REGISTRATION RIGHTS UNDERTAKING
By
DUCK HEAD APPAREL COMPANY, INC.
For
THE BENEFIT OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
December 30, 2000
REGISTRATION RIGHTS UNDERTAKING (this "Undertaking")is made and entered
into as of December 30, 2000, by Duck Head Apparel Company, Inc., a Georgia
corporation ("Duck Head"), for the benefit of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇").
WHEREAS, ▇▇▇▇▇▇▇ is the President and Chief Operating Officer of Duck
Head; and
WHEREAS, ▇▇▇▇▇▇▇ has the right to acquire from Duck Head up to 250,000
shares of Duck Head common stock (the "Subject Shares"); and
WHEREAS, Duck Head believes that its best interests and the interests
of its shareholders would be served by ▇▇▇▇▇▇▇ acquiring the Subject Shares; and
WHEREAS, ▇▇▇▇▇▇▇ is willing to acquire the Subject Shares on the
condition that Duck Head agrees to provide to ▇▇▇▇▇▇▇ the Registration Rights
set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, Duck Head, intending legally to be bound,
hereby agrees as follows:
SECTION 1. Definitions. As used in this Undertaking, the following
terms shall have the following meanings:
"Affiliate" of any Person means any other Person who either directly or
indirectly is in control of, is controlled by or is under common control with
such Person.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which New York City banking institutions are
authorized by law, regulation or executive order to close.
"Employment Termination Event" shall mean the termination by Duck Head
of ▇▇▇▇▇▇▇'▇ employment with Duck Head for any reason other than Cause, as
defined below. For purposes of this Undertaking, Cause shall be deemed to occur
if Duck Head shall terminate ▇▇▇▇▇▇▇'▇ employment under one or more of the
following circumstances, as determined in the sole, good faith judgment of a
majority of the Board of Directors of Duck Head (the "Board"):
a. the commission by ▇▇▇▇▇▇▇ of an act or acts of fraud, theft,
embezzlement or dishonesty; or
b. the failure or refusal by ▇▇▇▇▇▇▇ to perform and discharge the duties,
responsibilities and obligations assigned to ▇▇▇▇▇▇▇ by the Board from
time to time or the failure of ▇▇▇▇▇▇▇ to follow reasonable directives
and performance standards established by the Board; or
c. the commission by ▇▇▇▇▇▇▇ of any illegal act or act of moral turpitude
or willful misconduct that may adversely affect Duck Head or ▇▇▇▇▇▇▇'▇
ability effectively to serve as President of Duck Head; or
d. intentional material damage by ▇▇▇▇▇▇▇ to the property or business of
Duck Head.
A termination by ▇▇▇▇▇▇▇ of his employment with Duck Head shall not be deemed to
be an Employment Termination Event.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended (or any successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Holder" shall mean ▇▇▇▇▇▇▇ and the heirs, personal representatives,
successors and permitted assigns of ▇▇▇▇▇▇▇. For purposes of this Undertaking,
Duck Head may deem the registered holder of a Registrable Security as the Holder
thereof.
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"Holders of a Majority of the Registrable Securities" shall mean, at
any particular date of determination, a Holder or Holders holding more than 50%
of the Registrable Securities.
"Holders of a Majority of Securities in Registration" shall mean, at
any particular date of determination, a Holder or Holders holding more than 50%
of the Registrable Securities that are the subject of an ongoing demand
registration pursuant to Section 3.
"Material Development Election" shall have the meaning set forth in
Section 6 hereof.
"Person" shall mean an individual, partnership, corporation, limited
liability company, joint venture, trust or unincorporated organization, a
government or political subdivision thereof or any other entity.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments, and all material
incorporated by reference in such prospectus.
"Registrable Securities" shall mean, subject to the limitations set
forth in Section 2 hereof, (i) the Subject Shares; and (ii) any other securities
issued as a result of or in connection with any stock dividend, stock split or
reverse stock split, combination, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of such shares.
"Registration Expenses" shall have the meaning set forth in Section 7
hereof.
"Registration Statement" shall mean any registration statement that
covers any of the Registrable Securities pursuant to the provisions of this
Undertaking, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"Restricted Securities" shall have the meaning set forth in Section 2
hereof.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"SEC" shall mean the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Underwritten Offering" shall mean an offering that is registered under
the Securities Act in which securities of Duck Head are sold to an underwriter
for reoffering to the public.
SECTION 2. SECURITIES SUBJECT TO THIS UNDERTAKING; EFFECTIVENESS OF
THIS UNDERTAKING; DUCK HEAD'S OPTION TO TERMINATE DEMAND REGISTRATION.
(a) The securities entitled to the benefits of this Undertaking are the
Registrable Securities but, with respect to any particular Registrable Security,
only so long as such security continues to be a Restricted Security. A
Registrable Security that has ceased to be a Registrable Security cannot
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thereafter become a Registrable Security. As used herein, a "Restricted
Security" is a Registrable Security that has not been effectively registered
under the Securities Act and distributed in accordance with the Securities Act
and that is not eligible to be distributed by a Holder pursuant to Rule 144.
(b) Sections 3 and 4 of this Undertaking shall have no force or effect
unless and until an Employment Termination Event occurs with respect to ▇▇▇▇▇▇▇
prior to January 1, 2002. Upon the occurrence of an Employment Termination Event
prior to January 1, 2002, the Holders shall have the rights set forth in this
Undertaking. In the absence of an Employment Termination Event prior to January
1, 2002, neither ▇▇▇▇▇▇▇ nor any Holder shall have any registration rights under
this Undertaking.
(c) In the event that pursuant to Section 3 Holders demand registration
of their Registrable Securities, Duck Head shall have the option (exercisable in
its sole discretion by written notice to such Holders at any time prior to the
declaration by the SEC of effectiveness of the Registration Statement relating
thereto) to terminate Duck Head's obligation to register such Registrable
Securities pursuant to Section 3; provided that, in such written notice, Duck
Head irrevocably commits in writing (or provides to the Holders the irrevocable
commitment in writing of one or more persons designated by Duck Head and
financially capable of acquiring such Registrable Securities and/or Duck Head)
to acquire the Registrable Securities from such Holders at the Option Purchase
Price (as hereinafter defined) on a closing date selected by Duck Head (the
"Closing Date") that is no later than 10 Business Days following the date of
such notice. For purposes of this paragraph (c), Duck Head and/or such
designated person or persons shall be referred to as the "Purchaser(s)". In the
event that Duck Head exercises the option described in this Section 2(c), each
Holder that had demanded registration of Registrable Securities of the Holder
pursuant to Section 3 shall be obligated to sell such Registrable Securities to
the Purchaser(s) at the Closing Date. On the Closing Date, each such Holder
shall deliver to Duck Head and/or such other Purchaser(s) (as denominated by
Duck Head) certificates covering such Registrable Securities, with the necessary
assignments or stock powers signed, together with a written representation from
such Holder that such Holder is the owner of, with the full right to transfer,
such Registrable Securities, and that such Registrable Securities are not
subject to any claim, lien or other encumbrance. On the Closing Date, the
Purchaser(s) shall deliver payment to each such Holder of the Option Purchase
Price for the Holder's Registrable Securities being purchased. The "Option
Purchase Price" shall be the product of (i) the number of applicable Registrable
Securities, multiplied by (ii) the average of the per share closing trading
price of the Duck Head common stock for the twenty (20) trading days prior to
the Closing Date.
SECTION 3. DEMAND REGISTRATION.
(a) Demand. Upon the written request of Holders of a Majority of the
Registrable Securities, requesting that Duck Head effect the registration under
the Securities Act of Registrable Securities in connection with an Underwritten
Offering thereof, Duck Head will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of the
Registrable Securities that Duck Head has been so requested to register by such
Holders. Duck Head shall not be obligated to effect more than two demand
registrations pursuant to this Section 3 and Duck Head shall not be obligated to
effect more than one demand registration pursuant to this Section 3 in any
twelve-month period. Duck Head shall not be obligated to effect any registration
under this Section 3 unless the aggregate fair market value of the Registrable
Securities proposed for registration is at least $250,000.
Upon receipt of any request for registration pursuant to this Section
3, Duck Head shall promptly give written notice of such request to all other
Holders (if any). Duck Head shall include in the requested registration all
Registrable Securities requested to be included by such of the other Holders who
shall make such request by written notice to Duck Head delivered within 10
Business Days of their receipt of Duck Head's notice. If Duck Head shall receive
a request for inclusion in the registration of the Registrable Securities of
additional Holders, it shall promptly so inform the Holders who made the initial
request for registration.
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Holders of a Majority of Securities in Registration may, at any time
prior to the effective date of the Registration Statement relating to such
registration, revoke such request by providing a written notice to Duck Head
revoking such request. If so requested, Duck Head shall withdraw the
Registration Statement, but such withdrawn registration shall nevertheless
constitute one demand registration pursuant to this Section 3.
(b) Effectiveness of Registration Statement. Duck Head agrees to use
its best reasonable efforts to (i) cause the Registration Statement relating to
any demand registration pursuant to this Section 3 to become effective as
promptly as practicable; (ii) thereafter keep such Registration Statement
effective continuously for the period specified in the next succeeding
paragraph; and (iii) prevent the happening of any event of the kinds described
in clauses (4), (5) and (6) of Section 5(a)(ii) hereof.
A demand registration requested pursuant to this Section 3 will not be
deemed to have been effected unless the Registration Statement relating thereto
has become effective under the Securities Act and remains continuously effective
(except as otherwise permitted under this Undertaking) for a period ending on
the earlier of (i) the date that is 120 days after the effective date of such
Registration Statement (subject to extension as provided in Sections 5(c) and 6
hereof), and (ii) the date on which all Registrable Securities covered by such
Registration Statement have been sold and the distribution contemplated thereby
has been completed; provided, however, that if, after such Registration
Statement has become effective, the offering of the Registrable Securities
pursuant to such registration is interfered with by any stop order, injunction
or similar order of the SEC or other governmental agency or court (other than by
reason of any untrue statement of a material fact or any omission of a material
fact required to be stated in the Registration Statement or necessary to make
the statements therein not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in any information furnished
by a Holder to Duck Head specifically for inclusion therein), such Registration
Statement will be deemed not to be effective.
(c) Inclusion of Other Securities. Duck Head, and any other holder of
Duck Head's securities that has registration rights, may include its securities
in any demand registration effected pursuant to this Section 3; provided,
however, that, if the managing underwriter or underwriters of the Underwritten
Offering contemplated thereby advise the Holder or Holders in writing that the
total amount or kind of securities that Duck Head or any such other holder
intends to include in such proposed public offering is sufficiently large to
materially adversely affect the success of the proposed public offering
requested by the Holder or Holders, then the amount or kind of securities to be
offered for the account of Duck Head or any such other holder shall be reduced
to the extent necessary to reduce the total amount or kind of securities to be
included in such proposed public offering to the amount or kind recommended by
such managing underwriter or underwriters.
SECTION 4. PIGGYBACK REGISTRATION. If Duck Head at any time proposes to
file a registration statement with respect to any class of equity securities,
whether for its own account (other than a registration statement on Form S-4 or
S-8 (or any successor or substantially similar form) or a registration statement
covering (A) an employee stock option, incentive stock award, stock purchase or
compensation plan or securities issued or issuable pursuant to any such or
similar plan, or (B) a dividend reinvestment plan) or for the account of a
holder of securities of Duck Head pursuant to registration rights granted by
Duck Head (a "Requesting Securityholder") (other than for the registration of
securities for sale on a continuous or delayed basis pursuant to Rule 415), then
Duck Head shall in each case give written notice of such proposed filing to all
Holders of Registrable Securities at least ten Business Days before the
anticipated filing date of any such registration statement by Duck Head, and
such notice shall offer to all Holders the opportunity to have any or all of the
Registrable Securities held by such Holders included in such registration
statement. Each Holder of Registrable Securities desiring to have its
Registrable Securities registered under this Section 4 shall so advise Duck Head
in writing within five Business Days after the date of receipt of such notice
(which request shall set forth the amount of Registrable Securities for which
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registration is requested), and Duck Head shall include in such Registration
Statement all such Registrable Securities so requested to be included therein;
provided, that, in the event such Registration Statement is for an Underwritten
Offering, the Holders of Registrable Securities included therein shall join in
the underwriting on the same terms and conditions as Duck Head or the Requesting
Securityholders except that the Holders of Registrable Securities shall not be
required to give any representations and warranties relating to Duck Head, but
shall execute any underwriting agreement, "lock-up" letters or other customary
agreements or documents executed by Duck Head or the Requesting Securityholders
in connection therewith. Notwithstanding the foregoing, if the managing
underwriter or underwriters of any such proposed public offering advise Duck
Head in writing that the total amount or kind of securities that the Holders of
Registrable Securities, Duck Head, the Requesting Securityholders and any other
Persons intended to be included in such proposed public offering is sufficiently
large to materially adversely affect the success of such proposed public
offering, then the amount or kind of securities to be offered for the accounts
of Holders of Registrable Securities shall be reduced pro rata, together with
the amount or kind of securities to be offered for the accounts of any other
Persons (other than Duck Head) requesting registration of securities pursuant to
rights substantially similar to the rights of Holders under this Section 4, to
the extent necessary to reduce the total amount or kind of securities to be
included in such proposed public offering to the amount or kind recommended by
such managing underwriter or underwriters before the securities offered by Duck
Head or any Requesting Securityholder are so reduced. Duck Head may at any time
abandon or suspend any proposed registration covered by this Section 4.
SECTION 5. REGISTRATION PROCEDURES.
(a) General. In connection with Duck Head's registration obligations
pursuant to Section 3 hereof, Duck Head will:
(i) prepare and file with the SEC a new Registration Statement
or such amendments and post-effective amendments to an existing Registration
Statement as may be necessary to keep such Registration Statement effective for
the time periods set forth in Section 3(b); provided, however, that no
Registration Statement shall be required to remain in effect after all
Registrable Securities covered by such Registration Statement have been sold and
distributed as contemplated by such Registration Statement; and, provided,
further, that Duck Head shall not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (other than any amendment or
supplement made solely as a result of the incorporation by reference of
documents filed with the SEC subsequent to the filing of such Registration
Statement) to which the managing underwriter or underwriters of the applicable
offering or the Holders of a majority of the Registrable Securities covered by
such Registration Statement or Duck Head shall have reasonably objected in
writing to the effect that such Registration Statement or amendment thereto or
Prospectus or supplement thereto does not comply in all material respects with
the requirements of the Securities Act (provided that the foregoing shall not
limit the right of any Holder whose Registrable Securities are covered by a
Registration Statement promptly to reasonably object to any particular
information that is to be contained in such Registration Statement, amendment,
Prospectus or supplement that relates specifically to such Holder), and if Duck
Head is unable to file any such document due to the objections of such
underwriter or underwriters or such Holders, Duck Head shall use its best
efforts to cooperate with such underwriter or underwriters and Holders to
prepare, as soon as practicable, a document that is responsive in all material
respects to the reasonable objections of such underwriter or underwriters and
Holders; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act applicable to Duck Head with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the Prospectus
(it being understood that Duck Head shall not be deemed to have used its best
efforts to keep a Registration Statement effective during the applicable period
if any action is taken by Duck Head (other than actions taken by Duck Head in
the course of its business) that would result in Holders of the Registrable
Securities covered thereby not being able to sell such Registrable Securities
during that period unless such action is required under applicable law or as
contemplated under Section 5(c) or 6 hereof);
(ii) notify the selling Holders of Registrable Securities and
the managing underwriter or underwriters promptly (1) when a new Registration
Statement, amendment thereto, Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any new
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Registration Statement or post-effective amendment, when it has become
effective, (2) of any request by the SEC for amendments or supplements to any
Registration Statement or Prospectus or for additional information, (3) of the
issuance by the SEC of any comments with respect to any filing, (4) of any stop
order suspending the effectiveness of any Registration Statement or the
initiation or threatening of any proceedings for such purpose, (5) if at any
time the representations and warranties of Duck Head contemplated by paragraph
(xi) below cease to be true and correct as of any time they are required to be
true and correct, (6) of any suspension of the qualification of the Registrable
Securities for sale in any jurisdiction in the United States or the initiation
or threatening of any proceeding for such purpose, and (7) of the happening of
any event that makes any statement of a material fact made in any Registration
Statement, Prospectus or any document incorporated therein by reference untrue
or that requires the making of any changes in any Registration Statement,
Prospectus or any document incorporated therein by reference in order to make
the statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading; and make every
reasonable effort to obtain as promptly as practicable the withdrawal of any
order or other action suspending the effectiveness of any Registration Statement
or suspending the qualification or registration (or exemption therefrom) of the
Registrable Securities for sale in any jurisdiction in the United States;
(iii) if reasonably requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in connection with
an Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters and the Holders of a majority of the Registrable Securities being
sold in such Underwritten Offering agree should be included therein relating to
the sale of the Registrable Securities, including, without limitation,
information with respect to the aggregate number of shares of Registrable
Securities being sold to the underwriters, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
and promptly make all required filings of such Prospectus supplement or
post-effective amendment;
(iv) promptly after the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, provide
copies of such document to each selling Holder of Registrable Securities and the
managing underwriter or underwriters (unless such document has been filed with
the SEC in electronic format, such as on ▇▇▇▇▇);
(v) furnish to each selling Holder of Registrable Securities
and the managing underwriter or underwriters, without charge, at least one
manually signed or "edgarized" copy and as many conformed copies as may
reasonably be requested, of the then effective Registration Statement and any
post-effective amendment thereto, and one copy of all financial statements and
schedules, all documents incorporated therein by reference and all exhibits
thereto (including those incorporated by reference);
(vi) deliver to each selling Holder of Registrable Securities
and the managing underwriter or underwriters, without charge, as many copies of
the then effective Prospectus (including each prospectus subject to completion)
and any amendments or supplements thereto as such Persons may reasonably
request;
(vii) use reasonable best efforts to register or qualify or
cooperate with the selling Holders of Registrable Securities, the underwriters
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions in the United States as any
selling Holder of Registrable Securities or underwriter reasonably requests in
writing and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
securities covered by the then effective Registration Statement; provided,
however, that Duck Head will not be required to (1) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify, but for
this paragraph (vii), or (2) subject itself to general taxation in any such
jurisdiction;
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(viii) cooperate with the selling Holders of Registrable
Securities and the managing underwriter or underwriters to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and cause such Registrable
Securities to be issued in such denominations and registered in such names as
the managing underwriter or underwriters may request in writing at least two
Business Days prior to any sale of Registrable Securities to the underwriters;
(ix) upon the occurrence of any event contemplated by clause
(7) of Section 5(a)(ii) hereof, promptly prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(x) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange (or quotation
system-operated by a national securities association) on which identical
securities issued by Duck Head are then listed, and enter into customary
agreements including, if necessary, a listing application and indemnification
agreement in customary form with such exchange or securities association;
(xi) enter into an underwriting agreement and take all such
other actions in connection therewith in order to expedite and facilitate the
disposition of such Registrable Securities, in each case as the managing
underwriter or underwriters reasonably determine is reasonable and customary
and, in connection therewith, (1) make such representations and warranties to
the underwriters in form, substance and scope as are customarily made by issuers
to underwriters in secondary underwritten offerings; (2) obtain opinions of
counsel to Duck Head and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the underwriters and
shall cover the matters customarily covered in opinions requested in secondary
underwritten offerings); (3) obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of Duck Head addressed to the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with secondary
underwritten offerings; (4) cause the underwriting agreement to set forth in
full the indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to Section 8; and (5) deliver
such documents and certificates as may be reasonably requested by the managing
underwriter or underwriters to evidence compliance with clause (1) of this
Section 5(a)(xi) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by Duck Head in respect of the
relevant offering;
(xii) provide a CUSIP number for the Registrable Securities no
later than the effective date of the Registration Statement;
(xiii) otherwise use its best efforts to comply in all
material respects with all applicable rules and regulations of the SEC relating
to such registration and the distribution of the securities being offered and,
to the extent applicable, make generally available to its securities holders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and complying with Rule 158 of the SEC thereunder;
(xiv) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc.;
(xv) make available for inspection by a representative of the
Holders of the Registrable Securities covered by such Registration Statement,
any managing underwriter or underwriters participating in any disposition
pursuant to such registration and any attorney or accountant retained by the
sellers or such underwriters, all financial and other records, pertinent
corporate documents and properties of Duck Head and cause Duck Head's officers,
directors and employees to supply all information reasonably requested by, and
to cooperate fully with, any such representative, underwriter, attorney or
accountant in connection with such registration, and otherwise to cooperate
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fully in connection with any reasonable due diligence investigation; provided
that such representatives, underwriters, attorneys or accountants enter into a
confidentiality agreement, in form and substance reasonably satisfactory to Duck
Head, prior to the release or disclosure to them of any such information,
records or documents; subject to the proviso in Section 5(a)(vii) hereof, cause
the Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary to enable the seller or sellers thereof
or the underwriters, to consummate the disposition of such Registrable
Securities (other than as may be required by a law applicable to a selling
Holder by reason of its own activities or business other than the sale of
Registrable Securities); and
(xvii) use its best efforts to take all action reasonably
necessary or advisable to effect such registration in the manner contemplated by
this Undertaking.
(b) Duck Head may require each seller of Registrable Securities as to
which any registration is being effected to furnish to Duck Head such
information regarding such seller and the distribution of such securities as
Duck Head may from time to time reasonably request. Each Holder of Registrable
Securities agrees by its acquisition of such Registrable Securities that Duck
Head may appoint any managing underwriter or underwriters for an Underwritten
Offering pursuant to Section 3 hereof, which managing underwriter or
underwriters shall be reasonably satisfactory to the Holders of a majority of
Registrable Securities to be included in such Underwritten Offering.
(c) Each Holder of Registrable Securities agrees by its acquisition of
such Registrable Securities that, upon receipt of any notice from Duck Head of
the happening of any event of the kind described in Section 5(a)(ii) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the then current Prospectus until (i) such Holder is advised in
writing by Duck Head that a new Registration Statement covering the offer of
Registrable Securities has become effective under the Securities Act, (ii) such
Holder receives copies of a supplemented or amended Prospectus contemplated by
Section 5(a) hereof, or (iii) such Holder is advised in writing by Duck Head
that the use of the Prospectus may be resumed. If Duck Head shall have given any
such notice during a period when a demand registration pursuant to Section 3
hereof is in effect, Duck Head shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this
Undertaking by the number of days during which any such disposition of
Registrable Securities is discontinued pursuant to this Section 5(c). Duck Head
shall use its best reasonable efforts to limit the duration of any
discontinuance with respect to the disposition of Registrable Securities
pursuant to this Section 5(c).
SECTION 6. MATERIAL DEVELOPMENT ELECTION. Duck Head shall be entitled,
from time to time, but on each occasion for a period of time not to exceed 120
consecutive days, to postpone the filing of any Registration Statement otherwise
required to be prepared and filed by it pursuant to Section 3 hereof and/or to
request that the Holders refrain from effecting any public sales or
distributions of their Registrable Securities if the board of directors of Duck
Head determines in its reasonable business judgment that such registration
and/or such public sales or distributions would interfere in any material
respect with any financing, acquisition, corporate reorganization or other
transaction or development involving Duck Head or any subsidiary of Duck Head
that in the reasonable business judgment of such board is a transaction or
development that is or would be material to Duck Head (a "Material Development
Election"). The board of directors of Duck Head shall, as promptly as
practicable, give the Holders written notice of any such Material Development
Election. In the event of a determination by the board of directors to postpone
the filing of a Registration Statement otherwise required to be filed pursuant
to Section 3 hereof, Duck Head shall be required to file such Registration
Statement as soon as reasonably practicable after the board of directors of Duck
Head shall determine, in its reasonable business judgment, that the filing of
such Registration Statement and the offering thereunder shall not interfere with
the aforesaid material transaction or development, but in any event no later
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than the end of such 120 day period. In addition, if the board of directors of
Duck Head has requested that the Holders refrain from making public sales or
distributions of their Registrable Securities, such board shall, as promptly as
practicable following its determination that the Holders may recommence such
public sales and distributions, notify such Holders in writing of such
determination (but in any event no later than the end of such 120 day period).
In the event Duck Head shall exercise a Material Development Election during a
period when a Registration Statement filed pursuant to Section 3 is in effect,
the time period specified in Section 3(b) hereof during which such Registration
Statement is required to be kept effective shall be extended by the number of
days during which the Holders are prohibited by Duck Head from publicly selling
or distributing their securities as a result of such Material Development
Election.
SECTION 7. REGISTRATION EXPENSES. All expenses incident to Duck Head's
performance of or compliance with this Undertaking, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), the fees and
disbursements of counsel retained by Duck Head (but not counsel, if any,
retained by any Holders of Registrable Securities), printing expenses (including
expenses of printing Prospectuses), delivery expenses, internal Duck Head
expenses (including all salaries and expenses of its officers and employees),
fees and disbursements of Duck Head's independent certified public accountants
(including the expenses of any "comfort" letters required by or incident to such
performance or compliance), securities acts liability insurance (if Duck Head
elects to obtain such insurance), fees and expenses of any special experts
retained by Duck Head in connection with any registration hereunder and the fees
and expenses of any other Person retained by Duck Head (all such fees and
expenses being referred to as "Registration Expenses"), shall be borne by Duck
Head, whether or not any Registration Statement becomes effective; provided,
however, that Registration Expenses shall not include any underwriting
discounts, commissions or fees attributable to the sale of the Registrable
Securities.
SECTION 8. INDEMNIFICATION.
(a) Indemnification by Duck Head. Duck Head agrees to indemnify and
hold harmless, to the full extent permitted by law, but without duplication,
each Holder of Registrable Securities, its officers, directors, employees,
partners, principals, advisors and agents, and each Person who controls such
Holder (within the meaning of the Securities Act), against all losses, claims,
damages, liabilities and reasonable expenses (including reasonable costs of
investigation and reasonable legal fees and expenses) resulting from any untrue
statement of a material fact in or any omission of a material fact required to
be stated in, any Registration Statement or in any preliminary or final
Prospectus, or any amendment or supplement thereto, or necessary to make the
statements therein (in the case of a Prospectus in light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by or contained in any information furnished to Duck Head by any Holder
or any underwriter expressly for use therein. Duck Head will also indemnify
underwriters participating in the distribution, their officers, directors,
employees, partners and agents, and each Person who controls such underwriters
(within the meaning of the Securities Act), to the same extent as provided above
with respect to the indemnification of the Holders of Registrable Securities, if
so requested, provided that such underwriters indemnify Duck Head, its officers,
directors, shareholders, employees, advisors and agents, and each Person that
controls Duck Head, to the same extent as provided in Section 8(b) hereof.
Notwithstanding the foregoing, Duck Head shall not indemnify any of the
foregoing Persons if the Person asserting any such losses, claims, damages,
liabilities or expenses purchased Registrable Securities that are the subject
thereof from any underwriter and if such Person was not sent or given a copy of
the final Prospectus at or prior to the confirmation of the sale of such
Registrable Securities to such Person in any case where such sending or giving
is required by the Securities Act.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement covering Registrable Securities of a Holder,
each such Holder will furnish to Duck Head in writing such information as Duck
Head reasonably requests for use in connection with any such Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
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extent permitted by law, but without duplication, Duck Head, its officers,
directors, shareholders, employees, advisors and agents, and each Person who
controls Duck Head (within the meaning of the Securities Act), against any
losses, claims, damages, liabilities and reasonable expenses resulting from any
untrue statement of a material fact in, or any omission of a material fact
required to be stated in, the Registration Statement or in any preliminary or
final Prospectus, or any amendment or supplement thereto, or necessary to make
the statements therein (in the case of a Prospectus in light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished by such Holder to Duck Head specifically for inclusion
therein. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than two times the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. Duck Head and the
other Persons described above shall be entitled to receive indemnities from
underwriters participating in the distribution, to the same extent as provided
above, with respect to information so furnished in writing by such underwriters
specifically for inclusion in any Registration Statement or in any preliminary
or final Prospectus, or any amendment or supplement thereto.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification, and (ii) permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in, but not control, the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
indemnified Person, unless (A) the indemnifying party has agreed to pay such
fees or expenses, (B) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to the
indemnified party in a timely manner, or (C) in the reasonable judgment of any
such Person, based upon written advice of its counsel, a conflict of interest
may exist between such Person and the indemnifying party with respect to such
claims (in which case, if the Person notifies the indemnifying party in writing
that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of any such claim as to which such conflict of interest may exist).
The indemnifying party will not be subject to any liability for any settlement
made without its consent. No indemnified party will be required to consent to
the entry of any judgment or enter into any settlement that 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 in respect of such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of the claim will not be obligated to pay the fees and
expenses of more than one counsel for all Persons indemnified by such
indemnifying party with respect to such claim, as well as one local counsel in
each relevant jurisdiction.
(d) Contribution. If for any reason the indemnification provided for in
Section 8(a) or 8(b) hereof is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Sections 8(a) and 8(b)
hereof, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to reflect not only
the relative benefits received by the indemnifying party and the indemnified
party, but also the relative fault of the indemnifying party and the indemnified
party, as well as any other relevant equitable considerations; provided,
however, that no indemnifying Holder shall be required to contribute an amount
greater than two times the dollar amount of the net proceeds received by such
indemnifying Holder with respect to the sale of the Registrable Securities
giving rise to such indemnification obligation. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentations.
SECTION 9. RULE 144. For so long as there are at least 50,000 Restricted
Securities:
(a) Duck Head shall use its reasonable best efforts to make publicly
available and available to the Holders, pursuant to Rule 144, such information
as is necessary to enable the Holders to make sales of Registrable Securities
pursuant to that Rule;
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(b) Duck Head shall use its reasonable best efforts to file timely with
the SEC all documents and reports required of Duck Head under the Exchange Act;
and
(c) Duck Head shall furnish to any Holder, upon reasonable request, a
written statement executed on behalf of Duck Head as to the then status of its
compliance with the current public information requirements of Rule 144.
SECTION 10. NO CONFLICTING UNDERTAKINGS. Duck Head has not previously
and shall not in the future enter into any agreement, arrangement or
understanding with respect to its securities that directly conflicts with the
rights granted to the Holders of Registrable Securities in this Undertaking.
SECTION 11. AMENDMENTS AND WAIVERS. The provisions of this Undertaking,
including the provisions of this Section 11, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless Duck Head has obtained the written consent of Holders
of a majority of the Registrable Securities then outstanding. Whenever the
consent or approval of Holders of a specified number of Registrable Securities
is required hereunder, Registrable Securities held by Duck Head or any of its
controlled Affiliates shall not be counted in determining whether such consent
or approval was given by the Holders of such required number.
SECTION 12. SPECIFIC PERFORMANCE. Duck Head acknowledges and agrees
that the Holders would be damaged irreparably in the event any of the covenants
contained in this Undertaking are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, Duck Head agrees that the
Holders shall be entitled to an injunction or injunctions to prevent breaches of
the covenants contained in this Undertaking and to enforce specifically this
Undertaking and the covenants contained herein, in addition to any other remedy
to which the Holders may be entitled at law or in equity, without proving
damages or that monetary damages would not be an adequate remedy for such
breach. The remedies provided for or permitted by this Undertaking shall be
cumulative and the exercise by any party of any remedy provided for herein or
available hereunder shall not preclude the assertion or exercise by such party
of any other right or remedy provided for herein or available hereunder.
SECTION 13. NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air-courier guaranteeing overnight delivery:
(a) If to a Holder of Registrable Securities, at the most current
address for such Holder, as it appears on the books of Duck Head; and
(b) If to Duck Head, at its principal executive offices as set forth
in its SEC filings made under the Exchange Act, Attn: Chief Financial
Officer.
All such notices and other communications shall be deemed to have been delivered
and received upon reasonable proof of same.
SECTION 14. SUCCESSORS AND ASSIGNS. This Undertaking shall be binding
on and inure to the benefit of Duck Head and its successors and assigns and
▇▇▇▇▇▇▇ and his heirs, personal representatives, successors and permitted
assigns. No Holder may assign any of his, her or its rights under this
Undertaking, except (i) by operation of the laws of descent or to a spouse,
child or trust for the benefit of a spouse or child to whom such Holder
transfers Registrable Securities and (ii) except in connection with the transfer
of at least 100,000 shares of Registrable Securities.
SECTION 15. TERMINATION. This Agreement, including without limitation
Holders' rights under Section 3 and 4 hereof, shall terminate when there are no
more Restricted Securities outstanding or, if earlier, on December 31, 2001 if
no Employment Termination Event has occurred by that date.
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SECTION 16. HEADINGS. The headings in this Undertaking are inserted
for convenience only and shall not constitute a part hereof.
SECTION 17. GOVERNING LAW. This undertaking shall be governed by and
construed and enforced in accordance with the laws of the state of Georgia
applicable to contracts made and to be entirely performed therein.
SECTION 18. ENTIRE UNDERTAKING. This Undertaking states the entire
agreement of Duck Head with respect to the subject matter hereof.
IN WITNESS WHEREOF, Duck Head has duly executed and delivered this
Undertaking as of the date first written above.
DUCK HEAD APPAREL COMPANY, INC.
Attest: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Jr.
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Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
Chairman and Chief Executive
Officer
I CONSENT TO THE FOREGOING
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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