Exhibit 10.1
THIS AGREEMENT is entered into as of October 23, 2000 between JD AMERICAN
WORKWEAR, INC., a Delaware corporation (the "Company") and THE UNION LABOR LIFE
INSURANCE COMPANY OF AMERICA, INC., a Maryland corporation ("ULLICO").
W I T N E S S E T H
WHEREAS, the Company and ULLICO are parties to a Securities and Purchase
Agreement dated April 9, 1998 (the "SPA"), pursuant to which ULLICO acquired
2,500 shares, representing 100% of the issued and outstanding shares, of the
Company's Series B Cumulative Convertible Preferred Stock (the "Series B
Preferred Stock"); and
WHEREAS, Section 8.1 of the SPA provides that, unless ULLICO agrees in
writing, the Company shall not issue any other equity security senior to or on a
parity with the Series B Preferred Stock; and
WHEREAS, Section 8.3 of the SPA provides that, unless ULLICO agrees in
writing, the Company will not make any substantial change in the character of
its business; and
WHEREAS, Section 10 of the SPA provides that ULLICO shall have a right of
first refusal to purchase all (or any part of all) Equity Securities that the
Company may from time to time propose to sell and issue after the Closing
Date(as defined in the SPA); and
WHEREAS, the Company filed a Certificate of Designation of the Series B
Preferred Stock with the Secretary of State of Delaware on April 9, 1998 (the
"Certificate of Designation"); and
WHEREAS, the Section 4(a)(1)of the Certificate of Designation provides
that, in the event that the Company enters into any transaction or series of
transactions in which 50% of the Company's voting power is transferred, the
holders of the Series B Preferred Stock shall receive certain consideration as
set forth in said Section 4(a); and
WHEREAS, Section 7(i) of the Certificate of Designation provides that the
Conversion Price of the Series B Preferred Stock, as defined therein, shall be
adjusted in the event that the Company issues or sells Additional Shares of
Common Stock, as defined therein, for an Effective Price less than the existing
Conversion Price (each as defined therein), then the Conversion Price of the
Series B Preferred Stock shall be adjusted as set forth in said Section 7(i);
and
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WHEREAS, Section 8(c) of the Certificate of Designation provides that, so
long as any shares of Series B Preferred Stock remain outstanding, the Company
will not, without the prior written consent of the Holders of a Majority of the
Series B Preferred Stock (each term as defined therein), issue any other equity
security senior to or on a parity with the Series B Preferred Stock;
WHEREAS, ULLICO is the holder of the Company's Warrant No. 1 dated April 9,
1998, pursuant to which ULLICO is entitled to purchase 799,000 shares of the
Company's Common Stock in accordance with the term thereof (the "Existing
Warrant"); and
WHEREAS, the Existing Warrant provides for certain adjustments to the
Existing Warrant in the event that the Company issues additional shares of the
Company's Common Stock as set forth in Section 4(C) of the Existing Warrant; and
WHEREAS, the Company may enter into stock purchase agreements with
established corporations and may sell equity securities to raise capital for
future needs.
NOW THEREFORE, in consideration of the mutual agreements set forth herein
and for other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. ULLICO represents and warrants that it is the holder of 3,208 shares of the
Company's Series B Preferred Stock represented by certificate, which shares
have not been sold, transferred, assigned, pledged or otherwise hypothecated
in any way. ULLICO also stipulates that it is the holder of 1,032,500
warrants to purchase common stock.
2. ULLICO hereby consents to the execution of the Patina Agreement and the
Patina Amendment, Rhode Island Truck and Equipment, Inc and International
Commerce and Finance, Inc., and to the closing of the acquisitions or future
ventures contemplated thereby. In connection therewith, ULLICO hereby
consents to the issuance of the Series C Preferred Stock by JDAW as
consideration for the shares of all the above acquisitions or ventures.
3. ULLICO hereby consents to future Private Placements and the issuance of
shares of the Company's Preferred or Common Stock for capital raising as
long as the stock does not sell for or convert at less than $1.00 per share.
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4. ULLICO hereby expressly waives its Right of First Refusal as set forth in
Section 10 of the SPA as long as all equity is issued at or above $1.00 per
share.
5. ULLICO hereby expressly waives any rights that it may have to receive any
consideration under Section 4(a)and Section 8 of the Certificate of
Designation of 12% Convertible Series B Preferred Stock for all stock to be
issued in conjunction with stock purchase agreements and capital raising
transactions by the Company as long as all equity is issued at or above
$1.00 per share.
6. ULLICO hereby expressly waives any rights that it may have to adjust the
Conversion Price of the Series B Preferred Stock under Section 7(1) of the
Certificate of Designation as a result of the issuance of any stock by the
Company as long as all equity is issued at or above $1.00 per share.
7. ULLICO hereby expressly waives the right for any future warrants that would
normally have been included with any payment of PIK dividends.
8. ULLICO hereby expressly waives any rights that it may have to mandatory
redemption in the Certificate of Designation, Section 5 (c) and 5 (d)(ii).
9. ULLICO agrees to extend the PIK dividend period in the Certificate of
Designation, Section 2 (a)(iii) to the sixth anniversary of contract with
the final payment due on May 31, 2004.The PIK dividend received beginning
with November 30, 2000 will have a conversion rate of $1.00 per share.
10. ULLICO agrees that the dividend rate stipulated to in the SPA shall be
reduced from 12% to 6% per annum beginning June 1, 2000 with the amendment
to the Certificate of Designation to be filed with the appropriate Secretary
of State. ULLICO further agrees that it will receive a cash dividend equal
to six percent in lieu of stock during the PIK Dividend period in the event
that the Series C Preferred has more than 50% of the original amount issued
outstanding at the end of each extended PIK period. In the event that less
than 50% of the originally issued Series C Preferred is outstanding then the
cash dividend required to be paid is on a pro rata basis of outstanding
shares to the original amount of shares issued.
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11. The Redemption Premium shall be redefined to provide an IRR (as defined in
the Certificate of Designation) to 20% of the original investment. The
redemption provision is further amended to allow for the redemption of half
or more of the outstanding Series B Preferred at any time.
12. The signing of this consent shall be considered a permanent waiver of the
rights above by ULLICO, provided that the transactions set forth in
paragraph 2 are completed.
13. In the event of a secondary offering, common stock held by ULLICO whether by
conversion or exercise of warrants shall be included at ULLICO's option.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers as of the day and year
first above written.
JD AMERICAN WORKWEAR, INC.
By: /s/ David N Debaene
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David N. DeBaene, President
THE UNION LABOR LIFE INSURANCE COMPANY
By: /s/Herbert C Canapary
-----------------------------
Name: Herbert C Canapary
Title: V P Investments
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