UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): December 3, 2014

__________________________________________

 

Lakeland Industries, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware 0-15535 13-3115216
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

 

701 Koehler Avenue, Suite 7, Ronkonkoma, New York 11779-7410

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (631) 981-9700

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 
 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 3, 2014, Lakeland Industries Europe, Ltd. (the “Borrower”), a wholly-owned subsidiary of Lakeland Industries, Inc. (the “Company”), amended the terms (the “Loan Amendment”) of its existing financing facility with HSBC Invoice Finance (UK) Ltd. The Loan Amendment provides for (i) a one-year extension of the maturity date of the existing financing facility to December 3, 2015, (ii) an increase in the facility limit from £1,250,000 (approximately USD $2.0 million) to £1,500,000 (approximately USD $2,350,000), and (iii) a decrease in the annual interest rate margin from 3.46% to 3.0%. In addition, pursuant to a letter agreement (the “Letter Agreement”), dated December 5, 2014, the Company agreed that £400,000 (approximately USD $623,000) of the note payable by the Borrower to the Company shall be subordinated in priority of payment to the Borrower’s obligations under the financing facility.

 

The foregoing description the Loan Amendment and Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the Loan Amendment and Letter Agreement, which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference. The agreements entered into in connection with the financing facility have been previously filed with, and are described in, the Company’s Current Reports on Form 8-K dated February 20, 2013 and December 19, 2013.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosures set forth in Item 1.01 are incorporated by reference to this item.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

10.1 Amendment to Agreement for Purchase of Debts, dated effectively as of December 3, 2014.

 

10.2 Letter Agreement, dated December 5, 2014, between Lakeland Industries, Inc. and HSBC Invoice Finance (UK) Ltd.

 

 

 
 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

LAKELAND INDUSTRIES, INC.

 

 

/ s/ Gary Pokrassa

Gary Pokrassa

Chief Financial Officer

 

 

Dated: December 8, 2014

 

 
 

 

EXHIBIT INDEX

 

Exhibit

Number

Description

 

10.1 Amendment to Agreement for Purchase of Debts, dated effectively as of December 3, 2014.

 

10.2 Letter Agreement, dated December 5, 2014, between Lakeland Industries, Inc. and HSBC Invoice Finance (UK) Ltd.

 

 

 
 

EXHIBIT 10.1

 

Effective date: 3 December 2014

 

This Schedule replaces the Schedule to the Agreement for the Purchase of Debts entered into between HSBC Invoice Finance (UK) Limited and Lakeland Industries Europe Limited 04500660 on 19 August 2014 . This replacement is made under Condition 29 ( Variations ) of the Standard Terms and Conditions that are part of that agreement

 

THE SCHEDULE

 

1. Client particulars

 

Nature of business Wholesale of safety clothing

 

Principal place of business Jet Park 2, 244 Main Road, Newport, East Yorkshire, HU15 2RP

 

 

 

2. Product(s) selected

 

Finance Yes

 

Credit Management Yes

 

Credit Protection Yes

 

 

 

3. Commercial terms

 

Approved Countries (a) United Kingdom, Ireland, the Isle of Man and the Channel Islands

 

(b) Abu Dhabi (UAE), Ajman (UAE), American Samoa, Andorra, Anguilla, Australia, Austria, Bahamas, Belgium, Bermuda, Brazil, British Indian Ocean Territory, Brunei, Canada, Cayman Islands, Chile, China, Cyprus, Czech Republic, Denmark, Dubai (UAE), Estonia, Falkland Isles, Faroe Islands, Finland, France, French Guiana, French Polynesia, French Southern Territories, Fujairah (UAE), Germany, Gibraltar, Greece, Greenland, Guadeloupe, Guam, Hong Kong, Israel, Italy, Japan, Kuwait, Liechtenstein, Luxembourg, Macau, Malaysia, Malta, Martinique, Mauritius, Mayotte, Mexico, Monaco, Montserrat, Netherlands, New Caledonia, New Zealand, Norway, Northern Mariana Is., Oman, Peru, Poland, Portugal (Madeira), Portugal, Puerto Rico, Qatar, Ras Al-Khaimah (UAE), Reunion, Saint Helena, Sharjah (UAE), Saudi Arabia, St Pierre & Miquelon, San Marino, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain (Canary Islands), Spain, Sweden, Switzerland, Taiwan, Trinidad & Tobago, Turks & Caicos Islands, Umm Al-Qaiwain (UAE), United Arab Emirates, United States of America, US Minor Outlying Islands, Vatican City State, Virgin Islands (US & British) and Wallis & Futuna Islands.

 

(c) Bosnia, Hungary, Lithuania, Montenegro, Morocco, Romania, Serbia & Turkey

 

 

Page  1
 

 

 

Automatic Funding Limit United Kingdom, Ireland, the Isle of Man and the Channel Islands: £ 50,000

 

Other countries: £ 50,000

 

Client to give notice of assignment to Customers Yes

 

 

Commencement Date 30 January 2013

 

Concentration Percentage 40 per cent

 

Debtor Currencies Sterling and Euro

 

Debt Turn Target United Kingdom, Ireland, the Isle of Man and the Channel Islands: 90 days

 

Other countries: 90 days

 

Facility Limit £ 1,500,000

 

Law English law governs this Agreement

 

Minimum Period 12 Months

 

Non-Notifiable Debt The following are additional categories of Non-Notifiable Debt:

 

Debts arising from contracts of sale entered into with your customer Elite Supplies Limited (registration number 06309981) and PPG Clothing Limited (SC386962)

 

 

Notice Period 3 Months

 

Prepayment Currencies Sterling and Euro

 

Prepayment Percentage 90 per cent

 

Reduction Percentage N/A

 

Standard Payment Terms United Kingdom, Ireland, the Isle of Man and the Channel Islands: Not exceeding net 60 days from date of invoice

 

Other countries: Not exceeding net 90 days from date of invoice

 

4. Pricing

 

Allowance Margin 2.50 per cent

 

Arrangement Fee N/A

 

Discounting Margin 3.00 per cent

 

Facility Review Fee Nil

 

Other fees Fees will be payable for:

 

(a) any variation to the terms of this Agreement;

 

 

Page 2
 

 

 

(b) the release of any Security Interest;

 

(c) new Security Interests to be granted to HIF or any third party.

 

Service Charge For Approved Countries listed in paragraphs (a), (b) & (c) 0.900 per cent of the Notified value of each Debt, subject to a minimum of £ 42,500 per annum calculated in respect of each period of one year starting on the first day of the month following the Commencement Date and each anniversary thereafter

 

5. Credit Protection

 

Automatic Credit Protection Limit United Kingdom, Ireland, the Isle of Man and the Channel Islands: £ 3,000

 

Other countries: N/A

 

 

Credit Protection Percentage United Kingdom, Ireland, the Isle of Man and the Channel Islands: 100 per cent

 

Other countries: 90 per cent

 

First Loss United Kingdom, Ireland, the Isle of Man and the Channel Islands: £ 1,000

 

Other countries: £ 1,000

 

Unprotected Debts at the Commencement Date At the Commencement Date any Debt which is unpaid 60 days or more after the due date for payment and any other Debts of the same Customer

 

 

 

6. Covenants

 

Debt Turn Covenant N/A

 

Dilution Percentage N/A

 

Dispute Percentage N/A

 

Tangible Net Worth Covenant N/A

 

The covenants listed above shall be tested at the following times:

 

Testing Day

 

Debt Turn Final day of each calendar month

 

Dilution Percentage Final day of each calendar month

 

Dispute Percentage Final day of each calendar month

 

Page  3
 

 

 

7. Special terms

 

(a) In addition to the undertakings given by the Client in Condition 17, the Client also undertakes:
(i) To ensure that:
(A) where necessary, the Client and/or the Customer possess all licences required to export/import the relevant goods; and
(B) the Client and the Customer comply with all laws and/or regulations applicable to the import or export of the relevant goods including, but not limited to, any exchange control regulations; and
(ii) To provide HIF, each year, with a declaration (“Annual Declaration”) of the Client’s total sales to Customers located in each Approved Country in a form specified by HIF, for the period of 12 months (or part thereof) ending 31 March (or for such other period as HIF may specify from time to time). Such declaration to be supplied to HIF within 30 days of the end of the relevant period.

 

(b) Where a Credit Protection Limit is expressed in a currency other than that in which the Debt payable by the relevant Customer is expressed and/or the currency in which the purchase price is payable, then for the purposes of calculating any amount payable by HIF to the Client under the provisions of Condition 11.6, the Spot Rate of Exchange on the date of payment shall be used. Any gains or losses, resulting from fluctuation in exchange rates will be for the account of the Client.

 

(c) HIF will not provide Credit Protection in respect of any particular Debt if:
(i) the Debt arose after any expiry date notified by HIF to the Client in respect of the relevant Credit Protection Limit; or
(ii) there has been any breach by the Client of any term specified by HIF as being a condition of its approval of the relevant Credit Protection Limit

 

The provisions of this special term are in addition to, and not in replacement of, the provisions of Condition 11.4.

 

(d) For the purposes of Condition 11.4 (f) events of “force majeure” shall include

 

(i) the ionising, radioactive, toxic, explosive or other hazardous or contaminating properties or effects of any explosive nuclear assembly or component thereto, nuclear fuel, combustion or waste; and

(ii) where goods are to be despatched to, or payment is to be made from, a country other than that in which the Customer is located, any event preventing or delaying the issue of a remittance from such third country.

 

HSBC Invoice Finance (UK) Limited is, at the date of this Agreement, a member of the Asset Based Finance Association (“ABFA”) and abides by its terms of membership. Under its Memorandum of Association, publicly filed at Companies House, ABFA is not a public regulatory authority and has no financial or other responsibility to anyone arising out of the actions and dealings of its members. The ABFA has provided and/or will provide a Code of Conduct, guidance and a complaints procedure each of which can be viewed on its website at www.ABFA.org.uk .

 

 

Page  4
 

 

 

 

EXHIBIT 10.2

 

 

 

 

To: HSBC Invoice Finance (UK) Ltd

Farncombe Road

Worthing

West Sussex

BN11 2BW

 

 

Date December 5, 2014

 

 

 

Lakeland Industries Europe Limited ("the Company")

 

In consideration of your entering into or continuing an agreement for the purchase of debts ("the Agreement") with the Company, we Lakeland Industries Inc. (Incorporated in the United States of America registration number 47326) hereby undertake that:

 

1. We shall not, without your prior consent, accept payment or repayment from the Company so as to reduce the net indebtedness of the Company to us below the sum of £400,000 (Four Hundred Thousand Pounds) Sterling and;

 

2. We shall hold on trust for you any monies that we may receive from the Company contrary to this letter of undertaking.

 

We agree that this letter of undertaking shall remain effective until the Agreement comes to an end and the Company has discharged all its obligations to you.

 

Yours faithfully

 

For and on behalf of

 

Lakeland Industries, Inc.

 

 

 

/s/ Gary Pokrassa

 

Duly Authorised Director

 

Gary Pokrassa, CFO

 

 

Lakeland Industries, Inc. 701-7 Koehler Avenue, Ronkonkoma, New York 11779 (631) 981-9700