Document:

Registration rights agreement

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October 14, 2004, by and between THE KINGTHOMASON GROUP, INC., a Nevada corporation, (the "Company"), and FUSION CAPITAL FUND II, LLC (together with it permitted assigns, the “Buyer”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Common Stock Purchase Agreement by and between the parties hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "Purchase Agreement").

WHEREAS:

A.  The Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to issue to the Buyer (i) up to Six Million Dollars ($6,000,000) of the Company's common stock, par value $0.001 per share (the "Common Stock") (the "Purchase Shares"), and (ii) such number of shares of Common Stock as is required pursuant to Section 4(f) of the Purchase Agreement (the "Commitment Shares"); and

B.  To induce the Buyer to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:

1.  DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

a.  "Investor" means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

b.  "Person" means any person or entity including any corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

c.  "Register," "registered," and "registration" refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the "SEC").

 

	Exhibit 10.10
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d.  "Registrable Securities" means the Purchase Shares which have been, or which may from time to time be, issued or issuable upon purchases of the Available Amount under the Purchase Agreement (without regard to any limitation or restriction on purchases) the Signing Shares, issued or issuable to the Investor, and the Commitment Shares issued or issuable to the Investor and any shares of capital stock issued or issuable with respect to the Purchase Shares, the Commitment Shares the Signing Shares, issued or issuable to the Investor, or the Purchase Agreement as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitation on purchases under the Purchase Agreement.

e.  "Registration Statement" means the registration statement of the Company covering the sale of the Registrable Securities.

2.  REGISTRATION.

a.  Mandatory Registration. The Company shall within ten (10) Trading Days from the date hereof file with the SEC the Registration Statement. The Registration Statement shall register only the Registrable Securities and no other securities of the Company. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such registration statement or amendment to such registration statement and any related prospectus prior to its filing with the SEC. Investor shall furnish all information reasonably requested by the Company for inclusion therein. The Company shall use its best efforts to have the Registration Statement or amendment declared effective by the SEC at the earliest possible date. The Company shall use reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the 1933 Act and available for sales of all of the Registrable Securities at all times until the earlier of (i) the date as of which the Investor may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which (A) the Investor shall have sold all the Registrable Securities and no Available Amount remains under the Purchase Agreement (the "Registration Period"). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

b.  Rule 424 Prospectus. The Company shall, as required by applicable securities regulations, from time to time file with the SEC, pursuant to Rule 424 promulgated under the 1933 Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the Registrable Securities under the Registration Statement. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing with the SEC. The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Trading Day from the date the Investor receives the final version of such prospectus. 

c.  Sufficient Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement or file a new registration statement (a ”New Registration Statement”), so as to cover all of such Registrable Securities as soon as practicable, but in any event not later than ten (10) Trading Days after the necessity therefor arises. The Company shall use it reasonable best efforts to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof. 

	Exhibit 10.10
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3.  RELATED OBLIGATIONS.

With respect to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to Section 2(b) including on any New Registration Statement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

a.  The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.

b.  The Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments and supplements thereto at least two (2) Trading Days prior to their filing with the SEC, and not file any document in a form to which Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any New Registration Statement and any amendments or supplements thereto within two (2) Trading Days from the date the Investor receives the final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement or any New Registration Statement.

c.  Upon request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, ten (10) copies of the prospectus included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor.

d.  The Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

	Exhibit 10.10
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e.  As promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to such registration statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a registration statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to any registration statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a registration statement would be appropriate. 

f.  The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

g.  The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.

h.  The Company shall cooperate with the Investor to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to any registration statement and enable such certificates to be in such denominations or amounts as the Investor may reasonably request and registered in such names as the Investor may request.

i.  The Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.

j.  If reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any registration statement.

	Exhibit 10.10
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k.  The Company shall use its reasonable best efforts to cause the Registrable Securities covered by the any registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

l.    Within one (1) Trading Day after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached hereto as Exhibit A.

m.  The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to any registration statement.

4.  OBLIGATIONS OF THE INVESTOR.

a.  The Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any registration statement hereunder. The Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

b.  The Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any registration statement hereunder.

c.  The Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any registration statement(s) covering such Registrable Securities until the Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding anything to the contrary, the Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e) and for which the Investor has not yet settled.

5.  EXPENSES OF REGISTRATION.

All reasonable expenses, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company.

 

	Exhibit 10.10
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6.  INDEMNIFICATION.

a.  To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person, if any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor and each Person, if any, who controls the Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act") (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, "Violations"). The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superceded prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the superceded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 9.

	Exhibit 10.10
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b.  In connection with the Registration Statement or any New Registration Statement, the Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information about the Investor set forth on Exhibit B attached hereto and furnished to the Company by the Investor expressly for use in connection with such registration statement; and, subject to Section 6(d), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant to such registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 9. 

c.  Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

	Exhibit 10.10
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d.  The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

e.  The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7.  CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

8.  REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees, at the Company’s sole expense, to:

a.  make and keep public information available, as those terms are understood and defined in Rule 144;

b.  file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

c.  furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting and or disclosure provisions of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

	Exhibit 10.10
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d.  take such additional action as is requested by the Investor to enable the Investor to sell the Registerable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s Transfer Agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144.

The Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether or not it is pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.

	 	9.	ASSIGNMENT OF REGISTRATION RIGHTS.

The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor, including by merger or consolidation. The Investor may not assign its rights under this Agreement without the written consent of the Company, other than to an affiliate of the Investor controlled by Steven G. Martin or Joshua B. Scheinfeld.

10.  AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.

11.  MISCELLANEOUS.

a.  A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

b.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

	Exhibit 10.10
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If to the Company:

The KingThomason Group, Inc.

2600 Old Crow Canyon Road, #201

San Ramon, CA 94583

Telephone:        925-905-5630

Facsimile:          310-388-1187

Attention:         Thomas E. King III

 

With a copy to:

Fuller Tubb Pomeroy and Stokes

201 Robert S. Kerr Ave., Suit 1000

Oklahoma City, OK 73102

Telephone:        405-235-2575

Facsimile:           405-232-8384

Attention:          Thomas J. Kenan, Esq

If to the Investor:

Fusion Capital Fund II, LLC

222 Merchandise Mart Plaza, Suite 9-112

Chicago, IL 60654

Telephone:        312-644-6644

Facsimile:           312-644-6244

Attention:          Steven G. Martin

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Trading Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

c.  Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d.  The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting the City of Chicago, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

	Exhibit 10.10
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e.  This Agreement, and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

f.  Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

g.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

h.  This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

i.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

j.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

k.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

* * * * * *

	Exhibit 10.10
	 	 	Page 11 of 12 Pages
	

	 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

 

                                        THE COMPANY:

	 	 	 
	 	THE KINGTHOMASON GROUP, INC.
	 
 	 
 	 
 
		By:  	/s/ Thomas E. King III
	 	

Thomas E. King III
	 	President 

 

 

 

                                        BUYER:

	 	 	 
	 	FUSION CAPITAL FUND II, LLC
	 	BY: FUSION CAPITAL PARTNERS, LLC
	 	BY: SGM HOLDINGS CORP.
	 
 	 
 	 
 
		By:  	/s/ Steven G. Martin
	 	

Steven G. Martin
	 	President

 

 

	Exhibit 10.10
	 	 	Page 12 of 12 Pages<PAGE>

                                                                Exhibit 10.1

                            ANGELICA CORPORATION

                            EMPLOYMENT AGREEMENT

         This agreement (this "Agreement") has been entered into this 30th
day of September, 2004, by and between Angelica Corporation, a Missouri
corporation (the "Company"), and Richard M. Fiorillo, an individual (the
"Employee").

         WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and its stockholders to retain
the Employee in the employ of the Company as Vice President and Chief
Financial Officer of the Company's Textile Services business operations as
of the Effective Date (as defined below); and

         WHEREAS, this Agreement contains the terms and conditions that have
been negotiated by the Company and the Employee as an inducement to the
Employee to continue in the employment of the Company and as an incentive to
reinforce and encourage the continued attention and dedication of the
Employee to the Company and its business throughout the Employment Period
(as defined below), even in the face of a potential Change in Control;

         NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereby agree as follows:

SECTION 1:        DEFINITIONS AND CONSTRUCTION.

         1.1      DEFINITIONS. For purposes of this Agreement, the following
words and phrases, whether or not capitalized, shall have the meanings
specified below, unless the context plainly requires a different meaning.

                  1.1(a)   "ACCRUED OBLIGATIONS" has the meaning set forth in
                  Section 4.1(a) of this Agreement.

                  1.1(b)   "ANNUAL BONUS" has the meaning set forth in
                  Section 2.4(b) of this Agreement.

                  1.1(c)   "ANNUAL BASE SALARY" has the meaning set forth in
                  Section 2.4(a) of this Agreement.

                  1.1(d)   "BOARD" means the Board of Directors of the Company.

                  1.1(e)   "CAUSE" has the meaning set forth in Section 3.3
                  of this Agreement.

                                     1

                  1.1(f)   "CHANGE IN CONTROL" means:

                           (i)   The acquisition by any individual, entity or
                           group, or a Person (within the meaning of Section
                           13(d)(3) or 14(d)(2) of the Exchange Act) of
                           ownership of 20% or more of either (a) the then
                           outstanding shares of common stock of the Company
                           (the "Outstanding Company Common Stock") or (b)
                           the combined voting power of the then outstanding
                           voting securities of the Company entitled to vote
                           generally in the election of directors (the
                           "Outstanding Company Voting Securities"); or

                           (ii)  Individuals who, as of the date hereof,
                           constitute the Board (the "Incumbent Board")
                           cease for any reason to constitute at least a
                           majority of the Board; provided, however, that
                           any individual becoming a director subsequent to
                           the date hereof whose election, or nomination for
                           election, by the Company's stockholders was
                           approved by a vote of at least a majority of the
                           directors then comprising the Incumbent Board
                           shall be considered as though such individual
                           were a member of the Incumbent Board, but
                           excluding, as a member of the Incumbent Board,
                           any such individual whose initial assumption of
                           office occurs as a result of either an actual or
                           threatened election contest (as such terms are
                           used in Rule l4a-11 of Regulation l4A promulgated
                           under the Exchange Act) or other actual or
                           threatened solicitation of proxies or consents by
                           or on behalf of a Person other than the Board; or

                           (iii) Approval by the stockholders of the Company
                           of a reorganization, merger or consolidation, in
                           each case, unless, following such reorganization,
                           merger or consolidation, (1) more than 50% of,
                           respectively, the then outstanding shares of
                           common stock of the corporation resulting from
                           such reorganization, merger or consolidation and
                           the combined voting power of the then outstanding
                           voting securities of such corporation entitled to
                           vote generally in the election of directors is
                           then beneficially owned, directly or indirectly,
                           by all or substantially all of the individuals
                           and entities who were the beneficial owners,
                           respectively, of the Outstanding Company Common
                           Stock and Outstanding Company Voting Securities
                           immediately prior to such reorganization, merger
                           or consolidation in substantially the same
                           proportions as their ownership, immediately prior
                           to such reorganization, merger or consolidation,
                           of the Outstanding Company Common Stock and
                           Outstanding Company Voting Securities, as the
                           case may be, (2) no Person beneficially owns,
                           directly or indirectly, 20% or more of,
                           respectively, the then outstanding shares of
                           common stock of the corporation resulting from
                           such reorganization, merger or consolidation or
                           the combined voting power of the then outstanding
                           voting securities of such corporation, entitled
                           to vote generally in the election of directors,
                           and (3) at least a majority of the members of the
                           board of directors of

                                     2

                           the corporation resulting from such reorganization,
                           merger or consolidation were members of the
                           Incumbent Board at the time of the execution of the
                           initial agreement providing for such reorganization,
                           merger or consolidation; or

                           (iv)  Approval by the stockholders of the Company
                           of (a) a complete liquidation or dissolution of
                           the Company or (b) the sale or other disposition
                           of all or substantially all of the assets of the
                           Company, other than to a corporation, with
                           respect to which following such sale or other
                           disposition, (1) more than 50% of, respectively,
                           the then outstanding shares of common stock of
                           such corporation and the combined voting power of
                           the then outstanding voting securities of such
                           corporation entitled to vote generally in the
                           election of directors is then beneficially owned,
                           directly or indirectly, by all or substantially
                           all of the individuals and entities who were the
                           beneficial owners, respectively, of the
                           Outstanding Company Common Stock and Outstanding
                           Company Voting Securities immediately prior to
                           such sale or other disposition in substantially
                           the same proportion as their ownership,
                           immediately prior to such sale or other
                           disposition, of the Outstanding Company Common
                           Stock and Outstanding Company Voting Securities,
                           as the case may be, (2) no Person beneficially
                           owns, directly or indirectly, 20% or more of,
                           respectively, the then outstanding shares of
                           common stock of such corporation and the combined
                           voting power of the then outstanding voting
                           securities of such corporation entitled to vote
                           generally in the election of directors and (3) at
                           least a majority of the members of the board of
                           directors of such corporation were members of the
                           Incumbent Board at the time of the execution of
                           the initial agreement or action of the Board
                           providing for such sale or other disposition of
                           assets of the Company.

                  1.1(g)   "CHANGE IN CONTROL DATE" means the date that a
                  Change in Control first occurs.

                  1.1(h)   "COMPANY" has the meaning set forth in the first
                  paragraph of this Agreement and, with regard to
                  successors, in Section 6.2 of this Agreement.

                  1.1(i)   "DATE OF TERMINATION" has the meaning set forth
                  in Section 3.8 of this Agreement.

                  1.1(j)   "DISABILITY" has the meaning set forth in
                  Section 3.2 of this Agreement.

                  1.1(k)   "DISABILITY EFFECTIVE DATE" has the meaning set
                  forth in Section 3.2 of this Agreement.

                  1.1(l)   "EFFECTIVE DATE" means the date of this Agreement.

                                     3

                  1.1(m)   "EMPLOYMENT PERIOD" means the period beginning on
                  the Effective Date and ending on the Date of Termination.

                  1.1(n)   "EXCHANGE ACT" means the Securities Exchange Act of
                  1934, as amended.

                  1.1(o)   "GOOD REASON" has the meaning set forth in
                  Section 3.4 of this Agreement.

                  1.1(p)   "INCUMBENT BOARD" has the meaning set forth in
                  Section 1.1(f)(ii) of this Agreement.

                  1.1(q)   "NOTICE OF TERMINATION" has the meaning set forth
                  in Section 3.7 of this Agreement.

                  1.1(r)   "OTHER BENEFITS" has the meaning set forth in
                  Section 4.3 of this Agreement.

                  1.1(s)   "OUTSTANDING COMPANY COMMON STOCK" has the meaning
                  set forth in Section 1.1(f)(i) of this Agreement.

                  1.1(t)   "OUTSTANDING COMPANY VOTING SECURITIES" has the
                  meaning set forth in Section 1.1(f)(i) of this Agreement.

                  1.1(u)   "PERSON" means any "person" within the meaning of
                  Sections 13(d) and 14(d) of the Exchange Act.

         1.2      GENDER AND NUMBER. When appropriate, pronouns in this
Agreement used in the masculine gender include the feminine gender, words in
the singular include the plural, and words in the plural include the
singular.

         1.3      HEADINGS. All headings in this Agreement are included solely
for ease of reference and do not bear on the interpretation of the text.
Accordingly, as used in this Agreement, the terms "Article" and "Section"
mean the text that accompanies the specified Article or Section of the
Agreement.

         1.4      APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its conflict of law principles.

SECTION 2:        TERMS AND CONDITIONS OF EMPLOYMENT.

         2.1      PERIOD OF EMPLOYMENT; TERM OF AGREEMENT. The Employee shall
remain in the employ of the Company throughout the Employment Period in
accordance with the terms and provisions of this Agreement. Either party to
this Agreement may terminate the Employment Period (and the Employee's
employment with the Company) at any time by giving the other party a Notice of

                                     4

Termination, subject only to the obligation of the Company to pay the
benefits to the Employee as specified in Section 4 of this Agreement. The
term of this Agreement shall begin as of the Effective Date and shall end on
the Date of Termination.

         2.2      POSITIONS AND DUTIES.

                  2.2(a)   Throughout the Employment Period, the Employee
                  shall serve as Vice President and Chief Financial Officer
                  of the Company's Textile Services business, subject to the
                  reasonable directions of the principal executive officer
                  of the Textile Services business and the principal
                  executive officer and the principal financial officer of
                  the Company. The Employee shall have such authority and
                  shall perform such duties as shall be specified by the
                  principal executive officer of the Textile Services
                  business and the principal executive officer and the
                  principal financial officer of the Company from time to
                  time.

                  2.2(b)   Throughout the Employment Period (but excluding any
                  periods of vacation and sick leave to which the Employee
                  is entitled), the Employee shall devote reasonable
                  attention and time during normal business hours to the
                  business and affairs of the Company and shall use his
                  reasonable best efforts to perform faithfully and
                  efficiently such responsibilities as are assigned to him
                  under or in accordance with this Agreement; provided that,
                  it shall not be a violation of this Section 2.2(b) for the
                  Employee to (i) serve on corporate, civic or charitable
                  boards or committees, (ii) deliver lectures or fulfill
                  speaking engagements, or (iii) manage personal
                  investments, so long as such activities do not
                  significantly interfere with the performance of the
                  Employee's responsibilities as an employee of the Company
                  in accordance with this Agreement or violate the Company's
                  conflict of interest policy as is in effect at such times.

         2.3      SITUS OF EMPLOYMENT. Throughout the Employment Period, the
Employee's services shall be performed at the Company's divisional
headquarters offices located in the greater Atlanta, Georgia metropolitan
area.

         2.4      COMPENSATION.

                  2.4(a)   ANNUAL BASE SALARY. The Employee will initially
                  receive an annual base salary ("Annual Base Salary") of
                  One Hundred Fifty Thousand Dollars ($150,000.00), which
                  shall be paid in equal or substantially equal semi-monthly
                  installments. During the Employment Period, the Annual
                  Base Salary payable to the Employee shall be reviewed at
                  least once annually and shall be increased at the
                  discretion of the Company but shall not be reduced without
                  the consent of the Employee.

                                     5

                  2.4(b)   ANNUAL INCENTIVE BONUSES. In addition to Annual
                  Base Salary, the Employee will be entitled to earn an
                  incentive bonus on an annual basis (the "Annual Bonus")
                  during the Employment Period. The Board will set, on or
                  before the 90th day of such fiscal year, the criteria
                  which will be required to be achieved by the Employee
                  during the fiscal year to earn all or a specified
                  percentage of his Annual Bonus. The maximum Annual Bonus
                  that the Employee may earn is 60%, and the target bonus is
                  30%, of the Employee's salary paid during the fiscal year.
                  If a Change in Control occurs, the Employee will receive a
                  lump-sum payment on or before the Change in Control Date
                  equal to the Employee's maximum Annual Bonus, prorated
                  with the numerator being the number of months in the
                  fiscal year to the Change in Control Date (including the
                  month in which the Change in Control occurs as a full
                  month) and the denominator being 12. This payment will be
                  in lieu of any right of the Employee to receive an Annual
                  Bonus for the fiscal year in which the Change in Control
                  occurs.

                  2.4(c)   LONG-TERM INCENTIVE PLAN AWARDS. The Employee will
                  be entitled to earn long-term incentive bonus awards
                  payable in accordance with a plan established by the Board
                  or the Compensation and Organization Committee (the
                  "Long-Term Bonus"). The Employee will be eligible to earn
                  a Long-Term Bonus during the Employment Period on the
                  basis of the achievement of performance goals during a
                  three-year performance period. The Board will set, on or
                  before the 90th day of such fiscal year, the performance
                  goals to be achieved during the performance period that is
                  then commencing in order for the Employee to earn all or a
                  specified portion of his Long-Term Bonus. The Long-Term
                  Bonus amount that may be earned by the Employee will be
                  set at 35% of the Employee's then-current Annual Base
                  Salary.

                  2.4(d)   SAVINGS AND DEFERRED COMPENSATION PLANS. Throughout
                  the Employment Period, the Employee shall be entitled to
                  participate in all savings, deferred compensation and
                  retirement plans generally available to other peer
                  officers of the Company, including the Company's 401(k)
                  Plan and the Mirror 401(k) and Deferred Compensation Plan.

                  2.4(e)   WELFARE BENEFIT PLANS. Throughout the Employment
                  Period, the Employee and/or the Employee's family, as the
                  case may be, shall be eligible for participation in and
                  shall receive all benefits under welfare benefit plans,
                  practices, policies and programs provided by the Company
                  (including, without limitation, medical, prescription,
                  dental, disability, salary continuance, employee life,
                  group life, accidental death and travel accident insurance
                  plans and programs) to the extent generally available to
                  other peer employees of the Company.

                  2.4(f)   BUSINESS EXPENSES. Throughout the Employment
                  Period, the Employee shall be entitled to receive prompt
                  reimbursement for all reasonable business expenses
                  incurred by the Employee in the conduct of the business of
                  the Company (including

                                     6

                  travel and entertainment expenses) in accordance with the
                  policies, practices and procedures generally applicable
                  within the Company.

                  2.4(g)   OFFICE AND FURNISHINGS. Throughout the Employment
                  Period, the Employee shall be entitled to an office or
                  offices of a size and with furnishings and other
                  appointments commensurate with his office, duties and
                  responsibilities with the Company.

                  2.4(h)   VACATION. Throughout the Employment Period, the
                  Employee shall be entitled to paid vacation equal to three
                  (3) weeks per year.

SECTION 3:        TERMINATION OF EMPLOYMENT.

         3.1      DEATH. The Employee's employment shall terminate
automatically upon the Employee's death during the Employment Period.

         3.2      DISABILITY. If the Company determines in good faith that the
Disability of the Employee has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), the Company may
give to the Employee written notice in accordance with Section 7.2 of its
intention to terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the thirty (30) days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean that the Employee has been unable to perform the
services required of the Employee under this Agreement on a full-time basis
for a period of one hundred eighty (180) consecutive regular business days
by reason of a physical and/or mental condition. "Disability" shall be
deemed to exist when certified by a physician selected by the Company and
acceptable to the Employee or the Employee's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The Employee
will submit to such medical or psychiatric examinations and tests as such
physician deems necessary to make any such Disability determination.

         3.3      TERMINATION FOR CAUSE. The Company may terminate the
Employee's employment during the Employment Period for "Cause," which shall
mean termination based upon: (a) the Employee's willful and continued
failure to substantially perform his duties with the Company (other than as
a result of incapacity due to physical or mental condition), after a written
demand for substantial performance is delivered to the Employee by the
Company, which specifically identifies the manner in which the Employee has
not substantially performed his duties, (b) the Employee's commission of an
act constituting a criminal offense involving moral turpitude, dishonesty,
or breach of trust, or (c) the Employee's material breach of any provision
of this Agreement. For purposes of this Section 3.3, no act or failure to
act on the Employee's part shall be considered "willful" unless done or
omitted to be done without good faith on the part of the Employee and
without the Employee's reasonable belief that the act or omission was in the
best interest of the Company.

                                     7

         3.4      GOOD REASON. The Employee may terminate his employment with
the Company during the Employment Period for "Good Reason," which shall
mean:

                  3.4(a)   the assignment to the Employee of any duties
                  inconsistent in any respect with the Employee's position
                  (including status, offices, titles and reporting
                  requirements), authority, duties or responsibilities as
                  contemplated by Section 2.2(a) or any other action by the
                  Company which results in a diminution in such position,
                  authority, duties or responsibilities, excluding for this
                  purpose any action not taken in bad faith by the Company
                  and which the Company remedies promptly after receipt of
                  notice thereof given by the Employee;

                  3.4(b)   (i) the failure by the Company to continue in
                  effect any benefit or compensation plan, stock ownership
                  plan, life insurance plan, health and accident plan or
                  disability plan to which the Employee is entitled as
                  specified in Section 2.4, provided that the Company may
                  amend, modify or replace any such plan or plans as long as
                  the Employee is entitled to benefits under the amended,
                  modified or replaced plan or plans that are substantially
                  similar to those of the plan or plans so amended, modified
                  or replaced, (ii) the taking of any action by the Company
                  which would adversely affect the Employee's participation
                  in, or materially reduce the Employee's benefits under,
                  any plans described in Section 2.4, or deprive the
                  Employee of any benefits enjoyed by the Employee as
                  described in Section 2.4(f) and (g), or (iii) the failure
                  by the Company to provide the Employee with paid vacation
                  to which the Employee is entitled as described in Section
                  2.4(h);

                  3.4(c)   the Company's requiring the Employee to be based at
                  any office or location other than that described in
                  Section 2.3;

                  3.4(d)   a material breach by the Company of any provision
                  of this Agreement;

                  3.4(e)   any purported termination by the Company of the
                  Employee's employment otherwise than as expressly
                  permitted by this Agreement; or

                  3.4(f)   in connection with a Change in Control, the failure
                  of a successor of the Company to expressly assume and
                  agree to perform this Agreement pursuant to the provisions
                  of Section 6.2 of this Agreement prior to the Change in
                  Control Date; provided, however, that a termination of
                  employment by the Employee: (A) subsequent to an express
                  assumption and agreement to perform this Agreement by such
                  successor on or after the Change in Control Date, or (B)
                  subsequent to a date that is two years after a Change in
                  Control Date, shall not be deemed to be for "Good Reason"
                  under this subsection.

                                     8

         For purposes of this Section, any good faith determination of "Good
Reason" made by the Employee shall be conclusive unless and until such
determination is overturned by a court of competent jurisdiction.

         3.5      VOLUNTARY TERMINATION BY THE EMPLOYEE. The Employee may
voluntarily terminate his employment with the Company for any reason or for
no reason at any time during the Employment Period.

         3.6      TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the Employee's employment with the Company for any reason or for
no reason, without citing Cause, at any time during the Employment Period,
subject to the provisions of Section 4 of this Agreement.

         3.7      NOTICE OF TERMINATION. Any termination by the Company or by
the Employee shall be communicated by Notice of Termination given in accordance
with Section 7.2 to the other party. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined in Section 3.8 hereof) is other than the date of
receipt of such notice, specifies the Date of Termination. The failure by
the Employee or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Employee or the Company hereunder or
preclude the Employee or the Company from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.

         3.8      DATE OF TERMINATION. "Date of Termination" means (i) if the
Employee's employment is terminated by the Company for Cause or any other
reason, the date of receipt by the Employee of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Employee's
employment is terminated by reason of death or Disability, the date of death
of the Employee or the Disability Effective Date, as the case may be, or
(iii) if the Employee's employment is terminated by the Employee for Good
Reason, the date specified in the Notice of Termination which date shall not
be more than thirty (30) or less than fifteen (15) days after the receipt of
such notice; or (iv) if the Employee's employment is terminated by the
Employee voluntarily (either prior to or after a Change in Control Date),
the date that is specified in the Notice of Termination.

SECTION 4:        CERTAIN BENEFITS UPON TERMINATION.

         4.1      TERMINATION WITHOUT CAUSE OR FOR GOOD REASON NOT IN CONNECTION
WITH A CHANGE IN CONTROL. If, prior to a Change in Control Date during the
Employment Period (except in the event that one of the following
terminations of employment occurs within the six-month period prior to the
earlier of (a) a Change in Control Date or (b) the execution of a definitive
agreement or contract that eventually results in a Change in Control, which
shall result in the payment of severance benefits set forth in Section 4.2
of this Agreement), (i) the Company shall terminate the Employee's
employment without Cause, or

                                     9

(ii) the Employee shall terminate his employment for Good Reason, the
Employee shall be entitled to the payment of the benefits provided below:

                  4.1(a)   ACCRUED OBLIGATIONS. Within thirty (30) days after
                  the Date of Termination, the Company shall pay to the
                  Employee the sum of (i) the Employee's Annual Base Salary
                  through the Date of Termination to the extent not
                  previously paid, (ii) the accrued benefit payable to the
                  Employee under any compensation plan, program or
                  arrangement in which the Employee is a participant subject
                  to the computation of benefits provisions of such plan,
                  program or arrangement, and (iii) any accrued vacation
                  pay; in each case to the extent not previously paid (the
                  "Accrued Obligations").

                  4.1(b)   ANNUAL BASE SALARY CONTINUATION. For a period of
                  twelve (12) months beginning in the month immediately
                  subsequent to the month in which the Date of Termination
                  occurs, the Company shall pay to the Employee, on a
                  semi-monthly basis consistent with its then-existing
                  payroll practices, an amount equal to one/twenty-fourth
                  (1/24th) of the Employee's then-current Annual Base
                  Salary; provided, however, that during months seven (7)
                  through twelve (12) of such period, the amount of such
                  payments shall be reduced by the amounts, if any, earned
                  by the Employee during such months as a result of
                  self-employment and/or employment with another employer.
                  As a condition of payment during months seven through
                  twelve, the Employee agrees to provide the Company with
                  verification, reasonably acceptable to the Company,
                  substantiating the amounts of any such earnings or the
                  Employee's lack of other employment, as the case may be.
                  The Company at any time may elect to pay the balance of
                  such payments then remaining in a lump sum, without
                  discount.

         4.2      BENEFITS UPON TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
IN CONNECTION WITH A CHANGE IN CONTROL. If (a) a Change in Control occurs
during the Employment Period and within two (2) years after the Change in
Control Date (i) the Company shall terminate the Employee's employment
without Cause, or (ii) the Employee shall terminate employment with the
Company for Good Reason, OR, alternatively, (b) if one of the
above-described terminations of employment occurs within the six-month
period prior to the earlier of (i) a Change in Control Date or (ii) the
execution of a definitive agreement or contract that eventually results in a
Change in Control, then the Employee shall become entitled to the payment of
the benefits as provided below as of either (y) the Date of Termination, in
the case where the sequence of the requisite events is as set forth in
subsection (a) above or (z) the Change in Control Date, in the case where
the sequence of the requisite events occurred as set forth in subsection (b)
above (the relevant date for purposes of entitlement to the benefits as set
forth in this Section 4.2 is hereinafter referred to as the "Entitlement
Date"):

                  4.2(a)   ACCRUED OBLIGATIONS. Within thirty (30) days after
                  the Entitlement Date, the Company shall pay to the
                  Employee the Accrued Obligations.

                  4.2(b)   SEVERANCE AMOUNT. Within thirty (30) days after the
                  Entitlement Date, the Company shall pay to the Employee as
                  severance pay in a lump sum, in cash, an amount

                                     10

                  equal to one (1) times an amount equal to the Employee's
                  then-current Annual Base Salary.

                  4.2(c)   STOCK OPTIONS AND RESTRICTED STOCK. To the extent
                  not otherwise provided for under the terms of the
                  Company's stock-based compensation plans or the Employee's
                  award or grant agreements, all stock options and
                  restricted stock held by the Employee that have not
                  expired in accordance with their respective terms shall
                  fully vest as of the Entitlement Date.

         4.3      DEATH. If the Employee's employment is terminated by reason
of the Employee's death during the Employment Period (either prior or
subsequent to the Change in Control Date), this Agreement shall terminate
without further obligations to the Employee's legal representatives under
this Agreement, other than for (i) payment of Accrued Obligations (which
shall be paid to the Employee's estate or beneficiary, as applicable, in a
lump sum in cash within thirty (30) days of the Date of Termination) and
(ii) the timely payment or provision of such other benefits required to be
paid or provided by the Company to the Employee or the Employee's family
under any plan, program, policy, practice, contract or agreement of the
Company generally provided to other peer employees and their families
("Other Benefits"), including all such benefits payable in the event of
death.

         4.4      DISABILITY. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period (either
prior or subsequent to a Change in Control), this Agreement shall terminate
without further obligations to the Employee, other than for (i) payment of
Accrued Obligations (which shall be paid to the Employee in a lump sum in
cash within thirty (30) days of the Date of Termination) and (ii) the timely
payment or provision of Other Benefits including all such benefits payable
in the event of Disability.

         4.5      TERMINATION FOR ANY OTHER REASONS. If the Employee's
employment shall be terminated for Cause or by the Employee voluntarily
(either prior or subsequent to a Change in Control Date), this Agreement
shall terminate without further obligations to the Employee other than the
obligation to pay to the Employee the Accrued Obligations. In such case, all
of the Employee's Accrued Obligations shall be paid to the Employee in a
lump sum in cash within thirty (30) days of the Date of Termination.

         4.6      ENTIRE AGREEMENT; PRIOR AGREEMENTS AND BENEFITS UNDER OTHER
PLANS SUPERCEDED. This Agreement is the entire agreement of the parties on
the subject matter contained herein and shall supercede all prior
agreements, arrangements and understandings that the Employee and the
Company may have had with respect to the Employee's employment with the
Company and the payment of benefits by the Company to the Employee in the
event of a termination of the Employee's employment, either prior to or in
conjunction with a Change in Control. The benefits payable pursuant to this
Agreement are in lieu of and in substitution for any termination benefits
payable by the Company in conjunction with any other plan, program, policy,
practice, contract or agreement that the Company may have had either in the
past, currently or in the future.

                                     11

         4.7      FULL SETTLEMENT. The parties agree that the Company's
obligation to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder are intended to be in full settlement
of all claims that the Employee may have against the Company with respect to
the termination of the Employee's employment with the Company and the
Employee may be required to execute and deliver an agreement to this effect
prior to receipt of any payments under this Agreement. The payments to be
made by the Company or any other obligation that the Company is required to
perform pursuant to this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event shall the
Employee be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Employee under any of the
provisions of this Agreement and, except as provided in Section 4.1(b), such
amounts shall not be reduced whether or not the Employee obtains other
employment. To the extent the Employee prevails in any contest with respect
to the validity or enforceability of, or liability under, any provision of
this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Employee regarding the amount of any payment
pursuant to this Agreement), the Company agrees to pay promptly, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any such contest, plus in each case interest
on any delayed payment at the applicable Federal rate provided for in Code
Section 7872(f)(2)(A).

         4.8      RESOLUTION OF DISPUTES. If there shall be any dispute between
the Company and the Employee (i) as to whether any termination of the
Employee's employment was for Cause, or (ii) as to whether any termination
of the Employee's employment for Good Reason was made in good faith, then,
unless and until there is a final, non-appealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that
the determination by the Employee of the existence of Good Reason was not
made in good faith, the Company shall pay all amounts, and provide all
benefits, to the Employee and/or the Employee's family or other
beneficiaries, as the case may be, that the Company would be required to pay
or provide pursuant to Section 4.1 or 4.2 as though such termination was
without Cause or for Good Reason, as the case may be; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this Section 4.8 except upon receipt of an undertaking by or on behalf of
the Employee to repay all such amounts to which the Employee is ultimately
adjudged by such court not to be entitled.

SECTION 5:        NON-COMPETITION.

         5.1      NON-COMPETE AGREEMENT.

                  5.1(a)   During the period beginning on the Date of
                  Termination and ending one (1) year thereafter, the
                  Employee shall not, without prior written approval of the
                  principal executive officer of the Company, become a
                  partner, officer, director, stockholder, advisor,
                  employee, consultant, agent, salesman or otherwise of any
                  business enterprise in substantial direct competition (as
                  defined in Section 5.1(b)) with the Company or any of its
                  subsidiaries in the United States or in any other country
                  in which the Company does business on the Date of
                  Termination; provided that, if the Employee's employment is

                                     12

                  terminated for Good Reason, then the Employee will not
                  be subject to the restrictions of this Section 5.1(a).
                  This restriction will not limit the Employee's right to
                  invest in five percent (5%) or less of the outstanding
                  capital stock or other equity securities of any
                  corporation, the stock or securities of which are publicly
                  traded on a national stock exchange.

                  5.1(b)   For purposes of Section 5.1, a business enterprise
                  with which the Employee becomes associated shall be
                  considered in substantial direct competition, if such
                  entity competes with the Company or its subsidiaries in
                  any business in which the Company or any of its
                  subsidiaries is engaged and is within the Company's or the
                  subsidiary's market area as of the Date of Termination.

                  5.1(c)   During the period beginning on the date the
                  Employment Period terminates and ending one (1) year
                  thereafter, the Employee shall not directly or indirectly
                  solicit the employment of, recruit, employ, hire, cause to
                  be employed or hired, entice away or establish a business
                  relationship with, (i) any then current employee of the
                  Company or any of its subsidiaries or (ii) any person who
                  was employed by the Company or any of its subsidiaries
                  during the six (6) months immediately prior to the date
                  that the Employee first solicits such person.

         5.2      CONFIDENTIAL INFORMATION. The Employee shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Employee during the Employee's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Employee or representatives of the Employee in violation of this Agreement).
After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section constitute a basis for deferring or withholding
any amounts otherwise payable to the Employee under this Agreement.

SECTION 6:        SUCCESSORS.

         6.1      SUCCESSORS OF EMPLOYEE. This Agreement is personal to the
Employee and, without the prior written consent of the Company, the rights
(but not the obligations) shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's legal
representatives.

         6.2      SUCCESSORS OF COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken

                                     13

place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to terminate this Agreement at his option on or
after the Change in Control Date for Good Reason. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor
to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

SECTION 7:        MISCELLANEOUS.

         7.1      OTHER AGREEMENTS. The Board may, from time to time in the
future, provide other incentive programs and bonus arrangements to the
Employee with respect to the occurrence of a Change in Control that will be
in addition to the benefits required to be paid in the designated
circumstances in connection with the occurrence of a Change in Control. Such
additional incentive programs and/or bonus arrangements will affect or
abrogate the benefits to be paid under this Agreement only in the manner and
to the extent explicitly agreed to by the Employee in any such subsequent
program or arrangement.

         7.2      NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to such other address as one party may have
furnished to the other in writing in accordance herewith, except that notice
of change of address shall be effective only upon receipt.

                  Notice to Employee:

                  Richard M. Fiorillo
                  c/o Angelica Textile Services, Inc.
                  1105 Sanctuary Parkway
                  Suite 210
                  Alpharetta, Georgia 30004

                  Notice to Company:

                  Angelica Corporation
                  424 South Woods Mill Road
                  Chesterfield, Missouri  63017-3406
                  Attention: Secretary

         7.3      VALIDITY. The invalidity or unenforceability of any provision
                  of this Agreement shall not affect the validity or
                  enforceability of any other provision of this Agreement.

                                     14

         7.4      WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

         7.5      WAIVER. The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Employee or the
Company may have hereunder, including, without limitation, the right of the
Employee to terminate employment for Good Reason pursuant to Section 3.4
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

IN WITNESS WHEREOF, the Employee and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.

                                 "Employee"

                                 /s/ Richard M. Fiorillo
                                 ----------------------------------
                                 Richard M. Fiorillo

                                 "Company"

                                 ANGELICA CORPORATION

                                 By: /s/ Stephen M. O'Hara
                                   --------------------------------
                                 Name:  Stephen M. O'Hara
                                 Title: President and CEO

                                     15

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