x
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ANNUAL
REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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13-3115216
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S.
Employer Identification No.)
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701
Koehler Ave., Suite 7, Ronkonkoma, NY
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11779
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Large
accelerated filer
¨
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Accelerated
filer
¨
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Non-Accelerated
filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
x
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Class
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Outstanding at April 14,
2010
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Common
Stock, $0.01 par value per share
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5,439,410
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Document
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Parts Into Which
Incorporated
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Annual
Report to Stockholders for the Fiscal Year
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Parts
[I, II, and IV]
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Ended
January 31, 2010 (Annual Report)
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Page
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|||
PART
1:
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|||
Cautionary Statement
regarding Forward-Looking Information
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|||
Item
1
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Business
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3
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Overview
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3
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Industry
Overview
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4
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International and
Domestic Standards
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5
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Industry
Consolidation
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6
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Business
Strategy
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6
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Our Competitive
Strengths
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8
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Products
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9
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Quality
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13
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Marketing and
Sales
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14
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||
Research and
Development
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14
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Suppliers and
Materials
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14
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Internal
Audit
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15
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Competition
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15
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Seasonality
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15
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Patents and
Trademarks
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15
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Employees
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16
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Environmental
Matters
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16
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Available
Information
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16
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Item
1A
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Risk
Factors
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16
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Item
1B
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Unresolved Staff
Comments
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24
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Item
2
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Properties
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24
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Item
3
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Legal
Proceedings
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27
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Item
4
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[Removed and
Reserved]
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27
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PART
II
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|||
Item
5
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Market for the
Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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27
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Item
6
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Selected Financial
Data
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29
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Item
7
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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30
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Item
7A
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Quantitative and
Qualitative Disclosures about Market Risk
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39
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Item
8
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Financial Statements
and Supplementary Data
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40
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Item
9
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Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure
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68
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Item
9A
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Controls and
Procedures
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68
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Item
9B
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Other
Information
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70
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PART
III
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|||
Item
10
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Directors, Executive
Officers and Corporate Governance
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70
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Item
11
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Executive
Compensation
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72
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Item
12
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Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters
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72
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Item
13
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Certain Relationships
and Related Transactions, and Director Independence
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72
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Item
14
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Principal Accounting
Fees and Services
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72
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PART
IV
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|||
Item
15
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Exhibits
and Financial Statement Schedules
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73
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Signatures
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76
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Certification under
Exchange Act Rules 13a – 14(b) and 15d – 14(b)
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|
·
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economies
of scale when selling to end users, either through the use of a direct
sales force or independent representation
groups;
|
·
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broader
product offerings that facilitate cross-selling
opportunities;
|
·
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the
ability to employ dedicated protective apparel training and selling
teams;
|
·
|
the
ability to offer volume and growth incentives to safety distributors;
and
|
·
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access
to international sales.
|
·
|
Increase International Sales
Opportunities.
We intend to aggressively increase our penetration
of the international markets for our product lines. In FY07 and FY08, we
opened sales offices in Beijing, Shanghai, Chongqing, Guangzhou and
Weifang, China; Tokyo, Japan; and Santiago, Chile. In FY10, we opened
sales offices in Argentina and began the process of opening in Russia and
Kazakhstan, and sales in our older United Kingdom operation were flat in
FY2010 but increased 18% in 2009, 34.6% in fiscal 2008, and 46.6% in 2007.
We expect our newer operations in Chile, China, and India to ramp up sales
on a similar basis to our UK operations. We also acquired
Qualytextil, a Brazilian manufacturer with FY08 sales of $10.0 million and
revenue growth of $8.4 million for the nine months in FY09 in which we
owned Qualytextil and a growth in the full year of FY10 of 18% (38.4% in
Q4). This strategy is driven by the fact that many Asian and South
American countries have adopted legislation similar to the 1970 U.S.
Occupational Health and Safety Act (OSHA) in order to facilitate their
entry into the World Trade Organization (WTO) which has as a requisite for
entry worker safety laws (like OSHA), social security, environmental and
tax laws similar to that of the USA and Europe. These new worker safety
laws have driven the demand for our products in these rapidly growing
economies.
|
·
|
Acquisitions
. We
believe that the protective clothing market is fragmented and presents the
opportunity to acquire businesses that offer comparable products or
specialty products that we do not offer. We intend to consider
acquisitions that afford us economies of scale, enhanced opportunity for
cross-selling, expanded product offerings and an increased market
presence. We acquired a facility in New Delhi, India in November 2006
where we are producing Nitrile gloves. We also acquired Mifflin
Valley, Inc., a manufacturer of high visibility protective clothing in
August 2005. We closed on our acquisition of Qualytextil, a Brazilian
manufacturer of fire protective clothing in May 2008. We continue to
entertain other opportunities but with an eye to increase
earnings.
|
·
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Introduction of New
Products
. We continue our history of product development and
innovation by introducing new proprietary products across all our product
lines. Our innovations have included Micromax
®
disposable protective clothing line, our ChemMax
®
line of chemical protective clothing, our Despro
®
patented glove design, Microgard antimicrobial products for food service
and our engineered composite glove products for high cut and abrasion
protection, our Thermbar
™
glove and sleeve products for heat protection, Grapolator
™
sleeve lines for hand and arm cut protection and our Thermbar
™
Mock Twist glove for hand and arm heat protection. We own 16 patents on
fabrics and production machinery and have 6 additional patents in
application. We will continue to dedicate resources to research and
development.
|
·
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Decrease Manufacturing
Expenses by Moving Production to International Facilities
. We have
additional opportunities to take advantage of our low cost production
capabilities in Brazil, Mexico and China. Beginning in 1995, we
successfully moved the labor intensive sewing operation for our limited
use/disposable protective clothing lines to the facilities in Mexico and
China. Beginning January 1, 2005, pursuant to the United States World
Trade Organization Treaty with China and the North American Free Trade
Agreement (“NAFTA”), the reduction in quota requirements and tariffs
imposed by the U.S. and Canada on textiles goods, such as our reusable
woven garments, have made it more cost effective to move production for
some of these product lines to our assembly facilities in China and
Mexico. We completed this process in fiscal 2008. As a result, we expect
to see profit margin improvements for these product lines, which will
allow us to compete more effectively as quota restrictions on China were
removed as of January 1, 2009 and tariffs
lowered. Additionally, due to the overcapacity resulting from
the recent drop in demand globally:
|
|
1.
|
We
continue to press our raw material and component suppliers for price
reductions and better payment
terms.
|
|
2.
|
We
are sourcing more raw materials and components from our China based
operations as opposed to sourcing in Europe and North
America.
|
|
3.
|
We
are re-engineering many products so as to reduce the amount of raw
materials used and reduce the direct labor in such
products.
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·
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Improve Marketing in Existing
Markets
. We believe significant growth opportunities are
available to us through the better positioning, marketing and enhanced
cross-selling of our reusable woven protective clothing, glove and arm
guards and high-end chemical suit product lines, along with our limited
use/disposable lines as a bundled offering. This allows our
customers one stop shopping using combined freight
shipments.
|
·
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Increase Sales to the First
Responder Market.
Our high-end chemical protective suits meet all
of the regulatory standards and requirements and are particularly well
qualified to provide protection to first responders to chemical or
biological attacks. For example, our products have been used for response
to recent threats such as the 2001 anthrax letters, the 2003 SARS
epidemic, the 2004 ricin letters and the 2006 Avian Flu. A portion of
appropriations for the Fire Act of 2002 and the Bio Terrorism Act of 2002
with continuing funding through 2009 are available for purchase of
products for first responders that we manufacture, and we are aggressively
targeting this Homeland Security
market.
|
·
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Emphasize Customer
Service
. We continue to offer a high level of customer service to
distinguish our products and to create customer loyalty. We offer
well-trained and experienced sales and support personnel, on-time delivery
and accommodation of custom and rush orders. We also seek to advertise our
DuPont branded tradenames.
|
|
·
|
Industry Reputation
. We
devote significant resources to creating customer loyalty by accommodating
custom and rush orders and focusing on on-time delivery. Additionally, our
ISO 9001 and 9002 certified facilities manufacture high-quality products.
As a result of these factors, we believe that we have an excellent
reputation in the industry.
|
|
·
|
International Manufacturing
Capabilities
. We have operated our own manufacturing facilities in
Mexico since 1995 and in China since 1996. Our four facilities in China
total 454,000 sq. ft. of manufacturing, warehousing and administrative
space while our facility in Mexico totals over 43,000 sq. ft. of
manufacturing, warehousing and administrative space. Our facilities and
capabilities in China and Mexico allow access to a less expensive labor
pool than is available in the United States and permits us to purchase
certain raw materials at a lower cost than they are available
domestically.
|
|
·
|
India
. In
November 2006, we purchased three facilities comprising 47,408 square feet
in New Delhi, India where we are producing nitrile gloves which were sold
internationally in FY10. We have continued to enter the North
American and European markets in calendar 2009 with a newly designed line
of gloves, after a complete redesign and rebuild of the India machinery
and equipment during FY08 and FY09.
|
|
·
|
Brazil
. In May 2008, we
acquired Qualytextil, S.A., a Brazilian manufacturer of fire protective
clothing which opens up the tariff protected Mercosur markets of Brazil,
Argentina, Uruguay, Paraguay and soon, by membership, Venezuela, for not
only Qualytextil’s fire protective products, but also many of the products
we make in the USA, China and
Mexico.
|
|
·
|
International Sales
Offices
. We have sales offices around the world to
service various major markets, a greatly expanded Toronto, Canada facility
that went on line in January 2008 for the Canadian market, an expanded
Newport, United Kingdom office for the European Common Market that went on
line in late 2007, and new sales offices in Beijing, Weifang, Guangzhou,
Chongqing and Shanghai, China covering China, Australia and Southeast
Asia, Tokyo, Japan for Japan and Santiago, Chile and Jerez, Mexico for the
South American market. The Brazil acquisition in May 2008 completed the
infrastructure for our strategy for South America. In FY10, we opened a
sales office in Argentina as a spin off from our Chile
operations.
|
|
·
|
Comprehensive
Inventory
. We have a large product offering with numerous
specifications, such as size, styles and pockets, and maintain a large
inventory of each in order to satisfy customer orders in a timely manner.
Many of our customers traditionally make purchases of industrial
protective gear with expectations of immediate delivery. We believe our
ability to provide timely service for these customers enhances our
reputation in the industry and positions us strongly for repeat business,
particularly in our limited use/disposable protective clothing
lines.
|
|
·
|
Manufacturing
Flexibility
. By locating labor-intensive manufacturing processes
such as sewing in Brazil, Mexico, China, and India and by utilizing sewing
sub-contractors, we have the ability to increase production without
substantial additional capital expenditures. Our manufacturing systems
allow us flexibility for unexpected production surges and alternative
capacity in the event any of our independent contractors become
unavailable.
|
|
·
|
Experienced Management
Team
. We have an experienced management team. Our executive
officers, other than the CFO, average greater than 23 years of experience
in the industrial protective clothing market. The knowledge, relationships
and reputation of our management team helps us maintain and build our
customer base.
|
·
|
TyChem
®
TK
– a multi-layer film laminated to a durable non-woven substrate. This
garment offers the broadest temperature range for limited use garments of
-94°F to 194°F. This garment is an encapsulating design and is available
in National Fire Protection Agency 1991-2005 revision certified versions
and meets the requirements of the flash fire
option.
|
·
|
ChemMax
®
3
– a multi-layer film laminated to a durable spunbonded substrate. This is
a non-encapsulating garment and meets the requirements of NFPA 1992, 2005
Revision. In addition to NFPA certified ensembles, we also manufacture
garments from our proprietary ChemMax
®
1,
ChemMax
®
2,
and ChemMax
®
3
fabrics that are compliant with CE types 2, 3, and 4 for the international
markets.
|
·
|
Kiln
entry suit – to protect kiln maintenance workers from extreme
heat.
|
·
|
Proximity
suits – to give protection in high heat areas where exposure to hot
liquids, steam or hot vapors is
possible.
|
·
|
Approach
suits – to protect personnel engaged in maintenance, repair and
operational tasks where temperatures do not exceed 200°F ambient, with a
radiant heat exposure up to
2,000°F.
|
|
·
|
Fire
service station wear in multiple protective
fabrics
|
|
·
|
Fire
service extrication suits in FR
cotton
|
|
·
|
Additional
wildland firefighting apparel in multiple
fabrics
|
|
·
|
Flame
resistant arc/flash protective suits in FR
cotton
|
|
·
|
Flame
resistant shirts and pants in multiple protective
fabrics
|
|
·
|
Flame
resistant jackets in FR cotton
|
·
|
Electrostatic
dissipative apparel – used primarily in the pharmaceutical and automotive
industries.
|
·
|
Clean
room apparel – used in semiconductor manufacturing and pharmaceutical
manufacturing to protect against human
contamination.
|
·
|
Flame
resistant Nomex
®
/FR
Cotton coveralls/pants/jackets – used in chemical and petroleum plants and
for wild land firefighting.
|
·
|
Cotton
and Polycotton coveralls, lab coats, pants, and
shirts.
|
|
·
|
Interruptions
and delays in manufacturing and resulting cancellations of orders for our
products;
|
|
·
|
Increases
in fabrics or component prices that we may not be able to pass on to our
customers; and
|
|
·
|
Our
holding more inventory than normal because we cannot finish assembling our
products until we have all of the
components
|
|
·
|
Potential
adverse fluctuations in foreign currency exchange
rates;
|
|
·
|
Higher
credit risks;
|
|
·
|
Restrictive
trade policies of foreign
governments;
|
|
·
|
Currency
nullification and weak banking
institutions;
|
|
·
|
Changing
economic conditions in local
markets;
|
|
·
|
Political
and economic instability in foreign markets;
and
|
|
·
|
Changes
in leadership of foreign
governments.
|
|
·
|
A
one year, $23.5 million revolving credit facility which commenced January
2010, of which we had $9.5 million of borrowings outstanding as of January
31, 2010.
|
|
·
|
Our
financial condition, strength and credit
rating;
|
|
·
|
The
financial markets’ confidence in our management team and financial
reporting;
|
|
·
|
General
economic conditions and the conditions in the homeland security sector;
and
|
|
·
|
Capital
markets conditions.
|
|
·
|
Our
expansion of international
operations;
|
|
·
|
Competitive
pricing pressures;
|
|
·
|
Seasonal
buying patterns resulting from the cyclical nature of the business of some
of our customers;
|
|
·
|
The
size and timing of individual
sales;
|
|
·
|
Changes
in the mix of products and services
sold;
|
|
·
|
The
timing of introductions and enhancements of products by us or our
competitors;
|
|
·
|
Market
acceptance of new products;
|
|
·
|
Technological
changes in fabrics or production equipment used to make our
products;
|
|
·
|
Changes
in the mix of domestic and international
sales;
|
|
·
|
Personnel
changes; and
|
|
·
|
General
industry and economic conditions.
|
Address
|
Estimated
Square
Feet
|
Annual Rent
|
Lease Expiration
|
Principal Activity
|
||||
Weifang
Lakeland Safety Products Co., Ltd. – Plant #1
Xiao
Shi Village
AnQui
City, Shandong Province
PRC
262100
|
106,000
|
Owned
(1)
|
N/A
|
Manufacturing
Administration Engineering
|
||||
Weifang
Lakeland Safety Products Co., Ltd. – Plant #2
Xiao
Shi Village
AnQui
City, Shandong Province
PRC
262100
|
215,355
|
$226,000
|
11/27/12
|
Manufacturing
Administration
|
||||
Qing
Dao Lakeland Protective Products Co., Ltd
Yinghai
Industrial Park
Jiaozhou,
Shandong Province
PRC
266318
|
121,675
|
Owned
(1)
|
N/A
|
Manufacturing
Administration Warehousing
|
||||
Meiyang
Protective Products Co., Ltd.
Xiao
Shi Village
AnQui
City, Shandong Province
PRC
262100
|
11,296
|
$8,400
|
12/31/11
|
Manufacturing
|
||||
Lakeland
Industries, Inc.
Woven
Products Division
2401
SW Parkway
St.
Joseph, MO 64503
|
44,000
|
$96,000
|
7/31/12
|
Manufacturing
Administration Warehousing
|
||||
Lakeland
Mexico
Carretera
a Santa Rita
Calle
Tomas Urbina #1
Jerez
de Garcia, Salinas, Zacatecas
Mexico
|
43,000
|
$132,000
|
3/31/13
with
option to renew
|
Manufacturing
Administration Warehousing
|
||||
Lakeland
Protective Real Estate
59
Bury Court
Brantford,
ON N3S 0A9
Canada
|
22,092
|
Owned
|
N/A
|
Sales
Administration
Warehousing
|
Address
|
Estimated
Square
Feet
|
Annual Rent
|
Lease Expiration
|
Principal Activity
|
||||
Lakeland
Industries, Inc.
Headquarters
701-7
Koehler Avenue
Ronkonkoma,
NY 11779
|
6,250
|
Owned
|
N/A
|
Administration
Studio
Sales
|
||||
Lakeland
Industries, Inc.
202
Pride Lane
Decatur,
AL 35603
|
91,788
|
Owned
|
N/A
|
Manufacturing
Administration Engineering Warehousing
|
||||
Lakeland
Industries, Inc.
3420
Valley Ave.
Decatur,
AL 35603
|
49,500
|
Owned
|
N/A
|
Warehousing
Administration
|
||||
Lakeland
Industries, Inc.
201
Pride Lane, SW
Decatur,
AL 35603
|
2,400
|
$18,900
(Harvey Pride, Jr. –
officer related party)
|
3/31/11
|
Sales
Administration
|
||||
Lakeland
Industries, Inc.
3428
Pride Lane
Decatur,
AL 35603
|
7,000
|
$21,000
|
08/08/10
|
Warehouse
|
||||
Lakeland
Industries Europe Ltd.
Wallingfen
Park
236
Main Road
Newport,
East Yorkshire
HU15
2RH U United Kingdom
|
4,550
|
Approximately
$57,000 (varies with exchange rates) |
1/31/11
|
Warehouse
Sales
|
||||
Lakeland
Industries, Inc.
1100
Park Road
Blandon,
PA 19510
|
12,000
|
$40,200
(Leased from D.
Gallen an employee)
|
Month
to month
|
Warehouse
|
||||
Lakeland
Industries, Inc.
31
South Sterley Street
Shillington,
PA 19607
|
18,520
|
$62,700
(Leased from M.
Gallen an employee)
|
7/31/10
|
Manufacturing
Warehouse, Sales Administration
|
||||
Lakeland
Industries, Inc.
312
Hendle Street
Shillington,
PA 19607
|
1,760
|
$5,280
|
Month
to month
|
Warehouse
|
||||
Lakeland
Glove and Safety Apparel Private, Ltd.
Plots
81, 50 and 24
Noida
Special Economic Zone
New
Delhi, India
|
47,408
|
Owned
(2)
|
N/A
|
Manufacturing
Warehouse
|
Address
|
Estimated
Square
Feet
|
Annual Rent
|
Lease Expiration
|
Principal Activity
|
||||
Lakeland
Industries Inc., Agencia En Chile
Los
Algarrobos nº 2228
Comuna
de Santiago
Código
Postal 8361401
Santiago,
Chile
|
542
|
$17,208
|
03/01/11
|
Warehouse
Sales
|
||||
Qualytextil,
S.A.
Rua
do Luxemburgo, 260, Lotes 82/83, Condomicion
Industrial Presidente Vargas, Pirajá
Salvador,
Bahia 41230-130
Brazil
|
25,209
|
Owned
|
N/A
|
Manufacturing
Administration Engineering Warehousing
|
||||
Qualytextil,
S.A.
Curtume
Street, 708 Warehouse 10 Lapa de Baixo, Sao Paulo, Brazil
|
13,530
|
$124,699
|
10/31/13
|
Distribution
Center
Administration
|
||||
Qualytextil,
S.A.
Rui
Barbosa Street, 2237 - Store 09 Imbetiba, Macaè, Rio de
Janeiro, Brazil
|
1,259
|
$17,766
|
03/01/11
|
Store
|
||||
Lakeland
(Hong Kong) Trading Co., Ltd.
Unit
503 5/fl Silvercord Tower 2
30
Canton Road, Tsimshatsui, HK
|
N/A
|
N/A
|
N/A
|
Sales
|
||||
Lakeland
(Beijing) Safety Products Co., Ltd.
Unit
C412, Building C, Yeqing Plaza
No.
9 Wangjing Beilu, Chaoyang District
Beijing
100102 PRC
|
1,150
|
$17,988
|
06/30/2011
|
Sales
|
||||
Art
Prom, LLC
Varashilova
street 5/1,
Ust-Kamnogorsk,
Kazakhstan, 070002
|
54
|
$1,040
|
09/01/2010
|
Office
|
||||
Lakeland
Argentina, SRL
Centro
Industrial y Commercial Florida Oeste, Avda. Gral. Roca #4250
Pciade
Buenos Aires, Argentina
|
8,826
|
$35,765
|
08/18/2012
|
Office
|
(1)
|
We
own the buildings in which we conduct the majority of our manufacturing
operations in China and lease the land underlying the buildings from the
Chinese government. We have 36 years and 41 years remaining
under the leases with respect to the AnQui City and Jiaozhou facilities,
respectively.
|
(2)
|
The
annual total lease for the underlying land on plots 24, 81 and 50 in India
amounts to approximately $10,000 on a land lease expiring October 9,
2011.
|
ITEM 5
.
|
MARKET FOR THE REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
Price Range of
Common Stock
|
||||||||
High
|
Low
|
|||||||
Fiscal
2011
|
||||||||
First
Quarter (through April 14, 2010)
|
$ | 9.86 | $ | 7.69 | ||||
Fiscal
2010
|
||||||||
First
Quarter
|
$ | 8.66 | $ | 5.03 | ||||
Second
Quarter
|
8.73 | 7.10 | ||||||
Third
Quarter
|
9.17 | 7.32 | ||||||
Fourth
Quarter
|
8.50 | 6.62 | ||||||
Fiscal
2009
|
||||||||
First
Quarter
|
$ | 13.38 | $ | 9.62 | ||||
Second
Quarter
|
13.62 | 11.60 | ||||||
Third
Quarter
|
14.00 | 8.38 | ||||||
Fourth
Quarter
|
11.25 | 5.90 |
Plan
Category
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights (1)
|
Weighted-average
exercise
price
per share of
outstanding
options,
warrants
and rights (1)
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a)(1))
|
|||||||||
Equity
Compensation plans approved by security holders
|
||||||||||||
Restricted
stock grants-employees
|
167,371 | $ | 0 | 66,214 | ||||||||
Restricted
stock grants-directors
|
63,184 | $ | 0 | 12,496 | ||||||||
Matching
award program
|
2,558 | $ | 0 | 58,459 | ||||||||
Bonus
in stock program-employees
|
23,311 | $ | 0 | 37,343 | ||||||||
Retainer
in stock program-directors
|
0 | $ | 0 | 20,704 | ||||||||
Total
Restricted Stock Plans
|
256,424 | $ | 0 | 195,216 |
Year
Ended January 31,
|
||||||||||||||||||||
2006
|
2007
|
2008
|
2009
|
2010
|
||||||||||||||||
(in
thousands, except share and per share data)
|
||||||||||||||||||||
Income
Statement Data:
|
||||||||||||||||||||
Net
sales
|
$ | 98,740 | $ | 100,171 | $ | 95,740 | $ | 102,268 | $ | 94,141 | ||||||||||
Costs
of goods sold
|
74,818 | 75,895 | 73,383 | 74,299 | 68,735 | |||||||||||||||
Gross
profit
|
23,922 | 24,276 | 22,357 | 27,969 | 25,406 | |||||||||||||||
Operating
expenses:
|
||||||||||||||||||||
Selling
and shipping
|
8,301 | 9,473 | 9,291 | 10,931 | 10,480 | |||||||||||||||
General
and administrative
|
6,119 | 8,081 | 8,082 | 10,766 | 12,468 | |||||||||||||||
Total
operating expenses
|
14,420 | 17,554 | 17,373 | 21,697 | 22,948 | |||||||||||||||
Operating
profit
|
9,502 | 6,722 | 4,984 | 6,272 | 2,458 | |||||||||||||||
Other
income (expense):
|
||||||||||||||||||||
Interest
expense
|
(167 | ) | (356 | ) | (330 | ) | (828 | ) | (1,111 | ) | ||||||||||
Interest
income
|
49 | 20 | 66 | 125 | (3 | ) | ||||||||||||||
Gain
on pension plan liquidation
|
— | 353 | — | — | — | |||||||||||||||
Other
income
|
384 | 191 | 145 | 494 | 92 | |||||||||||||||
Total
other income (expense)
|
266 | 208 | (119 | ) | (209 | ) | (1,022 | ) | ||||||||||||
Income
before income taxes
|
9,768 | 6,930 | 4,865 | 6,063 | 1,436 | |||||||||||||||
Income
tax expenses
|
3,439 | 1,826 | 1,574 | 1,514 | 406 | |||||||||||||||
Net
income
|
$ | 6,329 | $ | 5,104 | $ | 3,291 | $ | 4,549 | $ | 1,030 | ||||||||||
Net income per
common share (basic)
(1)
|
$ | 1.15 | $ | 0.92 | $ | 0.60 | $ | 0.84 | $ | 0.19 | ||||||||||
Net income per
common share (diluted)
(1)
|
$ | 1.15 | $ | 0.92 | $ | 0.59 | $ | 0.83 | $ | 0.19 | ||||||||||
Weighted average
common shares outstanding
(1)
|
||||||||||||||||||||
Basic
|
5,518,751 | 5,520,881 | 5,522,751 | 5,435,829 | 5,426,784 | |||||||||||||||
Diluted
|
5,524,076 | 5,527,618 | 5,542,245 | 5,475,104 | 5,458,472 | |||||||||||||||
Balance
Sheet Data (at period end):
|
||||||||||||||||||||
Current
assets
|
$ | 63,719 | $ | 62,114 | $ | 70,269 | $ | 78,363 | $ | 64,827 | ||||||||||
Total
assets
|
72,464 | 74,198 | 84,623 | 101,615 | 90,020 | |||||||||||||||
Current
liabilities
|
3,839 | 4,326 | 4,997 | 7,452 | 15,921 | |||||||||||||||
Long-term
liabilities
|
7,829 | 3,813 | 10,753 | 25,852 | 1,675 | |||||||||||||||
Stockholders’
equity
|
60,796 | 66,059 | 68,873 | 68,311 | 72,424 |
Year
Ended January 31,
|
||||||||||||
2008
|
2009
|
2010
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
of goods sold
|
76.6 | % | 72.7 | % | 73.0 | % | ||||||
Gross
profit
|
23.4 | % | 27.3 | % | 27.0 | % | ||||||
Operating
expenses
|
18.2 | % | 21.2 | % | 24.4 | % | ||||||
Operating
profit
|
5.2 | % | 6.1 | % | 2.6 | % | ||||||
Interest
expense and other income, net
|
0.1 | % | .2 | % | 1.1 | % | ||||||
Income
tax expense
|
1.7 | % | 1.5 | % | 0.4 | % | ||||||
Net
income
|
3.4 | % | 4.4 | % | 1.1 | % |
For the Year
Ended January 31,
|
For the Three
Months
Ended January 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross
profit
|
27.0 | % | 27.3 | % | 30.2 | % | 26.8 | % | ||||||||
Operating
expenses
|
24.4 | % | 21.2 | % | 24.7 | % | 24.2 | % | ||||||||
Operating
profit
|
2.6 | % | 6.1 | % | 5.5 | % | 2.6 | % | ||||||||
Income
before tax
|
1.5 | % | 5.9 | % | 5.2 | % | 3.9 | % | ||||||||
Net
income
|
1.1 | % | 4.4 | % | 4.5 | % | 3.0 | % |
|
·
|
Disposables
gross margin declined by 4.5 percentage points in FY10 compared with FY09.
This decline was mainly due to higher priced raw materials and an extreme
competitive pricing environment coupled with lower volume, partially
offset by labor cutbacks. Disposables margins in Q4 FY10 were increased by
a year-end reversal of rebates accrued earlier in the year, due to many
customers not meeting their year-end targets for
rebates.
|
|
·
|
Brazil
gross margin was 45.7% for FY10 this year compared with 51.4% last year.
Several dynamics were at play. There were several large sales which had
bid requirements for complete fire ensembles including boots and/or
helmets. This required Qualytextil to obtain these items from vendors.
There were several issues with these vendors causing Qualytextil to use
different vendors under delivery pressure, resulting in higher costs.
Qualytextil is presently negotiating with a boot vendor and also a helmet
vendor to obtain more reliable delivery and pricing and has begun
maintaining a stock of these items on hand in inventory to avoid such
problems in the future. Much of Qualytextil’s fabric used as raw materials
is imported from vendors in the U.S. which caused unfavorable costs
earlier in the year resulting from exchange rate differences. Since then
the exchange rates have changed to strengthen the Brazilian real which
should favorably impact the cost and margins in the future. Further, the
margins obtained in FY2009 were exceptional, partially due to a very weak
U.S. dollar and may not be achieved in the near future. In normal
conditions, in the future, the Qualytextil margins will be expected to be
between 42% and 46%. In Q4 FY10, Qualytextil achieved a 53.0% margin
resulting from a larger bid
contract.
|
|
·
|
Glove
division reduction in volume coupled with inventory write-offs resulting
in a gross loss of $0.1 million.
|
|
·
|
Continued
gross losses of $0.6 million from India in
FY10.
|
|
·
|
Reflective
margins were lower than the prior year mainly due to lower
volume.
|
|
·
|
Canada
gross margin increased by 16.1 percentage points primarily from more
favorable exchange rates and local competitive pricing
climate.
|
|
·
|
UK
and Europe margins increased by 8.2 percentage points primarily from
exchange rate differentials.
|
|
·
|
Chile
margins increased by 8.7 percentage points primarily from higher volume
and several larger sales orders.
|
·
|
$(0.7)
|
million
- sales commissions declined, mainly resulting from lower
volume.
|
|
·
|
(0.6)
|
million
- freight out declined, mainly resulting from lower volume and lower
prevailing carrier rates.
|
|
·
|
(0.6)
|
million
- officers salaries declined, reflecting the retirement of Ray Smith to
become a non-employee director and Chairman of the Board and also
reflecting an 8% across the board reduction in total officer
compensation.
|
|
·
|
(0.5)
|
million
– reduction in foreign exchange costs resulting from the Company’s hedging
program and more favorable rates.
|
|
·
|
(0.3)
|
million
- shareholder expenses declined, reflecting the proxy fight in the prior
year.
|
|
·
|
(0.3)
|
million
– consulting fees were reduced, resulting from using interns and revising
Sarbanes Oxley procedures.
|
|
·
|
(0.2)
|
million
reduction in employee benefits, mainly resulting from the suspension of
the employer match for the 401-K plan.
|
|
·
|
0.1
|
million
increase in property tax, largely resulting from the Canadian
warehouse.
|
·
|
0.1
|
million
increased depreciation largely resulting from the Canadian
warehouse.
|
|
·
|
0.2
|
million
increased bank fees resulting from higher volume of sales paid by credit
cards instead of customer checks
|
|
·
|
0.5
|
million
– professional fees increased resulting from analysis of tax issues and an
IRS audit. The Company has changed independent auditing firms in the
expectation that such professional fees will be reduced in the
future.
|
|
·
|
0.7
|
million
– in increased operating costs in China were the result of the large
increase in direct international sales made by China, which are now
allocated to SG&A costs, previously allocated to cost of goods
sold.
|
·
|
$1.1
|
million
– Brazil operating expenses in Q1 of this year. Brazil operations were not
included in Q1 last year, as it was acquired effective May 1,
2008.
|
|
·
|
1.0
|
million
– start-up expenses in connection with Qualytextil gearing up to sell
Lakeland branded products. This includes hiring 20 sales and logistical
support staff, printing of catalogs, lease of two new distribution centers
and increased travel expense.
|
|
·
|
0.3
|
million
– in additional employee benefits and payroll taxes resulting from hiring
as employees certain people who had been performing services on an
out-sourcing basis.
|
|
·
|
0.2
|
million
additional freight out costs mainly resulting from higher
volume.
|
|
·
|
0.2
|
million
in additional commissions resulting from higher volume and higher rates
paid on some larger bids.
|
For the Year
Ended January 31,
|
For the Three Months
Ended January 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross
profit
|
27.3 | % | 23.4 | % | 26.8 | % | 24.7 | % | ||||||||
Operating
expenses
|
21.2 | % | 18.1 | % | 24.2 | % | 17.8 | % | ||||||||
Operating
profit
|
6.1 | % | 5.2 | % | 2.6 | % | 6.9 | % | ||||||||
Income
before tax
|
5.9 | % | 5.1 | % | 3.9 | % | 6.6 | % | ||||||||
Net
income
|
4.4 | % | 3.4 | % | 3.0 | % | 4.0 | % |
·
|
$2.9
|
million
– operating costs in the acquired Brazilian operations not in previous
year.
|
|
·
|
0.4
|
million
– in additional freight out costs, excluding Brazil, resulting from higher
rates prevailing in most of FY09, due to higher fuel
surcharges.
|
|
·
|
0.4
|
Million
– in additional sales salaries, commissions and administrative salaries
resulting from expanded sales staff.
|
|
·
|
0.3
|
million
– in additional costs resulting from the proxy contest earlier in
FY09.
|
|
·
|
0.2
|
million
– in additional international travel expenses and sales meetings that
tracked international sales growth.
|
|
·
|
0.1
|
million
– in additional advertising and printing costs.
|
|
·
|
0.1
|
million
– in additional equity compensation resulting from additional grants
charged to expense over the vesting period of the Company’s Restricted
Stock Program.
|
|
·
|
0.1
|
million
– in additional currency fluctuation costs.
|
|
·
|
0.1
|
million
– in additional computer expenses.
|
|
·
|
0.1
|
million
– in other taxes – mainly property taxes on the Canada warehouse opened in
December 2007.
|
|
·
|
(0.1)
|
million
– in reduced medical insurance costs resulting from favorable
experience.
|
|
·
|
(0.3)
|
million
– reduction in professional fees and consulting expenses mainly resulting
from an expenditure in the previous fiscal year in India to set up the
proper production
processes.
|
·
|
A
one year, $23.5 million revolving credit facility, of which we had
borrowings outstanding as of January 31, 2010 amounting to $9.5
million
|
Payments Due by Period
|
||||||||||||||||||||
Less than
|
||||||||||||||||||||
Total
|
1 Year
|
1-3 Years
|
4-5 Years
|
After 5 Years
|
||||||||||||||||
Canada
facility loan
|
$ | 1,677,019 | $ | 93,601 | $ | 280,803 | $ | 187,202 | $ | 1,115,413 | ||||||||||
*Operating
leases
|
881,946 | 130,220 | 495,027 | 256,699 | — | |||||||||||||||
Other
liabilities
|
— | — | — | — | — | |||||||||||||||
Revolving
credit facility
|
9,518,000 | 9,518,000 | — | — | — | |||||||||||||||
Total
|
$ | 12,076,965 | $ | 9,741,821 | $ | 775,830 | $ | 443,901 | $ | 1,115,413 | ||||||||||
*NOTE:
We renewed the Mexico lease and rent for the next 3 years at 10% more than
the past.
|
Consolidated
Financial Statements:
|
|
Page
No.
|
|
Reports
of Independent Registered Public Accounting Firms
|
41-42
|
Consolidated
Balance Sheets - January 31, 2010 and 2009
|
43
|
Consolidated
Statements of Income for the years ended January 31, 2010, 2009 and
2008
|
44
|
Consolidated
Statements of Stockholders' Equity for the years ended January 31, 2010,
2009 and 2008
|
45
|
Consolidated
Statements of Cash Flows for the years ended January 31, 2010, 2009 and
2008
|
46
|
Notes
to Consolidated Financial Statements
|
47-67
|
Schedule
II – Valuation and Qualifying Accounts
|
68
|
All
other schedules are omitted because they are not applicable, not required
or because the required information is included in the consolidated
financial statements or notes thereto
|
/s/
Warren, Averett, Kimbrough and Marino, LLC
|
Birmingham,
Alabama
|
April
14, 2010
|
2010
|
2009
|
|||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 5,093,380 | $ | 2,755,441 | ||||
Accounts
receivable, net of allowance for doubtful accounts of approximately
$200,200 and $104,500 at January 31, 2010 and 2009,
respectively
|
15,809,010 | 13,353,430 | ||||||
Inventories,
net of reserves of approximately $868,000 and $657,000 at January 31, 2010
and 2009, respectively
|
38,575,890 | 57,074,028 | ||||||
Deferred
income taxes
|
1,261,250 | 2,578,232 | ||||||
Prepaid
income tax
|
1,731,628 | 531,467 | ||||||
Other
current assets
|
2,355,506 | 2,070,825 | ||||||
Total
current assets
|
64,826,664 | 78,363,423 | ||||||
Property
and equipment, net
|
13,742,454 | 13,736,326 | ||||||
Intangibles
and other assets, net
|
5,622,120 | 4,405,833 | ||||||
Goodwill
|
5,829,143 | 5,109,136 | ||||||
Total
assets
|
$ | 90,020,381 | $ | 101,614,718 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 3,882,730 | $ | 3,853,890 | ||||
Accrued
compensation and benefits
|
1,288,796 | 3,069,409 | ||||||
Other
accrued expenses
|
1,138,303 | 434,809 | ||||||
Borrowings
under revolving credit facility
|
9,517,567 | — | ||||||
Current
maturity of long-term debt
|
93,601 | 94,000 | ||||||
Total
current liabilities
|
15,920,997 | 7,452,108 | ||||||
Borrowings
under revolving credit facility
|
— | 24,408,466 | ||||||
Construction
loan payable net of current maturity
|
1,583,419 | 1,368,406 | ||||||
Other
liabilities
|
92,176 | 74,611 | ||||||
Total
liabilities
|
17,596,592 | 33,303,591 | ||||||
Commitments
and Contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Preferred
stock, $.01 par; 1,500,000 shares authorized; none issued
|
— | — | ||||||
Common
stock, $.01 par; 10,000,000 shares authorized; 5,564,732 and 5,523,288
shares issued and outstanding at January 31, 2010 and 2009,
respectively
|
55,647 | 55,233 | ||||||
Less
treasury stock, at cost; 125,322 shares at January 31, 2010 and 107,317
shares at January 31, 2009
|
(1,353,247 | ) | (1,255,459 | ) | ||||
Additional
paid-in capital
|
49,622,632 | 49,511,896 | ||||||
Retained
earnings
|
25,221,050 | 24,191,258 | ||||||
Other
comprehensive loss
|
(1,122,293 | ) | (4,191,801 | ) | ||||
Total
stockholders' equity
|
72,423,789 | 68,311,127 | ||||||
Total
liabilities and stockholders' equity
|
$ | 90,020,381 | $ | 101,614,718 |
2010
|
2009
|
2008
|
||||||||||
Net
sales
|
$ | 94,140,819 | $ | 102,268,125 | $ | 95,740,068 | ||||||
Cost
of goods sold
|
68,735,076 | 74,298,935 | 73,382,713 | |||||||||
Gross
profit
|
25,405,743 | 27,969,190 | 22,357,355 | |||||||||
Operating
expenses
|
||||||||||||
Selling
and shipping
|
10,480,099 | 10,931,285 | 9,291,263 | |||||||||
General
and administrative
|
12,468,137 | 10,765,595 | 8,082,618 | |||||||||
Total
operating expenses
|
22,948,236 | 21,696,880 | 17,373,881 | |||||||||
Operating
profit
|
2,457,507 | 6,272,310 | 4,983,474 | |||||||||
Other
income (expense)
|
||||||||||||
Interest
expense
|
(1,111,456 | ) | (827,725 | ) | (330,268 | ) | ||||||
Interest
income
|
(2,614 | ) | 124,634 | 66,722 | ||||||||
Other
income – net
|
92,216 | 494,084 | 144,870 | |||||||||
Total
other income (expense)
|
(1,021,854 | ) | (209,007 | ) | (118,676 | ) | ||||||
Income
before income taxes
|
1,435,653 | 6,063,303 | 4,864,798 | |||||||||
Income
tax expense
|
405,861 | 1,513,835 | 1,573,936 | |||||||||
Net
income
|
$ | 1,029,792 | $ | 4,549,468 | $ | 3,290,862 | ||||||
Net
income per common share
|
||||||||||||
Basic
|
$ | 0.19 | $ | 0.84 | $ | 0.60 | ||||||
Diluted
|
$ | 0.19 | $ | 0.83 | $ | 0.59 | ||||||
Weighted
average common shares outstanding
|
||||||||||||
Basic
|
5,426,784 | 5,435,829 | 5,522,751 | |||||||||
Diluted
|
5,458,472 | 5,475,104 | 5,542,245 | |||||||||
Net
income
|
$ | 1,029,792 | $ | 4,549,468 | $ | 3,290,862 | ||||||
Translation
adjustments:
|
||||||||||||
Canada
Real Estate
|
76,899 | (55,152 | ) | (36,073 |
)
|
|||||||
Qualytextil,
S.A. Brazil
|
2,475,387 | (3,473,196 | ) | — | ||||||||
Lakeland
Industries Europe, Inc.
|
(110,238 | ) | — | — | ||||||||
Lakeland
(Beijing) Safety Products Co., Ltd.
|
80 | — | — | |||||||||
Interest
rate swap
|
627,380 | (627,380 | ) | — | ||||||||
Total
|
3,069,508 | (4,155,728 | ) | (36,073 | ) | |||||||
Total
comprehensive income
|
$ | 4,099,300 | $ | 393,740 | $ | 3,254,789 |
Common
Stock
|
Treasury
Stock
|
Additional
paid-in
|
Retained
|
Other
Comprehensive
|
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||||||||
Balance,
January 31, 2007
|
5,521,824 | $ | 55,218 | — | $ | — | $ | 48,972,025 | $ | 17,031,928 | $ | — | $ | 66,059,171 | ||||||||||||||||||
Net
income
|
— | — | — | — | — | 3,290,862 | — | 3,290,862 | ||||||||||||||||||||||||
Effect
of adoption of FIN 48
|
— | — | — | — | — | (419,000 | ) | — | (419,000 | ) | ||||||||||||||||||||||
Effect
of adoption of SAB No.108
|
— | — | — | — | — | (262,000 | ) | — | (262,000 | ) | ||||||||||||||||||||||
Exercise
of stock option
|
1,464 | 15 | — | — | 6,675 | — | — | 6,690 | ||||||||||||||||||||||||
Other
comprehensive loss
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Translation
adjustments regarding Canadian Real Estate
|
— | — | — | — | — | — | (36,073 | ) | (36,073 | ) | ||||||||||||||||||||||
Stock
based compensation
|
— | — | — | — | 233,261 | — | — | 233,261 | ||||||||||||||||||||||||
Balance,
January 31, 2008
|
5,523,288 | 55,233 | — | — | 49,211,961 | 19,641,790 | (36,073 | ) | 68,872,911 | |||||||||||||||||||||||
Net
income
|
— | — | — | — | — | 4,549,468 | — | 4,549,468 | ||||||||||||||||||||||||
Stock
repurchase program
|
— | — | (107,317 | ) | (1,255,459 | ) | — | — | — | (1,255,459 | ) | |||||||||||||||||||||
Other
comprehensive loss
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Translation
adjustments
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Canadian
Real Estate
|
— | — | — | — | — | — | (55,152 | ) | (55,152 | ) | ||||||||||||||||||||||
Qualytextil,
S.A., Brazil
|
— | — | — | — | — | — | (3,473,196 | ) | (3,473,196 | ) | ||||||||||||||||||||||
Interest
rate swap
|
— | — | — | — | — | — | (627,380 | ) | (627,380 | ) | ||||||||||||||||||||||
Stock
based compensation
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuance
of director stock options
|
— | — | — | — | 31,544 | — | — | 31,544 | ||||||||||||||||||||||||
Restricted
stock plan
|
— | — | — | — | 268,391 | — | — | 268,391 | ||||||||||||||||||||||||
Balance,
January 31, 2009
|
5,523,288 | 55,233 | (107,317 | ) | (1,255,459 | ) | 49,511,896 | 24,191,258 | (4,191,801 | ) | 68,311,127 | |||||||||||||||||||||
Net
income
|
— | — | — | — | — | 1,029,792 | — | 1,029,792 | ||||||||||||||||||||||||
Stock
repurchase program
|
— | — | (18,005 | ) | (97,788 | ) | — | — | — | (97,788 | ) | |||||||||||||||||||||
Other
comprehensive loss
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Translation
adjustments
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Canada
|
— | — | — | — | — | — | 76,899 | 76,899 | ||||||||||||||||||||||||
Qualytextil,
S.A., Brazil
|
— | — | — | — | — | — | 2,475,387 | 2,475,387 | ||||||||||||||||||||||||
UK
|
— | — | — | — | — | — | (110,238 | ) | (110,238 | ) | ||||||||||||||||||||||
China
|
— | — | — | — | — | — | 80 | 80 | ||||||||||||||||||||||||
Interest
rate swap
|
— | — | — | — | — | — | 627,380 | 627,380 | ||||||||||||||||||||||||
Stock
based compensation
|
||||||||||||||||||||||||||||||||
Issuance
of director stock options
|
— | — | — | — | 47,068 | — | — | 47,068 | ||||||||||||||||||||||||
Restricted
stock plan
|
— | — | — | — | 169,640 | — | — | 169,640 | ||||||||||||||||||||||||
Director
options granted at fair market value
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Director
stock options exercised
|
3,267 | 33 | — | — | 23,529 | — | — | 23,562 | ||||||||||||||||||||||||
Shares
issued from Restricted Stock Plan
|
38,177 | 381 | — | — | — | — | — | 381 | ||||||||||||||||||||||||
Return
of shares in lieu of payroll tax withholding
|
— | — | — | — | (111,000 | ) | — | — | (111,000 | ) | ||||||||||||||||||||||
Cash
paid in lieu of issuing shares
|
— | — | — | — | (18,501 | ) | — | — | (18,501 | ) | ||||||||||||||||||||||
Balance,
January 31, 2010
|
5,564,732 | $ | 55,647 | (125,322 | ) | $ | (1,353,247 | ) | $ | 49,622,632 | $ | 25,221,050 | $ | (1,122,293 | ) | $ | 72,423,789 |
2010
|
2009
|
2008
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
income
|
$ | 1,029,792 | $ | 4,549,468 | $ | 3,290,862 | ||||||
Adjustments
to reconcile net income to net cash
provided
by (used in) operating activities
|
||||||||||||
Provision
for inventory obsolescence
|
211,601 | 49,785 | 300,626 | |||||||||
Provision
for doubtful accounts
|
96,074 | 59,135 | (58,000 | ) | ||||||||
Deferred
income taxes
|
1,316,981 | (608,519 | ) | (641,575 | ) | |||||||
Depreciation
and amortization
|
1,744,113 | 1,633,846 | 1,186,840 | |||||||||
Stock
based and restricted stock compensation
|
198,588 | 299,935 | 233,261 | |||||||||
(Increase)
decrease in operating assets:
|
||||||||||||
Accounts
receivable
|
(2,551,654 | ) | 2,763,878 | (89,400 | ) | |||||||
Inventories
|
18,286,537 | (5,698,718 | ) | (7,723,060 | ) | |||||||
Prepaid
income taxes and other current assets
|
(1,731,628 | ) | — | 1,110,310 | ||||||||
Other
assets
|
692,476 | (422,309 | ) | (305,961 | ) | |||||||
Increase
(decrease) in operating liabilities
|
||||||||||||
Accounts
payable
|
28,840 | (1,418,602 | ) | 257,357 | ||||||||
Accrued
expenses and other liabilities
|
(644,011 | ) | 3,372 | 319,538 | ||||||||
Net
cash provided by (used in) operating activities
|
18,677,709 | 1,211,271 | (2,119,202 | ) | ||||||||
Cash
flows from investing activities
|
||||||||||||
Acquisition
of Qualytextil, S.A.
|
— | (13,780,205 | ) | — | ||||||||
Purchases
of property and equipment
|
(1,192,251 | ) | (2,371,914 | ) | (3,427,458 | ) | ||||||
Net
cash used in investing activities
|
(1,192,251 | ) | (16,152,119 | ) | (3,427,458 | ) | ||||||
Cash
flows from financing activities
|
||||||||||||
Net
borrowings (payments) under credit agreement
|
(14,890,899 | ) | 2,192,999 | 5,085,000 | ||||||||
Purchases
of stock under Stock Repurchase program
|
(97,788 | ) | (1,255,459 | ) | — | |||||||
Borrowing
to fund Qualytextil acquisition
|
— | 13,344,466 | — | |||||||||
Other
liabilities
|
17,566 | 74,611 | — | |||||||||
Net
proceeds (repayment) construction loan
|
(88,993 | ) | (88,000 | ) | 1,976,085 | |||||||
Proceeds
from exercise of stock options
|
23,562 | — | 6,690 | |||||||||
Shares
returned in lieu of taxes under Restricted Stock Program
|
(110,967 | ) | — | — | ||||||||
Net
cash provided by (used in) financing activities
|
(15,147,519 | ) | 14,268,617 | 7,067,775 | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
2,337,939 | (672,231 | ) | 1,521,115 | ||||||||
Cash
and cash equivalents at beginning of year
|
2,755,441 | 3,427,672 | 1,906,557 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 5,093,380 | $ | 2,755,441 | $ | 3,427,672 |
Fiscal Years Ended January 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Domestic
|
$ | 61,504,000 | 65.3 | % | $ | 76,695,000 | 75.0 | % | $ | 82,773,000 | 86.5 | % | ||||||||||||
International
|
32,637,000 | 34.7 | % | 25,573,000 | 25.0 | % | 12,967,000 | 13.5 | % | |||||||||||||||
Total
|
$ | 94,141,000 | 100.0 | % | $ | 102,268,000 | 100.0 | % | $ | 95,740,000 | 100.0 | % |
2010
|
2009
|
2008
|
||||||||||
Interest
paid
|
$ | 1,111,456 | $ | 827,725 | $ | 330,268 | ||||||
Income
taxes paid
|
$ | 625,204 | $ | 3,216,000 | $ | 699,456 |
2010
|
2009
|
|||||||
Raw
materials
|
$ | 18,727,993 | $ | 26,343,875 | ||||
Work-in-process
|
2,444,693 | 2,444,160 | ||||||
Finished
goods
|
17,403,204 | 28,285,993 | ||||||
$ | 38,575,890 | $ | 57,074,028 |
Useful life in years
|
2010
|
2009
|
|||||||||
Machinery
and equipment
|
3 –
10
|
$ | 9,020,453 | $ | 8,488,655 | ||||||
Furniture
and fixtures
|
3 –
10
|
494,464 | 389,746 | ||||||||
Leasehold
improvements
|
Lease
term
|
1,731,669 | 1,189,312 | ||||||||
Land
and building (China)
|
20
|
2,412,115 | 2,412,115 | ||||||||
Land,
building and equipment (India)
|
7 -
39
|
4,129,205 | 4,010,237 | ||||||||
Land
and building (Canada)
|
30
|
2,277,397 | 1,985,951 | ||||||||
Land
and buildings (USA)
|
39
|
3,655,764 | 3,654,008 | ||||||||
Land
and building (Brazil)
|
5
|
662,157 | 535,971 | ||||||||
24,383,224 | 22,665,995 | ||||||||||
Less
accumulated depreciation and amortization
|
(10,640,770 | ) | (8,929,669 | ) | |||||||
$ | 13,742,454 | $ | 13,736,326 |
Current assets
|
($000 USD)
|
|||
Cash
and equivalents
|
$ | 34 | ||
Accounts
receivable
|
1,199 | |||
Inventory
|
3,309 | |||
Other
current assets
|
210 | |||
Total
current assets
|
4,752 | |||
Deferred
tax asset
|
222 | |||
Fixed
assets
|
1,249 | |||
Intangible
(trademarks, tradenames)
|
186 | |||
Other
non-current assets
|
606 | |||
Total
assets
|
$ | 7,015 | ||
Current
Liabilities
|
||||
Loans
|
$ | 3,093 | ||
Trade
payables and other current liabilities
|
3,477 | |||
Total
current liabilities
|
6,570 | |||
Other
non-current liabilities
|
86 | |||
Net
assets acquired
|
359 | |||
$ | 7,015 | |||
Total
cost of acquisition of Qualytextil, SA
|
$ | 13,780 | ||
Less
net assets acquired
|
(359 | ) | ||
Less
debt repayment at closing
|
(3,890 | ) | ||
Less
additional values to reflect appraisal, assigned to (in
USD)
|
||||
Trademarks
|
(3,020 | ) | ||
Customer
contract
|
(373 | ) | ||
Goodwill
at closing
|
6,138 | |||
Foreign
currency translation
|
1,900 | |||
Goodwill
at January 31, 2009 arising from Qualytextil, SA
|
$ | 4,238 | ||
Effect
of foreign exchange in FY10
|
720 | |||
Goodwill
at January 31, 2010 arising from Qualytextil, S.A.
|
$ | 4,958 |
Fiscal
2009
|
Fiscal 2008
|
|||||||
Sales
|
$ | 104,233 | $ | 104,258 | ||||
Net
income
|
4,815 | 3,942 | ||||||
EPS
|
$ | 0.89 | $ | 0.71 |
2010
|
2009
|
|||||||
Trademarks
and tradenames, resulting from
|
||||||||
Qualytextil,
S.A. acquisition, per appraisal
|
$ | 3,972,157 | $ | 3,191,891 | ||||
Appraised
value of customer contracts acquired in Qualytextil, S.A. acquisition,
amortized over estimates remaining life of 39 months from January 31,
2010, net of accumulated amortization of $110,454 at 2010 and $20,716 at
2009
|
335,148 | 352,178 | ||||||
Bank
fees net of accumulated amortization of $0 at 2010 and $483,275 at
2009
|
71,761 | 83,550 | ||||||
Deferred
taxes non-current
|
705,102 | 519,211 | ||||||
Security
deposits
|
522,465 | 231,318 | ||||||
Other
|
15,487 | 27,685 | ||||||
$ | 5,622,120 | $ | 4,405,833 |
Directors’
Plan
|
||||||||||||||||
Number
of
shares
|
Weighted
average
exercise
price
|
Weighted
average
remaining
term
(years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Shares
under option
|
||||||||||||||||
Outstanding
at beginning of year
|
20,567 | $ | 13.42 | 2.27 | ||||||||||||
Granted
during FY10
|
8,000 | 6.88 | $ | 11,200 | ||||||||||||
Cancelled
during FY10
|
(1,000 | ) | 13.10 | |||||||||||||
Exercised
during FY10
|
(3,267 | ) | 7.22 | |||||||||||||
Outstanding
and exercisable at end of year
|
24,300 | $ | 12.11 | 2.34 | $ | 11,200 | ||||||||||
Weighted-average
fair value per share of options granted during:
|
||||||||||||||||
FY10
|
$ | 5.88 | ||||||||||||||
FY09
|
$ | 10.51 | ||||||||||||||
FY08
|
N/A | |||||||||||||||
Reserved
for future issuance:
|
||||||||||||||||
Directors’
Plan
|
6,000 |
2010
|
2009
|
2008
|
||||||||||
Domestic
|
$ | (1,208,641 | ) | $ | 2,826,365 | $ | 3,642,522 | |||||
Foreign
|
2,644,294 | 3,236,938 | 1,222,276 | |||||||||
Total
|
$ | 1,435,653 | $ | 6,063,303 | $ | 4,864,798 |
2010
|
2009
|
2008
|
||||||||||
Current
|
||||||||||||
Federal
|
$ | (1,228,449 | ) | $ | 1,063,383 | $ | 1,680,298 | |||||
State
|
(130,339 | ) | 154,558 | 174,369 | ||||||||
Foreign
|
447,668 | 904,413 | 343,864 | |||||||||
(911,120 | ) | 2,122,354 | 2,198,531 | |||||||||
Deferred
|
1,316,981 | (608,519 | ) | (624,595 | ) | |||||||
$ | 405,861 | $ | 1,513,835 | $ | 1,573,936 |
2010
|
2009
|
2008
|
||||||||||
Statutory
rate
|
34.0 | % | 34.0 | % | 34.0 | % | ||||||
State
income taxes, net of Federal tax benefit
|
(6.0 | )% | 1.7 | % | 2.4 | % | ||||||
Permanent
differences
|
— | — | (0.7 | )% | ||||||||
FIN48
adjustment
|
— | (3.4 | )% | — | ||||||||
Foreign
tax rate differential
|
(17.0 | )% | (6.2 | )% | (5.4 | )% | ||||||
India
tax credit valuation allowance
|
16.2 | % | — | — | ||||||||
Restricted
stock fair market value at vesting per tax compared with grant date per
books
|
6.2 | % | — | — | ||||||||
Various
tax credits
|
(4.7 | )% | — | — | ||||||||
Other
|
(0.4 | )% | (1.1 | )% | 2.0 | % | ||||||
Effective
rate
|
28.3 | % | 25.0 | % | 32.3 | % |
2010
|
2009
|
2008
|
||||||||||
Deferred
tax assets
|
||||||||||||
Inventories
|
$ | 902,809 | $ | 1,204,998 | $ | 1,120,426 | ||||||
Accounts
receivable
|
9,718 | 37,810 | 17,100 | |||||||||
Accrued
compensation and other
|
236,233 | 293,516 | 66,742 | |||||||||
Depreciation
|
26,935 | 22,304 | 35,666 | |||||||||
Stock
based compensation
|
85,555 | 262,502 | 130,000 | |||||||||
Losses
in India prior to restructuring
|
— | 757,102 | 599,779 | |||||||||
Deferred
tax assets
|
$ | 1,261,250 | $ | 2,578,232 | $ | 1,969,713 |
Accrued
as of January 31, 2008
|
$ | 439 | ||
Less
taxes refundable from1/04 per Company position written off in FY08 as part
of adjustment to reflect this guidance
|
(162 | ) | ||
Balance
as of January 31, 2008
|
$ | 277 | ||
Payments
made to settle the liability
|
(70 | ) | ||
Reduction
in tax expense in FY09 to reflect settlement with IRS
|
(207 | ) | ||
Uncertain
tax liability at January 31, 2009
|
$ | 0 |
Gross rental
|
Rentals paid to
related parties
|
|||||||
Year
ended January 31,
|
||||||||
2010
|
$ | 633,769 | $ | 127,080 | ||||
2009
|
$ | 550,513 | $ | 117,855 | ||||
2008
|
$ | 566,845 | $ | 167,904 |
Year ending January 31,
|
||||
2011
|
$ | 597,298 | ||
2012
|
454,973 | |||
2013
|
382,062 | |||
2014
|
129,015 |
January 31, 2010
|
January 31, 2009
|
|||||||
Unrealized
gains:
|
||||||||
Foreign
currency exchange contracts
|
— | — | ||||||
Unrealized
(losses):
|
||||||||
Foreign
currency exchange contracts
|
— | — | ||||||
Interest
rate swaps
|
— | $ | (627,380 | ) |
2010
|
2009
|
2008
|
||||||||||
Net
Sale
s:
|
||||||||||||
North
America and other foreign
|
$ | 75,274,796 | $ | 92,408,341 | $ | 97,922,742 | ||||||
China
|
19,473,004 | 22,182,628 | 14,823,755 | |||||||||
India
|
824,083 | 489,755 | 132,350 | |||||||||
Brazil
|
13,173,777 | 8,383,726 | — | |||||||||
Less
inter-segment sales
|
(14,604,841 | ) | (21,196,325 | ) | (17,138,779 | ) | ||||||
Consolidated
sales
|
$ | 94,140,819 | $ | 102,268,125 | $ | 95,740,068 | ||||||
Operating
Profit:
|
||||||||||||
North
America and other foreign
|
$ | 21,288 | $ | 2,890,601 | $ | 3,262,062 | ||||||
China
|
2,578,057 | 3,071,886 | 2,082,988 | |||||||||
India
|
(852,335 | ) | (845,791 | ) | (624,042 | ) | ||||||
Brazil
|
298,374 | 1,469,542 | — | |||||||||
Less
intersegment profit
|
412,123 | (313,928 | ) | 262,466 | ||||||||
Consolidated
operating profit
|
$ | 2,457,507 | $ | 6,272,310 | $ | 4,983,474 | ||||||
Identifiable
Assets:
|
||||||||||||
North
America and other foreign
|
$ | 53,233,159 | $ | 70,302,861 | $ | 76,306,269 | ||||||
China
|
14,133,006 | 13,270,793 | 9,904,174 | |||||||||
India
|
3,875,781 | 4,351,075 | (1,587,590 | ) | ||||||||
Brazil
|
18,778,435 | 13,689,989 | — | |||||||||
Consolidated
assets
|
$ | 90,020,381 | $ | 101,614,718 | $ | 84,622,853 | ||||||
Depreciation
:
|
||||||||||||
North
America and other foreign
|
$ | 790,555 | $ | 830,314 | $ | 665,182 | ||||||
China
|
320,999 | 286,773 | 352,009 | |||||||||
India
|
420,141 | 365,262 | 169,649 | |||||||||
Brazil
|
167,580 | 134,612 | — | |||||||||
Consolidated
depreciation
|
$ | 1,699,275 | $ | 1,616,961 | $ | 1,186,840 |
1/31/10
|
10/31/09
|
7/31/09
|
4/30/09
|
|||||||||||||
Net
sales
|
$ | 24,831 | $ | 22,285 | $ | 23,049 | $ | 23,976 | ||||||||
Cost
of sales
|
17,329 | 16,629 | 16,812 | 17,965 | ||||||||||||
Gross
profit
|
7,502 | 5,656 | 6,237 | 6,011 | ||||||||||||
Net
income
|
$ | 1,115 | $ | (190 | ) | $ | 8 | $ | 97 | |||||||
Basic
and diluted income per common
|
||||||||||||||||
Share
|
||||||||||||||||
Basic
|
$ | 0.20 | $ | (0.03 | ) | $ | 0.00 | $ | 0.02 | |||||||
Diluted
|
$ | 0.20 | $ | (0.03 | ) | $ | 0.00 | $ | 0.02 | |||||||
1/31/09
|
10/31/08
|
7/31/08
|
4/30/08
|
|||||||||||||
Net
sales
|
$ | 22,263 | $ | 25,160 | $ | 27,565 | $ | 27,280 | ||||||||
Cost
of sales
|
16,304 | 17,989 | 19,404 | 20,602 | ||||||||||||
Gross
profit
|
$ | 5,959 | $ | 7,171 | $ | 8,161 | $ | 6,678 | ||||||||
Net
income
|
$ | 659 | $ | 1,373 | $ | 1,625 | $ | 893 | ||||||||
Basic
and diluted income per common
share*:
|
||||||||||||||||
Share
|
||||||||||||||||
Basic
|
$ | 0.12 | $ | 0.25 | $ | 0.30 | $ | 0.16 | ||||||||
Diluted
|
$ | 0.12 | $ | 0.25 | $ | 0.30 | $ | 0.16 |
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|||||||||||
Additions
|
|||||||||||||||
Balance at
Beginning
of period
|
Charge to
costs and
expenses
|
Charged
to other
accounts
|
Additions /
Deductions
|
Balance at
end of
period
|
|||||||||||
Year ended January 31, 2010 | |||||||||||||||
Allowance
for doubtful accounts (a)
|
$ | 104,500 | $ | 95,700 | $ | 200,200 | |||||||||
Allowance
for slow moving inventory
|
657,000 | $ | 211,000 | $ | 868,000 | ||||||||||
Year ended January 31, 2009 | |||||||||||||||
Allowance
for doubtful accounts (a)
|
$ | 45,000 | $ | 59,500 | $ | 104,500 | |||||||||
Allowance
for slow moving inventory
|
$ | 607,000 | $ | 50,000 | $ | 657,000 | |||||||||
Year ended January 31, 2008 | |||||||||||||||
Allowance
for doubtful accounts (a)
|
$ | 103,000 | $ | (58,000 | ) | $ | 45,000 | ||||||||
Allowance
for slow moving inventory
|
$ | 306,000 | $ | 301,000 | $ | 607,000 |
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM
9A.
|
CONTROLS
AND PROCEDURES
|
Name
|
Age
|
Position
|
||
Raymond
J. Smith
|
71
|
Chairman
of the Board of Directors
|
||
Christopher
J. Ryan
|
58
|
Chief
Executive Officer, President, Secretary, General Counsel and
Director
|
||
Gary
Pokrassa
|
62
|
Chief
Financial Officer
|
||
Gregory
D. Willis
|
53
|
Executive
Vice President
|
||
Harvey
Pride, Jr.
|
63
|
Senior
Vice President - Manufacturing
|
||
Paul
C. Smith
|
43
|
Vice
President
|
||
Gregory
D. Pontes
|
49
|
Vice
President - Manufacturing
|
||
Charles
D. Roberson
|
49
|
Vice
President – International Sales
|
||
Phillip
L. Willingham
|
52
|
Vice
President - MIS
|
||
John
J. Collins
|
67
|
Director
|
||
Eric
O. Hallman
|
66
|
Director
|
||
A.
John Kreft
|
59
|
Director
|
||
Stephen
M. Bachelder
|
59
|
Director
|
||
Duane
W. Albro
|
63
|
Director
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
1.
|
Consolidated
Financial Statements (see Page 40 of this report which includes an index
to the consolidated financial
statements)
|
Exhibit
|
Description
|
|
3.1
|
Restated
Certificate of Incorporation of Lakeland Industries, Inc., as amended,
(Incorporated by reference to Exhibit 3.1 of Lakeland Industries, Inc.’s
Form 8-K, dated April 15, 2008)
|
|
3.2
|
Bylaws
of Lakeland Industries Inc., as amended (Incorporated by reference to
Exhibit 3.2 of Lakeland Industries, Inc.’s Form 8-K, dated April 15,
2008)
|
|
10.1
|
Amendment
dated February 1, 2007 to the original lease Agreement, dated August 1,
2001, between Southwest Parkway, Inc., as lessor, and Lakeland Industries,
Inc., as lessee (Incorporated by reference to Exhibit 10.1 of
Lakeland Industries, Inc. Form 10-K for fiscal year ended January 31, 2008
filed April 14, 2008)
|
|
10.2
|
Lakeland
Industries, Inc. Stock Option Plan (Incorporated by reference to Exhibit
10(n) of Lakeland’s Registration Statement on Form S-18 (File No. 33-7512
NY))
|
|
10.5
|
Employment
Agreement, dated April 13, 2008, between Lakeland Industries, Inc. and
Christopher J. Ryan. (filed herein)
|
|
10.6
|
Lease
Agreement, dated April 1, 2008, amendment to the original lease Agreement,
dated March 1, 2004, between Harvey Pride, Jr., as lessor, and Lakeland
Industries, Inc., as lessee for the property at 201 Pride Lane, Decatur,
Al. (Incorporated by reference to Exhibit 10.6 of Lakeland Industries,
Inc. Form 10-K for fiscal year ended January 31, 2009 filed April 15,
2009
|
|
10.9
|
Employment
Agreement, dated May 1, 2009, between Lakeland Industries, Inc. and Paul
C. Smith (Incorporated by reference to Exhibit 10.9 of Lakeland
Industries, Inc. Form 10-K for fiscal year ended January 31, 2009 filed
April 15, 2009)
|
|
10.10
|
Employment
Agreement, dated January 31, 2010, between Lakeland Industries, Inc. and
Gary Pokrassa, CPA. (Incorporated by reference to exhibit 10.1
of Lakeland Industries, Inc. Form 8-K filed January 15,
2010)
|
|
10.11
|
Employment
Agreement, dated April 16, 2007, between Lakeland Industries Inc. and
Gregory D. Willis (filed herein)
|
|
10.12
|
Asset
Purchase Agreement, dated July, 2005, between Lakeland Industries, Inc.
and Mifflin Valley, Inc. and Lease Agreement and Employment Contract
between Lakeland Industries, Inc., and Michael Gallen (Incorporated by
reference to exhibit 10.15, 10.16, and 10.17 of Lakeland Industries,
Inc.’s Quarterly Report on Form 10-Q filed September 7,
2005)
|
10.13
|
Lease
Agreement, dated January 1, 2010, between Carlos Tornquist Bertrand, as
lessor, and Lakeland Industries, Inc., as lessee for Lakeland Chile (filed
herein)
|
|
10.14
|
Lease
Agreement, dated 2006, between Michael Robert Kendall, June Jarvis and
Barnett Waddingham Trustees Limited, as lessor, and Lakeland Industries,
Inc., as lessee (Incorporated by reference to exhibit 10.22 of Lakeland
Industries, Inc.’s 10-K for the year ended January 31,
2007)
|
|
10.15
|
Modification
letter dated January 15, 2010 modifying the original Lease Agreement,
dated November 10, 2008, between Mifflin Management, as Landlord, and
Lakeland Industries, Inc., as Tenant, for the property at 312 Hendel
Street, Shillington, PA (filed herein)
|
|
10.16
|
Employment
Agreement, dated December 1, 2008, between Lakeland Industries, Inc. and
Phillip Willingham (Incorporated by reference to Exhibit 10.16 of Lakeland
Industries, Inc. Form 10-K for fiscal year ended January 31, 2009 filed
April 15, 2009)
|
|
10.17
|
Lease
Agreement dated September 1, 2009 between LIK 5 Ballow LLC, as lessor, and
Lakeland Industries, Inc., as lessee for Art Prom, LLC in Kazakhstan
(filed herein)
|
|
10.18
|
Lease
Agreement Extension letter dated December 23, 2009, extending the original
lease dated February 5, 2007, between Gotham Enterprises & Affiliates,
LLC, as lesssor, and Lakeland Industries, Inc., as lessee for Industrias
Lakeland S.A. de C.V in Mexico. (filed herein)
|
|
10.19
|
Lease
Agreement, dated August 19, 2009, between Acrilicos Palopoli S.A, as
lessor and Lakeland Argentina, SRL, as lessee (filed
herein)
|
|
10.20
|
Lease
Agreement, dated June 2, 2009, between Beijing Yeshi Enterprise Group Co.,
Ltd, as lessor, and Lakeland (Beijing) Safety Products Limited, as lessee.
(filed herein)
|
|
14.1
|
Amendment
dated February 13, 2009 to the Lakeland Industries, Inc. Code of Ethics
(Incorporated by reference to Exhibit 14.1 of Lakeland Industries, Inc.
Form 10-K for fiscal year ended January 31, 2009 filed April 15,
2009)
|
|
21.1
|
Subsidiaries
of Lakeland Industries, Inc. (wholly-owned):
Lakeland
Protective Wear, Inc.
Lakeland
Protective Real Estate
Industrias
Lakeland S.A. de C.V.
Laidlaw,
Adams & Peck, Inc. and Subsidiary (Meiyang Protective Products Co.,
Ltd.)
Weifang
Lakeland Safety Products Co., Ltd.
Qing
Dao Lakeland Protective Products Co., Ltd.
Lakeland
Industries Europe Ltd.
Lakeland
Glove and Safety Apparel Private Ltd.
Lakeland
Industries, Inc. Agencia en Chile
Lakeland
Japan, Inc.
Qualytextil,
S.A.
Lakeland
Argentina, SRL
Art
Prom, LLC
Lakeland
(Beijing) Safety Products, Co., Ltd.
Lakeland
(Hong Kong) Trading Co., Ltd.
|
|
23.1
|
Consent
of Warren, Averett, Kimbrough & Marino, LLC, Independent Registered
Public Accounting Firm
|
|
23.2
|
Consent
of Holtz, Rubenstein, Reminick LLP, Independent Registered Public
Accounting Firm
|
|
31.1
|
Certification
of Christopher J. Ryan, Chief Executive Officer, President, Secretary and
General Counsel, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Gary Pokrassa, Chief Financial Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Christopher J. Ryan, Chief Executive Officer, President, Secretary and
General Counsel, pursuant to Section 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of Gary Pokrassa, Chief Financial Officer, pursuant to Section 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
LAKELAND
INDUSTRIES, INC.
|
||
By:
|
/ s / Christopher J.
Ryan
|
|
Christopher
J. Ryan,
|
||
Chief
Executive Officer
|
||
and
President
|
Name
|
Title
|
Date
|
||
/s/ Raymond J. Smith
|
Chairman
of the Board
|
April
16, 2010
|
||
Raymond
J. Smith
|
||||
/s/ Christopher J. Ryan
|
Chief
Executive Officer, President,
|
April
16, 2010
|
||
Christopher
J. Ryan
|
General
Counsel, Secretary and Director
|
|||
/s/ Gary Pokrassa
|
Chief
Financial Officer
|
April
16, 2010
|
||
Gary
Pokrassa
|
||||
/s/ Eric O. Hallma
n
|
Director
|
April
16, 2010
|
||
Eric
O. Hallman
|
||||
/s/ John J. Collins, Jr
|
Director
|
April
16, 2010
|
||
John
J. Collins, Jr.
|
||||
/s/ John Kreft
|
Director
|
April
16, 2010
|
||
John
Kreft
|
||||
/s/ Stephen M. Bachelder
|
Director
|
April
16, 2010
|
||
Stephen
M. Bachelder
|
||||
/s/ Duane W. Albro
|
Director
|
April
16, 2010
|
||
Duane
W. Albro
|
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 COMPENSATION" has the meaning set forth in Section 4.5 of this
Agreement.
|
1.1
|
(b)
"ACCRUED OBLIGATIONS" has the meaning set forth in Section 4.1 (a) 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
|
(f)
"CHANGE IN CONTROL" means:
|
(i)
|
The
acquisition by any individual, entity or group, or a Person (within the
meaning on 13 (d) 3) or 14 (d) (2) of the Exchange Act) of a controlling
interest of either (a) the then outstanding 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 14a-11 of
Regulation 14A 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, (a) more than 35% 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, (b) no Person beneficially owns, directly or indirectly, 21% 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 (c) at least a majority of the members of the board of directors of
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 35% 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 sales 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, 21% 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) "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
|
(h)
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
|
1.1
|
(i)
"CURRENT TARGET BONUS" has the meaning set forth in Section 4.1 (a) of
this Agreement.
|
1.1
|
(j)
"DATE OF TERMINATION" has the meaning set forth in Section 3.6 of this
Agreement.
|
1.1
|
(k)
"DISABILITY" has the meaning set forth in Section 3.2 of this
Agreement.
|
1.1
|
(I)
"DISABILITY EFFECTIVE DATE" has the meaning set forth in Section 3.2 of
this Agreement.
|
1.1
|
(m)
[INTENTIONALLY DELETED]
|
1.1
|
(n)
'·EFFECTIVE DATE" means the date of this
Agreement.
|
1.1
|
(o)
"EMPLOYMENT PERIOD" means the period beginning on the Effective Date and
ending on the later of (i) April 16, 2015, or (ii) April 1 of any
succeeding fiscal year during which notice is given by either party (as
described in Section 1.1 (dd) of this Agreement) of such party's intent
not to renew this Agreement.
|
1.1
|
(p)
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
|
1.1
|
(q)
"EXCISE TAX" has the meaning set forth in Section 4.2 (e) of this
Agreement.
|
1.1
|
(r)
"GOOD REASON' has the meaning set forth in Section 3.4 of this
Agreement.
|
1.1
|
(s)
"GROSS-UP PAYMENT" has the meaning set forth in Section 4.2 (e) of this
Agreement.
|
1.1
|
(t)
"INCENTIVE BONUS" has the meaning set forth in Section 2.4 (b) of this
Agreement.
|
1.1
|
(u)
"NOTICE OF TERMINATION" has the meaning set forth in Section 3.5 of this
Agreement.
|
1.1
|
(v)
[INTENTIONALLY DELETED]
|
1.1
|
(w)
"OTHER BENEFITS" has the meaning set forth in Section 4.1 (d) of this
Agreement.
|
1.1
|
(x)
"OUTSTANDING COMPANY COMMON STOCK" has the meaning set forth in Section
1.1 (f) (i) of this Agreement.
|
1.1 | (y) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning set forth in Section 1.1 (f) (i) of this Agreement. |
1.1
|
(z)
"PAYMENT" has the meaning set forth in Section 4.2 (e) of this
Agreement
|
1.1
|
(aa)
"PERSON" has the meaning set forth in Sections 13 (d) and 14 (d) of the
Exchange Act.
|
1.1
|
(bb)
[INTENTIONALLY DELETED]
|
1.1
|
(cc)
"TERM" means the period that begins on the Effective Date and ends on the
earlier of (i) the Date of Termination as defined in Section 3.6 of this
Agreement, or (ii) the close of business on the later of February 1, 2003
or February 1 any renewal term as set forth in Section 2.1 of this
Agreement.
|
1.1
|
(dd)
"TRIGGERING TRANSACTION" means a Change of Control of the
Company
|
1.1
|
(ee)
"TRIGGERING TRANSACTION DATE" shall mean the date of the Triggering
Transaction.
|
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 and 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 New York without reference to its conflict of law
principles.
|
2.1.
|
PERIOD
OF EMPLOYMENT. The Executive shall remain in the employ of the Company
throughout the Term of this Agreement in accordance with the terms and
provisions of this Agreement. This Agreement will automatically renew for
two year periods unless either party gives the other written notice, by
October 30, 2014, or October 30 of any succeeding year, of such party's
intent not to renew this Agreement.
|
2.2.
|
POSITIONS
AND DUTIES.
|
2.2
|
(a)
Throughout the Term of this Agreement, the Executive shall serve as a
Director of the Board and Executive Vice President, General Counsel and
Secretary of the Company, subject to reasonable directions and nominations
of the Board. The Executive shall have such authority and shall perform
such duties as are specified by, the By-laws of the Company for the office
to which he has been appointed hereunder and shall so serve, subject to
the control exercised by the Board from time to time. Additionally, each
year throughout the Term of the Executive's service as a Director, the
Executive shall be nominated to serve as member of the
Board.
|
2.2
|
(b)
Throughout the Term of this Agreement (but excluding any periods of
vacation and sick leave to which the Executive is entitled), the Executive
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 paragraph for the Executive 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 Executive's responsibilities as an employee of
the Company in accordance with this Agreement or violate the
Company's conflict of interest policy as in effect immediately prior to
the Effective Date.
|
2.3.
|
SITUS
OF EMPLOYMENT. Throughout the Term of this Agreement, the Executive's
services shall be performed at the location where the Executive was
employed immediately prior to the Effective Date, or any office of the
Company which is located in the greater Long Island areas. It is
understood and agreed by the Executive that the Executive will be required
at the discretion of the Board of Directors, to engage in substantial
business travel.
|
2.4.
COMPENSATION.
|
|
2.4
|
(a)
ANNUAL
BASE SALARY. For the first calendar year within the Term of this
Agreement, the Executive shall receive an annual salary ("Annual Base
Salary") of Four Hundred Thousand Dollars ($400,000) which shall be paid
in equal or substantially equal semi-monthly installments. During the Term
of this Agreement, the Annual Base Salary payable to the Executive shall
be reviewed at least annually and shall be increased at the discretion of
the Board of the Compensation Committee of the Board but shall not be
reduced.
|
2.4
|
(b)
INCENTIVE
BONUSES. In addition to Annual Base Salary, the Executive shall
be awarded the opportunity to earn an incentive bonus on an annual basis
(“Incentive Bonus”) under an incentive compensation plan to be determined
by the Compensation Committee of the Board (and attached hereto as Exhibit
1). During the Term of this Agreement, the annual Incentive
Bonus which the Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the discretion of the
Compensation Committee of the Board
|
|
|
2.4
|
(c)
INCENTIVE,
SAVINGS AND RETIREMENT PLANS. Throughout the Term of this Agreement, the
Executive shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives of the
Company.
|
2.4
|
(d)
WELFARE
BENEFIT PLANS. Throughout the Term of this Agreement (and thereafter,
subject to Sections 4.1 (c) hereof), the Executive and/or the Executive'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
executives of the Company but only to the extent that such persons are
eligible for coverage under the terms of such Plan. As it affects Sections
2.4(c) and 2.4(d) above, the Company shall always have the right to alter
its benefit plan providers.
|
2.4
|
(e)
EXPENSES.
Throughout the Term of this Agreement, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies, practices and procedures
generally applicable to other peer executives of the Company. The
Executive agrees to submit receipts and or vouchers in support of all
requests for reimbursement.
|
2.4
|
(f)
FRINGE
BENEFITS. Throughout the Term of this Agreement, the Executive shall be
entitled to an automobile allowance of $9,500.00 annually and whole life
insurance of $500,000 paid by the Company. Executive agrees to be solely
responsible for any and all federal, state and local taxes owing as a
result of such term life insurance being
provided.
|
2.4
|
(g)
VACATION.
Throughout the Term of this Agreement, the Executive shall be entitled to
paid vacation for four (4) weeks each
year.
|
3.1.
|
DEATH.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment
Period.
|
3.2.
|
DISABILITY.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 7.2 of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth
(30) day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the ninetieth (90) days after such
receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" shall
mean that the Executive has been unable to perform the services required
of the Executive hereunder on a full-time basis for a period of one
hundred eighty (180) consecutive business days by reason of a physical
and/or mental condition. "Disability" shall be deemed to exist when
certified by a physician paid for and selected by the Company and
acceptable to the Executive or the Executive’s legal representative (such
agreement as to acceptability not to be withheld unreasonably). The
Executive 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 Executive’s employment during the
Employment Period for "Cause", which shall mean termination based upon:
(i) the Executive'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 Executive by the Company, which
specifically identifies the manner in which the Executive has not
substantially performed his duties, (ii) the Executive's arrest or
indictment for any felony or any act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii)
the Executive's material breach of any provision of this Agreement. For
purposes of this Section, no act, or failure to act on the Executive's
part shall be considered "willful" unless done, or omitted to be done,
without good faith and without reasonable belief that the act or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for Cause unless
and until (i) he receives a Notice of Termination from the Company, (ii)
he is given the opportunity, with counsel to be heard before the Board
(except in the event he is incarcerated, in which case his appearance
shall not be necessary); and (iii) the Board finds, in its good faith
opinion, the Executive was guilty of the conduct set forth in the Notice
of Termination.
|
3.4.
|
GOOD
REASON. The Executive may terminate his employment with the Company for
"Good Reason", which shall mean:
|
3.4
|
(a)
the assignment to the Executive of any duties inconsistent in any respect
with the Executive'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 material diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the
Executive;
|
3.4
|
(b)
(i) in the event of and after the occurrence of a Triggering Transaction,
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 Executive is entitled as
specified in Section 2.4, (ii) the taking of any action by the Company
which would adversely affect the Executive's participation in, or
materially reduce the Executive's benefits under, any plans described in
Section 2.4, or deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section 2.4 (f), or (iii) the
failure by the Company to provide the Executive with paid vacation to
which the Executive is entitled as described in Section 2.4
(g).
|
3.4
|
(c)
in the event of and after the occurrence of a Triggering Transaction, the
Company's requiring the Executive 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; Such
breach by the Company shall require Executive to provide the Company a
written notice describing with specificity the nature of the contractual
breach and the Company shall have 30 days to cure such
breach.
|
3.4
|
(e)
any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by this Agreement;
or
|
3.4
|
(f)
within a period ending at the close of business on the date one (1) year
after the Triggering Transaction Date of any Change in Control, if the
Company has failed to comply with and satisfy Section 6.2 on or after
suchTriggering Transaction Date. For purposes of this Section, any good
faith determination of "Good Reason" made by the Executive shall be
conclusive.
|
3.5.
|
NOTICE
OF TERMINATION. Any termination by the Company for Cause or Disability, or
by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party, given in accordance with Section 7.2. 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 Executive's employment under the provision so
indicated, and (iii)' if the Date of Termination (as defined in Section
3.6 hereof) is other than the date of' receipt of such notice, specifies
the termination date (which date shall be not more than thirty (30) days
after the giving of such notice). The failure by the Executive 6r 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 Executive or the Company hereunder or preclude the Executive
or the Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights
hereunder.
|
3.6.
|
DATE
OF TERMINATION. “Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive for
Good Reason, the Date of Termination shall be the date of receipt of the
Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be, or (iii)
if the Executive's employment is terminated by the Company other than for
Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination; provided that if within thirty (30)
days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been
perfected).
|
4.1.
|
TERMINATION
WITHOUT CAUSE OR FOR GOOD REASON NOT IN CONNECTION WITH A TRIGGERING
TRANSACTION. If, prior to a Triggering Transaction 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 Triggering Transaction or (b) the execution of a definitive
agreement or contract that eventually results in a Triggering Transaction,
which shall result in the payment of severance benefits set forth in
Section 4.2
of
this Agreement): (i) the Company shall terminate the Executive's
employment without Cause, or (ii) the
Executive
shall terminate employment with the Company for Good Reason, the Executive
shall be entitled to the payment of the benefits provided below as of the
Date of Termination:
|
4.1
|
(a)
Accrued Obligations. Within thirty (30) days after the Date of
Termination, the Company shall pay to the
Executive
the sum of (1) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (2) the accrued benefit
payable to the Executive under any deferred compensation plan, program or
arrangement in which the Executive is a participant subject to the
computation of benefits provisions of such plan, program or arrangement,
and (3) any accrued vacation pay; in each case to the extent not
previously paid (the "Accrued Obligation"). In addition, on the date that
Incentive Bonuses are paid to other peer executives for the year in which
the Executive's employment is terminated, the Executive will be paid an
amount equal to the product of the Current Target Bonus multiplied by a
fraction, the numerator of which is the number of days during the fiscal
year for which the Incentive Bonus is paid prior to the Date of
Termination and denominator of which is 365. For purposes of this
Agreement, the term "Current Target Bonus" means the Incentive Bonus that
would have been paid to the Executive for the fiscal year in which the
termination of employment occurred, if the Executive's employment had not
been so terminated and the Executive had earned 100% of the Incentive
Bonus that he could have earned for that
year.
|
4.1
|
(b)
Annual Base Salary and Target Bonus Continuation. For the remainder of the
Employment Period, the
Company
shall pay to the Executive, the Executive's then-current Annual Base
Salary and Current Target Bonus as would have been paid to the Executive
had the Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive shall receive,
at minimum, the
then-current
Annual Base Salary and Current Target Bonus for the remainder of the
Employment Period, or for a period beginning on the Date of Termination
and ending two years thereafter, whichever is longer. The Company at any
time may elect to pay the balance of such payments then remaining in a
lump sum, in which case the total of such payments shall be discounted to
present value on the basis of the applicable Federal short-term monthly
rate as determined according to Code Section 1274 (s) for the month in
which the Executive's Date of Termination
occurred.
|
4.1
|
(c)
Medical and Health Benefit Continuation. For a period of two years
beginning on the Date of Termination,
or
such longer period as any plan, program, practice or policy may provide,
but only to the extent allowable under such Plan, the Company shall
continue medical and health benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided
to them in accordance with the plans, programs, practices and policies
described in Section 2.4 (d) if the Executive's employment had not been
terminated, in accordance with the plans, practices, programs or policies
of the Company as those provided generally to other peer executives and
their families; provided, however, that if the Executive becomes
re-employed with another employer and is eligible to receive medical or
health benefits under another employer-provided plan, the medical and
health benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. In the
event Executive is able to obtain medical and health care coverage from a
third party for the duration of such coverage period that is at least as
good in all material respects as that described in the immediately
preceding sentence, Executive agrees to accept, in lieu of such Company
provided medical and health benefits. a lump sum cash payment in an amount
equal in value to the entire cost to Executive on an after-tax basis of
such alternate medical and health care
coverage.
|
4.1
|
(d)
Other Benefits. To the extent not previously paid or provided, the Company
shall timely payor provide to the
Executive
and/or the Executive's family any other amounts or benefits required to be
paid or provided for which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Company as
those provided generally to other peer executives and their families
("Other Benefits").
|
4.2.
|
BENEFITS
UPON TERMINATION IN CONNECTION WITH A TRIGGERING TRANSACTION. If (a) a
Triggering Transaction occurs during the Employment Period and within four
(4) years after the Triggering Transaction Date (i) the Company shall
terminate the Executive's employment without Cause, or (ii) the Executive
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 Triggering Transaction or (ii)
the
execution of a definitive agreement or contract that eventually results in
a Triggering Transaction, then the Executive 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 Triggering Transaction 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 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
Executive
the Accrued Obligation. In addition, on the date that Incentive Bonuses
are paid for the year in which the Executive's employment is terminated,
the Executive will be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive Bonus is
paid prior to the Date of Termination and the denominator of which is
365.
|
4.2
|
(b)
Severance Amount. Within thirty (30) days after the Entitlement Date, the
Company shall pay to the
Executive
as liquidated damages severance pay in a lump sum, in cash, an amount
equal to 3.99 times an amount equal to his then-current Annual Base Salary
and Current Target Bonus.
|
4.2
|
(c)
Stock Options. To the extent not otherwise provided for under the terms of
the Company's stock option plans
or
the Executive's Restricted Stock Plans, all stock options held by the
Executive that have not expired in accordance with their respective terms
shall vest and become fully exercisable as of the Entitlement
Date.
|
4.2
|
(d)
Other Benefits. To the extent not previously paid or provided, the Company
shall timely payor provide to the
Executive
and/or the Executive's family any Other Benefits required to be paid or
provided for which the
Executive
and/or the Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice or contract or
agreement of the Company to be implemented by the Company during the term
of this Agreement, such as deferred compensation or retirement
plans.
|
4.2
|
(e)
Excess Parachute Payment. Anything in this Agreement to the contrary
notwithstanding, in the event that it
shall
be determined that any payment or distribution by the Company to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise but
determined without regard to any additional payments required under this
Section 4.2 (e) (a "Payment") would be subject to the excise
tax imposed by Code Section 4999 (or any successor provision) or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-up Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any
interest or penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment on an after-tax basis equal to the Excise Tax imposed upon
the Payment. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty (30)
business days after the Executive is informed in writing of such claim by
the Internal Revenue Service and the notification shall apprise the
Company of the nature of the claim and the date on which such claim is
required to be paid.
|
The
Executive shall not pay such claim prior to the expiration of a thirty
(30) day period following the date on which the Executive has given such
notification to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is required). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall
cooperate with the Company in so contesting; provided, however, that the
Company shall bear and pay all costs and expenses, (including additional
interest and penalties) incurred in connection with such contest, on an
after-tax basis to the Executive.
|
4.3.
|
DEATH.
If the Executive's employment is terminated by reason of the Executive's
death during the employment Period (either prior or subsequent to a
Triggering Transaction), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations (as defined in Section 4.1
(a» (which shall be paid to the Executive'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 Other Benefits
(as defined in Section 4.1 (d», including death benefits pursuant to the
terms of any plan, policy, or arrangement of the
Company.
|
4.4.
|
DISABILITY.
If the Executive's employment is terminated by reason of the Executive's
Disability during the Employment Period (either prior or subsequent to a
Triggering Transaction), this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations as defined in Section 4.1
(a»
which shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of
Termination).
|
4.5.
|
TERMINATION
FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's employment shall be
terminated for Cause during the Employment Period (either prior or
subsequent to a Triggering Transaction), this Agreement shall terminate
without further obligations to the Executive other than the obligations to
pay to the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company during
the Employment Period, (excluding a termination for Good Reason), this
Agreement shall terminate without further obligations to the Executive,
other than for the payment of Accrued Compensation (as defined in this
Section). In such case, all Accrued Compensation shall be paid to the
Executive in a lump sum in cash within thirty (30) days of the Date of
Termination.
|
For
the purpose of this Section, the term "Accrued Compensation" means the sum
of (i) the Executive's Annual Base Salary pro-rated through the Date of
Termination to the extent not previously paid, (ii) any compensation
previously deferred by the Executive (together with any accrued interest
or earnings thereon), and (iii) any accrued vacation pay in each case to
the extent not previously
paid.
|
4.6.
|
NON-EXCLUSIVITY
OF RIGHTS; SUPERSESSION OF CERTAIN BENEFITS. Except as provided in Section
4.1 (c) and in this Section 4.6, nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with
the Company. Amounts which are vested benefits of which the Executive is
otherwise entitled to receive under any plan, policy, practice or program
of, or any contract or agreement with, the Company at or subsequent to the
Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
|
4.7.
|
FULL
SETTLEMENT. The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1 (c), such amounts shall not be
reduced whether or not the Executive obtains other employment. In the
event of and after the occurrence of a Triggering Transaction, the Company
agrees to pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of 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 Executive regarding
the amount of any payment pursuant to this Agreement), 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
Executive (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or (ii)
in the event of any termination of employment by the Executive, whether
Good Reason existed, 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
Executive of the existence of Good Reason was not made in good faith, the
Company shall pay all amounts, and provide all benefits, to the Executive
and/or the Executive's family or other beneficiaries, as the case may be,
that the Company would be required to payor provide pursuant to Section
4.1 as though such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except
upon receipt of an undertaking by or on behalf of the Executive to repay
all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled
|
5.1.
|
NON-COMPETE
AGREEMENT
|
5.1
|
(a)
It
is agreed that during the period beginning on the date the Term of this
Agreement expires and ending one (1) year (the "Non-Compete Term")
thereafter, the Executive shall not, without prior written approval of the
Board, become an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor, or director of any entity located
anywhere in the world which is engaged in the same business as the Company
is engaged at any time during the Non-Competition Term provided that, if
the Executive is terminated by the Company without Cause or if the
Executive terminates his employment for Good Reason, after a Triggering
Transaction, then he will not be subject to the restrictions of this
Section.
|
|
|
5.1
|
(b)
For
purposes of Section 5.1, a business enterprise with which the Executive
becomes associated as an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor or director shall be considered in
substantial direct competition, if such entity competes with the Company
in any business in which the Company is engaged and is within the
Company's market area as of the date that the Employment Period
expires.
|
|
|
5.1
|
(c)
The above constraint shall not prevent the Executive from making passive
investments, not to exceed five
percent
(5%), in any publicly traded company.
|
|
|
5.1
|
(d)
The Executive agrees that the foregoing restrictions, in the absence of a
Triggering Transaction are
reasonable
and may not prevent the Executive from earning a livelihood and
furthermore, if any court of
competent
jurisdiction deems any of the provisions of the foregoing invalid, this
Agreement shall be enforced to the full extent that such other provisions
are valid and such court may modify such restrictions to afford the
Company the maximum applicable protection permitted under the
law.
|
|
5.1
|
(e)
Should Executive be adjudicated by a court of competent Jurisdiction to be
in violation of this Section 5.1 or Section 5.2 below, all amounts owed
Executive pursuant to this Agreement shall be forfeited and the Company
shall be entitled to injunctive or such other equitable relief as is
necessary to restrain Executive's breaching
conduct.
|
5.2.
|
CONFIDENTIAL
INFORMATION. The Executive 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
Executive during the Executive's employment by the Company and which shall
not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
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 (nor shall Executive use such information in
any way).
|
6.1.
|
SUCCESSORS
OF EXECUTIVE. This Agreement is personal to the Executive and, without the
prior written consent of the Company, the rights (but not the obligations)
shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive'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 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 Executive to terminate the
Agreement at his option on or after the Triggering Transaction 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. After such obligations are agreed to be assumed by such
successor, the Company shall have no further obligations thereunder or
hereunder.
|
7.1.
|
OTHER
AGREEMENTS. The Board may, from time to time, in the fixture, provide
other incentive programs and bonus arrangements to the Executive with
respect to the occurrence of a Triggering Event that will be in addition
to the benefits required to be paid in the designated circumstances in
connection with the occurrence of a Triggering Transaction. 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 Executive 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 wl\en 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 the attention of the Chairman of the Board,
or 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.
|
7.3.
|
VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of
this Agreement.
|
7.4.
|
WAIVER.
The Executive'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 Executive or the Company may have
hereunder, including, without limitation, the right of the Executive 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.
|
NEW CONTRACT
2010-2015
|
2.4(b)
|
INCENTIVE
BONUSES. In addition to Annual Base Salary, the Executive shall
be awarded the opportunity to earn an incentive bonus on an annual basis
(“Incentive Bonus”) under an incentive compensation plan to be determined
by the Compensation Committee of the Board (and attached hereto as Exhibit
1). During the Term of this Agreement, the annual Incentive
Bonus which the Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the discretion of the
Compensation Committee of the
Board.
|
|
(a)
|
A
base annual salary of $200,000.00 payable bi-weekly (the “Base Salary”);
and
|
|
(b)
|
Participation,
if and when eligible, in the Company’s Restricted Stock plan, profit
sharing plan, medical or other benefit plans adopted by the Company during
the term of this Agreement and/or the existing 401(k) plan
and;
|
|
(c)
|
Such
benefits as are provided from time to time by the Company to its officers
and employees; provided however that your annual vacation shall be for a
period of 4 weeks, with no more than 2 such weeks taken at any one time;
and
|
|
(d)
|
A
commission structure shall be an override on net sales in the United
States.
|
Override on
|
||
Monthly Sales
|
||
Disposable
Tyvek
|
0.01%
|
|
Disposable
non Tyvek
|
0.50%
|
|
Chemical
DuPont
|
0.10%
|
|
Chemical
Lake Branded
|
1.25%
|
|
Highland
(all gloves)
|
0.60%
|
|
Weifang
|
0.40% - **
|
|
Qingdao
|
0.40% - **
|
|
Woven
/ fire (Uniland)
|
0.70%
|
|
Hi-Visability
(Reflective)
|
|
0.70%
|
|
(e)
|
Final
payment for the override in (d) herein shall be determined concurrently
with the determination of monthly sales by a Corporate
Controller.
|
|
(f)
|
An
automobile allowance in the amount of $750 per month, subject to on-going
review and discretion of the Company;
and
|
|
(g)
|
Reimbursement
for any dues and expenses incurred by you that are necessary and proper in
the conduct of the Company’s business;
and
|
|
(h)
|
A
bonus as set forth in Section 5 of this Agreement (the
“Bonus”).
|
|
(a)
|
Death
. Your
employment shall terminate on the date of your death. Your Base
Salary (as in effect on the date of death) shall continue through the last
day of the month in which your death occurs. Payment of your
Base Salary shall be made to your estate or your beneficiary as designated
in writing to the Company. Your estate or designated
beneficiaries as applicable shall also receive a pro-rata portion of the
Annual Bonus, if any, determined for the fiscal year up to and including
the date of death which shall be determined in good faith by the
Compensation Committee of the Board of Directors. Your
beneficiaries shall also be entitled to all other benefits generally paid
by the Company on an employee’s
death.
|
|
(b)
|
Disability
. Your
employment shall terminate if you become totally disabled. You
shall be deemed to be totally disabled if you are unable, for any reason,
to perform any of your duties to the Company, with or without a reasonable
accommodation, for a period of 90 consecutive days or for periods
aggregating 120 days in any period of 180 consecutive
days.
|
|
(c)
|
Cause
. The
Company may terminate your employment for “Cause”, which shall mean
termination based upon: (i) your failure to substantially perform your
duties with the Company, after a written demand for such performance is
delivered to you by the Company, which identifies the manner in which you
have not performed your duties, (ii) your commission of an act of fraud,
theft, misappropriation, dishonesty or embezzlement, (iii) your conviction
for a felony or pleading
nolo contendere
to a
felony, (iv) your failure to follow a lawful directive of management, or
(v) your material breach of any provision of this Agreement. In
the event of a termination for Cause, the Company shall pay you, within
thirty days of such termination, that portion of your Base Salary which is
accrued but unpaid as of the date of such termination and any other
benefits accrued prior to the date of termination under this
Agreement.
|
|
(d)
|
Other
Termination
. Should you decide to leave the Company, you
will provide the Company with 45 days written notice. Should
the Company decide to terminate you for any reason other than as set forth
above, it shall have the right to buy out your contract rights herein for
6 months Base Salary and any commissions and bonus due you on the date of
termination and what you would have been paid in commissions for 6 months
after the date of termination calculated from the prior six months of
commissions, all concomitant with your execution of the Company’s standard
severance agreement and release.
|
LAKELAND INDUSTRIES, INC. | |||
Compensation Committee | |||
By:
|
/s/
Duane
Albro
|
||
Duane
Albro
|
|||
AGREED
AND ACCEPTED:
|
By:
|
/s/
John J.
Collins
|
|
John
J. Collins
|
|||
/s/
Greg
Willis
|
By:
|
/s/
Stephen
Bachelder
|
|
Greg
Willis
|
Stephen
Bachelder
|
||
Executive
Vice President
|
/s/Carlos
Tornquist Bertrand
|
/s/
Patricia Bravo Arévalo
|
|
LESSOR
|
LESSEE
|
|
p.p.
INVERSIONES FAROLITO LTDA.
|
p.p.LAKELAND
INDUSTRIES INC.
|
|
AGENCIA
EN CHILE
|
||
Carlos
Tornquist Bertrand
|
Patricia
Bravo Arévalo
|
|
ID
num: 8.450.627-3
|
ID
num:
7.905.033-4
|
By:
|
/s/ Agustina Cendali Byer
|
By:
|
/s/
Ariel
Palopoli
|
|
Lessee
|
Lessor
|
1.
|
the
lease period of this contract is from June 11,2009 to June 30,
2011
|
2.
|
Rent:
the rent of this contract includes lease of room and management fees
(RMB1.5/day/ architectural m
2
)
|
3.
|
The
rent of the room to lease of building A, B and C is RMB4.5/ architectural
m
2
during the lease period.
|
4.
|
Part
A agrees that lease Part B the room at favorable price during the
favorable duration. The favorable price is RMB3.1/ architectural m
2
totally RMB245351. the favorable rent-free period is 20 days(
the rent-free period refer to Article 4. paragraph one
)
|
5.
|
The
rent should be calculated according to the foreign exchange rate middle
rate of the State Administration of Exchange Control when Part B pays the
rent by foreign currency.
|
6.
|
Electricity
fee: Part B pays Part A the electricity fee within five work days from 25
of every month according to the actual use of electricity (the number of
the ammeter). It starts from the day when Part B moves in as the first
time to charge the electricity. The current electricity price is RMB1 per
kilowatt hour which is subject to the price adjustment of the power supply
section.
|
7.
|
Water
fee: Part B pays Part A within five work days from 25 of each month
according to the actual use of water, and it starts from the day when Part
B move in as the first time to charge the water. The current water price
is RMB6.1 per ton which is subject to the price of the water supply
section.
|
8.
|
Parking
fee: monthly parking fee for each seven and less than seven seats car
includes RMB250 (RMB150 as monthly flat rate and RMB100 as overhead
expense of Contractor), fixed parking lot RMB500 (RMB210 as monthly flat
rate and RMB290 as overhead expense of Contractor) and underground parking
lot RMB800; monthly parking fee for each more than seven seats car is RMB
500 (RMB210 as monthly flat rate and RMB290 as overhead expense of
Contractor). Part B pays the parking fee of next month within five work
day. Charge the parking fee according to the actual days if park less than
one month. Parking lot number is one. Part A offer the parking place of
bicycle but have no responsibility of
management.
|
1.
|
Part
B pays Part A three months rent totally RMB29853 as the guarantee to
perform the contract when the two parties sign the contract. The security
deposit has no interest.
|
2.
|
When
the contract expires, Part A refund the full amount security deposit to
Part B without any interest or compensate within one month after Part B
change its registered address to be not Yeqing Building, provided the
latter performs all the obligation stipulated in the contract and pay off
all the payable expense. If Part B needs not change its registered address
Part A refund the full amount security deposit to Part B within one month
after Part B pay off all the expense provided the latter performs all the
obligation stipulated in the
contract.
|
3.
|
It
applies to Article 10 paragraph ten if Part B terminates the contract
without the consent of Part A during the lease
period.
|
4.
|
Part
B should not use the security deposit to countervail the rent or the other
expense.
|
5.
|
Part
B should not transfer the creditor’s right to the third part or pledge for
the others and should not use the security deposit as the other expense
except the performance of the
contract.
|
6.
|
The
contract terminated automatically if the security deposit of Part B do not
arrive the account of Part A within three days after the contract
signed.
|
1.
|
The
rent-free period of Part B is from 11 June, 2009 to 30 June, 2009. Part B
need no pay Part A the lease of the room, but should pay the management
fee stipulated in the contract (RMB1.5/day/architectural m
2)
,
public service fee (include electricity rate and water rate) and the other
expense. The management fee should pay with the security deposit during
the rent-free period. During the rent-free period, Part B should perform
the entire obligation and abide all the regulation stipulated in the
contract except need not pay lease of room. Part B should pay the
telephone bill and internet fee to China
Telecom.
|
2.
|
Part
B pays Part A the rent every one month. The first time to pay the rent is
before 01 July and the total amount is
RMB10282.7
. The
second time to pay the rent is within five work days from 25 July, 2009
and from then on the date to pay the rent is within five work days from 25
of every month according the actual number of days of each
month.
|
3.
|
Payment
of Part B shall be made in check or cash or remit to the bank appointed by
Part A if pay by bill of exchange. The date of remitting the bill of
exchange shall be the date of
payment.
|
4.
|
Part
B should pay the rent according to the date stipulated in the
contract.
|
5.
|
When
receive the rent and the other expense Part A should make legal equal
amount invoice to Part B with Part A as the issuer of the
invoice.
|
1.
|
Part
B should abide the regulation established by Part A and the agreement
signed by the two parties.
|
2.
|
Part
B should not rebuild or decorate any public area or public part, should
not mark, scrawl or drill on the public part, and should not change the
appearance of the building without the written consent of Part
A.
|
3.
|
After
getting the decoration permit, Part B should paste the decorate permit on
the door or the other conspicuous place of the lease room so Part A can
inspect the decoration.
|
4.
|
Part
B should insure the decoration have no damage to the instruction and
facility of the lease room and the building and have no effect on the
other lessee to use the building and the room they
lease.
|
5.
|
During
the lease period, Part B should support Part A when the latter need remedy
or rebuild the building and should not restrict or disturb the builder
employed by Part A. But Part A should give written notice to Part B and
made the utmost possible efforts to insure Part B can work
normally.
|
6.
|
Part
A can enter the lease room of Part B to inspect and maintain after giving
logical notice in advance. Part A can enter the lease room of Part B
without notice in an emergency and take down the window and door to get in
when necessary and inform Part B within 24 hours after the
fact.
|
7.
|
Part
B should keep the lease room and the facility of the room in good, clear,
tenantable and maintained condition (not include natural abrasion). Part B
should not repair any damage or flaw of the room, but should inform Part A
of that. Part B must assume the responsibility of any personal injury or
property lose to Part B or anyone others caused by the lease of the room
and the disrepair or damage of the
facility.
|
8.
|
Part
B should take all reasonable precaution to protect the interior of the
room against damages from fire, water, wind and the like, and ensure close
all the windows under the threaten of atrocious
weather.
|
9.
|
Part
B should not claim for compensation to Part A when remedy or rebuild of
the lease room or the whole building which make Part B cannot use the room
normally are caused by Force
Majeure.
|
1.
|
Part
B should presents the basic information of the company and the employ to
the administrative personnel of Part A and should equip its stuff Security
Access Control card (detail refer to Appendix Four Article 3 paragraph
five). Stuff of Part B should not stay in the room overnight. Part A stops
the normal property and personal service after 18:00 on work
day.
|
2.
|
Part
A or the worker hired by Part A should inform Part B in advance when they
need enter the lease room because of the reason of maintain, inspect,
security, fireproofing, installation and the like. Part A can enter the
room directly in emergency when Part A is not able to inform Part B in
advance, but get in touch with Part B within 24 hours after the
fact.
|
1.
|
Part
A should not announce unilaterally raise the rent without the consent of
Part B. but the rent price should be readjusted when renew the expired
contract, otherwise the contract cannot be
extended.
|
2.
|
Part
A should provide Part B the use of central
air-conditioning:
|
1)
|
Free
of charge cooling time and standard: 8:00-18: from Monday to Friday. No
heating on legal holiday.
|
2)
|
Free
of charge heating time and standard: heating period is 15 November every
year to 15 March of the next year. During this period 8:00 to 18:00 is
normal heating time and 18:00 to 8:00 is low temperature heating
time.
|
3)
|
It
charges 930 per hour (limited to D building) outside the time stipulated
above from Monday to Friday. If the central air-conditioning is used for
heating or cooling on the other holidays the using time of should not less
(it should be a mistake of the contract which should be “more” I think)
than 4 hour, and the excess time will be charged according to the above
charge regulation.
|
3.
|
To
be responsible for the security, fireproofing, environmental hygiene and
the like of the public area and public
facility.
|
4.
|
Inspect
and maintain the public area and facilities to ensure them in good usable
condition and repair in time in the event of any damage malfunction or
receiving the written notice from Part B of damage and
malfunction.
|
5.
|
Part
A provide Part B with the other paid service (details refers to Appendix
Four Article 3 Paragraph four)
|
6.
|
Part
A can amend the Appendixes of the contract Property Management Agreement,
Fire Control Safety Responsibility Pledge and Security Responsibility
Pledge according to the relevant government document and regulation and
the actual position of the company. The amended version should be sent to
Part B in time and come to force upon the arrival to Part
B.
|
7.
|
Part
A should keep the circuitry, equipment, water pipe, drainage system and
the other public facilities in good and rentable condition. Part A have no
responsibility for the failure to function normally of the public
facilities or the intermission of the water, air-condition and the like
caused by emergent maintaining, Force Majeure, or have notified Part B in
advance.
|
1.
|
Part
B should be a legal company registered in China, or legal office in
Beijing of foreign company registered legally, or legal entity, operating
unit, the other social organization registered in the relevant
administrative organ. Part B should submit the duplicate of Corporate
Business License (with the seal of the company) to Part A as the appendix
of the contract. If Part B is a newly established company, the appointed
corporate executive of Part B sign the contract with Part A, and submit
the relevant legal document to Part A within 10 days after the
establishment of the company. The two parties should change the contract
in the form of complementary
agreement.
|
2.
|
Part
B has the right to use the lease room but have not the ownership. No
sublease, relet, transfer, pledge or borrow are allowed. The above
regulation applied to the entire article in the lease room provided by
Part A.
|
3.
|
The
room leased to Lessee shall only be utilized for office of company. Part B
should not use the lease room as other application, should not change the
room or any part of the room to broadcasting studio, should not hold any
religion ritual or any other rite and should not use the room for
gambling, prostitution, or any other illegal and immoral purpose. Part B
should not use the lease room for any activity that endanger State
security, should not perform or allow any auction or sale activity of any
article or any property, should not lease the room by any way that may
that will harm or endanger Part A or the other lessee such as noise,
disarrangement smell and the like.
|
4.
|
Part
B should not operate business under the name of Part
A.
|
5.
|
Part
B should not jam, incise, damage, change or disarrange any public area or
fixed equipment of the building and should not influence the supply and
usage of the water, electricity, gas and the like of the
building.
|
6.
|
Part
B should not move or change the facilities of the lease room during the
decoration without the consent of Part A; otherwise, Part B should assume
total responsibility.
|
7.
|
Part
B should restore the lease room to the original state or bear the expense
to restore the lease room, except otherwise agreed by the
parties.
|
8.
|
Part
B should abide the contract and the management system of Part
A.
|
9.
|
Part
B is liable to the security
,
anti-epidemic
and the
fireproofing of the lease room. Office and business activities should
confirm to the regulation of Beijing fire and health and anti-epidemic
department and the Fire Control Safety Responsibility Pledge (refer to
Appendix Two).
|
10.
|
Part
B should report the power load condition of the lease room to Part A
before decoration for the later to audit in advance. Register and file the
number and power load of the large and irregular electric equipment to
Part A and obtain the consent of Part A before increasing new large and
irregular electric equipment. Equipment inside the room such as computer
should be equipped with UPS.
|
11.
|
Part
B should not put any article that beyond the design load of the lease room
floor in the room. Part A reserves the right to stipulate the weight and
location of the coffer of Part B.
|
12.
|
Part
B should not move any heavy machine and large equipment into the building.
Notifying Part A in advance before move out large number of office
electricity equipment and establishment, and move out with the consent of
Part A and out certificate. It’s considered as breach of the contract and
Part A have the right to penalize Part B if Part B moving our without
consent of Part A seriously badly. Part B should follow the direction of
Part A people.
|
13.
|
Part
B should not use the lease room as manufacture and storage purpose except
sample and item for display. Prohibit any flammable, explosive, virulent,
radioactive dangerous article.
|
14.
|
Part
B should not place article or garbage in the lobby, corridor or the other
public area of the building.
|
15.
|
Part
B should pay the agreed rent of the contract, the water and electricity
fee and the other relevant fee, and should not delay the payment by any
reason or refuse the payment.
|
16.
|
Part
B should keep the inside of the lease room clean and in good condition,
including but not limited to floor, wall, floor board, ceiling and the
estate like window, door, line of power and gas. Keeping the facilities,
furniture and sanitary utensils clean and in good condition. Part B pays
the expense to when Part A remedy the damage of the lease room, the damage
of the public area caused by Part B or the guest of Part
B.
|
17.
|
Except
the sign and nameplate provided by Part A, Part B should not put any
advertise sign, light box, signboard, decoration, flag, poster or the
other articles inside or outside of the lease and the public area which is
visible from outside of the
building.
|
18.
|
During
the lease period, Part B should submit the duplicate of its Corporate
Business License (with seal of the company) which passed the annual audit
to Part A to keep in a file.
|
|
1.
|
Part
B should negotiate the new rent and the other terms with Part A within two
month before the contract becomes expire if Part B desire a renewal, and
sign the official Lease Agreement with Part A within one month before the
contract becomes expires. If the two parties do not sign official Lease
Agreement within one month before the contract becomes to expires, Part A
have the rights to take potential lessee to the lease room and show them
around provided not disturb the normal work of Part
B.
|
1.
|
The
parties should strictly comply with provisions hereof. In case of any
breach of the Lease Agreement the not-defaulting party has the right to
seek the liability for breaching the agreement according to what the two
parties agreed and require the defaulting party bear all the economic lose
and pay penalty. The economic loss includes but not limited to the direct
lose and the foreseeable indirect lose, court fee, attorney fee and other
expenses incurred.
|
2.
|
When
Part B violates Article 5 paragraph one of the Lease Agreement, Part A has
the right to requires Part B stop the instruction immediately and punish
Part B according to the Decoration
Agreement.
|
3.
|
Part
B should bear all the remedy cost and the loss of Part A, when Part B
violate Article 5 paragraph two and Article 8 paragraph five, and damage
the reflection glass curtain wall, inside instruction or the central
air-condition system due to the behavior and
misfeasance.
|
4.
|
Part
B should bear all the loss and compensation when Part violates any
paragraph of Article 5 paragraph three, paragraph four, paragraph seven,
paragraph eight and paragraph
sixteen.
|
5.
|
Part
B should bear all the maintenance cost when Part B violates Article 5
paragraph eight and is liable to the damage of the lease room or the
inside of the building entirely or partly caused by the breach which
includes the damage to the decoration, the fixed facilities and
equipment.
|
6.
|
Part
A will finish the work substitute Part B with all the cost charge to the
latter, when the latter violates Article 8 paragraph seven or paragraph
fourteen.
|
7.
|
Part
B is liable to all the loss and compensation in case of breach of Article
8 paragraph nine or paragraph thirteen or Appendix Two Fire Control Safety
Responsibility Pledge. Responsibility person of the fire accident is
liable to compensate the economic loss and the one cause serious
consequences should be investigated for criminal responsibility by the
justice department.
|
8.
|
Part
B is liable to the compensation for the loss which includes the damage of
the building, elevator and personal injury caused by the activity of Part
B in case of the breach of Article 8 paragraph twelve. If Part B moves out
large number of article without the consent of Part A, the latter have the
right to increase equal amount of security deposit according to Article 3
paragraph one. It applies to Article 10 paragraph one in case of the
breach of the agreement.
|
9.
|
Part
A have the right to require Part B pay penalty due to breach of contract
which is one percent of the total expense when the latter violate Article
8 paragraph fifteen and fail to pay the rent including electricity fee,
parking fee, cleaning fee and the like. The penalty calculation starts
from 1
st
of each month. Part A have the right to intermit the supply of water,
electricity until Part B pay off all the payable expense when the latter
delay the payment up to ten days. Part A have the right to terminate the
Lease Agreement unilaterally assuming Part B breach the Lease Agreement
when the latter delay the rent more than one month or delay the
electricity fee more than three months. Part B should move out
unconditionally after receive the notice of Part A and pay the rent,
electricity fee, cleaning fee, parking fee and the like according to the
actually number of days till retrocede the lease room, at the same time
Part A have the right to claim for penalty which is two times of the rent.
In addition, Part B should bear all the expense when Part A obtains the
rent and penalty through litigant means of course (including but not
limited to legal fare, appraisal cost and retaining fee and the
like).
|
10.
|
If
Part B terminates the Lease Agreement before the prescribed time, Part B
should pay off the rent of the number of the days during the lease period
and the cost to restore the lease room and get the security deposit back
or waive the security deposit and the favorable polices which includes
rent-free period, favorable rent.
|
11.
|
Part
A have the right to dismantle the advertise, light box, signboard,
decoration, flag, poster or the other articles Part B installed or
exhibited against Article 8 paragraph seventeen with all the cost borne by
Part B.
|
12.
|
if
Part B breach the Lease Agreement and cost loss to Part A, the latter have
the right to require correct according to the breach and the consequence
or put forward the termination of the Lease Agreement. In case of
termination of Part A, Part B should move out of the lease room within one
month after receiving the notice of Part A and pay the rent till the date
retroceding the room. In case of deferred payment, Part A is entitled of
the double of rent as compensation besides the rent and will not return
the security deposit.
|
13.
|
It
breaches the Lease Agreement if Part A fails to hand the lease room to
Part B on schedule and is liable to one percent of the month rent penalty
per day beyond the time limit.
|
14.
|
If
Part A is liable to all the cost caused by the breach of Article 7
paragraph one of Part A and return full amount of the security deposit to
Part B.
|
1.
|
Part
A is entitled to terminate the Lease Agreement unilaterally in case of the
illegal operation identified by relevant government
bodies.
|
2.
|
Part
A is entitled to terminate the contract and do not return the security
deposit in case of the breach of Article 8 paragraph two or three or
paragraph two of Security and Safety Responsibility Pledge with all the
loss and compensation borne by Part
B.
|
3.
|
The
contract terminates automatically when the building is entirely or partly
unavailable or the lease room is unavailable or not allowed to use because
of the Force Majeure, and two parties should not claim compensation to
each other.
|
4.
|
Part
A have the right to terminate the contract unilaterally when Part B
violate the Property Management Agreement or the relevant accidental
contract and appendix, fail to correct immediately after receiving the
notice of Part A and cause loss to Part A with serious circumstance and
consequence. Part A do not refund the security deposit in case of this
kind of termination of the
contract.
|
5.
|
Part
B should notify Part A 60 days in advance if Part B need terminate the
contract before the expiration of the contract. The contract can be
terminated with the consent of Part A, and the security is not refunded.
It is deemed to breach the contract if Part B consist terminate the
contract without the consent of Part A and Article 10 paragraph
ten is execute at the same time.
|
6.
|
Part
A should notify Part B three month in advance if Part A have to terminate
the contract to rebuild, overhaul renovate the building because of Force
Majeure. The Contract terminates automatically after three
month.
|
7.
|
Part
B should not claim any expense such as transfer fee, remove fee, business
compensation fee, decoration fee and the like when the contract expire or
terminated with the consent of the two parties or recriminated because of
default of Part B.
|
8.
|
Part
B should retrocede the lease room to Part A in due time. Part B should
obtain the consent of Part A to delay the restoration of the lease room
and be responsible for the liability for breach of contract. The penalty
is double rent of breach of contract period. If Part B delay the
restoration without the consent of Part A, the latter is entitled to
execute Article 10 paragraph ten which stipulate Part B has no access to
the rent-free period and favorable
rent.
|
1.
|
Part
B should notify Part A in writing immediately if there is any change of
the company name, address, seat of head office, legal representative and
major representative, or the other significant issue of Part B. the notice
sent by Part A according to the address and name before changed is valid
if Part A does not receive the written
notice.
|
2.
|
Part
B should notify Part A when Part B change the legal representative, the
assignee to sign the contract and the liaison person to Part A. Part A is
entitled to require Part B to provide relevant documentation when Part A
think the changes are detrimental for Part A to exercise the rights and
obligations stipulated in the contract. Part A has the right to terminate
the contract unilaterally in case of the failure of Part B in providing
the documentation.
|
3.
|
during
the lease period, Part A is entitled to change the name of the entire or
part of the building and is not responsible for the cost of Part B caused
by the change. Part A should notify Part B one month before the change of
the name become effective.
|
1.
|
Before
Part A signs the contract, Part B should present the relevant procedure
and the authorization letter that authorize the tenant representative to
sign the contract, and the documentations mentioned above are the
appendixes of the contract.
|
2.
|
According
to the contract, the two parties should sign for all the announcement and
documentation present to each other by people of the two parties. If the
announcement and document are not present to each other by people of the
two parties, it’s deemed to be presented when they are sent out by
MES.
|
3.
|
Part
A authorizes
(
signature)
to be the assignee in charge of the management of the building and the
lease room stipulated in the contract, especially the execution of the
contract including collect the rent and the other relevant
expenses.
|
4.
|
Part
B authorizes _____(signature) to be the assignee in charge of sign the
contract and sign for the document such as regulations and announcements
from Part A which come into force upon
signature.
|
5.
|
Letter
of Authorization from the legal representative should be presented if the
Lease Agreement is signed by the
assignees.
|
6.
|
The
appendixes of the contract are components of the contract which have the
same validity with this contract.
|
7.
|
The
contract takes effect when the parties sign and stamp on it hereunto. The
contract is made in quadruplicate, two for each
party.
|
1.
|
Part
B should establish fire control safety management and assign the fire
control principal to ensure no fire accident occurs in the lease
place.
|
2.
|
Part
B should strictly enforce the regulation and requirement of the electrical
appliances usage to eliminate hidden fire
danger.
|
3.
|
Part
B should not hold dangerous articles such as those are virulent,
flammable, and explosive to prevent
accident.
|
4.
|
Part
B should furnish the fire control equipment ( 2 fire extinguishers for
less than 200m
2
; 3
fire extinguishers for 200-500 m
2
; 6
fire extinguishers for 500-1000m
2
and 10 fire extinguishers fore 1000 and up) and be acquainted with the use
and location of the equipment and the Fire Control Evacuation Road Map of
the Building.
|
5.
|
The
independent rooms of Part B such as warehouse and facility house should be
equipped with fire control devices.
|
6.
|
Control
the kindling strictly. Smoking in the room, corridor, service area is
strictly forbidden. Stub should not be littered. Smoking should be in the
smoking section. Open-flame is forbidden. The use of electric cooker and
dangerous electric heater is strictly
prohibited.
|
7.
|
Part
B should presents decoration scheme to Part B if decoration is necessary
before moving in and construct after obtaining the consent of Part A. Part
B should pay attention to the safety of electric appliance, should not use
open-flame and comply with the management of the fire control safety
personnel of the building. Part B should be punished in case of breach of
the decoration agreement.
|
8.
|
Part
B should not install temporary electrical wire. if electrical wire is to
be installed, Part B should submit the application the property project
department and install the electrical wire with the approval, abide the
relevant fire control regulation and ensure turn off the power after
worker.
|
9.
|
Part
B should check the fire extinguisher frequently to ensure the validity.
It’s forbidden to stack sundries in front of fire control equipment and
fireplug. Reasonable precaution should be taking to ensure the fire
control equipment in good condition. Remove and damage to the fire control
equipment are prohibited.
|
10.
|
Responsibility
person of the fire accident caused by breach of the above regulation is
liable to compensate the economic loss and the one cause serious
consequences should be investigated for criminal responsibility by the
justice department.
|
1.
|
Tenant
should abide all the laws and regulations of China and register the
company and the staff of the company legally to the relevant
organizations.
|
2.
|
Part
B should no engaging in illegal activities such as gambling, prostitution,
Falun Gong, rabble, fight and affects the office order of the
building.
|
3.
|
Staying
in the building overnight is not allowed and those who breach the
regulation should be pursued the responsibility according to the relevant
security regulation.
|
4.
|
The
staff of Part B should go the business center of the building to handle
Door Access Control card by valid document (foreign personnel use passport
and Chinese personnel use ID card and employee form) and letter of
instruction from the company. The Security Access Control card is the
valid certificate to enter the
building.
|
5.
|
Establish
and improve all kinds of safety and security regulations and reinforce the
security and law-abiding education to the
staff.
|
6.
|
Part
B should take reasonable preventative measurements, abide the financial
management regulations, properly keep the property of the company and the
money of the staff to prevent theft
case.
|
7.
|
Part
B should abide the receipt system and conform to the property management
of Part A.
|
1.
|
Part
B should observe the relevant laws, statutes and regulations and handle
the relation properly between the water supply, pollution discharge,
traffic, ventilation, lighting, maintenance, decoration,
environment sanitation and environment protection in light of helping
maintain the appearance and safety for use of the
property.
|
2.
|
following
acts are prohibited in property management
area:
|
2.1
|
Changing
the instruction, appearance and use of the room without authorization of
relevant government departments and consent of Part
A.
|
2.2
|
Encroaching
the public area such as public staircase, banister, corridor, basement,
platform and roof or removing public
equipment.
|
2.3
|
Setting
up building or stacking articles in the courtyard, platform, green land,
road and the other public area.
|
2.4
|
Encroaching
or damaging road, green land, flowers and trees, art landscape,
recreational and sports facilities.
|
2.5
|
Dumping
or littering garbage randomly.
|
2.6
|
Holding
flammable, explosive, virulent, radioactive dangerous articles in the
room, discharging deleterious substance and making noise beyond standard
level are strictly prohibited.
|
2.7
|
Constructing
windows or doors in the building without permit and hanging, posting,
scrawling and carving in the building
arbitrarily.
|
2.8
|
Using
the property for activities that jeopardizing public
interests.
|
2.9
|
The
other activities forbidden by laws, statutes and
regulations
|
3.
|
Part
B should presents decoration scheme to Part A in advance, decorate the
room with the consent of Part A and sign decoration agreement with Part
A.
|
4.
|
Part
B is strictly prohibited to bring pets into the
building.
|
1.
|
Conformation
of the Room
|
1.1
|
All
the building of Part B is case-in-place reinforced concrete frame concrete
wall structure. The seismic fortification intensity of the building is 8
and the anti-seismic rating is 2.
|
1.2
|
Load
capacity per unit area: 250kg/m
2
|
1.3
|
Height
of the floors: 2.5-2.8m
|
2.
|
Instruction
of Equipment and Facilities
|
2.1
|
Elevator:
it’s Hitachi elevator for the first phase and Mitsubishi elevator for the
second phase.
|
2.2
|
Fire
control system: the public area of each floor is furnished with fire alarm
and emergency broadcast system. There are emergency lighting system in all
public area and fire control
passageway.
|
2.3
|
Security
service: the public area of each floor is furnished with fire alarm and
emergency broadcast system. There are emergency lighting system in all
public area and fire control
passageway.
|
2.4
|
Central
air-conditioning system: Shuangliang central air-conditioning
system
|
2.5
|
Building:
the building has various kinds of services such as catering, post office
and business center.
|
2.6
|
Parking
place: underground garage and parking place in the courtyard. One parking
place per 150m
2
.
|
2.7
|
Postal
system: there are stainless steel individual big capacity letterboxes for
each tenant. The post office staff distribute the newspapers and
periodicals to all the customers. There are two keys for the letterbox,
one for the customer and one for the post office
person.
|
3.
|
Power
Supply and Distribution System
|
3.1
|
Instruction
of Power Distribution and Lighting
System
|
3.1.1
|
Customer
Ammeter
|
3.1.2
|
Lighting
System
|
4.
|
Instruction
of the Intellectualized System
|
4.1
|
Visible
Interphone System
|
4.2
|
Door
Access Management Subsystem
|
4.3
|
The
entry of Building A, C, D and the elevator entry of each building from the
garage are all equipped with door bans. Put the Door Access Control card
close to the card reader to enter, otherwise the entry will be denied. The
visitor can input the room number to visit and get enter with the consent
of the one to be visited.
|
1.
|
Decoration
Process and Requirement
|
1.1
|
Declaration
|
1.1.1
|
When
Part B need decorate the lease room, Part B should present a written
application to Part A which includes the
following:
|
1.3
|
Construction
|
1.3.1
|
Construction
time: during 18:00-7:00 of Monday to Friday, Saturday and Sunday can
construct with noise, and construct without noise during the other time.
Constructions with stimulating odour such as painting, gluing, pasting
wallpaper, laying carpet, paving floor are allowed to construct during
18:00-6:00 of Friday to Sunday.
|
1.3.2
|
Part
B should protect the equipment and facilities inside the room and equip
with fire extinguisher.
|
1.3.3
|
The
construction people should not stay in the construction site overnight,
and should not
|
1.3.4
|
The
decoration garbage and the construction material should be bought into the
site after 18:00 every day. The garbage should be packed by garbage bags
and dispose by the customer. Stacking and dumping randomly are not
allowed.
|
1.3.5
|
Decoration
company should assign one responsible person to supervise the
construction, manage the workers, contact with Part A in time and ensure
the management of the construction site comply with the regulation of Part
A.
|
1.3.6
|
The
construction should within the room and should not impropriate or block
public passage.
|
1.3.7
|
The
construction unit should ensure the neatness of the construction site
without any pollution during the construction
period.
|
1.3.8
|
The
following are considered as noise and should conduct during the assigned
time, otherwise, Part A have the right to expropriate the tools and stop
the construction:
|
(1)
|
drilling
wall
|
(2)
|
drilling
or cutting metal
|
(3)
|
construction
with power saw
|
(4)
|
the
other construction with noise
|
1.3.9
|
Part
B is not allowed to use carpet adhesive. Part B should declare for
approval to Part A and use the assigned product by Part A if Part B have
to use carpet adhesive.
|
1.3.10
|
The
other relevant matters refer to Decoration Construction Agreement and
Construction Decoration Fire Control Safe Agreement for
detail.
|
1.4
|
Inspection
and Approval
|
1.4.1
|
In
case of violation behavior of Part B during the decoration, Part A will
not inspect and approve before Part B correct
it.
|
1.4.2
|
The
decoration is inspected and approved by phrase. It should be applied for
inspecting and approving in advance in case of secluded
project.
|
1.4.3
|
Part
B should notify Part A for inspection and approval immediately after the
decoration of the room finished. Part B should correct the unqualified
decoration within allotted time.
|
1.4.4
|
Part
A handles the lease procedures for Part B according to the qualified sheet
of inspection and approval.
|
2.
|
Vehicle
Management System
|
2.1
|
Handling
long-distance identity induction parking card to park in the courtyard.
The deposit is RMB50 per card.
|
2.2
|
Each
company handles the ID card and parking permit uniformly and registers the
number and style of the car. Copy of vehicle license must be provided when
handle the parking permit.
|
2.3
|
Put
the new ID card and parking card behind the front windshield of the
vehicle and keep the “Activate the Window” forward to ensure the sensitive
effect of the induction.
|
2.4
|
The
vehicle should move lowly when enter or exit the park and move normally
after the barrier of the induction system raising
automatically
|
2.5
|
Driving
in and out of the park in order. The next car should move in (or out)
after the preceding car moving in (or out) and the barrier lowering
completely. More than one vehicle move in (or out) of the park is
prohibited. The vehicle will be declined to move in the park in case of
rushing through the barrier.
|
2.6
|
Vehicle
should enter the park once again after one entry and one
exit.
|
2.7
|
The
term of validity of the ID card is based on the payment period. It’s
required to go and pay the parking fee in time to the business center. The
ultimate activate time of the next month is with the ending date of the
payment period in the payment notification of each month. The vehicle will
be declined to enter when the payment is
overdue.
|
2.8
|
Please
go to the business center report the loss and handle the card again in
case of the loss of the ID card.
|
2.9
|
Company
certificate and ID card number of the vehicle are required when report the
loss of the ID card and handle the new
card.
|
2.10
|
Deposit will not be refunded in case of loss and damage of the
card.
|
2.11
|
Each company should have a copy of the ID card number of all the vehicle
of the company for the affairs such as payment and
activation.
|
2.12
|
The ID card is allowed for subtenancy of the ID card is allowed, but
limited to the same models (between compact cars or full-sized cars).
Sbutenancy is not allowed between different models, and parding place will
be canceled in case of subtenancy between different
models.
|
2.13
|
System do not allowed overground parking user drive into underground
parking garage, therefore, subtenancy is not allowed between overground ID
card and underground ID card.
|
2.14
|
When the vehicles that transfer people or goods for Part B enter the
courtyard for short time, Part A distribute temporary charging IC card to
the vehicle, withdraw the IC card when the vehicle leave and charge the
vehicle according to the parking charging standard of Beijing
city.
|
2.15
|
Vehicle of Part B should obey the direction of Part A people when enter or
leave the building, and blocking the door hostilely is strictly
prohibited. Vehicle inside of the park should move following the traffic
sign strictly, and going in a direction not allowed by traffic regulation
is strictly prohibited. Parking the vehicle according to the management
system of the park, taking care of the park equipment, paying attention to
the vehicle around. Part A have the right to disqualify those who breach
preceding regulation deliberately or hostilely from parking and even
terminate the contract.
|
2.16
|
Taking flammable and explosive article to the park, refilling, repairing
cars, washing cars and littering inside of the park is strictly
prohibited.
|
2.17
|
Please
not hold valuables in the vehicles. Part B is responsible for the loss in
case of miss.
|
2.18
|
Part A has no responsibility for the management of bicycle. If Part B
should put the bicycles in the bicycle parking place in west of Yeqing
Building, building C. put the bicycle in order and lock it after parking.
Part B is responsible for the losing in case of loss. The bicycle should
be wheeled in or out of the building and riding bicycle is not allowed
inside the courtyard.
|
3.
|
Management
System for Moving and conveying Article of
Customer
|
3.1
|
Part
B should notify Part A one week in advance before moving out and move out
after obtain the consent of Part A. Part A has to right to forbid the
moving of Part B in case of the non-conformance of Part B and Part B is
responsible for the loss arising therefrom. The moving time is after 18:00
from Monday to Friday, Saturday and Sunday the whole day. The customer of
building D can move article by cargo-lifts in other time excepting moving
out or moving a large amount of
articles.
|
3.2
|
Part
B is responsible for all the loss in case of problems such as crash and
damage during the course of moving.
|
3.3
|
Part
B should notify Part A by person assigned by Part B and move out the
articles with the out certificate.
|
4.
|
External
Cleaning Management System
|
4.1
|
The
property department decides one day of the first week of every month to
hold the cleaning people meeting which all the cleaning people are
supposed to attend. The customer assigns one person to attend the meeting
for those who are off duty at the day and convey the spirit of the meeting
to the cleaning people timely.
|
4.2
|
The
two parties should communicate in time and deal with it properly in case
of problem during of the routine.
|
4.3
|
Abide
the management of the building and study the management system of the
building.
|
4.4
|
Dress
neatly and ensure no unpleasant smell of the clothing. It’s suggested to
use perfume regularly.
|
4.5
|
Showering
and washing hair regularly, and ensure no unpleasant smell of the
body.
|
4.6
|
Workplace
is limited to the inside of the room of each customer. boiled water room
should be used as the place to wash cleaning appliance merely. It’s not
allowed to rest and stroll there.
|
4.7
|
Yield
to the customer when walking in public area and being civilized and
polite.
|
4.8
|
It’s
not allowed to take guest elevator, go to the other floor and enter the
room of the other customer
casualty.
|
4.9
|
Use
the cleaning appliance and article properly. Economized
water.
|
4.10
|
It’s not allowed to use the cleaning appliance and easy-consumable
articles of the building.
|
4.11
|
It should be cleaned timely in case of pollution to
cleanness.
|
4.12
|
The everyday small garbage should be packed by bags and sealed properly
and put into the garbage can in the toilet for building A, B,C and put
into the garbage can in the water room. It’s not allowed to drop garbage
when dump it. It’s supposed to go through the east stair and put the
garbage into the external garbage room for building A, B, C and carry by
cargo-lifts or go through the west stair and put the garbage into the
external garbage room for building
D.
|
4.13
|
The remains of meal should be sent to the garbage room immediately after
being packed by bag and sealed properly. It’s not allowed to dump into the
internal garbage can of the
building.
|
4.14
|
Washing the cleaning appliance in the mob sink, economize water and avoid
water splash down to the floor.
|
4.15
|
It’s not allowed to wash appliance such as cups, canteen in the face
basin. Put above mentioned appliance into the basin to wash them when it’s
necessary. Clean the stage after
washing.
|
4.16
|
Washing the mob in the mob sink. Washing mob in urinal is not
allowed.
|
4.17
|
Dumping of tea-leaf: dump the tea-leaf into the tea box in the toilet for
building A, B, C and tea box in the boiled water room for building
D.
|
4.18
|
Breaching any one of the terms mention above will be fine RMB 20. The
building has the right to forbid those who violate more than three times
(including three times) or repeat the same
mistake.
|
4.19
|
Those who damage public facility and equipment or the other damage to the
building caused by improper use of the cleaning appliance should
compensate according to the actual
price.
|
6.1
|
This
is a kind of “RF card” having an integrated function of allowing people go
in and out the building, having dinner and
consuming.
|
6.2
|
This
is a kind of pre-paid Card, which can not be overdrawed and should be
pre-paid timely when its remaining money is not enough. When pre-paid for
the first time, Party B should buy them by unit. Thereafter pre-paid
should be made by the company or it’s owner, bringing the card and cash,
going to the Business Center to pre-pay for it. After paid, please check
the amount to the clerk’s face. Any mistake afterwards should be on the
owner’s own responsibility.
|
6.3
|
To
assure the accuracy of reporting the loss or eliminating the card, the
provided name when opening the account should be the same with the owner’s
ID card, or any reporting of it’s loss will not be
accepted.
|
6.4
|
Please
remember your card number. If lose the card, please report the loss or buy
a new card from the Business Center. Any losing before reporting loss
should be on the owner’s responsibility and please buy the new card after
14:30 pm. of the same day.
|
6.5
|
This
card can be used in “Coffee House” and the “Qingqing Xiaomei Noshery” of
the building.
|
6.6
|
This
card has the function of “door access”. Please take this card along with
you. Any inconvenience caused by failing to take the card should be on the
owner’s responsibility.
|
6.7
|
Please
do not bend the card or make it contact the high
temperature.
|
6.8
|
This
card can only be used by the owner and should not transfer to the others,
otherwise, the consequence should be on the owner’s
responsibility.
|
6.9
|
The
cost of this card is high, and the deposit of each card is 50 RMB. The
deposit will not be refunded in case of loss or damage of the
card.
|
6.10
|
Buying the RF Card or pre-paid it with Check, the check can be retroceded
when withdraw the card. Buying the RF Card or pre-paid it with cash, the
owner will get the cash back when withdraw the
card.
|
1.
|
I
have reviewed this report on Form 10-K of Lakeland Industries, Inc. (the
“registrant”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statements of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we
have
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
|
c.
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d.
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal
controls over financial
reporting.
|
By: /s/ Christopher J.
Ryan
|
Chief
Executive Officer, President, Secretary and General
Counsel
|
1.
|
I
have reviewed this report on Form 10-K of Lakeland Industries, Inc. (the
“registrant”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statements of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we
have
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c.
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d.
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal
controls over financial
reporting.
|
By: /s/ Gary Pokrassa
|
Chief
Financial Officer
|
/s/ Christopher J. Ryan
|
Christopher
J. Ryan
|
Chief
Executive Officer, President, Secretary
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and
General Counsel
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/s/ Gary Pokrassa
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Gary
Pokrassa
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Chief
Financial Officer
|