REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as
of April 9, 1998, by and between JD AMERICAN WORKWEAR, INC. (the "Company"), a
Delaware corporation, and THE UNION LABOR LIFE INSURANCE COMPANY, a Maryland
corporation ("Investor").
R E C I T A L S
A. Concurrently with entering into this Agreement, the Company and
Investor are entering into a Securities Purchase Agreement bearing the same
date as this Agreement under which Investor is agreeing to purchase 2,500
shares of Series B Preferred Stock and Detached Ten-Year Stock Purchase
Warrants to purchase 799,000 shares of Common Stock (the "Investor Warrants")
and Investor may subsequently be issued Detached Ten-Year Warrants to purchase
a total of 213,552 shares of Common Stock as dividends appropriately increased
to adjust for the effect of anti-dilution provisions of the Series A Preferred
Stock, (the "Dividend Warrants") from the Company on the terms and subject to
the conditions appearing therein. The Investor Warrants and the Dividend
Warrants are referred to collectively herein as the "Warrants".
B. The execution and delivery of this Agreement by the parties hereto
are a condition to Investor's obligation to purchase the Series B Preferred
Stock and the Investor Warrants.
A G R E E M E N T
THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined.
"Agreement" means this Registration Rights Agreement.
"Board" means the Board of Directors of the Company.
"Common Stock" means the common stock of the Company.
"Commission" means the Securities and Exchange Commission.
"Dividend Warrants" shall have the meaning assigned to it in the Recital
A.
"Equity Security" has the meaning assigned to it in the Preferred Stock
Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" of any security means the record or beneficial owner of such
security. A Holder of Preferred Stock shall be treated as the Holder of the
Registrable Securities underlying such Preferred Stock.
"Holders of a Majority of the Registrable Securities" means the Person or
Persons who are the Holders of greater than 50% of the shares of Registrable
Securities then outstanding.
"Initiating Holders" means (i) with respect to each registration pursuant
to Section 2, other than on Form S-3, the Holder or Holders of at least 40% of
the shares of Registrable Securities then outstanding, and (ii) with respect to
a registration on Form S-3, the Holder or Holders of Registrable Securities
having an anticipated public offering price of at least $5.0 million at the
time the demand for registration is given under Section 2.
"Investor" has the meaning assigned to it in the introductory paragraph
of this Agreement.
"Investor Warrants" shall have the meaning assigned to it in the Recital
A.
"Person" includes any natural person, corporation, trust, association,
company, partnership, joint venture and other entity and any government,
governmental agency, instrumentality or political subdivision.
"Preferred Stock" means the Series B Preferred Stock of the Company.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (1) all Common Stock owned now or in the
future by Investor, (2) the Common Stock issued or issuable upon conversion of
the Preferred Stock or exercise of the Warrants, whether owned by Investor or
not, and (3) any securities issued or issuable with respect to the Common Stock
referred to in clauses (1) and (2) above by way of a stock dividend or stock
split or in connection with a combination of shares, reclassification,
recapitalization, merger or consolidation or reorganization; provided, however,
that such shares of Common Stock shall only be treated as Registrable
Securities if and so long as they have not been (i) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (ii) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions and restrictive legends with respect
to such Common Stock are removed upon the consummation of such sale and the
seller and purchaser of such Common Stock receive an opinion of counsel for the
Company, which shall be in form and content reasonably satisfactory to the
seller and buyer and their respective counsel, to the effect that such Common
Stock in the hands of the purchaser is freely transferable without restriction
or registration under the Securities Act in any public or private transaction.
"Registration Notice" shall have the meaning assigned to it in Section
2(a).
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of April 9, 1998, between the Company and Investor.
"Warrants" shall have the meaning assigned to it in the Recital A.
2. Required Registration.
(a) No sooner than six (6) months after the execution of this
Agreement, if and whenever the Company shall receive a written request therefor
from Initiating Holders, the Company agrees to prepare and file promptly a
registration statement under the Securities Act covering the shares of
Registrable Securities which are the subject of such request and agrees to use
its best efforts to cause such registration statement to become effective as
expeditiously as possible. Upon the receipt of such request, the Company agrees
to give promptly written notice to all Holders of Registrable Securities that
such registration is to be effected (the "Registration Notice"). The Company
agrees to include in such registration statement such shares of Registrable
Securities for which it has received written requests to register such shares
by the Holders thereof within thirty (30) days after the receipt of written
notice from the Company.
(b) The Company shall not be obligated to prepare, file and cause
to become effective more than two registration statements pursuant to this
Section 2, excluding registration statements on Form S-3 which shall not count
for purposes of this limitation. The Company shall not be obligated to effect
more than one registration on Form S-3 under this Section 2 during any
six-month period and shall not be obligated to prepare, file and cause to
become effective more than six registration statements on Form S-3 pursuant to
this Section 2.
(c) The Company shall not be required by this Section 2 to effect
a registration of Registrable Securities pursuant to any registration
statement, other than on Form S-3, unless the proposed public offering price of
the securities to be included in such registration shall be at least $5.0
million (before deducting underwriting discounts and commissions). A
registration under this Section 2 shall be on a form selected by the Holders of
a majority of the shares of Registrable Securities to be included in such
registration.
(d) If the Holders initiating a request for the registration of
Registrable Securities pursuant to this Section 2 intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they agree to provide the Company with the name of the managing underwriter or
underwriters (the "managing underwriter") that a majority interest of the
Initiating Holders requesting such registration propose to employ, as a part of
their request made pursuant to this Section 2, and the Company agrees to
include such information in its written notice referred to in Section 2(a). In
such event the right of any Holder to registration pursuant to this Section 2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to
the extent requested (unless otherwise mutually agreed by the Holders of a
Majority of the Registrable Securities initiating such request for registration
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting agree to enter into
(together with the Company) an underwriting agreement with the underwriter or
underwriters selected for such underwriting, in the manner set forth above,
provided that such underwriting agreement is in customary form and is
reasonably acceptable to the Holders of a majority of the shares of Registrable
Securities to be included in such registration.
(e) Notwithstanding any other provision of this Section 2, if the
managing underwriter of an underwritten distribution advises the Company and
the Holders of Registrable Securities participating in such registration in
writing that in its good faith judgment the number of shares of Registrable
Securities requested to be included in such registration exceeds the number of
shares of Registrable Securities which can be sold in such offering, then (i)
the number of shares of Registrable Securities so requested to be included in
such registration shall be reduced to that number of shares which in the good
faith judgment of the managing underwriter can be sold in such offering and
(ii) this reduced number of shares shall be allocated among all Holders thereof
in proportion, as nearly as practicable, to the respective number of shares of
Registrable Securities held by such Holders at the time of filing the
registration statement. Those Registrable Securities and other securities which
are excluded from the underwriting by reason of the managing underwriter's
marketing limitation and all other Registrable Securities not originally
requested to be so included shall not be included in such registration and
shall be withheld from the market by the Holders thereof for a period, not to
exceed one hundred and eighty (180) days, which the managing underwriter
reasonably determines is necessary to effect the underwritten public offering.
(f) If the managing underwriter has not limited the number of
Registrable Securities to be underwritten, the Company and, subject to the
requirements of Section 7 hereof, other holders of the Company's securities may
include securities for its (or their) own account in such registration if the
managing underwriter so agrees and if the number of Registrable Securities
which would otherwise have been included in such registration and underwriting
will not thereby be limited.
(g) If the Company is required to effect a registration pursuant
to this Section 2 and the Company furnishes to the Holders of Registrable
Securities requesting such registration, a certificate signed by the president
of the Company stating that in the good faith judgment of the Board it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed on or before the date such filing would otherwise be
required hereunder and it is therefore necessary to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after the expiration of the thirty-day
response period referred to in the last sentence of Section 2(a) above;
provided, that during such time the Company may not file a registration
statement (other than on Form S-8) for securities to be issued and sold for its
own account or that of anyone other than the Holder or Holders of Registrable
Securities requesting such registration; provided, further, that the Company
shall only have the right to invoke a delay in the filing of a registration
statement once during any twelve-month period. The Company shall not be
obligated to effect a registration pursuant to this Section 2 during the period
starting with the date thirty (30) days prior to the Company's estimated date
of filing of, and ending on a date ninety (90) days following the effective
date of, a registration statement pertaining to an underwritten public offering
of securities for the account of the Company; provided, that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and the Company's estimate of the
date of filing such registration statement is made in good faith by a
resolution of the Board adopted prior to the Company's receipt of the
registration request made pursuant to Section 2(a).
(h) Notwithstanding anything herein to the contrary, the Company
shall not be required to effect any registration pursuant to this Section 2
within 90 days following the effective date of any other registration statement
of the Company (other than another registration statement on Form S-8).
(i) Notwithstanding the foregoing but subject to the other
provisions of this Section 2, (1) the right of a holder of Registrable
Securities to require registration under this Section 2 shall not be
exercisable (A) less than six (6) months following the date upon which a
previous Registration Notice (unless withdrawn) issued in respect of an
offering of securities for cash for the account of the Company (and in which
such Holders have the right to sell Registrable Securities without limitation
as to the number of Registrable Securities to be sold) shall have become
effective, or (B) within six (6) months following the date upon which a
Registration Notice (unless withdrawn) is first delivered to a holder of
Registrable Securities if the registration statement described therein becomes
effective within one hundred twenty (120) days following the date of such
notice, and (2) the Company shall not be required to register any Registrable
Securities on behalf of a holder of Registrable Securities to the extent such
Registrable Securities may then be sold in a public or private securities
transaction and without any limitation on the number of Registrable Securities
to be sold without restrictive legend in compliance with all of the applicable
terms of Rule 144 under the Securities Act and provided further that the
Company takes all such steps (including the payment of fees and the delivery of
all necessary documentation) as are necessary or appropriate to permit the
transfer of such shares under such Rule and provided that such Holder receives
opinions from counsel for the Company and from counsel to such Holder (which
opinions and counsel shall be reasonable satisfactory to such Holder) to the
effect that such Registrable Securities may be so sold in reliance on Rule 144.
3. Incidental Registration.
(a) Each time the Company shall determine to file a registration
statement under the Securities Act other than pursuant to Section 2 hereof and
other than on Form S-4 or S-8 in connection with the proposed offer and sale
for money of any of its securities either for its own account or on behalf of
any other security holder, the Company agrees to give promptly written notice
of its determination to all Holders of Registrable Securities. Upon the written
request of a Holder of any shares of Registrable Securities given within thirty
(30) days after the receipt of such written notice from the Company, the
Company agrees to cause all such Registrable Securities, the Holders of which
have so requested registration thereof, to be included in such registration
statement and registered under the Securities Act, all to the extent requisite
to permit the sale or other disposition by the prospective seller or sellers of
the Registrable Securities to be so registered.
(b) If the registration of which the Company gives written notice
pursuant to Section 3(a) is for a public offering involving an underwriting,
the Company agrees to so advise the Holders as a part of its written notice. In
such event the right of any Holder to registration pursuant to this Section 3
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting agree to enter into (together
with the Company and the other holders distributing their securities through
such underwriting) an underwriting agreement with the underwriter or
underwriters selected for such underwriting by the Company, provided that such
underwriting agreement is in customary form and is reasonably acceptable to the
Holders of a majority of the shares of Registrable Securities requested to be
included in such registration.
(c) Notwithstanding any other provision of this Section 3, if the
managing underwriter of an underwritten distribution advises the Company and
the Holders of the Registrable Securities participating in such registration in
writing that in its good faith judgment the number of shares of Registrable
Securities and the other securities requested to be registered exceeds the
number of shares of Registrable Securities and other securities which can be
sold in such offering, then (i) the number of shares of Registrable Securities
and other securities so requested to be included in the offering shall be
reduced to that number of shares which in the good faith judgment of the
managing underwriter can be sold in such offering (except for shares to be
included pursuant to demand registration rights granted by the Company in
accordance with Section 7 hereof, in an offering initiated upon the exercise of
such rights, and except for shares to be issued by the Company in an offering
initiated by the Company, which shall have priority over the shares of
Registrable Securities), and (ii) such reduced number of shares shall be
allocated among all participating Holders of Registrable Securities and the
holders of other securities in proportion, as nearly as practicable, to the
respective number of shares of Registrable Securities and other securities held
by such Holders and other holders at the time of filing the registration
statement. All Registrable Securities and other securities which are excluded
from the underwriting by reason of the underwriter's marketing limitation and
all other Registrable Securities not originally requested to be so included
shall not be included in such registration and shall be withheld from the
market by the Holders thereof for a period, not to exceed one hundred and
eighty (180) days, which the managing underwriter reasonably determines is
necessary to effect the underwritten public offering.
4. Registration Procedures. If and whenever the Company is required by
the provisions of Section 2 or 3 hereof to effect the registration of
Registrable Securities under the Securities Act, the Company, at its expense
and as expeditiously as possible, agrees to:
(a) In accordance with the Securities Act and all applicable
rules and regulations, prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective until the securities
covered by such registration statement have been sold, and prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus contained therein as may be necessary to keep such
registration statement effective and such registration statement and prospectus
accurate and complete until the securities covered by such registration
statement have been sold;
(b) If the offering is to be underwritten in whole or in part,
enter into a written underwriting agreement in form and substance reasonably
satisfactory to the managing underwriter of the public offering and the Holders
of a majority of the Registrable Securities participating in such offering;
(c) Furnish to the Holders of securities participating in such
registration and to the underwriters of the securities being registered such
number of copies of the registration statement and each amendment and
supplement thereto, preliminary prospectus, final prospectus and such other
documents as such underwriters and Holders may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating Holders and underwriters may
reasonably request within ten (10) days prior to the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified;
(e) Notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the date and time when such
registration statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;
(f) Notify such Holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) Prepare and file with the Commission, promptly upon the
request of any such Holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such Holders, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Securities by such Holders;
(h) Prepare and file promptly with the Commission, and promptly
notify such Holders of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(i) In case any of such Holders or any underwriter for any such
Holders is required to deliver a prospectus at a time when the prospectus then
in circulation is not in compliance with the Securities Act or the rules and
regulations of the Commission, prepare promptly upon request such amendments or
supplements to such registration statement and such prospectus as may be
necessary in order for such prospectus to comply with the requirements of the
Securities Act and such rules and regulations;
(j) Advise such Holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(k) Not file any registration statement or prospectus or any
amendment or supplement to such registration statement or prospectus to which
the Holders of a majority of the Registrable Securities included or to be
included in a registration have reasonably objected on the grounds that such
registration statement or prospectus or amendment or supplement thereto does
not comply in all material respects with the requirements of the Securities Act
or the rules and regulations thereunder, after having been furnished with a
copy thereof at least five (5) business days prior to the filing thereof;
provided, however, that the failure of such Holders or their counsel to review
or object to any registration statement or prospectus or any amendment or
supplement to such registration statement or prospectus shall not affect the
rights of such Holders or their respective officers, directors, partners, legal
counsel, accountants or controlling Persons or any underwriter or any
controlling Person of such underwriter under Section 6 hereof;
(l) Make available for inspection upon request by any Holder of
Registrable Securities covered by such registration statement, by any managing
underwriter of any distribution to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
Holder or any such underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause all of the
Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant or
agent in connection with such registration statement; and
(m) At the request of any Holder of Registrable Securities
covered by such registration statement, furnish to such Holder on the effective
date of the registration statement or, if such registration includes an
underwritten public offering, at the closing provided for in the underwriting
agreement, (i) an opinion dated such date of the counsel representing the
Company for the purposes of such registration, addressed to the underwriters,
if any, and to the Holder or Holders making such request, covering such matters
with respect to the registration statement, the prospectus and each amendment
or supplement thereto, proceedings under state and federal securities laws,
other matters relating to the Company, the securities being registered and the
offer and sale of such securities as are customarily the subject of opinions of
issuer's counsel provided to underwriters in underwritten public offerings, and
such opinion of counsel shall additionally cover such legal and factual matters
with respect to the registration as such requesting Holder or Holders may
reasonably request, and (ii) letters dated each of such effective date and such
closing date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the Holder or Holders making such
request, stating that they are independent certified public accountants within
the meaning of the Securities Act and dealing with such matters as the
underwriters may request, or if the offering is not underwritten that in the
opinion of such accountants the financial statements and other financial data
of the Company included in the registration statement or the prospectus or any
amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act, and additionally
covering such other accounting and financial matters, including information as
to the period ending not more than five (5) business days prior to the date of
such letter with respect to the registration statement and prospectus, as such
requesting Holder or Holders may reasonably request.
5. Expenses.
(a) With respect to each registration effected pursuant to
Section 2 hereof and with respect to each inclusion of shares of Registrable
Securities in a registration statement pursuant to Section 3 hereof, the
Company agrees to bear all fees, costs and expenses of and incidental to such
registration and the public offering in connection therewith; provided,
however, that security holders participating in any such registration agree to
bear their pro rata share of the underwriting discount and commissions.
(b) The fees, costs and expenses of registration to be borne as
provided in paragraph (a) above, shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and disbursements
of counsel and accountants for the Company, fees and disbursements of counsel
for the underwriter or underwriters of such securities (if the Company and/or
selling security holders are otherwise required to bear such fees and
disbursements), all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered or qualified, reasonable fees
and disbursements of one firm of counsel for the selling security holders,
selected by the Holders of a majority of the shares of Registrable Securities
to be included in such registration, and the premiums and other costs of
policies of insurance against liability arising out of such public offering.
6. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless each
Holder of Registrable Securities which are included in a registration statement
pursuant to the provisions of this Agreement and each of such Holder's
officers, directors, partners, legal counsel and accountants, and each Person
who controls such Holder within the meaning of the Securities Act and any
underwriter (as defined in the Securities Act) for such Holder, and any Person
who controls such underwriter within the meaning of the Securities Act, from
and against, and agrees to reimburse such Holder, its officers, directors,
partners, legal counsel, accountants and controlling Persons and each such
underwriter and controlling Person of such underwriter with respect to, any and
all claims, actions (actual or threatened), demands, losses, damages,
liabilities, costs and expenses to which such Holder, its officers, directors,
partners, legal counsel, accountants or controlling Persons, or any such
underwriter or controlling Person of such underwriter may become subject under
the Securities Act or otherwise, insofar as such claims, actions, demands,
losses, damages, liabilities, costs or expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent
that any such claim, action, demand, loss, damage, liability, cost or expense
is caused by an untrue statement or alleged untrue statement or omission or
alleged omission so made in strict conformity with written information
furnished by such Holder, such underwriter or such controlling Person
specifically for use in the preparation thereof.
(b) Each Holder of shares of Registrable Securities which are
included in a registration statement pursuant to the provisions of this
Agreement hereby agrees, severally (in the proportion that the number of shares
sold by it bears to the total number of shares sold in the applicable
registration) and not jointly, to indemnify and hold harmless the Company, its
officers, directors, legal counsel and accountants and each Person who controls
the Company within the meaning of the Securities Act, from and against, and
agrees to reimburse the Company, its officers, directors, legal counsel,
accountants and controlling Persons with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs or expenses to which the
Company, its officers, directors, legal counsel, accountants or such
controlling Persons may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs
or expenses are caused by any untrue or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or are caused by the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such Holder
specifically for use in the preparation thereof. Notwithstanding the foregoing,
no Holder of Registrable Securities shall be obligated hereunder to pay more
than the net after-tax proceeds realized by it upon its sale of Registrable
Securities included in such registration statement.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of subsection (a) or (b) of this Section 6 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim therefor is to be
made against the indemnifying party pursuant to the provisions of subsection
(a) or (b), notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6 and shall not relieve the indemnifying party from liability under
this Section 6 unless such indemnifying party is prejudiced by such omission.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying parties similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties). Upon the permitted assumption by the
indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to
such indemnified party under subsection (a) or (b) for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs of investigation) unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next
preceding sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time, (iii) the indemnifying party and its counsel do not actively
and vigorously pursue the defense of such action, or (iv) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party shall be liable to an
indemnified party for any settlement of any action or claim without the consent
of the indemnifying party and no indemnifying party may unreasonably withhold
its consent to any such settlement. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim or
litigation.
(d) If the indemnification provided for in subsection (a) or (b)
of this Section 6 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of indemnifying
such indemnified party thereunder, hereby agrees to contribute to the amount
paid or payable by such indemnified party as a result of such claims, actions,
demands, losses, damages, liabilities, costs or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions which resulted in such claims, actions, demands,
losses, damages, liabilities, costs or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
any Holder of Registrable Securities shall be obligated to contribute pursuant
to this subsection (d) shall be limited to an amount equal to the per share
public offering price (less any underwriting discount and commissions)
multiplied by the number of shares of Registrable Securities sold by such
Holder pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages which such
Holder has otherwise been required to pay in respect of such claim, action,
demand, loss, damage, liability, cost or expense or any substantially similar
claim, action, demand, loss, damage, liability, cost or expense arising from
the sale of such Registrable Securities).
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
hereunder from any person who was not guilty of such fraudulent
misrepresentation.
(e) In addition to its other obligation under this Section 6, the
Company further agrees to reimburse each Holder of Registrable Securities
included in a registration statement pursuant to this Agreement (and each of
such Holder's controlling Persons, officers, directors, parties, legal counsel,
accountants and underwriters (and controlling Persons of such underwriters)) on
a monthly basis for all reasonable legal fees and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or admission, described in subsection (a) of
this Section 6, notwithstanding the possibility that such payments might later
be held to be improper. To the extent that any payment is ultimately held to be
improper, each Person receiving such payment shall promptly refund such
payment.
7. Future Registration Rights. Except as expressly permitted by this
Agreement and except for an underwriting agreement between the Company and one
or more professional underwriters of securities, the Company shall not enter
into any agreement to register any Equity Securities under the Securities Act
unless such agreement specifically provides that (a) the holder of such Equity
Securities may not participate in any registration requested pursuant to
Section 2 hereof without the written consent of the Holders of a majority of
the shares of Registrable Securities included in such registration unless (i)
the sale of the Registrable Securities is to be underwritten on a firm
commitment basis and the managing underwriter in its good faith judgment
concludes that the public offering or sale of such Equity Securities would not
cause the number of shares of Registrable Securities and such Equity Securities
to exceed the number which can be sold in such offering, and (ii) the Holders
of Registrable Securities shall have the right to participate, to the extent
that they may request, in any registration statement initiated under a demand
registration right exercised by the holder of such Equity Securities, except
that if the managing underwriter of a public offering made pursuant to such a
demand registration limits the number of shares of Common Stock to be sold, the
participation of the Holders of Registrable Securities and the holders of all
other Common Stock (other than the Equity Securities held by such holder of
Equity Securities) shall be pro rata based upon the number of shares of
Registrable Securities and Common Stock held at the time of filing the
registration statement, (b) the holder of such Equity Securities may not
participate in any registration requested pursuant to Section 3 hereof if the
sale of Registrable Securities is to be underwritten unless, if the managing
underwriter limits the total number of securities to be sold, the holders of
such Equity Securities and the Holders of Registrable Securities are entitled
to participate in such underwritten distribution pro rata based upon the number
of shares of Common Stock and Registrable Securities held at the time of filing
the registration statement, and (c) all Equity Securities excluded from any
registration as a result of the foregoing limitations shall not be included in
such registration and may not be publicly offered or sold for such period as
the managing underwriter of such registered distribution may reasonably
request.
8. Reporting Requirements Under the Exchange Act. When it is first
legally required to do so, the Company agrees to register its Common Stock
under Section 12 of the Exchange Act and agrees to keep effective such
registration and to file timely such information, documents and reports as the
Commission may require or prescribe under Section 13 of the Exchange Act. The
Company agrees to file timely (whether or not it shall then be required to do
so) such information, documents and reports as the Commission may require or
prescribe under Section 13 or 15(d) (whichever is applicable) of the Exchange
Act. The Company forthwith upon request agrees to furnish to any Holder of
Registrable Securities (a) a written statement by the Company that it has
complied with such reporting requirements, (b) a copy of the most recent annual
or quarterly report of the Company and (c) such other reports and documents
filed by the Company with the Commission as such Holder may reasonably request
in availing itself of an exemption for the sale of Registrable Securities
without registration under the Securities Act. The Company acknowledges and
agrees that the purposes of the requirements contained in this Section 9 are
(a) to enable any such Holder to comply with the current public information
requirement contained in paragraph (c) of Rule 144 under the Securities Act
should such Holder ever wish to dispose of any of the securities of the Company
acquired by it without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (b) to qualify the
Company for the use of registration statements on Form S-3. In addition, the
Company agrees to take such other measures and file such other information,
documents and reports, as shall be required of it hereafter by the Commission
as a condition to the availability of Rule 144 under the Securities Act (or any
similar exemptive provision hereafter in effect) and the use of Form S-3. The
Company also covenants to use its best efforts, to the extent that it is
reasonably within its power to do so, to qualify for the use of Form S-3.
9. Shareholder Information. The Company may request each Holder of
Registrable Securities as to which any registration is to be effected pursuant
to this Agreement to furnish the Company with such information with respect to
such Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing and as shall be required by
law or by the Commission in connection therewith, and each Holder of
Registrable Securities as to which any registration is to be effected pursuant
to this Agreement agrees to furnish the Company with such information.
10. Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to
include, references to all successor forms which are intended to replace, or to
apply to similar transactions as, the forms herein referenced.
11. Miscellaneous.
11.1 Waivers and Amendments. With the written consent of the
Holders of a Majority of the Registrable Securities, the obligations of the
Company and the rights of Investor under this Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively
and either for a specified period of time or indefinitely), and with the same
consent the Company, when authorized by resolution of its Board, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of any supplemental agreement or modifying in any manner the rights and
obligations hereunder of Investor and the Company; provided, however, that no
such waiver or supplemental agreement shall reduce the aforesaid proportion of
Registrable Securities, the Holders of which are required to consent to any
waiver or supplemental agreement, without the consent of the Holders of all of
the Registrable Securities. Upon the effectuation of each such waiver, consent
or agreement of amendment or modification, the Company agrees to give promptly
written notice thereof to the Holders of the Registrable Securities who have
not previously consented thereto in writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or by
course of dealing, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 11.1. Specifically, but
without limiting the generality of the foregoing, the failure of Investor at
any time or times to require performance of any provision hereof by the Company
shall in no manner affect the right of Investor at a later time to enforce the
same. No waiver by any party of the breach of any term or provision contained
in this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11.2 Effect of Waiver or Amendment. Investor acknowledges that by
operation of Section 11.1 hereof the Holders of a Majority of the Registrable
Securities will, subject to the limitations contained in such Section 11.1,
have the right and power to diminish or eliminate certain rights of Investor
under this Agreement.
11.3 Rights of Investor Inter Se. Investor shall have the absolute
right to exercise or refrain from exercising any right or rights which Investor
may have by reason of this Agreement or any Registrable Security, including,
without limitation, the right to consent to the waiver of any obligation of the
Company under this Agreement and to enter into an agreement with the Company
for the purpose of modifying this Agreement or any agreement effecting any such
modification; and Investor shall not incur any liability to any Holder or
Holders of Registrable Securities with respect to exercising or refraining from
exercising any such right or rights.
11.4 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing (including
telecopy or similar writing) and shall be given,
if to the Company to:
JD American Workwear, Inc.
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Investor to:
Union Labor Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to any other Holder of Registrable Securities to such Holder at
the address or to the telecopier number as such Holder may specify
by notice to the Company from time to time,
or to such other address or telecopier number as such party may specify for the
purpose by notice to the other party or parties to this Agreement, as the case
may be. A copy of any notice to the Company or to Investor or any other Holder
of Registrable Securities shall also be given to each other Holder of
Registrable Securities. Any notice, request, consent or other communication
hereunder shall be deemed to have been given and received on the day on which
it is delivered (by any means including personal delivery, overnight air
courier, United States mail) or telecopied (or, if such day is not a business
day or if the notice, request, consent or communication is not telecopied
during business hours of the intended recipient, at the place of receipt, on
the next following business day).
11.5 Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
11.6 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not and, in particular, shall inure to the benefit of and be
enforceable by the Holder or Holders at the time of any of the Registrable
Securities. Subject to the immediately preceding sentence, this Agreement shall
not run to the benefit of or be enforceable by any Person other than a party to
this Agreement and its successors and assigns; provided, however, that (i)
registration rights under this Agreement may only be assigned in connection
with a transfer by a Holder of at least 100,000 shares of Registrable
Securities, and (ii) such assignment shall not be effective unless and until
notice of the assignment has been delivered to the Company.
11.7 Headings. The headings of the sections, subsections and
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part of this Agreement.
11.8 Choice of Law. It is the intention of the parties that the
internal substantive laws, and not the laws of conflicts, of New York should
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties.
11.9 Expenses. The Company agrees to pay and hold Investor and
Holders of the Registrable Securities harmless from liability for the payment
of, (i) the fees and expenses incurred in connection with any requested waiver
of the right of Investor or the consent of Investor to contemplated acts of the
Company not otherwise permissible by the terms of this Agreement, (ii) the fees
and expenses incurred with respect to any amendment to this Agreement proposed
by the Company (whether or not the same becomes effective), (iii) the fees and
expenses incurred in respect of the enforcement of the rights granted under
this Agreement, and (iv) all costs of the Company's performance of and
compliance with this Agreement.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers thereof as of the day and year
first above written.
JD AMERICAN WORKWEAR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief
Executive Officer
THE UNION LABOR LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President--Investments