulfillment

In March 1990, using an in-house data base, the Company
mailed its first direct response catalog to over 100,000
addresses. In addition to contributing to sales, the catalog
has become an increasingly important market research and new
store promotion tool. During fiscal 1996, the Company used its
mail order buyer list (currently containing approximately
120,000 names), its retail customer list (currently containing
approximately 220,000 names) and a variety of rental lists to
mail six issues with an average of 48 pages, and an aggregate
circulation of approximately 6.5 million copies (including
abridged issues). The catalogs are designed and produced in-
house with photography, prepress and printing services being
outsourced. On-line computerized inventory systems and order
processing programs offer control of the fulfillment and
shipping times. Orders are processed daily and inventory
adjustments are managed accordingly.

In addition to the catalog's potential future
profitability, the Company believes that its catalog program
stimulates customer traffic in its existing retail locations
and offers a strategic advantage in expanding into new markets.
Before new stores are opened, the Company secures detailed
databases in specific geographical areas, and mails its
catalogs to a targeted consumer base. This process introduces
Harold's to potential customers in each market. Responses are
measured and analyzed to help formulate positioning strategies
and scout potential new locations. By the time a store opens,
the catalog has helped create a demand for the Company's
products where little may have previously existed.

In fiscal 1996, mail order sales were $9,384,000
representing approximately 10% of the Company's sales. The
Company plans to continue increasing its catalog circulation by
growing its own data base and investigating new list rental
sources. The Company also plans to expand its catalog
fulfillment facilities and management information systems in
the near future. While not yet profitable on a stand alone
basis, the Company believes that the catalog is a valuable
component of its overall marketing and expansion strategy.

Merchandise Inventory Replenishment and Distribution

The specialty retail apparel business fluctuates according
to changes in customer preferences dictated by fashion and
season. These fluctuations affect the inventory owned by
apparel retailers, since merchandise usually must be ordered
well in advance of the season and sometimes before fashion
trends are evidenced by customer purchases. The Company's
policy of carrying basic merchandise items in full assortments
of sizes and colors requires it to carry a significant amount
of inventory. The Company must enter into contracts for the
purchase and manufacture of proprietary label apparel well in
advance of its selling seasons.

The Company continually reviews its inventory level in
order to identify slow-moving merchandise and broken
assortments (items no longer in stock in a sufficient range of
styles, colors and sizes) and may use markdowns to clear this
merchandise. Markdowns also may be used if inventory exceeds
customer demand for reasons of style, seasonal adaptation,
changes in customer preference or if it is determined that the
inventory in stock will not sell at its currently marked price.
Such markdowns may have an adverse impact on earnings,
depending on their extent and the amount of inventory affected.
The Company utilizes its two outlet stores to dispose of slow
moving merchandise. In addition, slow moving merchandise is
cleared through regional off-site discount sales held in
January, June and August and which are promoted under the name
"Harold's Warehouse Sale".

The Company operates a 22,000 square foot distribution
facility in Norman, Oklahoma. All of the Company's
merchandise, over three million units projected for fiscal
1997, will route through the distribution center from various
manufacturers. Each item is examined, sorted, tagged and boxed
for shipment to the Company's 31 stores and catalog operation.
This process is done in a time sensitive manner in a
substantially paperless environment, utilizing computers, bar
codes and scanners.

A 64,000 square foot expansion of the existing
distribution center is scheduled for completion during the
summer of 1996. When the expansion is completed, the facility
will have the capability of processing merchandise for 64
stores and increasing to 128 stores with a modest additional
investment.

Seasonality

The Company's business follows a seasonal pattern, peaking
twice a year during the late summer back to school (August
through early September) and holiday (Thanksgiving through
Christmas) periods. In fiscal 1996, approximately 57% of the
Company's sales occurred and 64% of net income was earned
during the third and fourth fiscal quarters.

Competition

The Company's business is highly competitive. The
Company's stores compete with national and local department
stores, specialty and discount store chains, catalogers and
independent retail stores which offer similar lines of
specialty apparel. Many of these competitors have
significantly larger sales volumes and assets than the Company.

Depth of selection in sizes and colors and styles of
merchandise, merchandise procurement and pricing, ability to
anticipate fashion trends and customer preferences, inventory
control, reputation, quality of private-label merchandise,
store design and location, advertising and customer service are
all important factors in competing successfully in the retail
industry. Given the large number of companies in the retail
industry, the Company cannot estimate the number of its
competitors or its relative competitive position.

In addition, the success of the Company's operations
depends upon a number of factors relating to economic
conditions and general consumer spending. If current economic
conditions worsen and consumer spending is restricted, the
Company's growth and profitability would be negatively
impacted.

Customer Credit

The Company's stores accept the proprietary "Harold's"
credit card, and VISA, Mastercard, and American Express credit
cards. The Company's catalog operation accepts VISA,
Mastercard and the Company's credit card. Credit card sales
were 93.5% of sales in fiscal 1994 88.9% in fiscal 1995 and
96.8% in fiscal 1996. In fiscal 1996, 16.9% of sales were
made with the Harold's credit card and 79.9% were made with
third party credit cards. The Company maintains a credit
department for customer service, credit authorizations, credit
investigation, billing and collections. As of February 3,
1996, the allowance for bad debts from Company credit card
sales was approximately 1.3% of these sales for fiscal 1996.

Harold's has offered customers its proprietary credit card
since 1974. The Company believes that providing its own credit
card enhances customer loyalty while providing customers with
additional credit. At February 3, 1996, the Company had
approximately 32,000 credit accounts, 40.2% which had been used
at least once during the prior 12 months, and the average card
holder had a line of $1,200 and an outstanding balance of $365.

Advertising

The Company maintains an in-house advertising department
which has won numerous Addy awards at the local, district and
national levels. The advertising department staff produces in-
house print advertising for daily and weekly newspapers and
other print media, and designs the Company's direct response
catalogs and other direct mail pieces. In fiscal 1996, the
Company spent $7,807,000 (8.3% of sales) on advertising as
compared to $5,912,000 in fiscal 1995 (7.8% of sales). The
advertising department is also involved in the production of
quarterly and annual reports to the Company's stockholders,
sales training materials, internal marketing materials, and all
corporate logos and labeling.

Management Information Systems

The Company has placed great emphasis on upgrading and
integrating its management information systems ("MIS"). The
Company believes these upgrades will enable it to maintain more
efficient control of its operations and facilitate faster and
more informed responses to potential opportunities and
problems. The Company maintains a MIS team to oversee these
information management systems, which include credit, sales
reporting, accounts payable and merchandise control, reporting
and distribution.

The Company uses an integrated point-of-sale ("POS")
inventory and management system to control merchandising and
sales activities. This system automatically polls each
location every 24 hours and provides a detailed report by
merchandise category the next morning. Management evaluates
this information daily and implements merchandising controls
and strategies as needed. The Company's POS system has been
updated to allow additional functions to be programmed into the
system. Recently, the Company added new personnel scheduling
and timekeeping capabilities, and is currently in the process
of implementing a new customer profile function to better
identify and track consumer demographics.

The Company continues to implement newer and better
inventory control systems. The Company routinely conducts its
own inventory using a sophisticated scanning system. POS
scanning devices record and track SKU bar codes which are
assigned to every piece of merchandise. This information is
downloaded into the Company's IBM AS400 computer which
generates a detailed report within 24 hours of the physical
inventory.

The Company has also implemented ARTHURr, a computerized
merchandise planning system which interacts with the Company's
AS400 and Island Pacific software. ARTHURr facilitates
seasonal planning by department and store, and provides certain
data for financial planning.

The Company plans to continue implementing upgrades and
improving its management information system to keep abreast
with the retail industry's increasing technological advances.

Trademarks, Service Marks, and Copyrights

"Harold's", "Harold Powell", "Old School Clothing Company",
"OSCC Bespoke" and other trademarks either have been
registered, or have trademark applications pending, with the
United States Patent and Trademark Office and with the
registries of various foreign countries. The Company files
U.S. copyright registration on the original design and artwork
purchased or developed by the Company.

The Company's Houston store is called "Harold Powell"
rather than "Harold's" to avoid confusion with a local men's
apparel store which operates in Houston under the name
"Harold's" with prior usage in this market predating the
Company's federal registration.

Employees

At May 1, 1996, the Company had approximately 480 full-time
and 626 part-time employees. Additionally, the Company hires
temporary employees during the peak late summer and holiday
seasons. None of the Company's employees belongs to any labor
union and the Company believes it has good relations with its
employees.

Store Leases

At May 1, 1996, the Company had 30 leased stores. The
Company believes rent payable under its store leases is a key
factor in determining the sales volume at which a store can be
profitably operated. The leases typically provide for an
initial term of 12 years. In most cases, the Company pays a
base rent plus a contingent rent based on the store's net sales
in excess of a certain threshold, typically four to five
percent of net sales in excess of the applicable threshold.
Among current store leases, one store lease has fixed rent with
no percentage rent; all other store leases provide for a base
rent with percentage rent payable above specified minimum
sales. One store lease has percentage rent only. All stores
except six operated at sales volumes for fiscal 1996 above the
breakpoint (the sales volume below which only rent is payable).
Based on the Company's current level of sales per square foot,
some of the risk from any decline in future sales volume in
these stores is reduced because a corresponding decline in
occupancy expense would occur.

Substantially all of the leases require the Company to pay
property taxes, insurance, utilities and common area
maintenance charges. The current terms of the Company's
leases, including automatic renewal options, expire as follows:

Years Leases Number of
Expire Stores
1996-1997 3
1998-1999 4
2000-2002 7
2003 and later 16

The Company generally has been successful in renewing its
store leases as they expire.

During fiscal 1996, the Company entered into new leases for
stores in St. Louis, Louisville, Hillsboro, Texas, Baton Rouge,
Houston, Leawood, Kansas and Greenville, South Carolina.
Management believes the terms of these leases are comparable
with other similar national retailers in these locations. Base
rent (minimum rent under terms of lease) in current leases
ranges from $6 per square foot to $41 per square foot over the
terms of the leases. Total base rent has continued to increase
based on new store leases. Occupancy cost has increased
slightly as the Company has entered new markets. The following
table sets forth the fixed and variable components of the
Company's rent expense for the fiscal years indicated:

Fiscal Year
1994 1995 1996

Base rent $1,461,000 $1,791,000 $2,222,000
Additional amounts computed
as a percentage of sales 666,000 922,000 1,112,000

Total $2,127,000 $2,713,000 $3,334,000

Corporate Headquarters and Catalog Fulfillment Center

The Company owns a complex of contiguous buildings in
Norman, Oklahoma comprised of approximately 36,500 square feet,
with 22,000 square feet of this space being utilized by the
Company for its executive offices, administrative functions and
catalog fulfillment center. Data processing, accounting,
credit, and marketing departments are housed together with the
catalog telephone center, inventory and shipping facilities.
The remainder of this complex is currently rented and can be
used for expansion of the catalog fulfillment center and other
company needs.

Merchandise Buying Office and Distribution Center

The Company leases a 10,000 square foot building in Dallas
used as a buying office and a 22,000 square foot distribution
center in Norman. The distribution center is equipped with
automated systems for receiving, processing and distributing
merchandise. Substantially all merchandise is shipped from
vendors directly to the distribution center, where it is
received, inspected and ticketed for inventory control. The
merchandise is then shipped by company trucks or common carrier
to the stores.

The lessor of the Dallas buying office and the distribution
center is a limited partnership whose partners include Rebecca
Powell Casey, Michael T. Casey, H. Rainey Powell and Lisa
Powell Hunt, all of whom are shareholders and directors of the
Company. The term of the buying office lease is 16 years
commencing April 1, 1996, with annual rent payments of $158,000
plus insurance, utilities and property taxes until April, 2000,
at which time the annual rent will become $180,000, plus
insurance, utilities and property taxes, increasing $2,500 each
year thereafter until expiration of the lease. The term of the
distribution center lease is 10 years commencing December 1,
1992, with annual rent payments of $64,000 plus insurance,
utilities and property taxes.

The Company has an option to purchase the distribution
center for a purchase price equal to the greater of the
adjusted cost basis of the lessor at the time of closing or 90%
of appraised value, exercisable through the fifth year of the
lease. At the end of the third lease year on November 30,
1995, the lessor's adjusted cost of the distribution center was
approximately $798,000.

MANAGEMENT AND DIRECTORS

The following persons serve as executive officers and
directors of the Company. Unless otherwise noted, the executive
officers serve in the following capacities at the pleasure of the
Board of Directors of the Company:
<TABLE>
<CAPTION>

Officer or
Name Age Director Position
Since

<S> <C> <C> <C>
Harold G. Powell 72 1948 Chairman of the Board of Directors

Rebecca Powell Casey 44 1977 Chief Executive Officer and Director

H. Rainey Powell 42 1978 President, Chief Operating and Financial
Officer, Treasurer, Secretary and Director

Kenneth C. Row 31 1986 Executive Vice President and Director

Janet F. Firth 39 1984 Vice President - Ladies Merchandise Manager

Jeffrey T. Morrell 37 1993 Vice President - Stores

Linda L. Daugherty 41 1994 Vice President and Controller

James A. Agar 64 1987 Director

Michael T. Casey 47 1988 Director

Robert B. Cullum, Jr. 47 1993 Director

Lisa Powell Hunt 40 1987 Director

W. Howard Lester 60 1995 Director

Gary C. Rawlinson 54 1987 Director

William F. Weitzel, PhD 59 1989 Director
</TABLE>

Harold. G. Powell, the founder of the Company, has been
Chairman of the Board of the Company since its organization in
1987, and was Chief Executive Officer from 1987 to 1992. Prior
to 1987, he was chief executive officer and/or chairman of the
board of directors of each of the predecessor corporations
through which the Company's business was conducted. Mr. Powell
opened the first clothing store at the Company's Norman, Oklahoma
location in 1948. Mr. Powell is employed pursuant to an
employment agreement which expires January 31, 1998.

Rebecca Powell Casey was appointed Chief Executive Officer
of the Company in 1992, and prior to that time had been the
President from 1987 to 1988, and Executive Vice President-
Merchandise and Product Development from 1989 to 1991. Ms. Casey
has been employed by the Company and its predecessors in various
managerial positions since 1977. Ms. Casey is employed pursuant
to an employment agreement which expires January 31, 1998.

H. Rainey Powell has been Chief Financial Officer,
Treasurer, Secretary and a Director of the Company since 1987.
Mr. Powell was elected President and Chief Operating Officer in
1992. Mr. Powell has been employed by the Company and its
predecessors in various managerial positions since 1978. Mr.
Powell is employed pursuant to an employment agreement which
expires January 31, 1998.

Kenneth C. Row has served as Executive Vice President and a
Director of the Company since 1992. Prior to that time and since
1988, Mr. Row was Vice President - Marketing. Mr. Row has been
employed by the Company and its predecessors in various
managerial positions since 1986.

Janet F. Firth, has served as Vice President - Ladies
Merchandise Manager of the Company since 1987. Prior to that
time, Ms. Firth was employed by the Company and its predecessors
in various managerial capacities since 1984.

Jeffrey T. Morrell has served as Vice President - Stores of
the Company since 1993. Prior to that time, Mr. Morrell was
employed in various managerial capacities since 1990.

Linda L. Daugherty has served as Vice President and
Controller of the Company since 1994. Prior to that time, Ms.
Daugherty was employed by the Company and its predecessors in
various managerial capacities since 1980.

James A. Agar is President of Agar, Inc. and Advisory
Director of Agar, Ford, Jarmon and Muldrow Insurance Agency.

Michael T. Casey is Chairman of the Board of Grand Prairie
State Bank, Texas, a privately held bank since 1989, and
President of Casey Bancorp, Inc. Prior to and since that time,
Mr. Casey has been engaged in investments and banking. He
previously served as a Senior Vice President of the Company from
1989 until 1991

Robert B. Cullum, Jr. is Partner of Fairway Capital
Partners, Ltd and Wayfair Capital Partners, Ltd, both of which
are privately held real estate investment partnerships based in
Dallas, Texas. Mr. Cullum was involved for 30 years in the
supermarket industry with Cullum Co., Inc.

Lisa Powell Hunt is engaged in investments and was formerly
employed by The First Boston Corporation as a registered
institutional sales executive from 1980 to 1984. Ms Hunt is the
daughter of Harold G. Powell.

W. Howard Lester has been Chairman and Chief Executive
Officer of Williams-Sonoma, Inc. since 1978.

Gary C. Rawlinson is a shareholder-director of the law firm
of Crowe & Dunlevy, A Professional Corporation, which firm serves
as general counsel to the Company.

William. F. Weitzel, PhD has erved as Professor of Business
Administration at the University of Oklahoma since 1983 and as a
Director of the College of Business Administration's Skills
Enchancement Program since 1986. Mr. Weitzel is President of
William Weitzel, Inc. a management consulting organization.

DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 7,500,000 shares of
Common Stock, par value $0.01 per share, and 1,000,000 shares of
Preferred Stock, par value $0.01 per share. As of May 1, 1996,
there were 4,965,245 shares of Common Stock outstanding. No
shares of Preferred Stock have been issued.

The following summary description of the Company's capital
stock does not purport to be complete and is qualified in its
entirety by this reference to the Company's Certificate of
Incorporation and Bylaws, copies of which have been filed as
exhibits to the Registration Statement of which this Prospectus
is a part. See "Capitalization" and "Selling Shareholders".

Common Stock

Holders of Common Stock are entitled, among other
things, to one vote per share on each matter submitted to a vote
of shareholders and, in the event of liquidation, to share
ratably in the distribution of assets remaining after payment of
liabilities. At a meeting of shareholders at which a quorum is
present, a majority of the votes cast decides all questions,
unless the matter is one upon which a different vote is required
by express provisions of law or the Company's Certificate of
Incorporation or Bylaws. Holders of Common Stock have no
cumulative voting rights, and, accordingly, the holders of a
majority of the outstanding shares have the ability to elect all
of the directors. Holders of Common Stock have no preemptive or
other rights to subscribe for shares. Holders of Common Stock
are entitled to such dividends as may be declared by the Board of
Directors out of funds legally available therefor, when and if so
declared. See "Price Range of Common Stock and Dividend Policy."
All outstanding shares are, and the shares issuable pursuant to
the offering will be, when issued and paid, fully paid and non-
assessable.

Preferred Stock

No shares of Preferred Stock are outstanding.
The Company's Certificate of Incorporation authorizes the Board
of Directors to issue Preferred Stock from time to time in one or
more series. The Board of Directors, without shareholder
approval, is authorized to determine the rights, preferences,
privileges and restrictions granted to, and imposed upon, each
series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such
series. The issuance of Preferred Stock could be used under
certain circumstances, as a method of preventing a takeover of
the Company and could permit the Board of Directors, without any
action by the holders of the Common Stock, to issue Preferred
Stock which could adversely affect the rights of holders of the
Common Stock, including loss of voting control. The issuance of
any series of Preferred Stock, and the relative powers,
preferences, rights, qualifications, limitations and restrictions
of such series, if and when established, will depend upon, among
other things, the future capital needs of the Company, the then-
existing market conditions and other factors that, in the
judgment of the Board of Directors, might warrant the issuance of
Preferred Stock. The Company has no present plans, agreements or
understandings to issue any shares of Preferred Stock.

Oklahoma Law and Certain Charter Provisions
The Company's Certificate of Incorporation provides
that, to the fullest extent permitted by the Oklahoma General
Corporation Act, its directors shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the
Company and its shareholders. The provision in the Certificate
of Incorporation does not eliminate the duty of care and in
appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Oklahoma
law. However, such remedies may not be effective in all cases.
In addition, each director will continue to be subject to liability
for breach of the director's duty of loyalty to the Company, as well
as for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemption's that are unlawful
under Oklahoma law. The provision also does not affect a
director's responsibilities under any other law, such as the
state or federal securities laws.

Under the Oklahoma General Corporation Act, the Company has
broad powers to indemnity its directors and officers against
liabilities they may incur in such capacities, including
liabilities under the Securities Act. The Company's Certificate
of Incorporation provides that the Company shall indemnify its
directors and officers to the fullest extent permitted by the
Oklahoma General Corporation Act, except as to any action, suit
or proceeding brought by or on behalf of such persons without
prior approval of the Board of Directors. The Certificate of
Incorporation requires the Company to indemnify such persons
against expenses, judgments, fines, settlements and other amounts
incurred in connection with any proceeding, except for certain
proceedings brought by or on behalf of such persons as indicated
above, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was
a director or an officer of the Company, or is or was serving at
the request of the Company as a director or officer of another
enterprise, provided such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any
criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. However, in the case of a derivative
action, an officer or director will not be entitled to
indemnification in respect of any claim, issue or matter as to
which such person is adjudged to be liable to the Company, unless
and only to the extent that the court in which the action was
brought determines that such person is fairly and reasonable
entitled to indemnity for expenses.

In addition, the Company has entered into Indemnity
Agreements with each director of the Company which require the
Company to indemnify such persons against certain liabilities and
expenses incurred by any such persons by reason of their status
or service as directors or officers of the Company and which set
forth procedures that will apply in the event of a claim for
indemnification under such agreements. The Company believes that
these agreements enhance its ability to attract and retain highly
qualified directors.

As of the date of this Prospectus, there is no pending
litigation or proceeding involving a director or officer of the
Company as to which indemnification is being sought nor is the
Company aware of any threatened litigation that may result in
claims for indemnification by any officer or director.

Transfer Agent

Liberty Bank and Trust Company of Oklahoma City, N.A. is the
transfer agent and registrar for the Common Stock.

SELLING SHAREHOLDERS

The following table sets forth certain information with
respect to the beneficial ownership of the Company's Common
stock as of May 1, 1996 by each of the Selling Shareholders.
Except as otherwise indicated in the footnotes to this table,
the Company believes that each Selling Shareholder has sole
voting and investment power with respect to the shares
indicated as beneficially owned, subject to applicable
community property laws. For a description of related party
transactions, see "Business - Merchandise Buying Office and
Distribution Center".
<TABLE>
<CAPTION>

Shares Beneficially
Owned Prior to Shares Beneficially Owned
Offering Shares Being After Offering(1)
Selling Shareholders Number Percent Offered(1) Number Percent

<S> <C> <C> <C> <C> <C>
Harold G. Powell(2)(6) 513,003 10.3% 62,500 450,503 8.4%

The Security National Bank
and Trust Company of
Norman, as Trustee (3)(6) 638,943 12.9% 62,500 576,443 10.7%

Rebecca Powell Casey(4)(6) 750,678 15.0% 45,000 705,678 13.1%

Lisa Powell Hunt(5)(6) 364,813 7.3% 15,000 349,813 6.5%
__________________

(1) Except as otherwise indicated, assumes the Underwriters'
over-allotment option is not exercised. See "Underwriting."
If the Underwriters' over-allotment option is exercised in full,
the Selling Shareholders intend to sell additional shares as follows:
Harold G. Powell- ____additional shares; The Security National Bank and Trust
Company of Norman, as Trustee ("Security") - _____additional
shares; Rebecca Powell Casey - ____additional shares; and Lisa
Powell Hunt - ____additional shares. Sale of such additional
shares will result in beneficial ownership after the offering
as follows: Harold G. Powell - ___shares (__%); Security -
___shares (___%); Rebecca Powell Casey - ____shares (___%);
and Lisa Powell Hunt - ____shares (____%).

(2) Harold G. Powell is Chairman of the Board of Directors of the Company.
The shares indicated as beneficially owned by Mr. Powell
include (i) 21,318 shares that Mr. Powell has the right to
acquire upon exercise of currently exercisable stock options
granted under the Company's 1993 Performance and Equity
Incentive Plan and (ii) 273,865 shares held by Security, as
Trustee of the Elizabeth M. Powell Trust A, over which Mr.
Powell possesses a general power of appointment exercisable at
his death. The shares indicated as beneficially owned by Mr.
Powell do not include 365,078 shares held by Security, as
Trustee of the Elizabeth M. Powell Trust B, over which Mr.
Powell may be deemed to have shared voting power.

(3) Consists of 273,865 shares held by Security, as
Trustee of the Elizabeth M. Powell Trust A, and 365,078 shares
held by Security, as Trustee of the Elizabeth M. Powell Trust
B. All of the shares being sold by Security are held by
Security in its capacity as Trustee of the Elizabeth M. Powell
Trust A. The shares held by Security, as Trustee of the
Elizabeth M. Powell Trust A, are also included in the shares
indicated as beneficially owned by Mr. Powell. See footnote
(2) above.

(4) Rebecca Powell Casey is Chief Executive Officer of
the Company. The shares indicated as beneficially owned by Ms.
Casey include (i) 23,028 shares that Ms. Powell has the right
to acquire upon exercise of currently exercisable stock options
granted under the Company's 1993 Performance and Equity
Incentive Plan and (ii) 91,068 shares held by Ms. Casey as
custodian for the benefit of her minor children. The shares
indicated as beneficially owned by Ms. Casey do not include
294,846 shares beneficially owned by Michael T. Casey, a
director of the Company and the spouse of Ms. Casey, as to
which shares Ms. Casey disclaims beneficial ownership. Ms.
Casey is the daughter of Harold G. Powell.

(5) Lisa Powell Hunt is a director of the Company. The shares indicated
as beneficially owned by Ms. Hunt include (i) 4,725 shares that
Ms. Hunt has the right to acquire upon exercise of currently
exercisable stock options granted under the Company's 1993
Performance and Equity Incentive Plan, and (ii) 73,411 shares
held by Ms. Hunt as custodian for the benefit of her minor
children. The shares indicated as beneficially owned by Ms.
Hunt do not include 30,356 shares held by the spouse of Ms.
Hunt, as to which shares Ms. Hunt disclaims beneficial
ownership. Ms. Hunt is the daughter of Harold G. Powell.

(6) Pursuant to a Shareholders Agreement, effective August 18,
1987, Harold G. Powell, Rebecca Powell Casey, Lisa Powell Hunt,
Security and certain other shareholders have agreed to vote the
Common Stock held by them in accordance with the decision of
those holding a majority of the shares of Common Stock subject
to the Shareholders Agreement. Such group of shareholders may
be treated as the beneficial owners of 2,756,478 shares, or
approximately 54.7% of the outstanding Common Stock of the
Company. Except as otherwise indicated above, the shares
indicated as beneficially owned by each Selling Shareholder do
not include shares held by other members of the group.

UNDERWRITING

Under the terms and subject to the conditions set forth in an
Underwriting Agreement dated the date hereof (the "Underwriting
Agreement"), Scott & Stringfellow, Inc. (the "Underwriter"),
has agreed to purchase, and the Company and the Selling
Shareholders have agreed to sell to the Underwriter, the
respective number of shares of Common Stock set forth opposite
the Underwriter's name below:

Underwriter Number of Shares
Scott & Stringfellow, Inc. ________

Total 575,000

The Underwriting Agreement provides that the obligation of
the Underwriter to purchase shares of Common Stock is subject
to the approval of certain legal matters by counsel and certain
other conditions. The Underwriter is obligated to take and pay
for all such shares of Common Stock, if any are taken.

The Underwriter proposes initially to offer such shares of
Common Stock directly to the public at the public offering
price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess
of $ per share. The Underwriter may allow, and such
dealers may allow, a concession not in excess of $ per
share to certain other dealers. After the shares of Common
Stock are released for sale to the public, the offering price
and such concessions may be changed.

The Company and the Selling Shareholders have granted to
the Underwriter an option, expiring at the close of business on
the 30th day after the date of this Prospectus, to purchase up
to 87,750 additional shares of Common Stock at the public
offering price, less the underwriting discount. The
Underwriter may exercise such option solely for the purpose of
covering over-allotments, if any.

The Company and certain of its shareholders have agreed
not to offer, sell, contract to sell or otherwise dispose of
any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for shares of Common Stock, for
a period of 120 days after the date hereof, without the prior
written consent of Scott & Stringfellow, Inc., with certain
limited exceptions.

The Company and the Selling Shareholders have agreed to
indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock
offered hereby will be passed upon for the Company by Crowe &
Dunlevy, A Professional Corporation, Tulsa, Oklahoma. Gary C.
Rawlinson, a shareholder and director of Crowe & Dunlevy, is a
director of the Company and is the beneficial owner of 9,962
shares of Common Stock, including 4,725 shares issuable upon
exercise of outstanding options to purchase Common Stock
granted to Mr. Rawlinson in connection with his service as a
director. Certain legal matters in connection with the
offering will be passed upon for the Underwriter by Hunton &
Williams, Richmond, Virginia.

EXPERTS
The consolidated balance sheets of the Company and
subsidiaries as of February 3, 1996 and January 28, 1995, and
the related consolidated statements of earnings, shareholders'
earnings, and cash flows for the 53-week period ended February
3, 1996 and 52-week periods ended January 28, 1995 and January
29, 1994, have been included and incorporated by reference
herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere and incorporated by reference
herein, and upon the authority of said firm as experts in
accounting and auditing.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report F-2

Consolidated Financial Statements:

Consolidated Balance Sheets
February 3, 1996, and January 28, 1995 F-3

Consolidated Statements of Earnings
53 Weeks Ended February 3, 1996, 52 Weeks Ended
January 28, 1995, and January 29, 1994 F-5

Consolidated Statements of Stockholders' Equity
53 Weeks Ended February 3, 1996, 52 Weeks Ended
January 28, 1995, and January 29, 1994 F-6

Consolidated Statements of Cash Flows
53 Weeks Ended February 3, 1996, 52 Weeks Ended
January 28, 1995, and January 29, 1994 F-7

Notes to Consolidated Financial Statements F-8

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Harold's Stores, Inc.:

We have audited the accompanying consolidated balance
sheets of Harold's Stores, Inc. and subsidiaries (the Company)
as of February 3, 1996 and January 28, 1995, and the related
consolidated statements of earnings, stockholders' equity, and
cash flows for the 53 week period ended February 3, 1996, and
the 52 week periods ended January 28, 1995 and January 29,
1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Harold's Stores, Inc. and subsidiaries as
of February 3, 1996, and January 28, 1995, and the results of
their operations and their cash flows for the 53 week period
ended February 3, 1996, and the 52 week periods ended January
28, 1995, and January 29, 1994, in conformity with generally
accepted accounting principles.

KPMG PEAT MARWICK LLP

Oklahoma City, Oklahoma
March 29, 1996

HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)

February 3, January 28,
1996 1995
Current assets:

Cash and cash equivalents $ 2 109
Trade accounts receivable, less allowance
for doubtful accounts of $200 and $175,
respectively 4,687 4,238
Other accounts receivable 568 671
Merchandise inventories 21,647 17,847
Prepaid expenses 1,759 646
Deferred income taxes 710 622

Total current assets 29,373 24,133

Property and equipment, at cost 18,999 15,186
Less accumulated depreciation
and amortization (6,097) (4,955)

Net property and equipment 12,902 10,231

Other assets 334 297

Total assets $42,609 34,661

See accompanying notes to consolidated financial statements.

</TABLE>
<TABLE>

HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands Except Share Data)
<CAPTION>
February 3, 1996 January 28, 1995

<S> <C> <C>
Current liabilities:

Current maturities of long-term debt $ 75 4,977
Accounts payable 4,396 4,154
Redeemable gift certificates 672 509
Accrued bonuses and payroll expenses 1,624 1,129
Accrued rent expense 241 257
Income taxes payable 536 583

Total current liabilities 7,544 11,609

Long-term debt, net of current maturities 9,540 594
Deferred income taxes 226 198

Commitments and contingent liabilities (notes 8, 9 and 11)

Stockholders' equity:

Preferred stock of $.01 par value
Authorized 1,000,000 shares; none issued - -
Common stock of $.01 par value
Authorized 7,500,000 shares; issued and
outstanding 4,958,181 in 1996, 4,698,174 in 1995 50 47
Additional paid-in capital 20,572 17,491
Retained earnings 4,677 4,722

Total stockholders' equity 25,299 22,260

Total liabilities and stockholders' equity $ 42,609 34,661

See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>

HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Share Data)
<CAPTION>
53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
February 3, 1996 January 28, 1995 January 29, 1994

<S> <C> <C> <C>
Sales $94,264 75,795 60,940

Costs and expenses:
Cost of goods sold (including
occupancy and central buying expenses,
exclusive of items shown separately
below) 59,831 49,388 40,591

Selling, general and administrative
expenses 19,344 14,972 12,072

Advertising expense 7,807 5,912 3,968

Depreciation and amortization 2,185 1,710 1,409

Interest expense 452 274 117

89,619 72,256 58,157

Earnings before income taxes 4,645 3,539 2,783

Provision for income taxes 1,858 1,451 1,171

Net earnings $ 2,787 2,088 1,612

Earnings per common share $ .56 .42 .35
Weighted average number of common
shares outstanding 5,000,033 4,923,951 4,598,846

See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<CAPTION>

53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
February 3, 1996 January 28, 1995 January 29, 1994

<S> <C> <C> <C>
Common stock:

Balance, beginning of year $ 47 43 33

Stock dividend (5 percent) in
1996 of 235,868 shares, and (10
percent), 426,970 shares in 1995,
and 386,549 shares in 1994 3 4 4

Stock bonuses, 1,301 shares in
1996, 645 shares in 1995, and
1,315 shares in 1994 - - 1

Employee Stock Purchase Plan
22,838 shares in 1996, and 17,712
shares in 1995 - - -

Sale of 516,000 shares - - 5

Balance, end of year $ 50 47 43

Additional paid-in capital:

Balance, beginning of year $ 17,491 13,047 6,945

Stock dividend (5 percent) in
1996 and (10 percent) in 1995
and 1994 2,827 4,265 3,090

Stock bonuses 13 6 8

Sale of 516,000 shares, net of
issuance cost of $474,000 - - 3,004

Employee stock purchase plan 241 173 -

Balance, end of year $ 20,572 17,491 13,047

Retained earnings:

Balance, beginning of year $ 4,722 6,906 8,388

Net earnings 2,787 2,088 1,612

Stock dividend (5 percent) in
1996 and (10 percent )
in 1995 and 1994 (2,832) (4,272) (3,094)

Balance, end of year $ 4,677 4,722 6,906

See accompanying notes to consolidated financial statements.
</TABLE>

<TABLE>
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<CAPTION>
53 Weeks Ended 52 Weeks Ended 52 Weeks Ended
February 3, 1996 January 28, 1995 January 29, 1994

<S> <C> <C> <C>
Cash flows from operating
activities:
Net earnings $2,787 $ 2,088 1,612
Adjustments to reconcile net
earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,185 1,710 1,409
Loss (gain) on sale of assets 1 (4) (6)
Shares issued under employee
incentive plans 255 179 9
Changes in assets and liabilities:
Increase in trade and other
accounts receivable (346) (419) (999)
Increase in merchandise
inventories (3,800) (5,200) (1,891)
Increase in income taxes
receivable - 9 37
Deferred income taxes (benefits) (60) (95) 29
Decrease (increase) in other
assets (37) 2 (222)
Increase in prepaid expenses (1,113) (266) (35)
Increase (decrease) in accounts
payable 242 1,326 (393)
Increase (decrease) in income
taxes payable (47) 583 --
Increase (decrease) in accrued
expenses 642 656 (59)
Net cash provided by (used in)
operating activities 709 569 (509)

Cash flows from investing
activities:
Acquisition of property and
equipment (5,159) (3,994) (2,909)
Proceeds from disposal of
property and equipment 302 42 105
Net cash used in investing
activities (4,857) (3,952) (2,804)

Cash flows from financing
activities:
Advances on debt 32,652 26,357 18,325
Payments of debt (28,608) (23,005) (18,065)
Proceeds of common stock
offering - - 3,009
Payments of fractional shares
issued with stock dividend (3) (3) -
Net cash provided by financing
activities 4,041 3,349 3,269

Net decrease in cash and cash
equivalents (107) (34) (44)
Cash and cash equivalents at
beginning of year 109 143 187
Cash and cash equivalents at
end of year $ 2 109 143

Supplemental disclosure of cash
flow information:
Cash paid during the year for:
Income taxes $ 1,965 954 1,025
Interest $ 452 291 139

See accompanying notes to consolidated financial statements.
</TABLE>

HAROLD'S STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 3, 1996, January 28, 1995, and January 29, 1994

1. Summary of Significant Accounting Policies

Nature of Entity

Harold's Stores, Inc. an Oklahoma corporation (the
Company), operates a chain of "updated traditional", classic
styled ladies' and men's specialty apparel stores. The Company
offers its merchandise in 29 stores primarily across the South
and Southwest, with 10 stores located in Texas, and through its
mail order catalog. The product development and private label
programs provide an exclusive selection of upscale merchandise
to the consumer. In addition, the in-house advertising and
catalog production capabilities create opportunities for
vertical integration.

Basis of Presentation

The consolidated financial statements include the accounts
of the Company and its subsidiaries, all of which are wholly
owned. All significant intercompany accounts and transactions
have been eliminated.

Definition of Fiscal Year

The Company has a 52-53 week fiscal year which ends on the
Saturday closest to January 31. Fiscal years 1996, 1995 and
1994 ended February 3, 1996, January 28, 1995, and January 29,
1994, respectively.

Accounts Receivable and Finance Charges

Trade accounts receivable primarily represent the
Company's credit card receivables from customers. These
customers are primarily residents of Oklahoma and Texas.
Finance charges on these revolving receivables are imposed at
various annual rates in accordance with the state laws in which
the Company operates, and are recognized in income when billed
to the customers. Minimum monthly payments are required
generally equal to ten percent of the outstanding balance. The
average liquidation rate at February 3, 1996, was approximately
4 months. Finance charge revenue is netted against selling,
general and administrative expenses and was approximately
$705,000, $578,000, and $480,000, in fiscal 1996, fiscal 1995,
and fiscal 1994, respectively.

Merchandise Inventories

Merchandise inventories are valued at the lower of cost or
market using the retail method of accounting. Inventories of
raw materials are valued at the lower of cost or market, and
approximate $5,600,000 and $3,600,000 in fiscal 1996, and
fiscal 1995, respectively.

Depreciation, Amortization, and Maintenance and Repairs

Depreciation is computed using the straight-line method
over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the shorter of the
life of the respective leases or the expected life of the
improvements. The following are the estimated useful lives
used to compute depreciation and amortization:

Buildings 30 years
Leasehold improvements 5-10 years
Furniture and equipment 4-7 years

Maintenance and repairs are charged directly to expense as
incurred, while betterment's and renewals are
generally capitalized in the property accounts. When an item
is retired or otherwise disposed of, the cost and applicable
accumulated depreciation are removed from the respective
accounts and the resulting gain or loss is recognized.

Preopening Expenses and Catalog Costs

Costs associated with the opening of new stores are
expensed during the first full month of operations. The costs
are carried as prepaid expenses prior to the store opening.
Such costs included approximately $535,000 at February 3, 1996,
and $67,000 at January 28, 1995.

The Company expenses all non-direct advertising as
incurred and defers the direct costs of producing its mail
order catalogs. These costs are amortized over the estimated
sales period of the catalogs, generally three to four months.
At February 3, 1996 and January 28, 1995 approximately $257,000
and $220,000 of deferred catalog costs are included in other
assets, respectively. The Company incurred approximately
$7,807,000, $5,912,000, and $3,968,000 in advertising expenses
of which approximately $4,818,000, $3,678,000, and $2,157,000
were related to the mail order catalogs during fiscal years
1996, 1995 and 1994 respectively.

Income Taxes

Income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that
includes the enactment date.

Net Earnings Per Common Share

Net earnings per common share are based upon the weighted
average number of common shares outstanding during the periods
restated for the five percent stock dividend in fiscal 1996,
and the ten percent stock dividends in fiscal 1995, and fiscal
1994 and includes common stock equivalents of 53,181 in fiscal
1996.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect the reported amount
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassifications

Certain comparative prior year amounts in the consolidated
financial statements have been reclassified to conform with the
current year presentation.

2. Fair Value of Financial Instruments

The recorded amounts for cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses
approximate fair value because of the short maturity of these
financial instruments. The Company's debt is at a variable
interest rate; therefore, book value approximates fair value.

3. Property and Equipment

Property and equipment at February 3, 1996 and January 28,
1995 consisted of the following (in thousands):

1996 1995

Land $ 665 $ 590
Buildings 2,796 1,987
Leasehold improvements 4,934 4,310
Furniture and equipment 10,604 8,299
$18,999 $15,186

4. Note Payable and Long-term Debt

Borrowings under short-term agreements were as follows (in
thousands):

1996 1995 1994

Balance at end of fiscal year $ - 4,902 1,475
Weighted average interest rate at
end of fiscal year - 8.5% 6.0%
Maximum balance outstanding during
the year $7,558 5,928 2,950
Average balance outstanding during
the year $5,552 2,961 1,051
Weighted average interest rate
during the year 8.6% 7.4% 6.1%

Average outstanding balances in the above table are based on
the number of days outstanding. Weighted average interest
rates are the result of dividing the related interest expense
by average borrowings outstanding.

Long-term debt at February 3, 1996, and January 28, 1995
consisted of the following (in thousands):

1996 1995

Borrowings under line of credit,
bearing interest at a variable
rate (7.8% at February 3, 1996) payable
monthly, principal due June 30, 1997. $9,021 -

Note payable to bank, secured by
building and land with net book value
of $335 at February 3, 1996, bearing
interest at a variable rate, (8.0% at
February 3, 1996), due in monthly
installments of principal of $6 plus
accrued interest, with final payment
due September 2002. 594 669

Total long-term debt 9,615 669

Less current maturities of
long-term debt 75 75

Long-term debt, net of current
maturities $9,540 594

The annual maturities of the above long-term debt as of February
3, 1996 are as follows (in thousands):

Fiscal year ending
1997 $ 75
1998 9,096
1999 75
2000 75
2001 75
2002 and subsequent 219

Total $ 9,615

During fiscal 1995, the Company's line of credit was
classified as short-term. On August 22, 1995, the line of credit
available was renewed with a two-year maturity and increased to a
$12,000,000 credit facility. Subsequent to February 3, 1996, the
Company increased the above line of credit to $15,000,000.
Additionally, a $3,000,000 line of credit was obtained from a
separate banking institution for the purpose of issuing letters
of credit.

5. Income Taxes

Income tax expense (benefit) for the years ended February 3,
1996, January 28, 1995, and January 29, 1994, consisted of the
following (in thousands):

1996 1995 1994
Current:
Federal $1,569 1,265 925
State 349 281 217
1,918 1,546 1,142
Deferred:
Federal (50) (79) 23
State (10) (16) 6
(60) (95) 29

Total $1,858 1,451 1,171

Income tax expense differs from the normal tax rate as
follows :

1996 1995 1994

Statutory tax rate 34% 34% 34%
Increase in income taxes
caused by:
State income taxes 6 6 6
Other, net - 1 2

Effective tax rate 40% 41% 42%

The tax effects of temporary differences that give rise
to significant portions of the deferred tax assets and
deferred tax liabilities at February 3, 1996 and January 28,
1995 are presented below (in thousands):

1996 1995

Deferred tax assets - current:

Allowance for doubtful accounts $ 85 74
Merchandise inventories 534 528
Deferred compensation 91 20
$ 710 622
Deferred tax liability - noncurrent:

Property and equipment $ 226 198

The net deferred tax asset relates solely to future
deductible temporary differences and there is no valuation
allowance. Management believes that it is more likely than not
that the Company will fully realize the gross deferred tax
assets; however, there can be no assurances that the Company will
generate the necessary adjusted taxable income in any future
periods.

6. Stockholders' Equity and Stock Options

The Company has authorized 1,000,000 shares of preferred
stock, par value $.01 per share. This preferred stock may be
issued in one or more series and the terms and rights of such
stock will be determined by the Board of Directors. No
preferred shares were issued and outstanding at either February
3, 1996, or January 28, 1995.

The Company has reserved 1,000,000 shares of its common
stock for issuance to key employees under its current stock
option and equity incentive plan which was adopted in April
1993 and amended June 1995. The plan has a term of ten years.
The Board of Directors may grant incentive or non-qualified
stock options, restricted stock, stock appreciation rights and
other stock-based and cash awards under the provisions of the
plan. The exercise price of incentive stock options is the
fair market value of the stock at the date of the grant, plus
ten percent if the employee possesses more than ten percent of
the total combined voting power of all classes of the Company's
stock. Options granted may have a term of up to ten years,
except that incentive stock options granted to stockholders who
have more than ten percent of the Company's voting stock at the
time of the grant may have a term of up to five years. Any
unexercised portion of the options will automatically and
without notice terminate upon the applicable anniversary of the
issuance date or termination of employment. The following
table summarizes the stock option activity for the periods
indicated:

Shares Range of
Exercise
Prices

Options outstanding, fiscal 1993 33,033 $6.30

Granted - -
Exercised - -
Terminated (3,809) 6.30
Options outstanding, fiscal 1994 29,224 6.30

Granted 303,074 8.42-9.29
Exercised -
Terminated (21,484) 6.30-9.29
Options outstanding, fiscal 1995 310,814 6.30-9.29

Granted 33,075 10.48
Exercised (304) 10.48
Terminated (12,309) 6.30-9.29
Options outstanding, fiscal 1996 331,276 6.30-10.48

Options exercisable, fiscal 1996 141,736 6.30-10.48

The number of shares and exercise prices have been
restated to reflect the five percent stock dividend in fiscal
1996, and the ten percent stock dividends in fiscal 1995,
fiscal 1994, and fiscal 1993.

Additionally, as of February 3, 1996, restricted stock
awards for up to $32,700 in market value of common stock were
outstanding under the plan. These awards may be exercised over
the remaining four-year vesting period in equal annual
installments at the fair market value of common stock on such
installment vesting date. After giving effect to the
outstanding and exercised awards, and based upon the price of
common stock on February 3, 1996, the Company may award 666,027
shares or options under the plan.

7. Retirement and Benefit Plans

The Company has a profit sharing retirement plan with a
401(k) provision that allows participants to contribute up to
15 percent of their compensation before income taxes. Eligible
participants are employees at least 21 years of age with one
year of service. The Company's Board of Directors will
designate annually the amount of the profit sharing
contribution as well as the percentage of participants'
compensation that it will match as 401(k) contributions. For
the years ended February 3, 1996, January 28, 1995, and January
29, 1994, the Company contributed approximately $81,000,
$43,000, and $24,000, respectively, to the 401(k) plan.

The Company has reserved 200,000 shares of common stock
for employees under its stock purchase plan which covers all
employees who meet minimum age and service requirements. The
Company's Board of Directors will determine from time to time
the amount of any matching contribution as well as the
percentage of participants' compensation that it will match as
purchase contributions. The purchase price of shares covered
under the plan is fair market value as of the date of purchase
in the case of newly issued shares and the actual price paid in
the case of open market purchases. The plan was implemented in
January 1994 and there was no matching contribution in fiscal
year 1994. For the years ended February 3, 1996, and January
28, 1995 the Company's matching contributions were
approximately $48,000 and $35,000, and approximately 23,000 and
18,000 shares were issued, respectively.

8. Related Party Transactions

Rent on the Norman, Oklahoma store and certain related
facilities is paid to parties related to the Company's
Chairman. The store lease terms in 1996, 1995, and 1994
provided for payment of percentage rent equal to four percent
of sales plus certain ancillary costs. During the years ended
February 3, 1996, January 28, 1995, and January 29, 1994, the
total of such rent for the store and certain related facilities
was approximately $140,000, $133,000, and $136,000,
respectively.

The Company leases certain office space and a distribution
center facility from a limited partnership whose partners are
stockholders and directors of the Company. The term of the
office space lease is sixteen years commencing April 1, 1996,
with annual rent payments of $158,000 plus insurance,
utilities, and property taxes until April, 2000, at which time
the rent will be $180,000 plus insurance, utilities and
property taxes, increasing $2,500 per year until expiration of
the lease. The term of the distribution center lease is ten
(10) years commencing December 1, 1992. Rent payments are
approximately $64,000 per year payable in monthly installments
plus utilities, insurance, and property taxes.

The Company has an option to purchase the distribution
center for a purchase price equal to the greater of the
adjusted cost basis of the lessor at the time of closing or 90%
of appraised value, exercisable through the fifth year of the
lease. At the end of the third lease year on November 30, 1995,
the lessor's adjusted cost of the distribution center was
approximately $798,000.

See note 11 for information concerning the employment
contracts with the Company's Chairman of the Board, Chief
Executive Officer and President.

9. Facility Leases

The Company conducts substantially all of its retail
operations from leased store premises under leases that will
expire within the next ten years. Several of such leases
contain renewal options exercisable at the option of the
Company. In addition to minimum rental payments, certain
leases provide for payment of taxes, maintenance, and
percentage rentals based upon sales in excess of stipulated
amounts.

Minimum rental commitments for store and distribution
premises and office space (excluding renewal options) under
noncancelable operating leases having a term of more than one
year as of February 3, 1996, were as follows (in thousands):

Fiscal year ending:
1997 $ 2,827
1998 2,851
1999 2,523
2000 2,491
2001 2,314
2002 and subsequent 9,815
Total $ 22,821

Total rental expense for the years ended February 3, 1996,
January 28, 1995, and January 29, 1994, was as follows (in
thousands):

1996 1995 1994

Base rent $2,222 1,791 1,461
Additional amounts computed
as percentage of sales 1,112 922 666

Total $3,334 2,713 2,127

10. Business Concentrations

During fiscal 1996 and 1995, more than 90% and 80%
respectively, of the ladies' apparel sales were attributable to
the Company's product development and private label programs.
The breakdown of total sales between ladies' and men's apparel
was approximately 80% and 20% for fiscal 1996, and 78% and 22%
for fiscal 1995, respectively.

The product development programs result in a substantial
portion of the Company's purchases of raw materials being
concentrated among a small group of vendors, of which some are
located outside of the United States. CMT Enterprises, Inc. acts
as the Company's agent in the purchase of the raw materials,
including fabrics, linings, buttons, etc., and supervises the
manufacturing process of the Company's merchandise with
manufacturing contractors. In the event of the termination of
the CMT relationship or other of the Company's vendors,
management believes that in most instances more than one new
vendor would be required to replace the loss of a principal
vendor. Although management believes that replacement vendors
could be located, if any buying relationship is terminated and
until replacement vendors are located, the operating results of
the Company could be materially adversely affected.

The Company's sales are directly impacted by regional and
local economics and consumer confidence. The amount of
disposable income available to consumers, as well as their
perception of the current and future direction of the economy,
impact their level of purchases. The consumer demand for the
Company's apparel fluctuates according to changes in customer
preferences dictated by fashion and season. In addition, the
Company's sales are subject to seasonal influences, with the
major portion of sales being realized during the fall season,
which includes the back-to-school and the holiday selling
seasons. Such fluctuations could affect sales and the valuation
of inventory, since the merchandise is placed in the production
process, or ordered, well in advance of the season and sometimes
before fashion trends are evidenced by consumer purchases.

11. Commitments and Contingent Liabilities

The Company issues letters of credit which are used
principally in overseas buying, cooperative buying programs,
and for other contract purchases. At February 3, 1996, the
Company had outstanding, pursuant to such facility,
approximately $225,000 in letters of credit to secure orders of
merchandise from various domestic and international vendors.
Subsequent to year-end the Company renegotiated the line of
credit as discussed in Note 4.

The Company currently has an employment agreement with the
Chairman of the Board which continues until January 31, 1998.
Pursuant to this agreement, dated January 31, 1993, he is paid
an annual salary of $180,000 plus an annual performance bonus
and deferred annual compensation of $25,000. Subject to
certain terms, at the end of the agreement, the Chairman's
employment will be converted to that of a part-time consultant
for a period of ten years at an annual salary of $50,000.

The Company also has employment agreements with the Chief
Executive Officer and the President which terminate on January
31, 1998. The Chief Executive Officer's agreement, dated
January 31, 1993, and amended January 31, 1995, provides for
annual compensation of $220,000 plus an annual performance
bonus. The President's agreement, dated January 31, 1993 and
amended January 31, 1995, provides for annual compensation of
$160,000 plus an annual performance bonus. Neither of these
contracts provides for deferred compensation or part-time
consultant positions after the termination dates of such
contracts.

The Company is involved in various claims, administrative
agency proceedings and litigation arising out of the normal
conduct of its business. Although the ultimate outcome of such
litigation cannot be predicted, the management of the Company,
after discussions with counsel, believes that resulting
liability, if any, will not have a material effect upon the
Company's financial position or results of operations.

12. Quarterly Financial Data (Unaudited - in thousands, except
per share data)

Summarized quarterly financial results are as follows:

First Second Third Fourth
53 Weeks Ended February 3, 1996
Sales $21,316 19,069 25,415 28,464
Gross profit on sales 7,448 7,251 9,245 10,489
Net earnings 486 508 796 997
Net earnings per common share .10 .10 .16 .20

52 Weeks Ended January 28, 1995
Sales $16,753 15,415 21,031 22,596
Gross profit on sales 5,656 5,403 7,494 7,854
Net earnings 222 449 632 785
Net earnings per common share .04 .09 .13 .16

No dealer, salesperson or other
person has been authorized to
give any information or to make
any representation not contained
in this Prospectus and, if given
or made, such information or
representation must not be relied
upon as having been authorized by
the Company, any Selling 585,000 Shares
Shareholder or the Underwriter.
Neither the delivery of this
Prospectus nor any sale made [LOGO]
hereunder shall, under any
circumstances, create any
implication that the information
herein is correct as of any time
subsequent to the date hereof or Common Stock
that there has been no change in
the affairs of the Company since
such date. This Prospectus does
not constitute an offer to sell
or a solicitation of an offer to
buy any securities other than the
registered securities to which it
relates. This Prospectus does
not constitute an offer to sell _____________________________
or a solicitation of an offer to
buy such securities under any PROSPECTUS
circumstances in which such offer ____________________________
or solicitation would be
unlawful.

___________________

TABLE OF CONTENTS

Page
Available Information
Incorporation of Certain
Documents by Reference
Prospectus Summary SCOTT&STRINGFELLOW, INC.
Investment Consideration
Use of Proceeds May __, 1996
Market Price of
Common Stock
and Dividend Policy
Capitalization
Selected Consolidated Financial
Data
Management's Discussion and
Analysis of Financial
Conditions and
Results of Operations
Business and Properties
Management
Description of Capital Stock
Selling Shareholders
Underwriting
Legal Matters
Experts
Index to Consolidated Financial
Statement F-1

Part II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

Set forth below is an itemization of the estimated costs,
other than underwriting discounts and commissions, expected to be
incurred in connection with the offer and sale of the securities
registered hereby.
Selling
Company Shareholders Total
Securities Registration Fee $2,518 $1,165 $3,683
NASD Filing Fee*
American Stock Exchange Listing Fee*
Blue Sky Fees*
Printing Expenses*
Legal Fees and Expenses*
Accounting Fees and Expenses*
Transfer Agent and Registrar Fees*
Miscellaneous* _____ _____ _____
Total $ $ $
__________________
* To be filed by amendment.

Item 15. Indemnification of Directors and Officers

The Registrant's Certificate of Incorporation provides that,
to the fullest extent permitted by the Oklahoma General
Corporation Act, its directors shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to
the Registrant and its shareholders. The provision in the
Certificate of Incorporation does not eliminate the duty of care
and in appropriate circumstances, equitable remedies such as
injunctive or other forms of non-monetary relief will remain
available under Oklahoma law. However, such remedies may not be
effective in all cases. In addition, each director will continue
to be subject to liability for breach of the director's duty of
loyalty to the Registrant, as well as for acts or omissions not
in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal
benefit to the director, and for payment of dividends or approval
of stock repurchases or redemption's that are unlawful under
Oklahoma law. The provision also does not affect a director's
responsibilities under any other law, such as the state or
federal securities laws.

Under the Oklahoma General Corporation Act, the Registrant
has broad powers to indemnity its directors and officers against
liabilities they may incur in such capacities, including
liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). The Registrant's Certificate of Incorporation
provides that the Registrant shall indemnify its directors and
officers to the fullest extent permitted by the Oklahoma General
Corporation Act, except as to any action, suit or proceeding
brought by or on behalf of such persons without prior approval of
the Board of Directors. The Certificate of Incorporation
requires the Registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts
incurred in connection with any proceeding, except for certain
proceedings brought by or on behalf of such persons as indicated
above, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was
a director or an officer of the Registrant, or is or was serving
at the request of the Registrant as a director or officer of
another enterprise, provided such person acted in good faith and
in a manner such person reasonably believed to be in or not
opposed to the best interests of the Registrant, and with respect
to any criminal proceeding, had no reasonable cause to believe
his conduct was unlawful. However, in the case of a derivative
action, an officer or director will not be
entitled to indemnification in respect of any claim, issue
or matter as to which such person is adjudged to be liable to the
Registrant, unless and only to the extent that the court in which
the action was brought determines that such person is fairly and
reasonable entitled to indemnity for expenses.

The Registrant has entered into Indemnity Agreements with
each director of the Registrant which require the Registrant to
indemnify such persons against certain liabilities and expenses
incurred by any such persons by reason of their status or service
as directors or officers of the Registrant and which set forth
procedures that will apply in the event of a claim for
indemnification under such agreements. The form of such
Indemnity Agreement is contained as an exhibit to the
registration statement.

As of the date of this registration statement, there is no
pending litigation or proceeding involving a director or officer
of the Registrant as to which indemnification is being sought nor
is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any officer or director.

The Underwriting Agreement filed as an exhibit to this
registration statement provides for indemnification by the
Underwriter of the Registrant and its officers, directors and
controlling persons, and by the Registrant of the Underwriter for
certain liabilities arising under the Securities Act or
otherwise.

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions,
the Registrant understands that the Securities and Exchange
Commission is of the opinion that such indemnification may
contravene public policy as expressed in the Securities Act and
is, therefore, unenforceable.

Item 16. Exhibits

See Index to Exhibits immediately following the Signature
Page.

Item 17. Undertakings

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
described in Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling persons of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of
this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

The undersigned Registrant hereby further undertakes that,
for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-2 and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Norman, State of Oklahoma, on May 17, 1996.

HAROLD'S STORES, INC.

By:/s/H.Rainey Powell
H. Rainey Powell,
President,
Chief Financial Officer,
Treasurer
and Secretary

Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.

Signature Title Date
Harold G. Powell * Chairman of the Board of Directors May 17, 1996
Harold G. Powell

Rebecca P. Casey * Vice Chairman of the Board of May 17, 1996
Rebecca P. Casey Directors, Chief Executive Officer
and Director (principal executive
officer)

/s/H. Rainey Powell President, Chief Financial Officer May 17, 1996
H. Rainey Powell and Director (principal financial
officer)

Linda L. Daugherty * Vice President and Controller May 17 , 1996
Linda L. Daugherty (principal accounting officer)

James R. Agar * Director May 17, 1996
James R. Agar

Michael T. Casey * Director May 17, 1996
Michael T. Casey

Robert B. Cullum, Jr. * Director May 17, 1996
Robert B. Cullum, Jr.

Lisa Powell Hunt * Director May 17, 1996
Lisa Powell Hunt

W. Howard Lester * Director May 17, 1996
W. Howard Lester

Gary C. Rawlinson * Director May 17, 1996
Gary C. Rawlinson

Kenneth C. Row * Director May 17, 1996
Kenneth C. Row

William F. Weitzel * Director May 17, 1996
William F. Weitzel

* By:/s/H. Rainey Powell
H. Rainey Powell
Attorney-in-fact

HAROLD'S STORES, INC.
FORM S-2 REGISTRATION STATEMENT

INDEX TO EXHIBITS

No. Description

1.1* Form of Underwriting Agreement between Scott &
Stringfellow, Inc. and Registrant dated _______, 1996.

1.2* Form of Selected Dealers Agreement.

3.1 Certificate of Incorporation of Registrant
(Incorporated by reference to Exhibit 3.1 to Form 8-B
Registration Statements, Registration No. 1-10892).

3.2 By-laws of Registrant (Incorporated by reference
to Exhibit 3.2 to Form 8-B Registration Statements,
Registration No. 1-10892).

4.1 Specimen Certificate for Common Stock
(Incorporated by reference to Exhibit 4.1 to Form S-1
Registration Statements, Registration No. 33-15753).

5.1* Opinion of Crowe & Dunlevy, A Professional
Corporation, regarding legality of securities to be
issued.

9.1 Stockholders' Agreement Among Certain Stockholders
of Registrant dated August 20, 1987 (Incorporated by
reference to Exhibit 9.1 to Form S-1 Registration
Statements, Registration No. 33-15753).

10.1 Lease Agreement dated May 1, 1987 by and between
Harold's of Norman, Inc. and Powell Properties, Inc.
(Incorporated by reference to Exhibit 10.1 to Form S-1
Registration Statements, Registration No. 33-15753).

10.2 Lease Agreement dated May 1, 1987 by and between
Harold's of Norman, Inc. and Ruby K. Powell
(Incorporated by reference to Exhibit 10.2 to Form S-1
Registration Statements, Registration No. 33-15753).

10.3 Lease Agreement dated October 31, 1985 by and
between Harold's Men's Apparel, Inc. predecessor to
Harold's of Norman, Inc. and Highland Park Shopping
Village (Incorporated by reference to Exhibit 10.9 to
Form S-1 Registration Statements, Registration No. 33-
15753) and Amendment to Lease Dated June 15, 1988
(Incorporated by reference to Exhibit 10.8 to Form 10-K
for the year ended January 31, 1989).

10.4 Lease Agreement dated November 1, 1990 by and
between Harold's Stores, Inc. and Michael T. Casey,
Trustee (329 Partners-I Limited Partnership).
(Incorporated by reference to Exhibit 10.29 to Form 10-
K for the year ended February 2, 1991).

10.5 Amended and Restated Lease Agreement dated April
1, 1996 by and between Harold's Stores, Inc. and 329
Partners II Limited Partnership. (Dallas Buying
Office). (Incorporated by reference to Exhibit 10.5 to
Form 10-K for fiscal year ended February 3, 1996).

10.6 Lease Agreement dated October 4, 1991 by and
between Harold's Stores, Inc. and 329 Partners II
Limited Partnership. (East Lindsey Warehouse facility,
Norman, Oklahoma ) (Incorporated by reference to
Exhibit 10.22 to Form 10-K for the year ended February
1, 1992).

10.7 Lease Agreement effective May 1, 1996 between the
Registrant and Carousel Properties, Inc.

10.8 Agreement effective June 1, 1994 between the Registrant
and CMT Enterprises, Inc.

10.9 Employment and Deferred Compensation Agreement
dated January 31, 1993 between Registrant and Harold G.
Powell (Incorporated by reference to Exhibit 10.21 to
Form 10-K for year ended January 30, 1993).

10.10 Employment and Deferred Compensation Agreement
dated January 31, 1993 between Registrant and Rebecca
Powell Casey (Incorporated by reference to Exhibit
10.21 to Form 10-K for year ended January 30, 1993).

10.11 Employment and Deferred Compensation Agreement
dated January 31, 1993 between Registrant and H. Rainey
Powell (Incorporated by reference to Exhibit 10.21 to
Form 10-K for year ended January 30, 1993).

10.12 Form of Indemnity Agreement between Registrant
and members of its Board of Directors.

22.1 Subsidiaries of the Registrant (Incorporated by
reference to Exhibit 22.1 to Form 8-B Registration
Statements, Registration No. 1-10892).

23.1 Consent of KPMG Peat Marwick LLP

23.2* Consent of Crowe & Dunlevy, A Professional
Corporation (Contained in Exhibit 5.1).

24.1 Powers of Attorney.

_________________________
* To be filed by amendment

HAROLD'S STORES, INC.
APPENDIX TO REGISTRATION STATEMENT ON FORM S-2

Pursuant to Rule 304 of Regulation S-T, the following is a
good faith description of photographic image material not
included in the Registration Statement on Form S-2 of Harold's
Stores, Inc. filed with the Securities and Exchange Commission
via EDGAR:

Photo No. 1 (upper left on gatefold): Exterior of Store No. 30,
a full-line ladies' and men's Old School Clothing Co. store
located in CitiPlace Shopping Center, Baton Rouge, Louisiana.

Photo No. 2 (upper right on gatefold): Ladies' interior of
Store No. 06, a full-line ladies' and men's store located in
Highland Park Village, Dallas, Texas.

Photo No. 3 (bottom of gatefold): Exterior of Store No. 18, a
full-line ladies' store located on Broadway and Austin Highway,
San Antonio.

Photo No. 4 (top of inside front cover): Interior of Store No.
28, a full-line ladies' and men's Old School Clothing Co., store
located in Mall St. Matthews, Louisville, Kentucky.

Illustration 1 (lower left of inside front cover): Map showing
locations of Harold's existing and proposed stores, outlets,
distribution center, merchandising office and corporate
headquarters, as of fiscal year ending February 3, 1996.

Photo No. 5 (upper left of inside back cover): Exterior of
Store No. 29, the Company's second men's and ladies' outlet
facility, located in Southwest Outlet Center, Hillsboro, Texas.

Photo No. 6 (upper right of inside back cover): Interior
Harold's Outlet - located in Southwest Outlet Center, Hillsboro,
Texas.

Photo No. 7 (lower right of inside back cover): Exterior of
Store No. 16, the Company's first men's and ladies' outlet
facility, located on Mopac Expressway, Austin, Texas.

Photo No. 8 (lower left of inside back cover): Interior of the
Company's 22,000 square foot distribution center, located in
Norman, Oklahoma.

LEASE AGREEMENT

THIS LEASE AGREEMENT is made and entered into effective
this 1st day of May, 1996, by and between CAROUSEL PROPERTIES,
INC., an Oklahoma corporation, hereinafter called "Landlord," and
HAROLD'S STORES, INC., an Oklahoma corporation, hereinafter
called "Tenant."

ARTICLE I

PREMISES

1.1 Agreement to Lease. In consideration of the rents,
covenants and agreements hereinafter reserved and contained on
the part of Tenant to be observed and performed, the Landlord
demises and leases to the Tenant, and Tenant rents from Landlord,
the real property situated in Cleveland County, Oklahoma,
described on Exhibit A (the "Premises").

ARTICLE II

TERM

2.1 Term of Lease. The term of this lease shall be for
twelve (12) years, beginning on May 1, 1996 (the "Commencement
Date"), and terminating on April 30, 2008 (the "Expiration
Date"), unless sooner terminated as herein provided.

ARTICLE III

RENT

3.1 Percentage Rent. This is a percentage rent lease.
There shall be no minimum rent payable by Tenant. As
consideration for the leasing of the Premises, Tenant agrees to
pay Landlord four percent (4%) of the annual gross sales from the
Premises (the "Rent"). Such rental shall be paid monthly, on or
before the 20th day of each month, commencing June 20, 1996,
based upon the gross sales for the previous month.

The term "gross sales," as used herein, shall mean the
gross amount received by Tenant from all sales made from the
Premises (not including sales filled from other stores). The
following items shall be excluded from gross sales: (i) exchange
of merchandise between stores; (ii) returned goods; (iii) cash or
credit refunds to customers; (iv) sale of fixtures; (v) gift
certificates until redeemed; (vi) sale of inventory not in the
ordinary course of business; (vii) sales to employees at a
discount (not to exceed three percent [3%] of annual gross
sales); (viii) sales tax; (ix) interest on sales; (x) credit card
fees; and (xi) insurance proceeds.

At the time Tenant makes its rental payment, it shall
provide Landlord with a statement certified by an officer of
Tenant to be correct, certifying the amount of gross sales from
the Premises. Landlord shall be entitled to audit the records of
Tenant annually, and if the gross sales of Tenant are determined
to be in error, the amount of the error shall be adjusted between
the parties. If the audit determines greater than a three
percent (3%) shortage in reporting gross sales, Tenant shall pay
for the audit.

ARTICLE IV

CONDITION OF PREMISES

4.1 Tenant's Acceptance of Premises. Neither Landlord
nor Landlord's agents have made any representations with respect
to the Premises or the land upon which it is erected, except as
expressly set forth herein, and no rights, easements or licenses
are acquired by Tenant by implication or otherwise, except as
expressly set forth in the provisions of this agreement. The
taking of possession of the Premises by Tenant shall be
conclusive evidence that Tenant accepts the Premises and that the
Premises were in good condition at the time possession was taken.
In no event shall Landlord be liable for any defects in the
Premises or for any limitation on its use. Landlord shall not be
responsible for any latent defect in the Premises, and the rent
hereunder shall in no case be withheld or diminished on account
of any defect in the Premises, any change in the condition
thereof, any damage occurring thereto, or the existence with
respect thereto of any violations of laws or regulations of any
governmental authority.

4.2 Landlord's Title. Landlord is leasing the Premises
and has the right to enter into this Lease, and the Premises are
accepted by Tenant subject to, and Tenant agrees to abide by, all
and singular, the easements, restrictions, covenants,
reservations, mineral reservations and other matters affecting
title to the Premises.

ARTICLE V

ALTERATIONS, ADDITIONS AND IMPROVEMENTS

5.1 Improvements by Tenant. Tenant shall not make or
allow to be made any alterations or physical additions in or to
the Premises without first having the written consent of
Landlord. At such time as Tenant requests such consent of
Landlord, Tenant shall submit plans and specifications for such
alterations or additions, and comply with any and all reasonable
requirements of Landlord. Subject to the Landlord's lien, Tenant
may remove "removable trade fixtures," provided (1) any such
removal is made prior to the termination of this agreement; (2)
Tenant is not in default of any of the obligations or covenants
hereunder; and (3) such removal may be effected without
substantial damages to the Premises, and Tenant promptly repairs
all damage caused by such removal at its sole expense. All trade
fixtures, merchandise, equipment and signs of every description
which are not removable or not removed in accordance with the
preceding, and any alterations or additions to the Premises shall
become the property of Landlord, and shall remain upon and be
surrendered with the Premises as part thereof at the termination
of this Lease. Tenant hereby waives all rights to any payment or
compensation therefor. Removable trade fixtures shall include
signs, tables, cases, chairs, desks, wall brackets, shelves,
mirrors and business machines (provided same are not permanently
attached), but shall not include ducts, conduits, wiring, pipes,
paneling, wall covering or floor covering or permanently attached
fixtures which cannot be removed without substantial damage to
the Premises. Upon termination of this agreement, Tenant will,
at its sole cost and expense, if requested by Landlord, remove
any and all alterations, additions, fixtures, equipment and
property installed by Tenant in the Premises and restore the
Premises to the condition thereof at the time of tender of
possession of the Premises, ordinary wear and tear excepted.

5.2 Signs. Tenant will not place or suffer to be
placed or maintained on any exterior door, wall or window of the
Premises any sign, awning or canopy, or advertising matter, or
other thing of any kind, and will not place or maintain any
decoration, lettering or advertising matter on the glass of any
window or door of the Premises without first obtaining Landlord's
written approval and consent. Tenant further agrees to maintain
such sign, awning, canopy, decoration, lettering, advertising
matter or other thing as may be approved in good condition and
repair at all times. Tenant, upon vacation of the Premises or
the removal or alteration of its sign, for any reason, shall be
responsible for the repair, painting and/or replacement of the
building surface where the sign is attached.

ARTICLE VI

REPAIR AND MAINTENANCE

6.1 Tenant's Maintenance. Tenant shall at all times
keep the Premises (including maintenance of exterior entrances,
all glass and show window moldings) and all plate glass,
partitions, doors, fixtures, plumbing, electrical, and the
heating and air conditioning systems, in good order, condition
and repair (including repair of damage from burglary or attempted
burglary of the Premises and reasonably periodic painting and
maintenance of the air conditioning system as required by
Landlord). Tenant shall be responsible for all utility repairs
in ducts, conduits, pipes and wiring located in, under and above
the Premises. Tenant's maintenance responsibilities shall also
include maintenance of the parking lot, and Tenant shall keep the
sidewalks and parking areas adjoining the Premises free from
rubbish, dirt, garbage, snow and ice.

6.2 Landlord's Option to Make Tenant Repairs. If
Tenant refuses or neglects to repair the Premises within thirty
(30) days after receipt of Landlord's written demand, Landlord
may make such repairs without liability to Tenant for any loss or
damage that may accrue to Tenant's merchandise, fixtures or other
property, or to Tenant's business by reason thereof, and upon
completion thereof, Tenant shall pay Landlord's cost for making
such repairs, plus twenty percent (20%) for overhead, upon
presentation of bills therefor, as Additional Rent.

6.3 Landlord's Maintenance. Landlord shall keep the
roof, exterior walls, foundations and building structure of the
Premises in a good state of repair; provided, however, if
Landlord is required to make repairs to structural portions by
reason of Tenant's negligent act or omission to act, Landlord
shall add the cost of such repairs, plus twenty percent (20%) for
overhead, to the rent which shall thereafter become due.

6.4 Waste and Surrender. Tenant shall not commit or
allow any waste or damage to be committed on any portion of the
Premises, and upon expiration or sooner termination of the term
hereof, Tenant agrees to deliver up the Premises to Landlord in
the condition set out above, ordinary wear and tear excepted, and
Landlord shall have the right to re-enter and resume possession
of the Premises.

6.5 Surrender of Key. At the expiration of the tenancy
hereby created, Tenant shall surrender all keys for the Premises
to Landlord at the place then fixed for the payment of rent, and
shall inform Landlord of all combinations on locks, safes and
vaults, if any, in the Premises. Tenant shall not change locks
on the Premises without the prior written consent of the
Landlord.

ARTICLE VII

UTILITIES

7.1 Tenant Pays All Bills. Tenant shall pay all bills
for water, gas, electricity, fuel, light, heat and power
furnished to or used by Tenant on or about the Premises, and all
disposal or sewage service charges for the Premises, and all
telephone bills and other bills incurred by Tenant. Landlord
shall have no responsibility for such payments.

ARTICLE VIII

TAXES

8.1Tenant's Responsibility. Tenant shall pay, in
addition to the rent specified above, all real estate taxes and
special assessments levied upon the Premises by any state, city,
school district or federal governmental authority. The payment
for real estate taxes shall be made to Landlord on or before
December 15 of each year during the lease term, commencing
December 15, 1996. For the first and final years of the lease
term, the amount of the taxes shall be prorated. All other taxes
shall be paid directly to the taxing authority on or before their
due date.

ARTICLE IX

INSURANCE AND INDEMNITY

9.1 Tenant's Liability Insurance Requirements. During
the entire lease term, the Tenant shall, at its own expense,
maintain adequate liability insurance with a reputable insurance
company or companies, with minimum amounts of $1,000,000.00
combined single limit for personal injuries and property damage,
to indemnify both Landlord and Tenant against any such claims,
demands, losses, damages, liabilities and expenses. Landlord
shall be named as an additional insured, and shall be furnished
with a certificate of such insurance, which shall bear an
endorsement that the same shall not be cancelled except upon not
less than thirty (30) days prior written notice to Landlord.
Tenant shall also, at its own expense, maintain, during the lease
term, insurance covering its furniture, fixtures, equipment, all
leasehold improvements, and merchandise in an amount equal to not
less than one hundred percent (100%) of the full replacement
value thereof, and insuring against fire and all risk perils
coverage as provided by a standard all risk coverage endorsement,
and the plate glass and all other glass which is the
responsibility of the Tenant in the event of breakage from any
cause. Tenant shall provide Landlord with copies of the policies
of insurance or certificates thereof. If Tenant fails to
maintain such insurance, Landlord may maintain the same on behalf
of Tenant. Any premiums paid by Landlord shall be deemed
Additional Rent and shall be due on the payment date of the next
installment of Rent hereunder.

9.2 Tenant's Fire and Extended Coverage Insurance.
During the entire lease term, the Tenant shall, at its own
expense, maintain a fire and extended coverage insurance policy
on the Premises, in an amount and with endorsements required by
Landlord's first mortgage lender; provided, however, if there be
no first mortgage lender, the coverage shall, at a minimum,
insure all structures and improvements for not less than eighty
percent (80%) of the full insurable replacement cost value
thereof, and shall contain such other endorsements as Landlord
may from time to time require.

9.3 Indemnity. Tenant agrees to indemnify Landlord and
save Landlord harmless from and against any and all claims,
actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from
or out of any occurrence in, upon or at the Premises, or the
occupancy or use by Tenant of the Premises, or any part thereof,
if occasioned wholly or in part by any act or omission of Tenant,
Tenant's agents, contractors, employees, servants, lessees or
concessionaires. In case Landlord shall, without fault on
Landlord's part, be made a party to any litigation commenced by
or against Tenant, then Tenant shall protect and hold Landlord
harmless, and shall pay all costs, expenses and reasonable
attorney's fees incurred or paid by Landlord in connection with
such litigation.

9.4 Waiver of Subrogation. As long as their respective
insurers so permit, Landlord and Tenant hereby mutually waive
their respective rights of recovery against each other for any
loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective
parties. Each party shall apply to their insurers to obtain such
waivers. Each party shall obtain any special endorsements, if
required by their insurer to evidence compliance with the
aforementioned waiver.

ARTICLE X

CASUALTY LOSS

10.1 Damage to Premises. If the Premises shall be
damaged by fire, the elements, unavoidable accident or other
casualty, but are not thereby rendered untenantable in whole or
in part, Landlord shall, at Landlord's expense, cause such damage
to be repaired, and the Rent shall not be abated. If by reason
of such occurrence, the Premises shall be rendered untenantable
only in part, Landlord shall, at Landlord's expense, cause the
damage to be repaired, and the Rent shall not be abated, since
it is percentage rent only. If the Premises shall be rendered
wholly untenantable by reason of such occurrence, the Landlord
shall, at Landlord's expense, cause such damage to be repaired,
or Landlord may, at Landlord's election, terminate this Lease and
the tenancy hereby created by giving to Tenant, within the sixty
(60) days following the date of said occurrence, written notice
of Landlord's election to do so.

ARTICLE XI

SUBORDINATION

11.1 Subordination. This Lease shall be subordinate to
the existing leases on the Premises and any mortgage that is now
or may hereafter be placed upon the Premises, and to any and all
advances to be made thereunder, and to the interest thereon, and
to all renewals, replacements and extensions thereof; provided
that Tenant receives a non-disturbance agreement from the
mortgagee and lessor on a form satisfactory to Tenant. Tenant
shall, upon written demand by Landlord, execute and deliver such
instruments as may be required at any time and from time to time
to subordinate the rights and interests of Tenant under this
Lease to the lien of any mortgage placed upon the Premises, or
upon the real property of which the Premises are a part at any
time and from time to time, whether before or after the
commencement of this Lease or during the term thereof; provided
that such a non-disturbance agreement is in effect.

ARTICLE XII

ASSIGNMENT OR SUBLETTING

12.1 Prohibitions. Tenant will not assign this Lease,
in whole or in part, nor sublet all or any part of the Premises,
without the prior written consent of Landlord in each instance,
which consent shall not be unreasonably withheld. The consent of
Landlord to any assignment or subletting shall not constitute a
waiver of the necessity for such consent to any subsequent
assignment or subletting. Tenant shall not mortgage, pledge or
otherwise encumber its interest in this Lease or the Premises
without the prior written consent of Landlord. If this Lease be
assigned, or if the Premises or any part thereof be sublet or
occupied by anybody other than Tenant, Landlord may collect rent
from the assignee, subtenant or occupant, and apply the net
amount collected to the rent herein reserved, but no such
assignment, subletting, occupancy or collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant
herein contained. Notwithstanding any assignment or sublease,
Tenant shall remain fully liable on this Lease, and shall not be
released from performing any of the terms, covenants and
conditions of this Lease.

12.2 Landlord's Right to Transfer. Landlord shall have
the right to transfer and assign, in whole or in part, Landlord's
rights hereunder and in the Premises. In the event of the sale,
assignment or transfer by Landlord of Landlord's interest in the
Premises, Landlord shall thereupon be released or discharged from
all covenants and obligations of Landlord, and Tenant agrees to
look solely to such successor in interest of Landlord for
performance of such obligations. All covenants and obligations
of the Landlord shall run with the land and be binding upon each
new owner or successor of the Premises during their period of
ownership.

ARTICLE XIII

CONDEMNATION

13.1 Award of Damages. If the whole or any part of the
Premises shall be taken for any public or quasi-public purpose by
any lawful power or authority by the exercise of the right of
condemnation or eminent domain, Landlord shall be entitled to and
shall receive all awards that may be made in any such proceeding
for the Premises, and Tenant hereby assigns and transfers to
Landlord any and all such awards.

13.2 Taking of All of Premises. If such proceedings
shall result in taking of the whole or substantially all of the
Premises, this Lease shall terminate from the date of such
taking, and all rent and other sums or charges provided herein to
be paid by Tenant shall be apportioned and paid to the date of
such taking. If less than substantially all of the Premises
shall be taken in such proceedings, this Lease shall terminate
only as to the portion of the Premises so taken, and this Lease
shall continue for the balance of its term as to the part of the
Premises remaining. In the event of a partial taking, the Rent
to be paid by Tenant after such taking shall be reduced pro rata
in proportion to which the space so taken bears to the entire
space in the Premises originally demised.

13.3 Taking of Less Than All of Premises. If less than
substantially all of the Premises shall be taken, Landlord shall
repair the remaining portion of the Premises so as to restore
same as a building complete in itself, but Landlord shall not be
obligated to expend thereon more than the sum allowed to Landlord
in such condemnation proceeding for damage to the Premises, less
expenses incurred by Landlord for such proceeding.
Notwithstanding the foregoing, if the expense of such restoration
would be greater than the sum allowed Landlord, less expenses in
the condemnation proceeding, then Landlord shall have the option,
for a period of thirty (30) days after such partial payment,
within which to terminate this Lease.

13.4 Tenant's Damages. Although all damages in the
event of any condemnation are to belong to Landlord, whether such
damages are awarded as compensation for diminution in value of
the leasehold or to the fee of the Premises, Tenant shall have
the right to claim and recover from the condemning authority, but
not from Landlord, such compensation as may be separately awarded
or recoverable by Tenant in Tenant's own right on account of any
and all damages to Tenant's business by reason of the
condemnation and for or on account of any cost or loss to which
Tenant might be put in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment.

ARTICLE XIV

ACCESS AND EASEMENTS

14.1 Access. Landlord or Landlord's agents shall have
the right to enter the Premises at all times to examine the same,
and to show them to prospective purchasers or tenants of the
Premises, and to make such repairs, alterations, improvements or
additions as Landlord may deem necessary or desirable, and
Landlord shall be allowed to take all material into and upon the
Premises that may be required therefor, without the same
constituting an eviction of Tenant in whole or in part, and the
rent reserved shall in no way abate while said repairs,
alterations, improvements or additions are being made, by reason
of loss or interruption of business of Tenant, or otherwise.
During the six (6) months prior to the expiration of the term of
this Lease, Landlord may exhibit the Premises to prospective
tenants or purchasers, and place upon the Premises the usual
notices "For Lease" or "For Sale," which notices Tenant shall
permit to remain thereon without molestation. If Tenant shall
not be personally present to open and permit an entry into the
Premises, at any time, when for any reason an entry therein shall
be deemed necessary or permissible, Landlord or Landlord's agents
may enter the same by a master key, or may forcibly enter the
same, without rendering Landlord or such agents liable therefor,
and without in any manner affecting the obligations and covenants
of this lease. Nothing herein contained, however, shall be
deemed or construed to impose upon Landlord any obligation,
responsibility or liability whatsoever, for the care, maintenance
or repair of the Premises, or any part thereof, except as
otherwise herein specifically provided.

14.2 Structural Repairs. If an excavation or
construction shall be made upon land adjacent to the Premises, or
shall be authorized to be made, Tenant grants to the person
causing or authorized to cause such excavation or construction,
license to enter upon the Premises for the purpose of doing such
work as Landlord shall deem necessary to preserve the wall or the
building of which the Premises form a part from injury or damage,
and to support the same by proper foundations, without any claim
for damages or indemnification against Landlord, or diminution or
abatement of rent.

ARTICLE XV

TENANT'S PROPERTY

15.1 Tenant's Personal Property Taxes. Tenant shall be
responsible for and shall pay before delinquency all municipal,
county or state taxes assessed during the term of this Lease
against any leasehold interest or personal property of any kind,
owned by or placed in, upon or about the Premises by the Tenant.

15.2 Responsibility of Landlord. Landlord shall not be
liable for any damage to property of Tenant or of others located
on the Premises, nor for the loss of or damage to any property of
Tenant or of others by theft or otherwise. Landlord shall not be
liable for any injury or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity,
water, rain or snow, or leaks from any part of the Premises, or
from the pipes, appliances or plumbing works, or from the roof,
street or sub-surface, or from any other place, or by dampness,
or by any other cause of whatsoever nature. Landlord shall not
be liable for any such damage caused by occupants of adjacent
property, or the public, or caused by operations in construction
of any private, public or quasi-public work. All property of
Tenant kept or stored on the Premises shall be so kept or stored
at the risk of Tenant only, and Tenant shall hold Landlord
harmless from any claims arising out of damage to the same,
including subrogation claims by Tenant's insurance carrier,
unless such damage shall be caused by the willful act or gross
negligence of Landlord.

ARTICLE XVI

USE OF PREMISES

16.1 Tenant's Usage. The Premises are to be used and
occupied by Tenant solely for the purposes of the retail sale of
clothing and accessories, including jewelry and shoes, and for a
restaurant, continuously during the term. Tenant shall not
occupy or use, or permit any portion of the Premises to be
occupied or used for any business or purpose which, in Landlord's
opinion, is unlawful, disreputable or deemed to be extra
hazardous on account of fire, or permit anything to be done which
would in any way increase the rate of fire insurance coverage on
the Premises and/or its contents.

16.2 Compliance with Laws, Covenants and Regulations.
Tenant shall at all times comply with all laws, ordinances,
orders, rules and regulations of governmental agencies having
jurisdiction of the Premises, and of all restrictive covenants
relating to the use, condition or occupancy of the Premises. In
the event such laws mandate alterations to the Premises, Tenant
agrees to promptly make such alterations at its sole cost and
expense.

16.3 Concessionaires. Tenant shall not permit any
business to be operated in or from the Premises by any
concessionaire or licensee without prior written consent of
Landlord, which consent will not be unreasonably withheld.
ARTICLE XVII

PEACEFUL ENJOYMENT

17.1 Covenant of Landlord. Tenant shall, and may
peacefully have, hold and enjoy the Premises, subject to the
other terms hereof, providing Tenant pays the rentals herein
recited and performs Tenant's covenants and agreements herein
contained.

ARTICLE XVIII

DEFAULT AND REMEDIES

18.1 Tenant's Default. Any of the following, if not
cured by Tenant within ten (10) days after written notice to
Tenant of their occurrence, shall constitute events of default on
the part of Tenant:

A. Failure of Tenant to pay Rent, Additional Rent, or
any other rent or other payment when due;

B. Failure of Tenant to comply with any covenant or
obligation of Tenant hereunder;

C. Abandonment or vacation of the Premises by Tenant;

D. The filing of a voluntary or involuntary petition in
bankruptcy by or against Tenant, or any guarantor
hereof, under the National Bankruptcy Act, or should
Tenant, or any guarantor, make an assignment for the
benefit of their creditors, or should a trustee,
receiver or liquidator of Tenant, or any guarantor
hereof, of Tenant's or any guarantor's property
hereof, be appointed, or should any governmental
authority institute any proceeding for the
dissolution of Tenant, or any guarantor hereof, or
should Tenant's interest hereunder pass by operation
of law or otherwise;

E. Failure to provide estoppel certificates as
requested by Landlord.

18.2 Remedies. In addition to any other rights and
remedies provided in this Lease or by applicable law or equity,
on the occurrence of any event of default and after expiration of
any cure period, Landlord will have the following remedies, all
of which may be exercised without any further notice or demand on
Tenant:

(A) Past Due Rent. Landlord may collect from Tenant all
past due rent, including interest thereon at twelve
percent (12%) per annum and late charges, and all
other reasonable damages caused by Tenant's default.
(B) Termination. Landlord may terminate this Lease, in
which event Tenant will immediately surrender the
Premises to Landlord, but if Tenant fails to do so,
Landlord may, without notice and without prejudice
to any other remedy Landlord might have, enter and
take possession of the Premises and remove Tenant,
anyone claiming under Tenant, and any property
therefrom without being subject to any claim for
damages therefor. Tenant shall be obligated to pay
to Landlord all costs reasonably incurred by
Landlord in any such action, including the costs of
taking possession of and repairing any damage to the
Premises, and all other reasonable damages caused by
Tenant's default. After default, this Lease may be
terminated only by written notice from Landlord, and
no other action or inaction by Landlord after
default shall constitute a termination of this
Lease.

(C) Reletting. If Landlord does not terminate this
Lease, then Landlord may, at its option, reenter and
remove any persons or property therein, forcibly if
necessary, without being guilty of trespass and
without the same constituting a termination of this
Lease, and may relet the Premises or any part
thereof for the benefit of Tenant, in which event
Tenant shall pay Landlord all reasonable costs
incurred by Landlord in taking such action,
including, without limitation, the costs of taking
possession of and repairing the Premises, the
reasonable cost of preparing the same for reletting,
attorneys' fees, brokerage commissions, and all
other damages caused by Tenant's default. Tenant
shall remain obligated to Landlord for the
difference between any rent received by Landlord as
a result of such reletting and the rent (computed on
the average of Rent paid by Tenant prior to the date
of Tenant's default) and other sums for which Lessee
is obligated hereunder. In the event any such
reletting results in payment of rent thereunder to
Landlord in excess of the rent for which Tenant is
obligated hereunder, Landlord shall be entitled to
retain such excess.

18.3 Landlord's Right to Cure. Should Tenant be in
default hereunder, Landlord may cure any such default on behalf
of Tenant, in which event Tenant shall reimburse Landlord for all
sums paid to effect compliance, together with interest at the
rate of eighteen percent (18%) per annum, from and after the date
of such expenditure, which shall be Additional Rent due
hereunder.

18.4 Landlord's Default. If Landlord fails to perform
any of Landlord's covenants hereunder, Landlord shall not be in
default unless: (1) Tenant gives Landlord written notice
thereof, setting forth in reasonable detail the nature and extent
of such failure, and (2) if such failure by Landlord is not cured
or attempted to be cured within thirty (30) days following the
delivery of such notice. If such failure cannot be reasonably
cured within thirty (30) days, the length of such period shall be
extended for a period reasonably required therefor if Landlord
commences curing such failure within the thirty (30) day period
and continues the curing thereof with reasonable diligence and
continuity.

ARTICLE XIX

MISCELLANEOUS PROVISIONS

19.1 Amendment. This agreement may not be altered,
changed or amended, except by instrument in writing, signed by
all parties hereto.

19.2 Non-Waiver. Failure of Landlord to declare any
default immediately upon the occurrence thereof, or delay in
taking any action in connection therewith, or acceptance of
rental after same is due, shall not waive such default, but
Landlord shall have the right to declare any such default at any
time, and to take such action as may be lawful or authorized
hereunder, either at law or in equity.

19.3 Force Majeure. Neither Landlord nor tenant shall
be required to perform any term, condition or covenant in this
Lease so long as such performance is delayed or prevented by
force majeure, which shall mean acts of God, strikes, lock outs,
material or labor shortages, or restrictions by government
authorities and other causes which are not reasonably within the
control of either Landlord or Tenant, and which, by the exercise
of due diligence, Landlord or Tenant would be unable, wholly or
in part, to prevent or overcome. Provided, however, this
provision shall not apply to Tenant's obligation to pay Rent and
Additional Rent.

19.4 Interpretation. As used herein, the masculine or
neuter genders shall be deemed to include all genders and
singular, the plural, and vice versa, except where any such
construction would be unreasonable. This Lease shall be
construed under and in accordance with the laws of the State of
Oklahoma, and all obligations of the parties hereunder are
performable in Cleveland County, Oklahoma. The paragraph
headings are inserted for convenience only, and shall not in any
way vary the provisions they identify. If any provision of this
Lease or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions hereof and other
applications thereof, shall not in any way be affected or
impaired thereby.

19.5 Covenants. All agreements, obligations and
undertakings of the parties shall be deemed to be covenants,
whether or not so denominated.

19.6 Notices. Except as may be otherwise specifically
provided herein, all notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered when
delivered personally, or when deposited with the United States
Postal Service, postage prepaid, registered or certified mail,
return receipt requested, addressed to the parties at the
respective addresses set forth hereunder, or at such other
address as may have been theretofore specified by written notice
delivered in accordance herewith.

19.7 Limitation of Landlord Liability. Any provisions
hereof to the contrary notwithstanding, Tenant hereby agrees that
no personal or partnership liability of any kind or character
whatsoever now attaches or at any time hereafter, under any
condition, shall attach to Landlord for payment of any amounts
payable under this agreement, or for the performance of any
obligations hereunder. The exclusive remedies of Tenant for the
failure of Landlord to perform any of its obligations under this
Lease shall be to proceed against the interest of Landlord in and
to the Premises.

19.8 Attorney's Fees. In the event Tenant defaults in
the performance of any of the terms, covenants, agreements or
conditions contained in this Lease and Landlord places the
enforcement of this Lease, or any part thereof, or the collection
of any rent due, or which may become due hereunder, or recovery
of the possession of the Premises, in the hands of an attorney,
or files suit upon same, Tenant agrees to pay to Landlord a
reasonable attorney's fee which is incurred by Landlord in such
enforcement, collection or recovery of possession.

19.9 Holding Over. In the event of holding over by
Tenant after the expiration or termination of this agreement
without the express written consent of Landlord, the Base Rent
shall be doubled for the entire holdover period. No holding over
by Tenant after the term of this Lease shall operate to extend
this Lease; and in the event of any unauthorized holding over,
Tenant shall indemnify Landlord from and against all claims for
damages by any other tenant to whom Landlord may have leased all
or any portion of the Premises, effective upon the termination of
this Lease. Any holding over with the consent of Landlord in
writing shall thereafter constitute this Lease a lease from month
to month.

19.10 Entire Agreement. This instrument constitutes
the entire agreement of the parties. It supersedes any and all
other agreements, either oral or in writing, between the parties
hereto. Each party to this Lease acknowledges that no
representations, inducements, promises or agreements, oral or
otherwise, have been made by any party or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Lease shall
be valid or binding. This Lease may not be modified or amended
by oral agreement, but only by an agreement in writing, signed by
the parties hereto.

19.11 Recording. This Lease may not be recorded by
either party, but at the request of either party, Landlord and
Tenant shall execute a short form memorandum of this Lease, which
may be recorded for all purposes.

19.12 Indemnity. Tenant shall indemnify Landlord
against all liabilities, expenses and losses incurred by Landlord
as a result of: (1) failure by Tenant to perform any covenant
required hereunder; (2) any accident, injury or damage which
shall happen in or about the Premises; (3) failure to comply with
any requirement of any governmental authority; and (4) any
mechanic's lien or security agreement filed against the Premises,
any equipment therein, or any materials used in the construction
or alteration of the Premises. Landlord shall not be liable for
injury or damage to any person or property occurring on the
Premises unless caused by or resulting from the gross negligence
of Landlord.

19.13 Estoppel Certificates. At any time and from time
to time within twenty (20) days after Landlord shall request the
same, Tenant will execute, acknowledge and deliver to Landlord or
any party as may be designated by Landlord, a certificate in a
reasonably acceptable form, with respect to the matters required
by such party, and such other matters relating to this Lease or
the status or performance of obligations of the parties hereunder
as may be reasonably requested by Landlord. If Tenant fails to
provide such certificate within twenty (20) days after request by
Landlord, Tenant shall be deemed to have approved the contents of
any such certificate submitted to Tenant by Landlord, and
Landlord is hereby authorized to so certify.

19.14 Binding Effect. This Lease shall be binding upon
and inure to the benefit of the parties hereto, their respective
successors, permitted assigns, heirs and legal representatives,
as the case may be.

19.15 Termination of Existing Lease. The existing
lease on the Premises between the parties dated May 1, 1987, is
terminated effective April 30, 1996.

EXECUTED as of the day and year first above written.

"LANDLORD" CAROUSEL PROPERTIES, INC.,
an Oklahoma Corporation

By:
_________________________________________
Title:
_________________________________________
Address: 765 Asp Avenue
Norman, OK 73069

"TENANT" HAROLD'S STORES, INC.,
an Oklahoma Corporation

By:
_________________________________________
Title:
_________________________________________
Address: P.O. Drawer 2970
Norman, OK 73070-2970

ACKNOWLEDGMENTS

STATE OF OKLAHOMA )
) ss:
COUNTY OF CLEVELAND )

The foregoing instrument was acknowledged before me this
day of , 1996, by _______________________,
President of CAROUSEL PROPERTIES, INC., an Oklahoma corporation,
on behalf of said corporation.

Notary Public
My commission expires:

STATE OF OKLAHOMA )
) ss:
COUNTY OF CLEVELAND )

The foregoing instrument was acknowledged before me this
day of , 1996, by H. RAINEY POWELL, President
of HAROLD'S STORES, INC., an Oklahoma Corporation, on behalf of
said corporation.

Notary Public
My commission expires:

EXHIBIT A
to
LEASE AGREEMENT

LEGAL DESCRIPTION OF PREMISES

That portion of Lots Twenty-Seven (27) through Thirty (30) in
Block One (1) of LARSH's UNIVERSITY ADDITION to the City of
Norman, Cleveland County, Oklahoma, according to the recorded
plat thereof, which is shown as Tracts E, F, ED, G, H, EH, C, D,
I and A on the drawing attached, and that portion of Lots Thirty-
One (31) and Thirty-Two (32) in Block One (1) of LARSH'S
UNIVERSITY ADDITION which is currently paved and used for
parking.

A G R E E M E N T

THIS AGREEMENT, made and entered into this 27th day of
March, 1995, effective June 1, 1994, by and between HAROLD'S
STORES, INC., an Oklahoma corporation, hereinafter referred to as
"Harold's," and CMT ENTERPRISES, INC., a New York corporation,
hereinafter referred to as "CMT,"

W I T N E S S E T H:

For and in consideration of the mutual covenants
hereinafter contained, the parties agree as follows:

1. Recitations. Harold's is in the retail clothing
business, selling through stores and catalogs. A substantial portion
of Harold's sales are of its exclusive designs, which are developed
by Harold's and manufactured to Harold's specifications. CMT
previously manufactured garments for Harold's. The parties have
determined that it is advisable to alter their relationship so that
CMT will serve as Harold's agent in the manufacturing process. CMT
has expertise in the development, manufacturing and distribution of
garments, and represents that it is qualified to serve as Harold's
agent in coordinating Harold's design and manufacturing of ladies'
merchandise. The parties have entered into this Agreement in order
to establish the terms of their relationship.

2. Duties of CMT. In consideration for the fee set forth in
paragraph 4 hereof, CMT agrees to perform the following duties:

2.1 Provide all services previously provided to
Harold's while serving as a manufacturer, including, without
limitation:

A. Design development services by personnel acceptable
to Harold's, including, without limitation, European
buying trips and development services in Dallas,
Texas;

B. Research and development in foreign markets;

C. Purchasing piece goods on Harold's behalf, if, and
only if, Harold's has given CMT a buy sheet
requesting the purchase of the particular goods;

D. Providing samples and making patterns;

E. Pre-production approval sampling of Harold's
garments ("Modeling");

F. Assistance in selection of patterns and fabric for
exclusive designs, including coordination with art
studios;

G. Coordination of manufacturing production process,
including selection of and negotiation with
contractors and mills, and including use of
effective markers to assure maximum usage of fabric,
and processing fabric into finished product;

H. Assistance in importation of Harold's goods into the
United States;

I. Storage of fabric and finished goods owned by
Harold's;

J. Coordination of shipment dates of fabric to assure
timely delivery of finished goods to Harold's;

K. Assistance in pricing of products and assurance of
quality control.

The following services previously provided by CMT under the
manufacturing relationship will no longer be provided by CMT:

A. Harold's will pay for all parts of the garments,
including fabric, buttons, etc.

B. Harold's will pay for all artwork and prints.

C. Harold's will pay for manufacturing the goods into
finished products and transportation of same to
Harold's.

2.2In addition to the above, CMT further agrees to
provide:

A. Manufacturing expertise;

B. Fashion and trend information and fabric research;

C. Scheduling of deadlines for development, fabric
imprint and contractors to accommodate Harold's
delivery dates;

D. Pricing determination two (2) weeks after the
receipt of the Modeled blockout

E. Dedication of personnel necessary to perform the
services required under this Agreement;
F. Recommendations as to contractors for particular
finished goods and negotiation of most favorable
economic and delivery terms with the manufacturers;

G. Perform other duties reasonably assigned to CMT by
Harold's.

2.3 CMT further agrees to provide the following
accounting, security and cost control systems and
procedures:

A. Accounting records, including general ledger, cost
sheets, inventory records, buy sheets, purchase
orders, etc., shall be maintained in CMT's office.
CMT shall provide duplicate originals of all
records, which Harold's requests for its office in
Oklahoma.

B. CMT shall maintain a separate general ledger for
Harold's in accordance with Harold's 52-53 week
year. CMT shall also maintain and provide to
Harold's supporting schedules for such items as
inventory, accounts receivable and accounts payable.

C. All records maintained by CMT for Harold's shall be
in such form as shall permit the consolidation of
period ending balances into Harold's consolidated
financial records.

D. Physical inventories of Harold's goods stored by CMT
and work in process will be taken quarterly and
observed by Harold's or its agents.

E. All of Harold's goods stored by CMT shall be
segregated from all other goods in the storage
facility, and shall be marked as Harold's.
F. Purchase orders for piece goods will originate from
CMT (using the Harold's Manufacturing Center ("HMC")
name), and will contain terms approved in advance by
Harold's buying office.

G. Harold's will establish an imprest checking account
at an Oklahoma City bank which will allow Harold's
or CMT personnel to sign checks. A check register
and open payables report will be faxed daily from
CMT to Harold's for review. Copies of checks with
documentation shall be Federal Expressed to Harold's
weekly.

H. CMT will cause all vendors to be timely paid in
order to take advantage of discounts available and
to avoid any late charges.

I. A weekly bank statement will be reviewed by Harold's
and sent to CMT.

J. Harold's shall be entitled to audit the performance
of CMT at any time during the term of this
Agreement.

3. Best Efforts. CMT agrees that it will at all times
faithfully, industriously, and to the best of its ability, experience
and talents, perform all of the duties that may be required of it by
Harold's pursuant to the express and implicit terms of this
Agreement, to the reasonable satisfaction of Harold's. Such duties
shall be performed at any such places as Harold's shall, in good
faith, require, or as the interests, needs, business or opportunity
of Harold's shall require. Notwithstanding anything herein to the
contrary, CMT warrants that CMT will provide finished goods of the
quantity and quality as specified by Harold's, and in accordance with
the Harold's purchase orders.

4. Compensation. For its services, Harold's agrees to pay
CMT a fixed fee of thirty percent (30%) of all direct costs
attributable to the manufacture of garments for Harold's where piece
goods cost $12.49 per yard or less and twenty-five percent (25%) of
all direct costs attributable to the manufacture of garments where
piece goods cost $12.50 per yard or more, which fee shall be paid by
wire transfer within ten (10) days after Harold's receives the goods
ordered hereunder, and has received an invoice from CMT along with
the corresponding bill of lading.

4.1 For the purposes hereof, "direct costs" shall mean
the sum of actual costs and expenses directly expended for
the purchase of fabric, trim and the actual manufacturing
cost in the production of particular goods ordered by
Harold's. Direct costs shall not include for these purposes
costs and expenses such as indirect operating expenses,
dedicated personnel as defined above, other personnel who
have exerted efforts hereunder, utilities, travel expense,
storage costs, and all other operating expenses associated
with the fulfillment of CMT's responsibilities hereunder.
Attached hereto, marked Exhibit A, and made a part hereof by
this reference is a form of submittal itemizing expenses
which CMT agrees to submit with each request for payment
(CMT's Direct Cost Worksheet). Notwithstanding the
foregoing, it is agreed that "direct cost" shall not include
the cost to purchase the fabric described on Exhibit B
hereto, which fabric was purchased prior to the effective
date of this agreement.

5. Term. The term of this Agreement shall commence
effective June 1, 1994, and shall terminate May 31, 1995; provided,
however, the Agreement shall thereafter automatically renew for
successive annual terms unless either party notifies the other that
it elects not to renew. Notice of non-renewal shall be given on or
before March 1 during the term. The parties acknowledge that in the
event of renewal, the fee structure may need to be revised to account
for additional volume of Harold's business placed with CMT.

6. Quality and Timely Delivery Adjustments. The parties
have identified three (3) categories of non-performance which may
cause financial hardship for Harold's. These categories are as
follows:
(A) Unsalable merchandise;

(B) Substandard merchandise, which may be sold at a
discount; and

In the event CMT ships merchandise that falls into one or more of the
three categories, CMT, upon notice from Harold's, agrees to negotiate
with Harold's an adjustment due to CMT's performance. Should the
parties fail to agree to a financial remuneration to Harold's for the
deficient performance, the dispute will be submitted to binding
arbitration before a panel of three (3) arbitrators, one (1)
appointed by each party and who may be employed by either party, but
who will not be the party who failed to negotiate the remuneration.
The two (2) arbitrators will select a third arbitrator who is neither
employed, associated nor affiliated with either party. Their
decision shall be final.

In the event this Agreement is terminated prior to the
arbitration panel making its decision, the arbitration panel, if it
chooses, may either continue with the arbitration and render its
decision, or defer the issues for arbitration, as provided in
paragraph 16.1 hereof.

7. Pricing. Intentionally omitted..

8. Ownership of Goods and Security Agreement. The parties
acknowledge that Harold's shall retain ownership of all goods
purchased under the terms of this Agreement, notwithstanding their
storage by CMT. CMT shall be a bailee only. CMT shall at all times
keep such goods free and clear of any and all claims to a lien
thereon by creditors of CMT, and specifically agrees that such goods
are not the inventory of CMT, and such goods shall be delivered to
Harold's or third parties at any time upon the request of Harold's.
The parties acknowledge that by agreement of April 21, 1994, CMT
granted Harold's a security interest in all of Harold's goods stored
by CMT in order to assure the return of the piece goods to Harold's.
This agreement remains in full force and effect, and is hereby
ratified and confirmed.

9. Independent Contractor. For all purposes of this
Agreement, it is understood and agreed that CMT, in the performance
of its services hereunder, is and shall be an independent contractor,
and that no other relationship shall be deemed to be created by this
Agreement. Nothing herein contained shall in any event or under any
circumstances be construed as creating a partnership between CMT and
Harold's, or any relationship other than that of independent
contractor, and Harold's shall in no event or under any circumstances
be liable for any debts or obligations incurred by CMT in the conduct
of the business contemplated under this Agreement. All orders that
are placed upon the credit of Harold's shall be the subject of a
Harold's buy sheet or purchase order and approved in writing by
Harold's. Neither CMT, nor any officer, agent or employee of CMT,
shall be considered an employee of Harold's. CMT is not granted and
shall not exercise the right or authority to create any obligation or
responsibility, including, without limitation, contractual
obligations on behalf of Harold's without the express written
authorization of Harold's. CMT shall not misrepresent its authority
to any third party.

10.Indemnity. CMT agrees to indemnify and hold Harold's,
its officers, directors, employees, successors and assigns, harmless
against all losses, damages or expenses of whatever form or nature,
including attorney's fees and other costs of legal defense, whether
direct or indirect, that they, or any of them, may sustain or incur
as a result of any acts or omissions of CMT, or any of its officers,
directors, employees or agents, including, but not limited to: (1)
breach of any of the provisions of this Agreement; (2) negligence or
tortious conduct; (3) representations or statements not specifically
authorized by Harold's herein or otherwise in writing; or (4)
violation by CMT, or any of its directors, officers, employees or
agents of any applicable law or regulation.

11.Trade Secrets. During the term hereof, CMT will have
access to and become acquainted with what Harold's and CMT
acknowledge are trade secrets of Harold's, to wit: knowledge or data
concerning Harold's, including its operation and business, the prices
it obtains or has obtained from the sale of or which it sells or has
sold its goods, the manner of its development of its designs, or any
other information concerning the business of Harold's, its manner of
operations, its plans, processes, or other data which the parties
expressly stipulate and agree are important, material and
confidential, and gravely affect the effective and successful conduct
of Harold's business. Neither CMT nor any of its officers, agents or
employees, shall divulge, disclose or communicate to any person, firm
or corporation, or any other entity, in any manner whatsoever, any of
the foregoing information. The parties agree that the breach of the
terms of this paragraph shall be a material breach of this Agreement.
Neither CMT nor any of its officers, agents or employees, shall
disclose any of the aforesaid trade secrets, either directly or
indirectly, or use them in any way, either during the term hereof or
for a period of two (2) years after the termination of this Agreement
except as is required under the terms and provisions of this
Agreement.

12.Copyrights. The parties acknowledge and agree that all
designs developed pursuant to this Agreement are the sole and
exclusive property of Harold's. Harold's shall be entitled to
register in its name copyrights of all designs developed by the
parties, and CMT hereby assigns to Harold's all of its right, title
and interest in and to such designs and the copyrights thereof. CMT
agrees to assist Harold's in obtaining assignments of any original
artwork that may be necessary to perfect Harold's ownership rights in
the artwork and the designs. CMT shall not assist in the development
of or sell any designs developed by or for Harold's, or in any other
manner infringe upon Harold's copyrights, either during or after the
term of this Agreement.

13.Insurance. CMT shall procure and maintain throughout the
term of this Agreement a policy of insurance in form and substance
satisfactory to Harold's, from a responsible insurance company
satisfactory to Harold's, at CMT's sole cost and expense, insuring
CMT and Harold's against any claim for liability indemnified against
under the terms and provisions of paragraph 10 above, which policy
shall be of an amount not less than One Million Dollars
($1,000,000.00) per occurrence in respect to injury to persons,
including death, and in the amount of not less than Five Hundred
Thousand Dollars ($500,000.00) per occurrence in respect to property
damage or destruction, including loss of use thereof. A certificate
evidencing such coverage shall be provided to Harold's.

14.Termination. This Agreement may be terminated prior to
its expiration by written notice to the other party as follows:

A. By either party in the event the other party should fail
to perform any of its obligations hereunder, and should
fail to remedy such non-performance within ten (10)
calendar days after receiving written demand therefor;
provided, however, that upon a second breach of the same
obligation by such party, the other party may forthwith
terminate this Agreement upon notice to the breaching
party;

B. By either party, effective immediately, if the other
party should become the subject of any voluntary or
involuntary bankruptcy, receivership or other insolvency
proceeding, or make an assignment or other arrangement
for the benefit of creditors;

C. By Harold's, effective immediately, if CMT should
attempt to sell, assign, delegate or transfer any of its
rights or obligations under this Agreement without
having obtained Harold's prior written consent thereto,
or if Frank Bober shall cease to serve as Chief
Executive Officer of CMT, or if there should occur any
other material change in the management, ownership,
control or financial condition of CMT;
D. By Harold's, effective immediately, if CMT makes any
false or untrue statements or representations to
Harold's herein in the course of the performance of its
obligations hereunder.
15.Remedies. The parties acknowledge and agree that any
breach of the terms of this Agreement by either party will result in
immediate and irreparable injury to the other party, and in
connection with the breach of the provisions of paragraphs 11, 12 and
16.2 hereof, an adequate remedy at law will not be available, and
therefore, the parties agree that injunction or specific performance
may be granted to any party in regard to the terms and provisions of
this Agreement, in addition to such other legal or equitable remedies
as may be available.

16.Miscellaneous. It is further understood and agreed as
follows:

16.1 Arbitration. Any differences, claims or matters
in dispute arising between Harold's and CMT out of or
connected with this Agreement shall be submitted by them to
an arbitration panel by the American Arbitration
Association, or its successor, in Dallas, Texas, and the
determination of the American Arbitration Association or its
successor shall be final and absolute. The arbitration
panel shall be governed by the duly promulgated rules and
regulations of the American Arbitration Association and the
pertinent provisions of the laws of the State of Oklahoma
relating to arbitration. The decision of the arbitrators
will be entered as a judgment in any court of the State of
Oklahoma or elsewhere. The costs of arbitration shall
initially be borne by the parties equally; provided,
however, the arbitrators may reimburse the prevailing party
by awarding the costs of the arbitration, including a
reasonable attorney fee, in the discretion of the
arbitration panel. Pending the issuance of a decision or
award, on a showing for potential for irreparable injury or
in the instance of an asserted violation of paragraphs 11,
12, and 16.2 hereof, the arbitrators shall have the power to
award provisional conservational relief measures to be taken
to preserve the respective rights of either party.

16.2 Restriction on Sale. CMT agrees that it will not
exhibit for sale, sell or solicit the sales of, whether
directly or indirectly, any product that it has assisted in
the development of for Harold's without the prior express
and written consent of Harold's for a period which is the
greater of: (i) the term of Harold's copyright
registration, or (ii) five (5) years after first being
offered by Harold's to the public. In this regard, CMT
shall promptly advise Harold's in writing of any
representations undertaken or contemplated for other
manufacturers, representatives or distributors of any
products currently or previously developed for Harold's
under the terms of this Agreement or any predecessor
arrangement between Harold's and CMT.

16.3 Financial Statement. In order that Harold's may
be advised of the financial condition of CMT, which the
parties acknowledge and agree is relevant to Harold's
determination to do business with CMT, CMT agrees to provide
to Harold's annually a financial statement certified to be
true and correct by an independent certified public
accountant. The first such financial statement shall be
provided no later than March 1, 1995, and shall cover the
year ending December 31, 1994.

16.4 Choice of Law. It is the intention of the parties
to this Agreement that this Agreement, and the performance
under this Agreement, and all actions under this Agreement,
shall be construed in accordance with and under and pursuant
to the laws of the State of Oklahoma, and that any action or
proceeding that may be brought arising out of, in connection
with, or by reason of this Agreement, the laws of the State
of Oklahoma shall be applicable and shall govern to the
exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or proceeding may be
instituted.

16.5 Notices. All notices hereunder shall be in
writing and served by certified mail, return receipt
requested, postage prepaid, or by Federal Express or similar
private delivery service, or by facsimile capable of
confirming receipt, at the addresses shown below.
To Harold's: Mr. Harold G. Powell
Harold's Stores, Inc.
P.O. Drawer 2970
Norman, OK 73070-2970
Facsimile: (405) 366-2588

with a copy to: Mr. Gary C. Rawlinson
Crowe & Dunlevy, Luttrell, Pendarvis
& Rawlinson
P.O. Box 1286
Norman, OK 73070-1286
Facsimile: (405) 360-4002

To CMT: Mr. Frank Bober
CMT Enterprises, Inc.
1412 Broadway
New York, NY 10018
Facsimile: (212) 354-5135

with a copy to: Mr. George T. Bruckman
Finkelstein, Bruckman, Wohl,
Most & Rothman
575 Lexington Ave., 19th Floor
New York, NY 10022
Facsimile: (212) 371-2980

16.6 Severability. If any provision of this Agreement
shall be held to be void or unenforceable for any reason,
the remaining terms and provisions hereof shall not be
affected thereby.

16.7 Assignment. Neither party may assign its rights
in this Agreement without the written approval of the other
party.

16.8 Attorney's Fees. In the event either party hereto
files suit in order to enforce or interpret this Agreement,
or in the event of arbitration, the prevailing party in such
litigation or arbitration may be entitled to the award of a
reasonable attorney fee, in the discretion of the court or
the arbitration panel.
16.9 Captions and Paragraph Headings. Captions and
paragraph headings contained in this Agreement are for
reference only and shall not affect, in any way, the meaning
or interpretation of this Agreement.

16.10 Entire Agreement. This instrument constitutes
the entire agreement of the parties. It supersedes any and
all other agreements, either oral or in writing, between the
parties hereto. Each party to this Agreement acknowledges
that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party
or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or
promise not contained in this Agreement shall be valid or
binding. This Agreement may not be modified or amended by
oral agreement, but only by an agreement in writing, signed
by the parties hereto.

16.11 Waiver. The failure of either party to this
Agreement to insist upon the performance of any of the terms
and conditions of this Agreement, or the waiver of any
breach of any of the terms and conditions of this Agreement
shall not be construed as thereafter waiving any such terms
and conditions, but the same shall continue and remain in
full force and effect as if no such forbearance or waiver
has occurred.

16.12 Binding Effect. The provisions of this Agreement
shall inure to the benefit of and bind the successors and
permitted assigns of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.

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

By:
Title:

"CMT" CMT ENTERPRISES, INC.,
a New York corporation

By:
Title:

EXHIBIT A

CMT'S DIRECT COST WORKSHEET

INDEMNITY AGREEMENT

This Agreement is made as of the _____ day of
________, 199_, by and between HAROLD'S STORES, INC., an Oklahoma
corporation (the "Corporation"), and _________________
("Indemnitee"), a Director and/or Officer of the Corporation.

WHEREAS, it is essential to the Corporation to attract
and retain as Directors and Officers the most capable persons
available; and

WHEREAS, the substantial increase in corporate
litigation subjects Directors and Officers to expensive
litigation risks at the same time that the availability of
Directors' and Officers' liability insurance has been severely
limited; and

WHEREAS, it is the express policy of the Corporation to
indemnify its Directors and Officers so as to provide them with
the maximum possible protection permitted by law for the purpose
of inducing its Directors and/or Officers to continue to serve
the Corporation in such capacities; and

WHEREAS, Indemnitee does not regard the protection
available under the Corporation's Certificate of Incorporation
and insurance, if obtained, as adequate in the present
circumstances and would not be willing to serve as a Director or
Officer without adequate protection, and the Corporation desires
Indemnitee to serve or continue to serve in such capacity;

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1. Agreement to Serve. Indemnitee agrees to serve or
continue to serve as a Director and/or Officer of the Corporation
for so long as he or she is duly elected or appointed or until
such time as he or she tenders his or her resignation in writing.

2. Definitions. As used in this Agreement:

(a) The term "Proceeding" shall include any
threatened, pending or completed action, suit or proceeding,
whether brought in the right of the Corporation or otherwise
and whether of a civil,

criminal, administrative or investigative nature, in which
Indemnitee may be or may have been involved as a party or
otherwise, by reason of the fact that Indemnitee is or was a
Director and/or Officer of the Corporation by reason of any
action taken by him or her or of any inaction on his or her
part while acting as such Director and/or Officer, or by
reason of the fact that he or she is or was serving at the
request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, whether or not he or she is
serving in such capacity at the time any liability or
Expense is incurred for which indemnification or
reimbursement can be provided under this Agreement.

(b) The term "Expense" includes, without
limitation thereto, expenses of investigations, judicial or
administrative proceedings or appeals, amounts paid in
settlement by or on behalf of Indemnitee, attorneys' fees
and disbursements and any expenses of establishing a right
to indemnification under Paragraph 7 of this Agreement, but
shall not include the amount of judgments, fines or
penalties against Indemnitee.

(c) References to "other enterprise" shall
include employee benefit plans; references to "fines" shall
include any excise tax assessed with respect to any employee
benefit plan; references to "serving at the request of the
Corporation" shall include any services as a Director,
Officer, employee, or agent of the Corporation which imposes
duties on, or involves services by, such Director, Officer,
employee or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted
in good faith and in a manner he or she reasonably believed
to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the
Corporation" as referred to in this Agreement.

3. Indemnity in Third Party Proceedings. The
Corporation shall indemnify Indemnitee in accordance with the
provisions of this Paragraph 3 if Indemnitee is a party to or
threatened to be made a party to or otherwise involved in any
Proceeding (other than a Proceeding by or in the right of the
corporation to procure a judgment in its favor) by reason of the
fact that Indemnitee is or was a Director and/or Officer of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against all Expenses, judgments, fines and penalties,
actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of such Proceeding but only if
Indemnitee acted in good faith and in a manner which he or she
reasonably believed to be in or nor opposed to the best interests
of the Corporation and, in the case of a criminal proceeding, in
addition, had no reasonable cause to believe that his or her
conduct was unlawful. The termination of any such Proceeding by
judgment, order of the court, settlement, conviction, or upon a
plea of nolo contendere, or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not act in good faith in
a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and with
respect to any criminal proceeding, that such person had
reasonable cause to believe that his or her conduct was unlawful.

4. Indemnity in Proceedings by or in the Right of the
Corporation. The Corporation shall indemnify Indemnitee in
accordance with the provisions of this Paragraph 4 if Indemnitee
is a party to or threatened to be made a party to or otherwise
involved in any Proceeding by or in the right of the Corporation
to procure a judgment in its favor by reason of the fact that
Indemnitee was or is a Director and/or Officer of the Corporation
or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
all Expenses, actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such Proceeding, but
only if he or she acted in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best
interest of the Corporation except that no indemnification for
Expenses shall be made under this Paragraph 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Corporation unless and only to the
extent that any court in which such Proceeding was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for
such expenses as such court shall deem proper.

5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee has been successful on the merits or
otherwise, in defense of any Proceeding or in defense of any
claim, issue or matter therein, including the dismissal of any
action without prejudice, Indemnitee shall be indemnified against
all Expenses incurred in connection therewith.

6. Advances of Expenses. The Expenses incurred by
Indemnitee pursuant to Paragraphs 3 and 4 in any Proceeding shall
be paid by the Corporation in advance at the written request of
the Indemnitee, if Indemnitee shall undertake in writing (in form
and substance reasonably satisfactory to the Corporation) to
repay such amount to the extent that it is ultimately determined
that Indemnitee is not entitled to indemnification for such
Expenses.

7. Right of Indemnitee to Indemnification Upon
Application; Procedure Upon Application. Any indemnification
under Paragraphs 3 and 4 shall be made no later than 45 days
after receipt by the Corporation of the written request of
Indemnitee (together with a written undertaking pursuant to
Paragraph 6), unless a determination is made within said 45-day
period by (1) the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such
Proceedings, or (2) independent legal counsel in a written
opinion (which counsel shall be appointed if such a quorum is not
obtainable) that the Indemnitee has not met the relevant
standards for indemnification set forth in Paragraphs 3 and 4.

The right to indemnification or advances as provided by
this Agreement shall be enforceable by Indemnitee in any court of
competent jurisdiction. The burden of proving that
indemnification is not appropriate shall be on the Corporation.
Neither the failure of the Corporation (including its Board of
Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that
indemnification is proper in the circumstances, because
Indemnitee has met the applicable standard of conduct, nor an
actual determination by the Corporation (including its Board of
Directors or independent local counsel) that Indemnitee has not
met such applicable standard of conduct shall be a defense to the
action or create a presumption that Indemnitee has not met the
applicable standard of conduct. Indemnitee's Expenses reasonably
incurred in connection with successfully establishing his right
to indemnification, in whole or in part, in any such Proceeding
shall also be indemnified by the Corporation.

8. Indemnification Hereunder Not Exclusive. The
indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled
under the Corporation's certificate of incorporation, by-laws,
any agreement, any vote of shareholders or disinterested
Directors, the General Corporation Act of the State of Oklahoma,
or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office.

The indemnification under this Agreement shall continue
as to Indemnitee even though he or she may have ceased to be a
Director or Officer and shall inure to the benefit of the heirs
and personal representatives of Indemnitee.

9. Partial Indemnification. If the Indemnitee is
entitled under any provision of this Agreement to indemnification
by the Corporation for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonable incurred by
him or her in the investigation, defense, appeal, or settlement
of any Proceedings but not, however, for the total amount
thereof, the Corporation shall nevertheless indemnify Indemnitee
for the portion of such Expenses, judgments, fines or penalties
to which Indemnitee is entitled.

10. Saving Clause. If this Agreement or any portion
thereof shall be invalidated on any ground by any court of
competent jurisdiction, the Corporation shall nevertheless
indemnify Indemnitee as to Expenses, judgments, fines and
penalties with respect to any Proceeding to the full extent
permitted by any applicable portion of this Agreement that shall
not have been invalidated or by any other applicable law.

11. Notice. Indemnitee shall, as a condition
precedent to his right to be indemnified under this Agreement,
give to the Corporation notice in writing as soon as practicable
of any claim made against him or her for which indemnification
will or could be sought under this Agreement. Notice to the
Corporation shall be directed to Harold's Stores, Inc., 765 Asp,
Norman, Oklahoma 73069, Attention: H. Rainey Powell (or such
other address as the Corporation shall designate in writing to
Indemnitee). Notice shall be deemed received three days after
the date postmarked if sent by prepaid mail, properly addressed.
In addition, Indemnitee shall give the Corporation such
information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.

12. Counterpart. This Agreement may be executed in
any number of counterparts, each of which shall constitute an
original.

13. Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Oklahoma.

14. Successors and Assigns. This Agreement shall be
binding upon the Corporation and its successors and assigns.

15. Amendment. No amendment to this Agreement shall
be effective unless such amendment is in writing and signed by
both of the parties to this Agreement.

IN WITNESS WHEREOF, and in reliance upon the terms and
conditions of this Agreement, the parties hereto have caused this
Agreement to be duly executed and signed as of the day and year
first above written.

"CORPORATION"

HAROLD'S STORES, INC.

By: _______________________________
Name: _____________________________
Title:
______________________________

"INDEMNITEE"

___________________________________

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors of
Harold's Stores, Inc.

We consent to the use of our report included and incorporated by
reference herein and to the reference to our firm under the heading
"Experts" in the Prospectus.

KPMG PEAT MARWICK LLP

Oklahoma City, Oklahoma
May 17, 1996

POWER OF ATTORNEY

The person whose signature appears below hereby
appoints Harold G. Powell and H. Rainey Powell, or either of
them, as his or her true and lawful attorney-in-fact with
full power of substitution to execute and file in the name
of and on behalf of Harold's Stores, Inc. (the
"Corporation"), and the person whose signature appears
below, both individually and in the capacities indicated,
the Corporation's Registration Statement on Form S-2 filed
with the Securities and Exchange Commission, and any and all
amendments thereto.