As filed with the Securities and Exchange Commission on July 7, 1998.
Registration No. 333-25799
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8 AND FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
JD AMERICAN WORKWEAR, INC.
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(Exact name of issuer as specified in its charter)
Delaware 05-0460102
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) (Identification No.)
46 Old Flat River Road, Coventry, Rhode Island 02816
- ---------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
JD AMERICAN WORKWEAR, INC. 1995 Stock Option Plan
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(Full title of the plan)
David N. DeBaene, 46 Old Flat River Road, Coventry, Rhode Island 02816
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(Name and address of agent for service)
(401) 397-6800
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(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: Upon
exercise of the options granted under the Stock Option Plan, but in no event
prior to the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of securities to Amount to be offering price aggregate Amount of
be registered registered(1) per share offering price Registration Fee(2)
- ---------------------- ------------- -------------- -------------- -------------------
<S> <C> <C> <C> <C>
Common Stock
$.002 par value 750,000 $4.84375 $3,632,812.50 $1,100.85
<F1> The aggregate amount of securities registered hereunder is 750,000
shares of Common Stock of which 500,000 shares are being registered
with the filing of this Post-Effective Amendment No. 1 to this
Registration Statement. Pursuant to Rule 416 promulgated under the
Securities Act of 1933, as amended, this Registration Statement covers
such additional shares of Common Stock to be offered or issued to
prevent dilution as a result of future stock splits, stock dividends
or similar transactions.
<F2> The fee with respect to 500,000 shares has been calculated pursuant to
paragraphs (h) and (c) of Rule 457 upon the basis of $4.84375, the
average of the bid and asked price per share of the Registrant's
Common Stock on July 7, 1998, a date within five (5) business days
prior to the date of filing of this Post-Effective Amendment to the
Registration Statement, as reported by the Over The Counter Bulletin
Board ("OTC Bulletin Board") of the National Association of Securities
Dealers, Inc.'s ("NASD") Automated Quotation System ("Nasdaq"). A fee
of $435.61 was paid with respect to 250,000 shares registered with the
Securities and Exchange Commission (the "SEC;" the "Commission") in
the initial filing on April 24, 1997.
</TABLE>
EXPLANATORY NOTE
This Registration Statement contains two parts. The first part
contains a prospectus pursuant to Form S-3 (in accordance with Section C of
the General Instructions to Form S-8) which covers reoffers and resales by
affiliates and non-affiliates of JD American Workwear, Inc. (the
"Registrant") of shares of Common Stock of the Registrant to be issued upon
exercise of options granted pursuant to the Registrant's 1995 Stock Option
Plan, as amended. The second part contains Information Required in the
Registration Statement pursuant to Part II of Form S-8 and certain items
from Information Not Required in the Prospectus pursuant to Part II of Form
S-3. Pursuant to the introductory Note to Part I of Form S-8, the Plan
Information specified by Part I is not being filed with the Commission.
PROSPECTUS
(Form S-3)
JD AMERICAN WORKWEAR, INC.
750,000 Shares
Common Stock ($.002 par value)
____________________
JD American Workwear, Inc. 1995 Stock Option Plan
(amended as of April 15, 1998)
This Prospectus is being used in connection with the offering from
time to time by certain shareholders (the "Selling Shareholders") of JD
American Workwear, Inc. (the "Company") or their successors in interest of
shares of the Common Stock ($.002 par value) of the Company ("Common Stock")
which have been issued under, or may be acquired upon the exercise or grant
of, stock options pursuant to the Company's 1995 Stock Option Plan, as
amended (the "Plan").
The Common Stock may be sold from time to time by the Selling
Shareholders or by their pledgees, donees, transferees or other successors
in interest. Such sales may be made in the over-the-counter market or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Common Stock
may be sold by one or more of the following: (a) block trades in which the
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell portions of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c) an
exchange distribution in accordance with the rules of such exchange; and (d)
ordinary brokerage transactions and transactions in which the broker
solicits purchases. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
Selling Shareholders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") in connection with
such sales. In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus. The Company will
not receive any of the proceeds from the sale of these shares, although it
has paid the expenses of preparing this Prospectus and the related
Registration Statement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The bid and asked prices of the Company's Common Stock on July 7,
1998 as reported by the NASD's OTC Bulletin Board was $4.75 and $4.9375,
respectively.
The date of this Prospectus is July 7, 1998.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN AS CONTAINED HEREIN, IN CONNECTION WITH THE
OFFER MADE IN THE PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
____________________
The Company has filed with the Commission a Registration Statement
under the Securities Act with respect to the securities offered by this
Prospectus. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Additional
information concerning the securities offered hereby is to be found in the
Registration Statement including various exhibits thereto, which may be
inspected at the Commission's office in Washington, D.C.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the Commission's regional offices located
at Seven World Trade Center, Suite 1300, New York, New York 10048; and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of
such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates.
The Common Stock of the Company is listed for quotation on the NASD's
OTC Bulletin Board and is traded under the Symbol "JDAW". Reports, proxy
statements and other information filed by the Company can be inspected at
the offices of the NASD OTC Bulletin Board, 1735 "K" Street, N.W.,
Washington, D.C. 20006.
____________________
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 33-98682)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended February 28, 1998, as filed and as amended from time to
time.
2. All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since June 12, 1998.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of
this offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing
thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of that person, a copy
of all documents incorporated by reference into the Registration Statement
of which this Prospectus is a part, other than exhibits to those documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests for such documents should be directed to Anthony P.
Santucci, Chief Financial Officer, JD American Workwear, Inc., 46 Old Flat
River Road, Coventry, Rhode Island 02816, telephone: (401) 397-6800.
THE COMPANY
Recent Developments
Private Placement of Series A Preferred Stock. In December 1997, the
Company completed a private placement of $782,500 of Series A 10% Manditorily
Convertible Preferred Stock, $0.001 par value (the "Series A Preferred Stock").
The Series A Preferred Stock is convertible, at the option of the holder, into
shares of the Company's Common Stock at an initial conversion rate equal to
1,000 shares of Common Stock for each share of Series A Preferred Stock
(representing a conversion price of $1.93 per share of Common Stock), after
giving effect to antidilution adjustments resulting from the April 9, 1998
private placement of Series B Preferred Stock described below under "Recent
Developments-- Private Placement of Series B Preferred Stock"). A significant
portion of the proceeds of this offering were used to increase production of
finished goods inventory, repay principal and accrued interest on outstanding
short term borrowings, fund marketing and sales programs, settle overdue
accounts payable and accrued liabilities, and for working capital.
The Series A Preferred Stock entitles the holders thereof to receive,
when and as declared by the Company's Board of Directors, cumulative cash
dividends in preference to the payment of dividends on all other shares of
capital stock of the Company; however the Company has the option of making
payment of the semi-annual dividends on the Series A Preferred Stock either
in cash or by issuing additional shares of Series A Preferred Stock. Each
holder of Series A Preferred Stock is entitled to vote on all Company
matters and is entitled to the number of votes equal to the largest number
of full shares of Common Stock into which such shares of Series A Preferred
Stock are convertible (approximately 405,440 shares of Common Stock).
The Company has agreed to file a registration statement, no later than
July 15, 1998, to register the public resale of the Common Stock issued on
conversion of the Series A Preferred Stock. At the time that registration
statement is declared effective by the SEC, the Series A Preferred Stock
will automatically convert into Common Stock. The Company has agreed to
maintain the effectiveness of that registration statement until March 15,
1999.
Private Placement of Series B Preferred Stock. On April 9, 1998, the
Company entered into a Securities Purchase Agreement (the "Purchase Agreement")
with The Union Labor Life Insurance Company, a Maryland corporation ("ULLICO"),
and certain additional agreements related to the Purchase Agreement. Pursuant
to the terms of the Purchase Agreement, the Company issued to ULLICO 2,500
shares of Series B 12% Cumulative Convertible Preferred Stock, $.001 par value
(the "Series B Preferred Stock"). As a part of the issuance of the Series B
Preferred Stock, the Company also issued to ULLICO a detached ten-year stock
purchase warrant to purchase 799,000 shares of Common Stock at an exercise
price of $.01 per share (the "Investor Warrant"). The aggregate purchase price
for the Series B Preferred Stock and the Investor Warrant was $2,500,000. The
Company will use the net proceeds to facilitate and expand a program of union
labor manufacturing of its products, to repay certain notes payable and long-
term debt, and for sales and administrative salaries, product development,
sales and marketing expense, and other general corporate purposes.
The Series B Preferred Stock is convertible, at the option of the
holder, into the number of shares of Common Stock which results from
dividing the conversion price into $1,000 for each share of Series B
Preferred Stock being converted. The conversion price shall be $5.00,
subject to adjustment.
The Series B Preferred Stock entitles ULLICO to receive, when and as
declared by the Company's Board of Directors, cumulative cash dividends in
preference to the payment of dividends on all other shares of capital stock
of the Company. The Company has the option of making payment of the semi-
annual dividends on the Series B Preferred Stock either in cash or by
issuing additional shares ("payment in kind" or "PIK") of Series B Preferred
Stock ("PIK Dividends") during the two-year period following issuance of the
Series B Preferred Stock (the "PIK Period"). In the event the Company
elects to pay dividends in shares of Series B Preferred Stock, the Company
is required to issue additional detached ten-year dividend warrants (the
"Dividend Warrants") to purchase 54,000 shares of Common Stock at an
exercise price of $.01 per share for each semi-annual dividend period that
PIK Dividends are paid. During the PIK Period the Company may not pay or
declare cash dividends on any stock other than the Series B Preferred Stock.
Unless full dividends on the Series B Preferred Stock for all past dividend
periods and the then current period shall have been paid or declared and a
sufficient sum for the payment thereof set aside in trust for the Series B
Preferred Stock Holders, no dividend (other than a dividend payable solely
in Common Stock) shall be paid or declared, and no distribution made, on any
other shares of stock.
The Company may, at its own option and at any time after the third
anniversary of the original issuance of the Series B Preferred Stock, redeem
the Series B Preferred Stock, in whole but not in part. In such event, the
Company is obligated to pay holders of the Series B Preferred Stock the
investment value per share, which is the sum of (i) the per share amount of
$1,000 plus (ii) the amount of any unpaid dividends on such share, plus a
redemption premium equal to a 20% internal rate of return on the investment
value. A mandatory redemption of 1,250 shares of Series B Preferred Stock
is required on each of the first business days of April 2004 and 2005.
Each holder of Series B Preferred Stock is entitled to vote on all
Company matters and is entitled to the number of votes equal to the largest
number of full shares of Common Stock into which such shares of Series B
Preferred Stock are convertible. The Series B Preferred Stock holders shall
be entitled to elect one director out of the seven authorized directors of
the Company's board and one director out of the three directors comprising
the Company's Compensation Committee. If certain events occur or do not
occur, such as the failure to pay either a PIK Dividend or cash dividend to
the Series B Preferred Stock holders, the holders of the Series B Preferred
Stock shall be entitled, immediately upon giving written notice, to elect
the smallest number of directors that will constitute a majority of the
authorized number of directors.
The Company and ULLICO entered into a Registration Rights Agreement
dated April 9, 1998 (the "Registration Rights Agreement"), which requires
the Company, upon written request, to file a registration statement for the
public resale of the Common Stock issued on conversion of the Series B
Preferred Stock. The Company is required to file and cause to become
effective a maximum of two registration statements, excluding registration
statements on Form S-3. The Company shall not be obligated to effect more
than one registration on Form S-3 during any six-month period and shall be
obligated to file and cause to become effective no more than six
registration statements on Form S-3. No registration statement is required
to be filed unless the proposed public offering price of the securities
under such registration shall be at least $5 million (prior to deducting
underwriting discounts and commissions). The Registration Rights Agreement
also provides for incidental registration.
Increase in Authorized Capital. At the Annual Meeting of
Stockholders held April 15, 1998 (the "Annual Meeting"), the shareholders of
the Company approved an amendment to the Company's Certificate of
Incorporation that increased the number of authorized shares of Common Stock
of the Company from 4,500,000 shares to 7,500,000 shares. In January 1998,
the Board of Directors of the Company voted to amend the Company's 1995
Stock Option Plan to reserve for issuance under the Plan an additional
500,000 shares, for a total of 750,000 shares, which amendment was ratified
by the stockholders of the Company at the Annual Meeting.
Company Background
JD American Workwear, Inc. designs, markets and sells commercial and
industrial workwear highlighted by its two key proprietary safety products,
denim safety work jeans ("JD Safety Work Jeans") and cotton\poly blend
uniform-style Safety Work Pants ("JD Safety Uniform Pants"). The Company is
a party to various supply agreements that will enable it to offer a complete
line of commercial and industrial footwear and workwear to complement its JD
Safety Work Jeans and JD Safety Uniform Pants. The Company's initial
product, JD Safety Work Jeans, was designed and patented by David N.
DeBaene, the Company's founder and President. In June 1997, the Company was
granted U.S. Patent No. 5,634,215 covering certain functional features of
its JD Safety Uniform Pants. This patent will expire in the year 2008.
Historically, the Company had a manufacturing arrangement with Reed
Manufacturing Co., Inc. ("Reed") pursuant to which Reed manufactured both
the JD Safety Work Jeans and JD Safety Uniform Pants to the Company's
specifications. In December 1997 the Company began producing JD Safety Work
Jeans and JD Safety Work Uniform Pants in contractor facilities covered by
collective bargaining agreements. As a result, the Company has established
manufacturing relationships with Fine Vines, Inc. ("FVI") and East Texas
Sportswear, Inc. ("East Texas"). The Company has arrangements with several
suppliers, including Reed, FVI and East Texas, pursuant to which such
companies supply, under the Company's own label, a complete line of uniform
workwear to complement its proprietary safety products. The Company
advertises and markets its products through direct mailings, participation
and exhibition of products at industrial trade shows, personal solicitations
at businesses which have been identified as likely purchasers and industry
referrals. The Company's products are sold to several catalog merchants and
distributors for resale to customers. The Company sells through its own
employees and additionally through a team of independent sales
representatives, regional sales directors and sales agents.
The Company was incorporated in Rhode Island in 1991 under the name
Jaque Dubois, Inc. and in 1994 changed its state of incorporation to
Delaware. In July 1995, the Company's name was changed to JD American
Workwear, Inc. The Company's business address is 46 Old Flat River Road,
Coventry, Rhode Island 02816, and its telephone number is (401) 397-6800.
FORWARD LOOKING STATEMENTS
When used in this Prospectus, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act regarding events, conditions and financial trends that may affect the
Company's future plans of operations, business strategy, operating results
and financial position. Prospective investors are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ
materially from those included within the forward-looking statements as a
result of various factors. Such factors are described in the Company's
Exchange Act reports under the headings "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "The Company,"
"Business" and in the Risk Factors set forth below.
RISK FACTORS
All prospective investors should carefully consider, among other
things, the following factors before purchasing any securities offered
hereby:
Accumulated Deficit and Operating Losses and Anticipated Continuing Losses;
Explanatory Language in Auditor's Report Regarding Ability to Continue as
Going Concern. The Company had an accumulated deficit at February 28, 1998
of $4,496,566 and incurred a net loss of $1,162,109 for the fiscal year
ended February 28, 1998. At February 28, 1997, the accumulated deficit was
$3,334,457 and the Company's net loss for the fiscal year then ended was
$804,208. Because the Company is attempting to scale up its operations, it
is expected that the Company will continue to sustain losses for part if not
all of the fiscal year ended February 28, 1999, and perhaps thereafter. The
Company had significant negative cash flow from operations during each of
fiscal 1996, 1997 and 1998 and the Company continues to experience negative
cash flow as it builds inventory to be in a position to aggressively pursue
market opportunities. Additionally, the Company's financial statements are
presented on the basis that the Company is a going concern, which
contemplates the realization of assets and the satisfaction of liabilities
in the ordinary course of business. The reports of the Company's auditors
concerning the Company's financial statements for each of the two years
ended February 28, 1998 include an explanatory paragraph expressing
substantial doubt with respect to the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Need for Additional Financing. In the event that adequate levels of revenue
are not realized, higher than anticipated costs are incurred in the
expansion of the Company's manufacturing and marketing activities, or
product demand exceeds expected levels, the Company may be required to seek
additional financing. There can be no assurance that any additional
financing thereby necessitated will be available on acceptable terms to the
Company, if at all.
Manufacturing, Distribution and Scale Up Risks. Although the Company has
established numerous customer relationships as well as relationships with
suppliers and manufacturers to conduct operations at higher unit volumes,
difficulties may be experienced in inventory management, product
distribution and other areas until the Company's operations have been scaled
up for some period of time. Since the Company has recently entered into
manufacturing arrangements with FVI and East Texas, difficulties such as
production delays and quality control problems may be encountered. The
Company has switched manufacturers on three occasions, once because of the
Company's capital constraints in meeting minimum production levels, once
because of the manufacturer's quality control problems and most recently in
contemplation of the Company's transaction with ULLICO. Two of these past
incidents caused an inventory shortage which adversely affected the
Company's operations. Stockholders should be aware that unanticipated
problems, many of which may be beyond the Company's control, could be
encountered. These include, but are not limited to, product development,
marketing and customer support problems, increased competition, new
manufacturer learning curve, and lack of credibility with suppliers and
customers. There can be no assurance that the Company's products will
achieve broad based market acceptance or that in view of the extensive
manufacturing, sales and marketing and general overhead costs expected to be
incurred by the Company, that any sales will result in positive cash flow or
profitable operations.
Limited Customer Base; Seasonality. A significant amount of the Company's
past sales have been derived from a relatively small number of customers.
Failure of the Company to expand its customer base could have a material
adverse effect on the Company's results of operations. The Company's
business has been subject to seasonal trends based upon climate, because the
highly durable denim in JD Safety Work Jeans is heavier (and consequently
warmer) than the materials used in conventional work jeans. Sales volume
for JD Safety Work Jeans is higher during the fall and winter seasons and
declines to lower levels during the spring and summer seasons. The Company
believes that sales of JD Safety Uniform Pants and the conventional workwear
now offered by the Company will be somewhat less sensitive to the seasonal
trends which affect JD Safety Work Jeans. The Company believes, therefore,
that as its revenue mix changes to include greater uniform sales volume,
overall seasonality will be reduced, but not eliminated.
Sales and Marketing. The Company has a network of non-exclusive independent
sales representatives. The Company's future growth and profitability will
depend, in part, on the expansion of this representative network and later,
if business conditions dictate, upon the building of an internal sales
force, the hiring of a sufficient number of qualified sales agents and upon
their ability to develop and continue relationships with commercial
accounts.
Dependence on Limited Management; Part Time Chief Financial Officer. The
success of the Company is substantially dependent on the efforts and
abilities of its founder and President, David N. DeBaene, Thomas A. Lisi,
its Executive Vice President of Sales and Marketing, and Anthony P.
Santucci, its Chief Financial Officer. Decisions concerning the Company's
business and its management are and will continue to be made or
significantly influenced by Messrs. DeBaene, Lisi and Santucci. The loss or
interruption of their continued services would have a materially adverse
effect on the Company's business operations and prospects. Neither Mr. Lisi
nor Mr. Santucci are required to devote full-time to the Company. Mr.
Santucci's oral agreement with the Company does not require him to devote
any minimum amount of time to the Company's business, although it does
require him to perform activities related to his office as he shall be
reasonably directed and use his best efforts, skills and abilities to
promote the best interests of the Company. In the event that the Company's
growth is rapid and sustained, the Company may be forced to seek the
services of additional accounting and other administrative personnel or a
full time senior sales executive or additional sales personnel.
Control by Current Stockholders, Officers and Directors. Management and
affiliates of the Company currently beneficially own (including shares they
have the right to acquire) approximately 43% of the outstanding Common
Stock. These persons are and will continue to be able to exercise control
over the election of the Company's directors and the appointment of
officers.
Possible Change in Control. Pursuant to its agreements with ULLICO, the
Series B Preferred Stock holders shall be entitled to elect one director out
of the seven authorized directors of the Company's board and one director
out of the three directors comprising the Company's Compensation Committee.
If certain events occur or do not occur, such as the failure to pay either a
PIK Dividend or cash dividend to the Series B Preferred Stock holders, the
holders of the Series B Preferred Stock shall be entitled, immediately upon
giving written notice, to elect the smallest number of directors that will
constitute a majority of the authorized number of directors. Moreover,
ULLICO holds Series B Preferred Stock which is currently convertible into
500,000 shares of Common Stock, and holds warrants to purchase 799,000
shares of Common Stock. Pursuant to its agreements with ULLICO, in the
event the Company does not reach certain performance milestones, the Series
B Preferred Stock held by ULLICO may be converted into a greater number of
shares of the Company's Common Stock than provided for upon conversion if
the performance targets are met. As a result, ULLICO could potentially
obtain a substantial controlling interest in the Company. There can be no
assurance that the Company will be able to meet the performance targets set
forth in the applicable agreements and, therefore, avoid a possible change
in control of the Company's capital stock. Such a change in control may
result in fundamental changes to the management of the Company and the
character of its business.
Dividend Policy. The Company has never declared or paid a dividend on its
Common Stock, and management expects that a substantial portion of any
future earnings will be retained for expansion or development of the
Company's business. The decision to pay dividends, if any, in the future is
within the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other
relevant factors such as contractual obligations. Management, therefore,
does not anticipate that the Company will pay dividends on the Common Stock
in the foreseeable future.
Significant Competition. The work clothing industry is highly competitive
and dominated by several large companies with substantially greater
financial resources and name recognition than the Company. Many of these
companies are well established and possess substantially greater financial,
technological and personnel resources than the Company. The Company's
ability to compete with such competition will depend on the features,
quality and price of its products, customer service, effective sales and
marketing programs and upon its ability to design innovative products which
meet the needs of the marketplace. No assurances can be given that the
Company will be able to compete successfully.
Limited Proprietary Protection. The Company holds patents issued by the
United States Patent and Trademark Office ("PTO") on two of its proprietary
products - JD Safety Work Jeans[TRADEMARK] and JD Safety Uniform
Pants[TRADEMARK]. No assurance can be given that these patents will provide
any meaningful protection. The Company also has registered trademarks in
the United States on the aforementioned products as well as on the names
Jaque Dubois[REGISTERED TRADEMARK], The Original Jaque Dubois Carpenter
Jean[REGISTERED TRADEMARK] and The Original Jaque Dubois Construction
Jean[REGISTERED TRADEMARK] which the Company is in the process of
discontinuing because of its name change. The Company does not currently
have any registered trademarks for the name JD American Workwear, but has
filed an application with the PTO to register that name. The Company
regards any non-patented and the non-copyrighted technology and know-how
related to its products as proprietary trade secrets and attempts to protect
them with confidentiality agreements and confidentiality provisions in its
employee handbook and in its various agreements. Confidentiality
agreements, however, may be difficult to enforce, and, despite the
precautions the Company has taken, it may be possible for third parties to
copy aspects of the Company's products or, without authorization, to obtain
and use information which the Company regards as proprietary.
Underwriter's Unit Purchase Option and Additional Options and Warrants. In
connection with the Company's January 11, 1996 initial public offering, the
Company issued to the sole underwriter an option to purchase 32,777 Units
exercisable at $8.4375 per unit for a term of three years commencing January
11, 1996 (the "Unit Purchase Option"). In addition, the Company has
reserved shares of its Common Stock for issuance upon exercise of common
stock purchase warrants, including approximately 225,893 warrants issued to
investors in connection with the Company's 1995 private placements
(collectively, the "Placement Warrants"), 505,775 Class A Warrants, 70,093
warrants issued to a former outside Director, and an aggregate of 382,316
(such amount being subject to certain vesting conditions) warrants issued
to two outside consultants of the Company associated with the Underwriter.
None of these warrants are subject to the Plan, and they are not covered by
the Registration Statement of which this Prospectus forms a part. None of
the Placement Warrants or other warrants have been exercised. The holders
of the Placement Warrants and certain of the other warrants have certain
registration rights with respect to the public resale of the Common Stock
underlying the Placement Warrants. In addition, the Company has agreed with
the Underwriter, under certain circumstances, to register the Shares and
Class A Warrants subject to the Unit Purchase Option for distribution to the
public. Exercise of these registration rights could involve a substantial
expense to the Company and could prove a hindrance to future financings.
Shares Under Stock Option Plan; Exercise of Convertible Securities. The
Company has reserved 750,000 shares of its Common Stock for issuance upon
exercise of stock options or similar awards which may be granted pursuant to
the Company's 1995 Stock Option Plan, as amended (hereinafter the "Plan").
At the date hereof, stock grants covering 137,500 shares and options to
purchase an aggregate of 462,500 shares have been issued under the Plan.
Exercise of the Unit Purchase Option, the Placement Warrants, the
outstanding warrants and stock options, and those which have been or may be
granted under the Plan (collectively, the "Convertible Securities"), will
reduce the percentage of Common Stock held by the public stockholders.
Further, the terms on which the Company could obtain additional capital
during the life of the Convertible Securities may be adversely affected, and
it should be expected that the holders of the Convertible Securities would
exercise them at a time when the Company would be able to obtain equity
capital on terms more favorable than those provided for by such Convertible
Securities.
OTC Bulletin Board; Volatility of Price. Currently, the Common Stock is
quoted on the OTC Bulletin Board. The OTC Bulletin Board offers less
trading liquidity than Nasdaq. Quotes for securities traded on the OTC
Bulletin Board are not as widely available in newspapers as are those for
Nasdaq. Therefore, this lack of readily available price information may
impair the ability of purchasers of the Common Stock to resell the
securities offered hereby at or near their purchase price or at any price.
Furthermore, it is unlikely that a lending institution will accept the
Company's securities as pledged collateral for loans even if a regular
trading market develops. The trading price of the Common Stock could be
subject to wide fluctuations in response to quarterly variations in the
Company's operating results, announcements by the Company or other parties,
developments affecting the Company, and other events or factors. In
addition, the stock market has experienced extreme price and volume
fluctuations in recent years. These fluctuations have had a substantial
effect on the market price for many companies, often unrelated to the
operating performance of such companies and may adversely affect the market
price of the Common Stock.
Proceeds of the Offering. The Company will not receive any of the proceeds
of this offering. All of the proceeds of this offering will be received by
the Selling Shareholders. However, the Company will receive the
consideration necessary for the exercise of outstanding options issued under
the Plan, if and when such options are exercised. See "Use of Proceeds."
Possible Future Sales of Shares by the Selling Shareholders. Subject to the
restrictions described under "Risk Factors -- Shares Eligible for Future
Sale" and applicable law, the Selling Shareholders could cause the sale of
any or all the shares of Common Stock they own upon the effectiveness of the
Registration Statement of which this Prospectus forms a part. The Selling
Shareholders may determine to sell shares of Common Stock from time to time
for any reason. Although the Company can make no prediction as to the
effect, if any, that sales of shares of Common Stock owned by Selling
Shareholders would have on the market price prevailing from time to time,
sales of substantial amounts of Common Stock, or the availability of such
shares for sale in the public market, could adversely affect prevailing
market prices of Common Stock.
Shares Eligible for Future Sale. There are 1,984,899 shares of Common Stock
currently issued and outstanding. To the extent they are not held by
"affiliates," the 327,768 shares sold in the Company's initial public
offering, approximately 278,000 shares publicly resold under Rule 144, and
the 750,000 shares of Common Stock offered hereby are eligible for sale in
the public market. All of the remaining issued and outstanding shares of
Common Stock are currently "restricted securities" for purposes of the
Securities Act. Although the Company can make no prediction as to the
effect, if any, that sales of the shares of Common Stock referred to above
would have on the market price prevailing from time to time, sales of
substantial amounts of Common Stock, or the availability of such shares for
sale in the public market could adversely affect prevailing prices of the
Common Stock.
Potential Effect of Penny Stock Rules on Liquidity of Common Stock. If the
Company's securities are not listed on the Nasdaq SmallCap market or certain
other national securities exchanges and the price thereof falls below $5.00,
then subsequent purchases of such securities will be subject to the
requirements of the penny stock rules absent the availability of another
exemption. The Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities listed on certain national securities exchanges or designated for
quotation on the Nasdaq system). The penny stock rules require a broker-
dealer to (i) deliver a standardized risk disclosure document required by
the SEC, (ii) provide the customer with (a) current bid and offer quotations
for the penny stock, (b) the compensation of the broker-dealer and its
salesperson in the transaction, and (c) monthly account statements showing
the market value of each penny stock held in the customer's account, (iii)
make a special written determination that the penny stock is a suitable
investment for the purchaser, and (iv) receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for
a stock that becomes subject to the penny stock rules. If the Company's
securities become subject to the penny stock rules, stockholders may find it
more difficult to sell their securities. If the Company's securities were
subject to the existing or proposed regulations on penny stocks, the market
liquidity for the Company's securities could be severely and adversely
affected by limits on the ability of broker-dealers to sell the Company's
securities and the ability of Selling Shareholders in this offering to sell
their securities in the secondary market.
Limitation on Directors' Liabilities under Delaware Law. Pursuant to the
Company's Certificate of Incorporation and under Delaware law, directors of
the Company are not liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty, except for liability in connection
with a breach of duty of loyalty, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law or any
transaction in which a director has derived an improper personal benefit.
Authorization and Discretionary Issuance of Preferred Stock. The Company's
Certificate of Incorporation authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividends, liquidation, conversion, voting or other
rights which could adversely affect the relative voting power or other
rights of the holders of the Company's Common Stock. In the event of
issuance, the preferred stock could be used, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company, which could have the effect of discouraging bids for the Company
and thereby prevent stockholders from receiving the maximum value for their
shares. Although the Company has no present intention to issue any shares
of its preferred stock, there can be no assurance that the Company will not
do so in the future.
Registration Rights of Series B Stockholder. Pursuant to the Registration
Rights Agreement, the Company, upon written request, is required to file a
registration statement for the public resale of the Common Stock issued on
conversion of the Series B Preferred Stock. The Company is not obligated to
prepare, file and cause to become effective more than two registration
statements, excluding registration statements on Form S-3. The Company is
not obligated to effect more than one registration on Form S-3 during any
six-month period, nor is it obligated to prepare, file and cause to become
effective more than six registration statements on Form S-3. The Company is
not required to effect a registration 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
million (before deducting underwriting discounts and commissions). The
Registration Rights Agreement also provides for incidental registration of
the Company's Common Stock. The Company has also agreed to file, no later
than July 15, 1998, a registration statement to register the public resale
of the Common Stock issued on conversion of the Series A Preferred Stock,
which will automatically convert into Common Stock at the time the
registration statement is declared effective by the SEC.
Conversion of Preferred Shares. The Series A Preferred Stock and the Series
B Preferred Stock are convertible into Common Stock. Either event of
conversion will reduce the percentage of Common Stock held by public
stockholders, thereby diluting their holdings.
USE OF PROCEEDS
The shares which may be sold under this Prospectus will be sold for
the respective accounts of each of the Selling Shareholders. Accordingly,
the Company will not realize any proceeds from the sale of the shares,
except that the Company will derive net proceeds of approximately $1,350,000
if all of the options currently outstanding are exercised. Such funds will
be available to the Company for working capital and general corporate
purposes. No assurance can be given, however, as to when or if any or all
of the options will be exercised. All expenses of the registration of the
Shares will be paid for by the Company. See "Selling Shareholders" and
"Plan of Distribution."
SELLING SHAREHOLDERS
The following table sets forth the name and relationship to the
Company of each Selling Shareholder and the number of shares of Common Stock
which each Selling Shareholder (1) owned of record as of June 12, 1998; (2)
may acquire pursuant to the exercise of a previously granted option or
options under the Plan, all of which Shares may be sold pursuant to this
Prospectus; and (3) the amount of Common Stock to be owned by each Selling
Shareholder assuming the exercise of all options granted under the Plan, and
the sale of all shares acquired upon exercise of such options.
<TABLE>
<CAPTION>
Expected to
Acquire Pursuant Amount of Percentage of
to the Plan and Common Stock to Common Stock
Name and Relationship to the Owned as of Offered Pursuant be Owned After Owned After
Company June 12, 1998 Hereto(1) Exercise and Sales Exercise and Sales
- ---------------------------- ------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Mission Bay Consulting, Inc.
(Consultant)(2) 47,000(3) 350,000 0 0%
<F1> Includes shares that may be acquired within 180 days upon exercise of
options, subject to certain vesting conditions.
<F2> The figures reflect the beneficial ownership of Mission Bay
Consulting, Inc. ("Mission Bay") and its affiliated persons, if any.
The Company shall issue to Mr. Randy Beimel of Mission Bay, in
connection with his consulting services, immediately exercisable
options to purchase up to 300,000 shares, of which 50,000 shares are
subject to option at each of the following exercise prices, with the
expiration dates noted: $3.25 (March 2, 1999); $3.75 (June 2, 1999);
$4.25 (September 2, 1999); $4.75 (December 2, 1999); $5.25 (March 2,
2000; and $5.75 (June 2, 2000).
<F3> Includes 12,000 shares of Common Stock beneficially owned by Mr.
Beimel and 14 shares of Series A Preferred Stock, each convertible
into 2,500 shares of Common Stock.
</TABLE>
PLAN OF DISTRIBUTION
The securities covered by this Prospectus (the "Securities") may be
sold from time to time by the Selling Shareholders, or by pledgees,
transferees or other successors in interest, on the NASD's OTC Bulletin
Board (or such other exchange on which the Securities are listed at the time
of sale), in the over-the-counter market or otherwise, at prices and at
terms then prevailing or at prices related to the then current market price,
or in privately negotiated transactions. The Securities may be sold by
various methods, including, but not limited to one or more of the following;
(a) directly in a privately negotiated transaction; (b) a block trade in
which the broker or dealer so engaged will attempt to sell the Securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (c) purchased by a broker or dealer as principal
and resale by such broker or dealer for its own account pursuant to this
Prospectus; (d) an exchange transaction in accordance with the rules of such
exchange; and (e) ordinary brokers transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers or dealers
to participate. Alternatively, the Selling Shareholders may from time to
time offer the Securities through underwriters, dealers or agents who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Shareholders and/or the purchasers of Securities for
whom they may act as agents. In addition any of the Securities which
qualify for sale pursuant to Rule 144 under the Securities Act, or otherwise
pursuant to an applicable exemption under the Securities Act, may be sold
other than pursuant to this Prospectus.
The Selling Shareholders and any such underwriters, dealers or agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any profit on the sale of the Securities by them and any
discounts, commissions or concessions received by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The
Securities may be sold from time to time in one or more transactions at a
fixed offering price, which may be changed, or at varying prices determined
at the time of sale or at negotiated prices. Such prices will be determined
by the Selling Shareholders or by an agreement between the Selling
Shareholders and underwriters or dealers. Brokers or dealers acting in
connection with the sale of the Securities contemplated by this Prospectus
may receive fees or commissions in connection therewith.
At the time a particular offer of Securities is made, to the extent
required, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Securities being offered and
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriter for Securities
purchased from the Selling Shareholders, any discounts, commissions and
other items constituting compensation from the Selling Shareholders and/or
the Company and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, including the proposed selling price to the
public. Such supplement to this Prospectus and, if necessary, a post-
effective amendment to the Registration Statement of which this Prospectus
is a part, will be filed with the Commission to reflect the disclosure of
additional information with respect to the distribution of the Securities.
The Company will pay all of the expenses incident to the registration and
certain other expenses related to this offering with respect to Securities,
other than underwriting commissions and discounts, normal commission
expenses and brokerage fees, applicable transfer taxes and attorney's fees
of Selling Shareholders' counsel.
Upon the Company's being notified by any Selling Shareholder that any
material arrangement has been entered into with a broker-dealer for the sale
of Securities through a cross or block trade, a supplemental prospectus will
be filed under Rule 424(c) under the Securities Act, setting forth the name
of the participating broker-dealer(s), the number of shares involved, the
price at which such shares were sold by the Selling Shareholder, the
commissions paid or discounts or concessions allowed by the Selling
Shareholder to such broker-dealer(s), and where applicable, that such
broker-dealer(s) did not conduct any investigation to verify the information
set out in this Prospectus.
Any Securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule
rather than pursuant to this Prospectus.
The Selling Shareholders have entered into indemnification agreements
with the Company pursuant to which the Company will be indemnified against
failure by the Selling Shareholders to deliver a Prospectus if required, as
well as against certain civil liabilities, including liabilities under the
Securities Act or the Exchange Act, incurred in connection with any untrue
(or alleged untrue) statement of a material fact or omission of a material
fact in this Registration Statement to the extent such liability relates to
information supplied by the Selling Shareholder for inclusion in the
Registration Statement or Prospectus.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Securities may not enter bids to
purchase, purchase or engage in similar trading or market making activities
with respect to the Securities for a period commencing nine business days
prior to the commencement of such distribution and ending with the
completion of such distribution. In addition, and without limiting the
foregoing, the Selling Shareholders and any person participating in the
distribution of the Securities will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including without
limitation Regulation M, which provisions may limit the timing of purchases
and sales of the Securities by the Selling Shareholders. All of the
foregoing may affect the marketability of the Securities.
In order to comply with certain states' securities laws, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states the Securities
may not be sold unless the Securities have been registered or qualified for
sale in such state, or unless an exemption from registration or
qualification is available and is perfected.
There can be no assurance that the Selling Shareholders will sell any
or all of the Securities offered by them hereby.
PART II
-------
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3 (FORM S-8): DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 33-98682)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended February 28, 1998, as filed and as amended from time to
time.
2. All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since June 12, 1998.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of
this offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing
thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute part of this Prospectus.
ITEM 4 (FORM S-8): DESCRIPTION OF SECURITIES
The Common Stock
Each holder of Common Stock is entitled to one vote per share in the
election of directors and on all other matters submitted to a vote of
stockholders. The Common Stock has no cumulative voting rights. The
holders of shares of Common Stock have no preemptive rights and are entitled
to share ratably in any dividends when, as and if declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision is
made for each class of stock, if any, having preference over the Common
Stock. There are no pre-emptive or conversion rights, and the shares are
not subject to redemption. All shares of Common Stock now outstanding and
shares to be outstanding upon completion of this Offering are, and will be,
fully paid and non-assessable.
The Company's by-laws which govern the rights of stockholders of the
Company in accordance with statutory guidelines set forth under the General
Corporation Law of the State of Delaware, provide that such by-laws may be
amended by a majority vote of the stockholders or by a majority vote of the
Board of Directors. Any amendment of the by-laws by action of the Board of
Directors is subject to further amendment or repeal by a majority vote of
the stockholders.
Stockholders do not have cumulative voting rights for the election of
directors. Therefore, the holders of more than 50% of the shares voting for
the election of directors could, if they chose to do so, elect all of the
directors, and in such event, the holders of the remaining shares would not
be able to elect any directors.
The Company has not paid any dividends since its organization. While
the payment of dividends rests within the discretion of the Board of
Directors, the Company presently intends to retain all earnings, if any, in
the foreseeable future for use in the development of its business. It is
not anticipated that dividends will be paid in the foreseeable future.
Moreover, there can be no assurance that dividends can or will ever be paid.
There are no provisions discriminating against any existing or
prospective holder of the Company's Common Stock as a result of such holder
owning a substantial amount of the Company's Common Stock.
With the exception of the authorized and unissued Preferred Stock,
there is no provision in the Company's charter or by-laws that would have
the effect of delaying, deferring or preventing a change in control in the
Company or that would operate only with respect to an extraordinary
corporate transaction involving the Company, such as a merger,
reorganization, tender offer, sale or transfer of substantially all of the
Company's assets, or liquidation. The Company, in its original Certificate
of Incorporation, opted out of the provisions of Section 203 of the Delaware
General Corporation Law relating to certain business combination
transactions.
Transfer Agent
The Transfer Agent for the Company's Common Stock is Jersey Transfer
and Trust Co., 201 Bloomfield Avenue, P.O. Box 36, Verona, NJ 07044.
ITEM 5 (FORM S-8): INTERESTS OF NAMED EXPERTS AND COUNSEL
The balance sheet of the Company as of February 28, 1997 and the
statements of operations, changes in stockholders' equity and cash flows for
year ended February 28, 1997, incorporated by reference in this Registration
Statement, have been audited by Richard A. Eisner & Company, LLP,
independent auditors. The balance sheet of the Company as of February 28,
1998 and the statements of operations, changes in stockholders' equity and
cash flows for year ended February 28, 1998, incorporated by reference in
this Registration Statement, have been audited by BDO Seidman, LLP,
independent auditors. Richard A. Eisner & Company, LLP's report on the
aforesaid financial statements dated May 30, 1997 is included in the
Company's Annual Report on Form 10-KSB for the year ended February 28, 1997.
BDO Seidman, LLP's report dated May 20, 1998 (June 12, 1998, as to notes 1
and 10), is included in the Company's Annual Report on Form 10-KSB for the
year ended February 28, 1998 (the "1998 Annual Report"). These financial
statements have been incorporated herein by reference in reliance upon the
reports of Richard A. Eisner & Company, LLP and BDO Seidman, LLP, and upon
their authority as experts in accounting and auditing.
The legality of the Common Stock to be offered hereby has been passed
upon for the Company by Reed Smith Shaw & McClay LLP, One Riverfront Plaza,
Newark, NJ 07201. Gerard S. DiFiore, a member of the firm, holds a warrant
to purchase shares of Common Stock.
ITEM 6 (FORM S-8) AND ITEM 15 (FORM S-3): INDEMNIFICATION OF DIRECTORS AND
OFFICERS
The Company is permitted by Delaware law and required by its
Certificate of Incorporation and By-Laws to indemnify any present or former
director, officer, employee or agent against all expenses and liabilities
reasonably incurred by him in connection with any legal action in which such
person is involved by reason of his position with the Company unless he is
adjudged liable for negligence or misconduct in the performance of his
duties as a director, officer, employee or agent.
In addition to such other rights of indemnification as they may have
as directors or as members of the committee (the "Committee") administering
the Company's 1995 Stock Option Plan (the "Plan"), under the terms of the
Plan the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney's fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any option granted thereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Board member is liable for negligence
or misconduct in the performance of his duties.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company
has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
ITEM 7 (FORM S-8): EXEMPTION FROM REGISTRATION CLAIMED
Prior to the effectiveness of the initial filing of this Registration
Statement, options to purchase 28,000 shares of Common Stock issued under
the Plan were issued in a transaction not involving a public offering and
such offer and sale was therefore exempt pursuant to the provision of
Section 4(2) under the Act. Fifty-thousand shares of Common Stock and
options to purchase 350,000 shares of Common Stock were also issued pursuant
to the recent amendment to the Plan prior to the effectiveness of this Post-
Effective Amendment No. 1 in a non-public offering also pursuant to Section
4(2) under the Act.
ITEM 8 (FORM S-8) AND ITEM 16 (FORM S-3): EXHIBITS
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<C> <S>
3.1 Registrant's Certificate of Incorporation, as amended
3.2 Registrant's By-Laws*
4.13 Registrant's 1995 Stock Option Plan, as amended
5.1 Opinion of Reed Smith Shaw & McClay LLP
10.11 Second Amendment to Consulting Agreement with Mission Bay
Consulting,. Inc.
23.1 Consent of BDO Seidman LLP (included on page II-5)
23.2 Consent of Reed Smith Shaw & McClay LLP (included in Exhibit 5.1)
<F*> Incorporated by reference to the Registrant's Form SB-2 Registration
Statement No. 33-98682 filed on October 29, 1995.
</TABLE>
ITEM 9 (FORM S-8) AND ITEM 17 (FORM S-3): UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
JD American Workwear, Inc.
Coventry, Rhode Island
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Post-effective Amendment No. 1 to the
Registration Statement on Form S-3 and Form S-8 of our report dated May 20,
1998 (June 12, 1998, as to notes 1 and 10), relating to the financial
statements of JD American Workwear, Inc. appearing in the Company's Annual
Report on Form 10-KSB for the year ended February 28, 1998.
We also consent to the reference to us under the caption "Interests
of Named Experts and Counsel" included in the Prospectus.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Boston, Massachusetts
July 8, 1998
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and Form S-3. and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Coventry, State of Rhode Island,
on July 7, 1998.
JD AMERICAN WORKWEAR, INC.
By: /s/ David N. DeBaene
---------------------------
David N. DeBaene, President
Know all persons by these presents, that each person whose signature
appears below, constitutes and appoints David N. DeBaene and, jointly and
severally, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendment to this Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8 and Form S-3 and
to file the same with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <S> <C>
/s/ David N. DeBaene Chairman of the Board, President and Chief July 7, 1998
- -------------------- Executive Officer (Principal Executive
David N. DeBaene Officer)
/s/ Anthony P. Santucci Treasurer, Chief Financial Officer, July 7, 1998
- ----------------------- Secretary and Director (Principal
Anthony P. Santucci Financial Officer)
/s/ Thomas A. Lisi Director July 7, 1998
- ------------------
Thomas A. Lisi
/s/ Elizabeth Cotter Director July 7, 1998
- --------------------
Elizabeth Cotter
/s/ Dean M. Denuccio Director July 7, 1998
- --------------------
Dean M. Denuccio
/s/ Steev Panneton Director July 7, 1998
- ------------------
Steev Panneton
/s/ Herbert Canapary Director July 7, 1998
- --------------------
Herbert Canapary
</TABLE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
____________________
JD AMERICAN WORKWEAR, INC.
____________________
Electronically restated solely for purposes of Rule 102(b) of Regulation S-T
(Under Section 101 of the General Corporation Law of the State of Delaware)
* * * * * * * * * * * *
The undersigned, in order to form a corporation for the purposes
hereinafter stated pursuant to the provisions of the General Corporation Law
of the State of Delaware, does HEREBY CERTIFY AS FOLLOWS:
ARTICLE FIRST
NAME
1.1 The name of the corporation (hereinafter called the
"Corporation") is JD AMERICAN WORKWEAR, INC.
ARTICLE SECOND
NAME AND ADDRESS OF REGISTERED AGENT
2.1 The address of the Corporation's registered office in the State
of Delaware is 32 Lockerman Square, Suite L-100, Kent, County of Dover, zip
code 19901. The name of the Corporation's registered agent at such address
is Corporation Service Company.
ARTICLE THIRD
NATURE OF BUSINESS
3.1 The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE FOURTH
CAPITAL STOCK
4.1 Authorized Stock. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is eight million
five hundred thousand (8,500,000) shares, which are to be divided into two
classes as follows:
7,500,000 shares of Common Stock, par value $.002 per share; and
1,000,000 shares of Preferred Stock, par value $.001 per share.
4.2 Designation of Relative Rights, Preferences and Qualifications of
Preferred Stock. The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of this Article,
to provide for the issuance from time to time in one or more series of any
number of the shares of Preferred Stock, and, by filing a certificate
pursuant to the Delaware General Corporation Law, to establish the number of
shares to be included in each such series, and to fix the designation,
relative rights, preferences, qualifications and limitations of the shares
of each such series. The authority of the Board of Directors with respect
to each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and
whether they shall be payable in preference to, or in another relation to,
the dividends payable on any other class or classes or series of stock;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or exchange
rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the manner of selecting shares for redemption if less than all
shares are to be redeemed, the date or dates upon or after which they shall
be redeemable, and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different redemption
dates;
(f) Whether that series shall be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of that
series, and, if so, the terms and amounts of such sinking fund;
(g) The right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issue of any additional stock
(including additional shares of such series or of any other series) and upon
the payment of dividends or the making of other distributions on, and the
purchase or redemption or other acquisition by the Corporation or any
subsidiary of any outstanding stock of the Corporation;
(h) The rights of the shares of that series in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in another
relation to, the comparable rights of any other class or classes or series
of stock; and
(i) Any other relative, participating, optional or other
special rights, qualifications, limitations or restrictions of that series.
4.3 Status of Redeemed Shares of Preferred Stock. Shares of any
series of Preferred Stock which have been redeemed (whether through the
operation of a sinking fund or otherwise) or which, if convertible or
exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of Preferred Stock of the same series and may be reissued as a part
of the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions and the
restrictions on issuance set forth in the resolution or resolutions adopted
by the Board of Directors providing for the issue of any series of Preferred
Stock.
4.4 Common Stock Voting Rights. Subject to the provisions of any
applicable law, or except as otherwise provided by the resolution or
resolutions providing for the issue of any series of Preferred Stock, the
holders of outstanding shares of Common Stock shall exclusively possess
voting power for the election of directors and for all other purposes, each
holder of record of shares of Common Stock being entitled to one vote for
each share of Common Stock standing in his name on the books of the
Corporation.
4.5 Common Stock Dividends. Except as otherwise provided by the
resolution or resolutions providing for the issue of any series of Preferred
Stock, after payment shall have been made to the holders of Preferred Stock
of the full amount of dividends to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of
Preferred Stock, the holders of Common Stock shall be entitled, to the
exclusion of the holders of preferred stock of any and all series, to
receive such dividends as from time to time may be declared by the Board of
Directors.
4.6 Rights of Common Stock Upon Liquidation, Etc. Except as
otherwise provided by the resolution or resolutions providing for the issue
of any series of Preferred Stock, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amount to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall be entitled, to the exclusion of
the holders of Preferred Stock of any and all series, to share, ratably
according to the number of shares of Common Stock held by them, in all
remaining assets of the Corporation available for distribution to its
stockholders.
4.7 Changes in Authorized Stock. The number of authorized shares of
any class may be increased or decreased by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote.
See Certificate of Designation of Series A 10% Mandatorily Convertible
Preferred Stock filed with the Secretary of State of the State of Delaware
on September 16, 1997 and incorporated by reference from Exhibit 4.12 to the
Corporation's Form 10-KSB for the period ended February 28, 1998, filed with
the Securities and Exchange Commission on June 12, 1998.
See Certificate of Designation of Series B 12% Cumulative Convertible
Preferred Stock filed with the Secretary of State of the State of Delaware
on April 9, 1998 and Certificate of Correction of Certificate of Designation
of Series B 12% Cumulative Convertible Preferred Stock filed with the
Secretary of State of the State of Delaware on April 13, 1998, incorporated
by reference from Exhibit 4.2 to Form 8-K filed with the Securities and
Exchange Commission on April 16, 1998.
ARTICLE FIFTH
MANAGEMENT
5.1 The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The Board of
Directors of the Corporation shall have at all times at least one (1)
director. The number of directors shall be determined in the manner
provided in the By-Laws.
ARTICLE SIXTH
DURATION OF EXISTENCE
6.1 The Corporation is to have perpetual existence.
ARTICLE SEVENTH
POWERS OF THE BOARD OF DIRECTORS
7.1 In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation without the assent or vote of the
stockholders.
ARTICLE EIGHTH
ELECTION OF DIRECTORS
8.1 Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
8.2 Meetings of stockholders may be held within or without the State
of Delaware, as the By-laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the
State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Corporation.
ARTICLE NINTH
LIABILITY OF DIRECTORS
9.1 A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability:
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation or the law,
(iii) under Section 174 of the General Corporation Law of
Delaware, or
(iv) for any transaction from which the director derived an
improper personal benefit.
9.2 If the General Corporation Law of Delaware is amended, changed or
modified to authorize corporate action further eliminating or limiting the
personal liability of directors to the Corporation, its stockholders or
third parties, then the liability of the directors of the Corporation shall
be eliminated or limited to the fullest extent permitted by the General
Corporation Law of Delaware, as so amended, changed or modified. Any
repeal, amendment or modification of the provisions of this Article Ninth by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation relating to claims arising in
connection with events which took place prior to the date of such repeal,
amendment or modification.
ARTICLE TENTH
INDEMNIFICATION
10.1 The Corporation shall indemnify any person who was or is a party
or witness, or is threatened to be made a party or witness, to any
threatened, pending or completed action, suit or proceeding (including,
without limitation, an action, suit or proceeding by or in the right of the
Corporation), whether civil, criminal, administrative or investigative
(including a grand jury proceeding), by reason of the fact that he or she
(i) is or was a director or officer of the Corporation or, (ii) as a
director or officer of the Corporation, is or was serving at the request of
the Corporation as a director, officer, employee, agent, partner or trustee
(or in any similar position) of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, to the fullest
extent permitted by the General Corporation Law of Delaware and any other
applicable law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding, or in connection with any appeal thereof;
provided, however, that, except as provided in Section 10.2 of this Article
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such person in connection with an action,
suit or proceeding (or part thereof) initiated by such person only if the
initiation of such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors. Such right to indemnification shall
include the right to payment by the Corporation of expenses incurred in
connection with any such action, suit or proceeding in advance of its final
disposition; provided, however, that the payment of such expenses incurred
by a director or officer in advance of the final disposition of such action,
suit or proceeding shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it should be determined ultimately that such director
or officer is not entitled to be indemnified under this Article or
otherwise.
10.2 Any indemnification or advancement of expenses required under
this Article shall be made promptly, and in any event within sixty (60)
days, upon the written request of the person entitled thereto. If a
determination by the Corporation that the person is entitled to
indemnification pursuant to this Article is required, and the Corporation
fails to respond within sixty (60) days to a written request for indemnity,
the Corporation shall be deemed to have approved such request. If the
Corporation denies a written request for indemnity or advancement of
expenses, in whole or in part, of if payment in full pursuant to such
request is not made within sixty (60) days, the right to indemnification and
advancement of expenses as granted by this Article shall be enforceable by
the person in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his or her
right to indemnification, in whole or in part, in any such action or
proceeding shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim
for advancement of expenses pursuant to this Article where the required
undertaking has been received by the Corporation) that the claimant has not
met the standard of conduct set forth in the General Corporation Law of
Delaware, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel or the stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of
Delaware, nor the fact that there has been an actual determination by the
Corporation (including the Board of Directors, independent legal counsel or
the stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
10.3 The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may
be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office, and shall continue as to person who has ceased to be a director,
officer, employee or agent, and shall inure to the benefit of the heirs,
executors and administrators of such a person. Any repeal or modification
of the provisions of this Article Tenth shall not affect any obligations of
the Corporation or any rights regarding indemnification and advancement of
expenses of a director, officer, employee or agent with respect to any
threatened, pending or completed action, suit or proceeding for which
indemnification or the advancement of expenses is requested, in which the
alleged cause of action accrued at any time prior to such repeal or
modification.
10.4 The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article, the General Corporation Law of Delaware or otherwise.
10.5 If this Article or any portion thereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation
shall nevertheless indemnify each director and officer of the Corporation as
to expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including, without limitation, a
grand jury proceeding and an action, suit or proceeding by or in the right
of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated, by the General
Corporation Law of Delaware or by any other applicable law.
ARTICLE ELEVENTH
COMPROMISE WITH CREDITORS
11.1 Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware, may, in a summary
fashion, upon the application of the Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for the Corporation under the provisions of Section 291 of the
Delaware General Corporation Law or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation
under the provisions of Section 279 of the Delaware General Corporation Law,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or a class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of the Corporation as a consequence of such compromise
or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on this Corporation.
ARTICLE TWELFTH
CERTAIN BUSINESS COMBINATIONS
12.1 The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware, as amended from
time to time, relating to business combinations with interested
stockholders.
EXHIBIT 4.13
JD AMERICAN WORKWEAR, INC.
1995 Stock Option Plan
(As amended as of April 15, 1998)
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the JD American Workwear, Inc. (the
"Company") 1995 Stock Option Plan (the "Plan") is to enable the Company to
offer to its key employees, officers, directors and consultants whose past,
present and/or potential contributions to the Company and its Subsidiaries have
been, are or will be important to the success of the Company, an opportunity to
acquire a proprietary interest in the Company. The various types of long-term
incentive awards which may be provided under the Plan will enable the Company
to respond to changes in compensation practices, tax laws, accounting
regulations and the size and diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations
promulgated thereunder.
(d) "Committee" means the Compensation Committee of the Board or
any other committee of the Board, which the Board may designate to
administer the Plan or any portion thereof. The Committee shall consist
of disinterested persons appointed by the Board who, during the one year
period prior to commencement of service on the Committee, shall not have
participated in, and while serving and for one year after serving on the
Committee, shall not be eligible for selection as persons to whom awards
of Stock may be allocated, or to whom Stock Options may be granted under
the Plan or any other discretionary plan of the Company, under which
participants are entitled to acquire Stock or Stock Options of the
Company. If no Committee is so designated, then all references in this
Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, par
value $.001 per share.
(f) "Company" means JD American Workwear, Inc., a corporation
organized under the laws of the State of Delaware.
(g) "Continuous Status as an Employee" means the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the
Board.
(h) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company and for whom a withholding obligation exists under Section 3401
of the Code by the employing corporation, as applicable. The payment of a
director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "Deferred Stock" means Stock to be received, under an award
made pursuant to Section 8 below, at the end of a specified deferral
period.
(j) "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
(k) "Effective Date" means the date set forth in Section 11.
(l) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder,
means, as of any given date: (i) if the Common Stock is listed on a
national securities exchange or quoted on the NASDAQ National Market or
NASDAQ SmallCap Market, the last sale price of the Common Stock in the
principal trading market for the Common Stock on the last trading day
preceding the date of grant of an award hereunder, as reported by the
exchange or NASDAQ, as the case may be; (ii) if the Common Stock is not
listed on a national securities exchange or quoted on the NASDAQ National
Market or NASDAQ SmallCap Market, but is traded in the over-the-counter
market, the closing bid price for the Common Stock on the last trading
day preceding the date of grant of an award hereunder for which such
quotations are reported by the National Quotation Bureau, Incorporated or
similar publisher of such quotations; and (iii) if the fair market value
of the Common Stock cannot be determined pursuant to clause (i) or (ii)
above, such price as the Committee shall determine, in good faith.
(m) "Holder" means a person who has received an award under the
Plan.
(n) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(o) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(p) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary on or after age 65.
(q) "Other Stock-Based Award" means an award under Section 9
below that is valued in whole or in part by reference to, or is otherwise
based upon, Stock.
(r) "Parent" means any present or future parent corporation of
the Company, as such term is defined in Section 424(e) of the Code.
(s) "Plan" means the JD American Workwear, Inc. 1995 Stock Option
Plan, as hereinafter amended from time to time.
(t) "Restricted Stock" means Stock, received under an award made
pursuant to Section 7 below, that is subject to restrictions under said
Section 7.
(u) "SAR Value" [Intentionally omitted.]
(v) "Stock" means the Common Stock of the Company, par value
$.001 per share.
(w) "Stock Appreciation Right" [Intentionally omitted.]
(x) "Stock Option" or "Option" means any option to purchase
shares of Stock which is granted pursuant to the Plan.
(y) "Stock Reload Option" means any option granted under Section
5.3 as a result of the payment of the exercise price of a Stock Option
and/or the withholding tax related thereto in the form of Stock owned by
the Holder or the withholding of Stock by the Company.
(z) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of
the Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by the Board
or a Committee. Committee members shall serve for such term as the Board may in
each case determine, and shall be subject to removal at any time by the Board.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4.2 hereof, to award, pursuant to the terms of the Plan: (i)
Stock Options, (ii) Restricted Stock; (iii) Deferred Stock; (iv) Stock Reload
Options; and/or (v) Other Stock-Based Awards. For purposes of illustration and
not of limitation, the Committee shall have the authority (subject to the
express provisions of this Plan):
(a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options,
Restricted Stock, Deferred Stock, Stock Reload Options and/or Other
Stock-Based Awards may from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or
limitations, and any vesting, exchange, surrender, cancellation,
acceleration, termination, exercise or forfeiture provisions, as the
Committee shall determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction
with or apart from other equity awarded under this Plan and cash awards
made by the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan
under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated in cash and of
dividend equivalents on deferred amounts denominated in Stock;
(f) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder;
and
(g) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new
awards of any other type for previously granted awards of the same type,
which previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 10 hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any award issued under the Plan (and to
determine the form and substance of all Agreements relating thereto), and
to otherwise supervise the administration of the Plan. Subject to Section
10 hereof, all decisions made by the Committee pursuant to the provisions
of the Plan shall be made in the Committee's sole discretion and shall be
final and binding upon all persons, including the Company, its
Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options (including but limited to Stock Reload Options rights
granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
so exercised, so as to disqualify the Plan under Section 422 of the Code,
or, without the consent of the Holder(s) affected, to disqualify any
Incentive Stock Option under such Section 422.
Section 3. Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 750,000 shares.
Shares of Stock under the Plan may consist, in whole or in part, of authorized
and unissued shares or treasury shares. If any shares of Stock that have been
optioned cease to be subject to a Stock Option, or of any shares of Stock that
are subject to any Restricted Stock, Deferred Stock award, Stock Reload Option
or Other Stock-Based Award granted hereunder are forfeited or any such award
otherwise terminates without a payment being made to the Holder in the form of
Stock, such shares shall again be available for distribution in connection with
future grants and awards under the Plan. Only net shares issued upon a
stock-for-stock exercise (including stock used for withholding taxes) shall be
counted against the number of shares available under the Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of
any merger, reorganization, consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Stock, such substitution or adjustment shall
be made in the aggregate number of shares reserved for issuance under the Plan,
in the number and exercise price of shares subject to outstanding Options, in
the number of shares and in the number of shares subject to, and in the related
terms of, other outstanding awards (including but not limited to awards of
Restricted Stock, Deferred Stock, Stock Reload Options and Other Stock-Based
Awards) granted under the Plan as may be determined to be appropriate by the
Committee in order to prevent dilution or enlargement of rights, provided that
any fractional shares resulting from such adjustment shall be eliminated by
rounding to the next lower whole number of shares.
Section 4. Eligibility.
4.1 General. Awards may be made or granted to key employees, officers,
directors and consultants who are deemed to have rendered or to be able to
render significant services to the Company or its Subsidiaries and who are
deemed to have contributed or to have the potential to contribute to the
success of the Company. No Incentive Stock Option shall be granted to any
person who is not an employee of the Company or a Subsidiary at the time of
grant.
4.2 Directors' Awards. [Intentionally Omitted]
Section 5. Stock Options.
5.1 Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, or with respect to Incentive Stock Options, the
Code, as the Committee may from time to time approve. The Committee shall have
the authority to grant Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options and may be granted alone or in addition to other
awards granted under the Plan. To the extent that any Stock Option intended to
qualify as an Incentive Stock Option does not so qualify, it shall constitute a
separate Non-Qualified Stock Option. An Incentive Stock Option may only be
granted within the ten year period commencing from the Effective Date and may
only be exercised within ten years of the date of grant (or five years in the
case of an Incentive Stock Option granted to optionee ("10% Stockholder") who,
at the time of grant, owns Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or a Parent or Subsidiary.
5.2 Terms and Conditions. Stock Options granted under the Plan shall
be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at
the time of grant and may be less than 100% of the Fair Market Value of
the Stock as defined above; provided, however, that (i) the exercise
price of an Incentive Stock Option shall not be less than 100% of the
Fair Market Value of the Stock (110%, in the case of 10% Stockholder);
and (ii) the exercise price of a Non-Qualified Stock Option shall not be
less than 85% of the Fair Market Value of the Stock as defined above.
(b) Option Term. Subject to the limitations in Section 5.1, the
term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides, in its
discretion, that any Stock Option is exercisable only in installments,
i.e., that it vests over time, the Committee may waive such installment
exercise provisions at any time at or after the time of grant in whole or
in part, based upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise
and waiting period provisions are applicable in a particular case, Stock
Options may be exercised in whole or in part at any time during the term
of the Option, by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, which
shall be in cash or, unless otherwise provided in the Agreement, in
shares of Stock (including Restricted Stock and other contingent awards
under this Plan) or, partly in cash and partly in such Stock, or such
other means which the Committee determines are consistent with the Plan's
purpose and applicable law. Cash payments shall be made by wire transfer,
certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be
required to deliver certificates for shares of Stock with respect to
which an Option is exercised until the Company has confirmed the receipt
of good and available funds in payment of the purchase price thereof.
Payments in the form of Stock shall be valued at the Fair Market Value of
a share of Stock on the date prior to the date of exercise. Such payments
shall be made by delivery of stock certificates in negotiable form which
are effective to transfer good and valid title thereto to the Company,
free of any liens or encumbrances. Subject to the terms of the Agreement,
the Committee may, in its sole discretion, at the request of the Holder,
deliver upon the exercise of a Non-Qualified Stock Option a combination
of shares of Deferred Stock and Common Stock; provided that,
notwithstanding the provisions of Section 8 of the Plan, such Deferred
Stock shall be fully vested and not subject to forfeiture. A Holder shall
have none of the rights of a stockholder with respect to the shares
subject to the Option until such shares shall be transferred to the
Holder upon the exercise of the Option.
(e) Transferability. No Stock Option shall be transferable by the
Holder otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder's lifetime,
only by the Holder.
(f) Termination by Reason of Death. If a Holder's employment by
the Company or a Subsidiary terminates by reason of death, any Stock
Option held by such Holder, unless otherwise determined by the Committee
at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the legal representative of the
estate or by the legatee of the Holder under the will of the Holder, for
a period of one year (or such other greater or lesser period as the
Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter.
(g) Termination by Reason of Disability. If a Holder's employment
by the Company or any Subsidiary terminates by reason of Disability, any
Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be
fully vested and may thereafter be exercised by the Holder for a period
of one year (or such other greater or lesser period as the Committee may
specify at the time of grant) from the date of such termination of
employment or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 12.3
below and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the
Company or a Subsidiary at the time of grant and if such Holder's
employment by the Company or any Subsidiary terminates for any reason
other than death or Disability, the Stock Option shall thereupon
automatically terminate, except that if the Holder's employment is
terminated by the Company or a Subsidiary without cause or due to Normal
Retirement, then the portion of such Stock Option which has vested on the
date of termination of employment may be exercised for the lesser of
three months after termination of employment or the balance of such Stock
Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of
an Incentive Stock Option, the amount of aggregate Fair Market Value of
Stock (determined at the time of grant of the Option) with respect to
which Incentive Stock Options are exercisable for the first time by a
Holder during any calendar year (under all such plans of the Company and
its Parent and any Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any
time offer to buy out a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish and communicate to
the Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock Option shall be
confirmed by, and shall be subject to the terms of, the Agreement
executed by the Company and the Holder.
5.3 Stock Reload Option. The Committee may also grant to the Holder
(concurrently with the grant of an Incentive Stock Option and at or after the
time of grant in the case of a Non-Incentive Stock Option) a Stock Reload
Option up to the amount of shares of Stock held by the Holder for at least six
months and used to pay all or part of the exercise price of an Option and, if
any, withheld by the Company as payment for withholding taxes. Such Stock
Reload Option shall have an exercise price of the Fair Market Value as of the
date of the Stock Reload Option grant. Unless the Committee determines
otherwise, a Stock Reload Option may be exercised commencing one year after it
is granted and shall expire on the date of expiration of the Option to which
the Reload Option is related.
Section 6. Stock Appreciation Rights. [Intentionally omitted.]
Section 7. Restricted Stock.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom, and the time or times at which, grants
of Restricted Stock will be awarded the number of shares to be awarded, the
price (if any) to be paid by the Holder, the time or times within which such
awards may be subject to forfeiture (the "Restriction Period"), the vesting
schedule and rights to acceleration thereof, and all other terms and conditions
of the awards.
7.2 Terms and Conditions. Each Restricted Stock award shall be subject
to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name
of the Holder to whom such Restricted Stock shall have been awarded.
During the Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as defined
below) shall bear a legend to the effect that ownership of the Restricted
Stock (and such Retained Distributions), and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms and
conditions provided in the Plan and the Agreement. Such certificates
shall be deposited by the Holder with the Company, together with stock
powers or other instruments of assignment, each endorsed in blank, which
will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions
that shall be forfeited or that shall not become vested in accordance
with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and
retain all regular cash dividends and other cash equivalent distributions
as the Board may in its sole discretion designate, pay or distribute on
such Restricted Stock and to exercise all other rights, powers and
privileges of a holder of Common Stock with respect to such Restricted
Stock, with the exceptions that (i) the Holder will not be entitled to
delivery of the stock certificate or certificates representing such
Restricted Stock until the Restriction Period shall have expired and
unless all other vesting requirements with respect thereto shall have
been fulfilled; (ii) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other
cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or declared with respect to
the Restricted Stock (and such Retained Distributions will be subject to
the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall have been made, paid
or declared shall have become vested and with respect to which the
Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement
or otherwise established by the Committee with respect to any Restricted
Stock or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction
Period with respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions, terms and conditions
(i) all or part of such Restricted Stock shall become vested in
accordance with the terms of the Agreement, and (ii) any Retained
Distributions with respect to such Restricted Stock shall become vested
to the extent that the Restricted Stock related thereto shall have become
vested. Any such Restricted Stock and Retained Distributions that do not
vest shall be forfeited to the Company and the Holder shall not
thereafter have any rights with respect to such Restricted Stock and
Retained Distributions that shall have been so forfeited.
Section 8. Deferred Stock.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom and the time or times at which grants of Deferred
Stock shall be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of the period (the "Deferral Period") during which,
and the conditions under which receipt of the shares will be deferred, and all
other terms and conditions of the awards. 8.2 Terms and Conditions. Each
Deferred Stock award shall be subject to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 8.2(c) below, where
applicable), share certificates shall be delivered to the Holder, or his
legal representative, representing the number equal to the shares covered
by the Deferred Stock award.
(b) Vesting; Forfeiture. Upon the expiration of the Deferral
Period (or the Additional Deferral Period, where applicable) with respect
to each award of Deferred Stock and the satisfaction of any other
applicable limitations, terms or conditions, such Deferred Stock shall
become vested in accordance with the terms of the Agreement. Any Deferred
Stock that does not vest shall be forfeited to the Company and the Holder
shall not thereafter have any rights with respect to such Deferred Stock
that has been so forfeited.
(c) Additional Deferral Period. A Holder may request to, and the
Committee may at any time, defer the receipt of an award (or an
installment of an award) for an additional specified period or until a
specified event (the "Additional Deferral Period"). Subject to any
exceptions adopted by the Committee, such request must generally be made
at least one year prior to expiration of the Deferral Period for such
Deferred Stock award (or such installment).
Section 9. Other Stock-Based Awards.
9.1 Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan including, without limitation, purchase rights,
shares of Common Stock awarded which are not subject to any restrictions or
conditions, convertible or exchangeable debentures, or other rights convertible
into shares of Common Stock and awards valued by reference to the value of
securities of or the performance of specified Subsidiaries. Other Stock-Based
Awards may be awarded either alone or in addition to or in tandem with any
other awards under this Plan or any other plan of the Company.
9.2 Eligibility. The Committee shall determine the eligible persons to
whom and the time or times at which grants of such awards shall be made, the
number of shares of Common Stock to be awarded pursuant to such awards, and all
other terms and conditions of the awards.
9.3 Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee.
Section 10. Amendment and Termination.
The Board may at any time, and from time to time, amend, alter, suspend
or discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made which would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without his
consent.
Section 11. Term of Plan.
11.1 Effective Date. The Plan shall be effective as of July 1, 1995
("Effective Date"). Any awards granted under the Plan prior to such approval
shall be effective when made (unless otherwise specified by the Committee at
the time of grant), but shall be conditioned upon, and subject to, such
approval of the Plan by the Company's stockholders and no awards shall vest or
otherwise become free of restrictions prior to such approval.
11.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time no further awards may be granted
and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten year period following the Effective Date.
Section 12. General Provisions.
12.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under
the Plan if the Agreement relating thereto is not executed and returned to the
Company within sixty (60) days after the Agreement has been delivered to the
Holder for his or her execution.
12.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a general
creditor of the Company.
12.3 Employees.
(a) Engaging in Competition With the Company. In the event an
employee Holder terminates his employment with the Company or a
Subsidiary for any reason whatsoever, and within one year after the date
thereof accepts employment with any competitor of, or otherwise engages
in competition with, the Company, the Committee, in its sole discretion
may require such Holder to return to the Company the economic value of
any award which was realized or obtained (measured at the date of
exercise, vesting or payment) by such Holder at any time during the
period beginning on that date which is six months prior to the date of
such Holder's termination of employment with the Company.
(b) Termination for Cause. The Committee may, in the event an
employee is terminated for cause, annul any award granted under this Plan
to such employee and, in such event, the Committee, in its sole
discretion, may require such Holder to return to the Company the economic
value of any award which was realized or obtained (measured at the date
of exercise, vesting or payment) by such Holder at any time during the
period beginning on that date which is six months prior to the date of
such Holder's termination of employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan or in
any award hereunder shall be deemed to confer upon any employee of the
Company or any Subsidiary any right to continued employment with the
Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the employment of any
of its employees at any time.
12.4 Investment Representations. The Committee may require each person
acquiring shares of Stock pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in writing that the Holder is
acquiring the shares for investment without a view to distribution thereof.
12.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
12.6 Withholding Taxes. Not later than the date as of which an amount
first becomes includable in the gross income of the Holder for Federal income
tax purposes with respect to any Option or other award under the Plan, the
Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional upon such payment or arrangements
satisfactory to the Company and the Company or the Holder's employer (if not
the Company) shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Holder from
the Company or any Subsidiary.
12.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of Rhode Island (without regard to choice of law provisions).
12.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement
plan of the Company or any Subsidiary and shall not affect any benefits under
any other benefit plan no or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).
12.9 Non-Transferability. Except as otherwise expressly provided in the
Plan, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.
12.10 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness
of a registration statement under the Securities Act of 1933, as amended, and
(ii) the rules and regulations of any securities exchange on which the Stock
may be listed.
12.11 Conflicts. If any of the terms or provisions of the Plan conflict
with the requirements of (with respect to Incentive Stock Options), Section 422
of the Code, then such terms or provisions shall be deemed inoperative to the
extent they so conflict with the requirements of said Section 422 of the Code.
Additionally, if this Plan does not contain any provision required to be
included herein under Section 422 of the Code, such provision shall be deemed
to be incorporated herein with the same force and effect as if such provision
had been set out at length herein.
12.12 Non-Registered Stock. The shares of Stock being distributed under
this Plan have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), or any applicable state or foreign securities laws and the
Company has no obligation to any Holder to register the Stock or to assist
Holder in obtaining an exemption from the various registration requirements, or
to list the Stock on a national securities exchange or inter-dealer quotation
system.
Accepted by the Board
of Directors:
April 15, 1998
JD AMERICAN WORKWEAR, INC.
By: /s/ GERARD S. DIFIORE
---------------------------------
Gerard S. DiFiore, Secretary
EXHIBIT 5.1
July 7, 1998
Board of Directors
JD American Workwear, Inc.
46 Old Flat River Road
Coventry, Rhode Island 02816
Re: JD American Workwear, Inc. (the "Company") Registration
Statement on Form S-8 with Reoffer Prospectus on Form S-3
1995 Stock Option Plan (the "Plan")
Ladies and Gentlemen:
This opinion is delivered to you in connection with Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8 and Form S-3 (the
"Registration Statement"), which will be filed on or about July 7, 1998 by JD
American Workwear, Inc. (the "Company") under the Securities Act of 1933, as
amended (the "Act") for registration under the Act of an additional 500,000
shares (the "S-8 Shares") of Common Stock, $.002 par value, of the Company to
be sold and issued by the Company pursuant to its 1995 Stock Option Plan, as
amended (the "Plan") and, for resale only, of 50,000 shares (the "S-3 Shares")
of Common Stock, $.002 par value, of the Company issued pursuant to the Plan.
We are familiar with the Certificate of Incorporation, the corporate
minute book and the Bylaws of the Company, the Plan and the Registration
Statement. We have examined the proceedings taken and proposed to be taken in
connection with the issuance, sale and payment of consideration for the S-8
Shares; the proceedings taken in connection with the issuance, sale and payment
of consideration for Common Stock previously issued under the Plan; and the
steps taken and proposed to be taken in connection with the resale of the S-3
Shares originally issued pursuant to the Plan. We have also examined such other
documents, records and certificates and made such further investigation as we
have deemed necessary for the purposes of this opinion.
Based upon and subject to the foregoing, we are of the opinion that upon
completion of the proceedings being taken or contemplated by us, as your
counsel, to be taken prior to the issuance of the S-8 Shares pursuant to the
S-8 Prospectus contained in the Registration Statement, and to be taken prior
to the resale of the S-3 Shares pursuant to the S-3 Prospectus contained in the
Registration Statement, and upon completion of the proceedings being taken to
permit such transactions to be carried out in accordance with the securities
laws of the various states where required, the S-8 Shares will be legally
issued, fully paid and nonassessable, and the S-3 Shares are now, and when
resold in accordance with Rule 144(e) of the Securities Act of 1933, as
amended, and in the manner referred to in the Registration Statement will
remain, legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to our firm in the Prospectus
under the caption "Legal Opinion and Experts."
Very truly yours,
/s/ REED SMITH SHAW & McCLAY LLP
REED SMITH SHAW & McCLAY LLP
EXHIBIT 10.11
SECOND AMENDMENT TO CONSULTING AGREEMENT
Second Amendment to Consulting Agreement is dated as of this 3rd day of
June 1998, between JD AMERICAN WORKWEAR, INC., a Delaware corporation, whose
address is 46 Old Flat River Road, Coventry, Rhode Island 02816 (hereinafter
the "Company") and MISSION BAY CONSULTING, INC. a Rhode Island corporation
(hereinafter "Consultant") whose address is 600 Tall Gate Road, Warwick,
Rhode Island, 02886.
WITNESSESTH:
WHEREAS, on April 2, 1997, the Company and Consultant entered into a
certain Consulting Agreement (the "Original Agreement"); and
WHEREAS, on September 18, 1997, the Company and Consultant entered
into an amendment to the Original Agreement pursuant to which the parties
amended and modified the terms of the Original Agreement (the "First
Amendment"); and
WHEREAS, Company has proposed an amendment to the First Amendment in
order to extend the term, modify the compensation terms, and expand the
scope of the Consultant's services thereunder; and the parties have agreed
that the Original Agreement as amended by the First Amendment shall be
modified in accordance with the terms hereof; and
WHEREAS, pursuant to Section 2.1 of the Original Agreement, the
Company issued to Consultant a nonqualified stock option (the "Option")
under the Company's 1995 Stock Option Plan (the "1995 Plan") to purchase an
aggregate of 200,000 shares of the Company's Common Stock, such Option
having been modified by the parties written amendment (the "Amended
Option"); and
WHEREAS, pursuant to the terms and conditions of this Second
Amendment, the parties will enter into a second option agreement ("Second
Option").
NOW, THEREFORE, in consideration of the mutual promises contained
below, and for other good and valuable consideration, the receipt and
sufficiency of which both parties acknowledge, the parties agree as follows:
1. The Consultant shall grant to the Consultant options to purchase
300,000 shares of common stock of JD American Workwear, Inc., par value
$.002 (the "Common Stock") in accordance with the respective exercise prices
and expiration dates set forth as follows:
<TABLE>
<CAPTION>
No. of Shares Exercise Price Expiration Date
------------- -------------- ---------------
<C> <C> <C>
50,000 $3.25 270 days from the date hereof
50,000 $3.75 360 days from the date hereof
50,000 $4.25 450 days from the date hereof
50,000 $4.75 540 days from the date hereof
50,000 $5.25 630 days from the date hereof
50,000 $5.75 720 days from the date hereof
</TABLE>
2. Section 1.1 of the Original Agreement shall be amended to expand
the scope of the services the Consultant shall provide to the Company,
including, but not limited to the following:
(i) managing an upgrade of the Company's current computer
systems, including assessing the current system, researching alternative
system options, presenting a recommendation to management and managing the
implementation of an upgraded network system;
(ii) managing an upgrade of the Company's current
telecommunication systems, including assessing the current system,
researching alternative system options, presenting a recommendation to
management and managing the implementation of an upgraded telecommunications
system;
(iii) overseeing the development of a Company website,
including selecting and working with a web site provider to meet the
Company's design and functional needs;
(iv) assisting management in the implementation of certain
catalog marketing initiatives;
(v) serving as liason to ULLICO member unions for investor
relations purposes; and
(vi) serving as liason to the Company's human resource
consultant for purposes of addressing the Company's staffing and
operational needs, including overseeing recruiting initiatives for executive
sales and marketing employees.
3. Section 3.1 of the Original Agreement shall be amended such that
the Consultant shall continue providing services to the Company pursuant to
the Original Agreement until the earlier of (i) March 30, 2001; or (ii) such
time as this Agreement is earlier terminated pursuant to the provisions of
Section 3.2 of the Original Agreement.
4. As additional compensation for the performance of the services
pursuant to the Original Agreement, as amended by this Second Amendment, the
Company shall grant to the Consultant 50,000 shares of Common Stock under
the Plan.
5. All other terms of the Original Agreement and First Amendment not
amended by the terms hereof shall remain in full force and effect.
6. This Second Amendment to the Original Agreement shall be effective
as of the date first written above.
IN WITNESS WHEREOF, the parties have signed this Amendment as of the
effective date shown above.
JD AMERICAN WORKWEAR, INC.
By: s/David N. DeBaene
--------------------------------
David N. DeBaene, President
MISSION BAY CONSULTING, INC.
By: s/Randolph E. Beimel
--------------------------------
Randolph E. Beimel, President
