SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Eastco Industrial Safety Corp.
-----------------------------
(Name of Registrant as Specified in Its Charter)
Eastco Industrial Safety Corp.
-----------------------------
(Name of Person(s) Filing Proxy Statement)
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[X] No fee required
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and 0-11.
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___________________________________________________________
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<PAGE>
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
________________________________________
The annual meeting of the stockholders of Eastco Industrial Safety Corp. will
be held on December 16, 1998 at 3:30 p.m. at the Company's office located at
130 West 10th Street, Huntington Station, New York 11746. The meeting is
called for the following purposes:
ELECTION OF DIRECTORS
The election of three directors to hold office for the term continuing
through the annual meeting following the fiscal year ended June 30, 2000 and
until the election and qualification of their respective successors.
APPROVAL OF AN AMENDMENT TO CERTIFICATE OF INCORPORATION
To approve an amendment to the Certificate of Incorporation to effectuate a
change of name of the Company to Worksafe Industries Inc.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
To ratify the appointment of Arthur Andersen LLP, Certified Public
Accountants, as independent auditors.
TRANSACTION OF OTHER BUSINESS
To transact such other business as may properly come before the meeting or
any adjournments thereof.
Stockholders of record at the close of business on November 9, 1998 are
entitled to receive notice of, and to vote at, this meeting. Sending in your
proxy will not prevent you from attending and voting at the meeting in person
should you later decide to do so.
The accompanying form of proxy is solicited by the Board of Directors of the
Company. Reference is made to the enclosed proxy statement for further
information with respect to the business to be transacted at the meeting.
If you do not expect to attend the meeting in person, please sign and date
the enclosed proxy and mail it promptly in the enclosed envelope.
By order of the Board of Directors.
LAWRENCE DENSEN
President
DATED: October 28, 1998
<PAGE>
<PAGE>
EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
__________________________________
PROXY STATEMENT
__________________________________
The proxy statement mailed to stockholders commencing approximately on
November 10, 1998 is furnished in connection with the solicitation of proxies
by the Board of Directors of Eastco Industrial Safety Corp. (the "Company")
in connection with the annual meeting of stockholders (the "Annual Meeting")
of the Company to be held December 16, 1998 at 3:30 p.m. at the offices of
the Company located at 130 West 10th Street, Huntington Station, New York
11746. Proxies will be voted in accordance with directions specified thereon
or otherwise in accordance with the judgment of the persons designated as
proxies. Any proxy on which no direction is specified will be voted in favor
of the action described in the proxy statement.
A proxy in the enclosed form may be revoked at any time, prior to it being
voted at the Annual Meeting, by sending a subsequently dated proxy or by
giving written notice to the Company, in each case to the attention of
Anthony P. Towell, Secretary, at the address set forth above. Stockholders
who attend the meeting may withdraw their proxies at any time before their
shares are voted by voting their shares in person.
The expense of the solicitation of proxies for the meeting, including the
cost of preparing, assembling and mailing the notice, proxy card and proxy
statement, the handling and tabulation of proxies received and the charges of
brokerage houses and other institutions, nominees or fiduciaries in
forwarding such documents of the proxy material to beneficial owners, will be
paid by the Company. In addition to the mailing of the proxy material, such
solicitation may be made in person or by telephone by directors, officers or
regular employees of the Company. It is estimated that the total cost of
proxy solicitations by the Company will not exceed $10,000.
The matters to be considered at this Annual Meeting will be the election of
three directors to hold office for the term continuing through the annual
meeting following the fiscal year ended June 30, 2000 ("2000 Annual Meeting")
and until the election and qualification of their respective successors, the
approval of an amendment to the Certificate of Incorporation to effectuate a
change of name of the Company to Worksafe Industries Inc., and the ratifica-
tion of the appointment of Arthur Andersen LLP, Certified Public
Accountants, as independent auditors. The Company is aware of no other
matters to be presented for action at this meeting.
Under SEC rules, boxes and a designated blank space are provided on the proxy
card for stockholders to mark if they wish either to abstain on one or more
of the proposals or to withhold authority to vote for one or more nominees
for director.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Company's voting securities consist solely of Common Stock. Holders of
Common Stock at the close of business on November 9, 1998 will be entitled to
vote. Each share of Common Stock entitles the holder to one (1) vote on each
matter to be voted upon. On the record date there were outstanding 1,683,079
shares of Common Stock.
STOCK OWNERSHIP OF DIRECTORS
The following table sets forth as of October 28, 1998 the number of shares of
Common Stock owned by each of the present directors of the Company, together
with certain information with respect to each:
Number of
Shares
Director Beneficially Percent
Name Since Owned (1) (1)
- ---- ----- ----------- ------
Lawrence Densen 1986 204,702(2) 11%
Alan E. Densen 1958 201,115(2) 11%
Anthony P. Towell 1989 225,815(2) 13%
Dr. Martin Fleisher 1989 2,500 *
James Favia 1995 4,500 *
Charles Holzberg 1996 2,917 *
Dr. Bruce Friedman 1997 1,500 *
- -------
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934.
(2) Includes 100,000 shares of Common Stock for each Messrs. L. Densen, A.
Densen, and A. Towell, who are each trustees under a voting trust
agreement dated April 17, 1997 (the "Voting Trust Agreement") by and
among Eastco Glove Technologies, Inc., the Company, Steven Robins and
Phillip Robins. The Voting Trust Agreement was a condition to the
closing of a stock exchange agreement (the "Stock Exchange Agreement")
dated April 17, 1997 by and among Eastco Glove Technologies, Inc., the
Company, Steven Robins and Phillip Robins. Pursuant to the Stock
Exchange Agreement and the Voting Trust Agreement, 100,000 shares of the
Company's Common Stock were issued, said shares being issued in the
names of Lawrence Densen, Alan E. Densen and Anthony P. Towell as
trustees until the five (5) year term of the voting trust expires or
Steven Robins or Phillip Robins desires to sell the shares after one
year pursuant to Rule 144 of the Securities Act of 1933.
As of October 28, 1998, the directors and executive officers of the Company,
nine (9) persons, owned of record and beneficially a total of 462,173 shares
representing 21% of the issued and outstanding Common Stock of the Company.
The foregoing assumes the exercise of all of the outstanding options and
warrants held by each of such persons, but reflects the ownership of the
shares described in the preceding footnote (2) above for each of the three
directors named therein, only once.
Lawrence Densen became President and Chief Executive Officer of the Company
effective March 1, 1997. Prior to this time, he served as Senior Vice
President and has also been a Vice President. He has been a director of the
Company since 1986. He is the son of Alan E. Densen.
Alan E. Densen is a Senior Vice President and has been a director of the
Company since 1958 and Co-Chairman of the Board since March, 1997. From 1958
through March 1, 1997 (except for the period September 1993 to January 1994,
when he served as its Senior Vice President), he served as President and
Chief Executive Officer of the Company. He was also Treasurer and Chief
Financial Officer of the Company through 1992. He is the father of Lawrence
Densen.
Anthony P. Towell is a Senior Vice President and has been Secretary of the
Company since 1993, as well as Vice President and Co-Chairman of the Board
since March, 1997. From 1992 through February 1,1997, he served as the
Company's Vice President of Finance, Treasurer, and Chief Financial Officer,
and from 1989 to 1992 he served as its Vice President. He has been a
director of the Company since 1989. In addition, he has been a director of
Windswept Environmental Group, Inc. ("Windswept")(formerly Tradewinds, Inc.)
since November, 1996. He was a director from 1988 through September, 1997 of
Nytest Environmental Inc. ("Nytest"), a hazardous waste testing company. He
was a director from 1988 to 1995 of New York Testing Laboratories, Inc.
("NYT"), a laboratory testing company and manufacturer of automotive
accessories. Mr. Towell was a director of Ameridata Technologies, Inc.
("Ameridata"), a provider of computer products and services from 1991 to
1996. Since January of 1998, Mr. Towell has been a director of GulfWest Oil
Company, an oil exploration and production company. The common stock of
Windswept and Nytest are registered under Section 12(g) of the Securities
Exchange Act of 1934, and the common stock of Ameridata and GulfWest Oil
Company are registered under Section 12(g) and (b) of the Securities
Exchange Act of 1934.
Richard Boyen has been employed with the Company since 1994, serving as Vice
President of Manufacturing Operations since February 1, 1997. From 1990 until
his employment with the Company in 1994, he served as Director of
Manufacturing for Kappler Safety Group, a manufacturer of industrial and
safety disposable clothing.
Arthur Wasserspring has been employed with the Company since 1994, serving as
Treasurer and Chief Financial Officer, as well as Vice President of Finance
since February 1, 1997. From July, 1989 until his employment with the
Company in 1994, he served as a financial and business consultant for
companies in the distribution, manufacturing and retail sectors, among
others.
Dr. Martin Fleisher has been a director of the Company since 1989. He holds
a Ph.D. in biochemistry from New York University, and has been an attending
clinical chemist at Memorial Sloan-Kettering Cancer Center since 1967. He
devotes only a limited portion of his time to the business of the Company.
James Favia has been a director of the Company since July 26, 1995. He has
been a consultant during the past five (5) years to Donald & Co. ("Donald"),
which has acted in the past as the Company's investment advisor. He is a
chartered Financial Analyst and has an MBA in finance from New York
University. He was a director of T.J. Systems until November, 1994. The
common stock of T.J. Systems is registered under Section 12(g) of
the Securities Exchange Act of 1934. Mr. Favia is currently a director of
K2 Design, Inc., the common stock of which is registered under Section
12(g) of the Securities Exchange Act of 1934. He devotes only a limited
portion of his time to the business of the Company.
Charles Holzberg has been a director of the Company since December 5, 1996.
He has been President, since 1975, of The Charles Holzberg Agency, Inc., a
general agent for the sale of life insurance. He devotes only a limited
portion of his time to the business of the Company.
Dr. Bruce Friedman has been a director of the Company since April 16, 1997.
Since 1988, he has served as President of the Flower Hill Chiropractic
Office, P.C., where he is a chiropractic doctor. He devotes only a limited
portion of his time to the business of the Company.
ELECTION OF DIRECTORS
Present Composition of Board
The bylaws of the Company provide that there will be not less than three (3)
nor more than seven (7) directors. The present size of the board is fixed at
seven (7) directors. The Board of Directors is divided into two (2) classes.
The terms of office of James Favia, Dr. Bruce Friedman, Dr. Martin Fleisher
and Charles Holzberg do not expire until the Company's annual meeting
following the fiscal year ended June 30, 1999 and when their successors are
elected.
Nominees for Director
The Board of Directors has unanimously nominated and designated the following
individuals for election as directors for a two-year term continuing through
the Company's 2000 Annual Meeting and until their successors are elected and
take their places:
Lawrence Densen
Alan E. Densen
Anthony P. Towell
Reference should be made to "Stock Ownership of Directors," above, for
disclosure of their business experience and stock ownership, and to "Certain
Relationships and Related Transactions," below, for additional information
about them.
Proxies in the enclosed form will be voted for the nominees named above.
Authority may be withheld for any nominee. In addition, stockholders may
nominate additional nominees as candidates for the position as director.
Although the Board of Directors does not anticipate that any nominee will be
unavailable for election, in the event of such occurrence, the proxy will be
voted for such substitute, if any, as the Board of Directors may designate.
Proxies will not vote for a greater number of persons than the number of
nominees named. Directors will be elected by the vote of a plurality of the
votes cast. Abstentions and broker non-votes are not counted as votes cast.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN
COMMITTEES THEREOF
Five (5) meetings of the Board of Directors were held during the fiscal year
ending June 30, 1998. The Board of Directors has established a Compensation
Committee, a Stock Option Committee and an Audit Committee. The Company does
not have a standing nominating committee. The Compensation Committee consists
of Messrs. Fleisher, Holzberg and Towell. The purpose of the Compensation
Committee is to review the Company's compensation for its executives, to make
determinations relative thereto and to submit recommendations to the Board of
Directors with respect thereto. The Stock Option Committee consists of
Messrs. Fleisher, Favia and Holzberg. The purpose of the Stock Option
Committee is to select the persons to whom options will be granted to
purchase shares of the Company's Common Stock under the Company's Stock
Option Plans and to make various other determinations with respect to such
plans. The Company's Audit Committee consists of Messrs. Towell, Fleisher and
Holzberg. The purpose of the Audit Committee is to provide general oversight
of audit, legal compliance and potential conflict of interest matters. The
Stock Option Committee met twice during the fiscal year ended June 30, 1998.
The Audit Committee met six (6) times during the fiscal year ended June 30,
1998, and the Compensation Committee met twice. Members of the Board of
Directors who are not employees of the Company receive a fee of $500 per each
Board of Directors meeting attended in person.
PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth, as of October 28, 1998, the ownership with
respect to each person known to own beneficially more than 5% of the
Company's common stock:
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Owner(1) of Class(1)
- -------------- -------------------- ------------------- -----------
Common Stock Lawrence Densen 204,702 11%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
Common Stock Alan E. Densen 201,115 11%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
Common Stock Anthony P. Towell 225,815 13%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
(1) See the footnotes under "Stock Ownership of Directors."
EXECUTIVE COMPENSATION
Summary
The following describes the components of the total compensation of the CEO
and each other executive officer of the Company whose total annual salary and
bonus exceeds $100,000.
Summary Compensation Table
Annual Compensation Long term compensation
------------------------ --------------------------------------
Awards Payouts
------------------ -----------------
Other Securities All
Name and annual Restricted underlying LTIP other
principal Salary Bonus compen- stock options/ payouts compen-
position Year ($) ($) sation($) award(s)($) SARs (#) ($) sation($)
- -------- ---- ------ ----- ---------- --------- ---------- ------ --------
Lawrence 1998 121,441 -0- 4,200 -0- 1,500 -0- -0-
Densen, 1997 115,381 -0- 4,200 -0- 85,200 -0- -0-
Pres/CEO 1996 103,848 -0- 4,200 -0- 9,003 -0- -0-
Alan E. 1998 123,378 -0- 35,672(1) -0- 1,500 -0- -0-
Densen 1997 130,486 -0- 35,672(1) -0- 35,200(1) -0- -0-
Sr. VP 1996 119,731 -0- 35,672(1) -0- 9,003 -0- -0-
- ------
(1) Primarily life insurance premiums on the life of Alan E. Densen owned by
his wife and paid for by the Company.
Stock Options
OPTION/SAR GRANTS AND EXERCISES IN LAST FISCAL YEAR
OPTION/SAR GRANTS IN LAST FISCAL YEAR
[Individual Grants]
Number of Percent of Potential realizable value
securities total options/ at assumed annual rates
underlying SARs granted Exercise of stock price apprec.
Options/SARs in fiscal or base Exp. for option term
Name granted (#)(1) year price($/Sh) Date 5% 10%
- ----- -------------- ------- ---------- ----- --- ----
Lawrence 1,500 14% 3.44 4/17/03 $1,425 $3,150
Densen,
CEO 1,500 4/17/04 1,755 3,975
Alan E. 1,500 14% 3.44 4/17/03 1,425 3,150
Densen,
Sr. VP 1,500 4/17/04 1,755 3,975
(1) See note (1) above in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number
of securities Value
underlying unexercised in-
unexercised the-money options
Shares SARs at FY-end (#) SARs at FY-end($)
acquired on Value exercisable / exercisable /
Name exercise (#) realized ($) unexercisable unexercisable
- ----- -------------- -------------- ------------- ----------------
Lawrence 0 0 62,374/111,118 -0-
Densen
CEO
Alan E. 0 0 52,318/71,118 -0-
Densen,
Sr.VP
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL FEATURES
As of July 1, 1995, Alan E. Densen entered into an employment agreement which
provided for him to serve as the Company's President for a term of five (5)
years and Lawrence Densen also entered into an employment agreement to serve as
Senior Vice-President for a term of five years. Anthony P. Towell has a
similar contract to that described herein for Alan E. Densen and Lawrence
Densen but with a lesser amount of compensation. (The employment agreements
of Lawrence Densen, Alan E. Densen and Anthony P. Towell are referred to as
"Employment Agreements".) Effective March 1, 1997, Messrs. L. Densen, A.
Densen, and A. Towell signed modification agreements (the "1997 Modification
Agreements"). The 1997 Modification Agreement of Lawrence Densen changed his
position with the Company to President and increased his salary to $125,000
in fiscal 1997, which figure was pro-rated for that portion of the fiscal
year during which Lawrence Densen served in such capacity. The 1997
Modification Agreements of Alan E. Densen and Anthony P. Towell changed each
one's position to Senior Vice President. Pursuant to the 1997 Modification
Agreements of Messrs. L. Densen, A. Densen, and A. Towell, the Company may
terminate each individual's Employment Agreement as a result of physical or
mental disability, or failure or inability to perform required duties for a
period of six (6) months in any two-year period. At the end of each fiscal
year during the term of the Employment Agreements, they are automatically
extended for one additional year to be added at the end of the then current
term of the agreements, unless the Board of Directors determines not to
extend the Employment Agreements. Each may also terminate his Employment
Agreement upon 30 days written notice. For fiscal 1999, the annual base
salaries of Lawrence Densen and Alan E. Densen are $175,000 and $113,000,
respectively. Each is entitled to receive an annual bonus, which has been
waived for the fiscal years to date, equal to 3 1/3% of the Company's
earnings before interest and taxes for the fiscal year ended June 30, 1998
and each fiscal year thereafter during the term of the Employment Agreement,
and Lawrence Densen is entitled to .75% of the Company's revenues in excess
of $20.5 million (which also was waived for fiscal 1996, 1997 and 1998).
Bonuses are to be paid within 30 days after the completion of the Company's
audited financial statements for each fiscal year and is to be paid in cash
or registered shares of common stock of the Company.
The Employment Agreements entered into by Messrs. L. Densen and A. Densen
include provisions that provide for their right to terminate the Employment
Agreements and thereby receive additional compensation, as provided below, in
the event that they are not elected or retained as President and Senior
Vice-President, respectively, or as a director of the Company; the Company
acts to materially reduce their duties and responsibilities under the
Employment Agreement; the Company changes the geographic location of their
duties to a location from the New York metropolitan area; their base
compensation is reduced by 10% or more; any successor to the Company fails to
assume the Employment Agreements; any other material breach of the Employment
Agreements which is not cured by the Company within 30 days; and a change of
control by which a person, other than a person who is an officer and/or
director of the Company as of the effective date of the agreements, or a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, becomes the beneficial owner of 20% or more of the combined voting
power of the then outstanding securities of the Company or the composition of
the board changes so that officers of the Company no longer hold a majority
of the seats ("Change of Control").
In the event that Messrs. L. Densen or A. Densen terminate their positions
because of any of the aforesaid reasons other than a Change of Control, or
if the Company terminates their employment in any way that is a breach of the
Employment Agreement by the employer, Messrs. L. Densen and A. Densen shall
be entitled to receive, in addition to their salary continuation, a cash
payment equal to their total base salary plus projected expenses and bonuses
for the remainder of the term thereof, payable within 30 days of termination
and all stock options, warrants and other stock appreciation rights granted
by the Company, with the exception of qualified incentive stock option plans,
to them shall become immediately exercisable at an exercise price of $0.10
per share. In the event that either owns or is entitled to receive any
unregistered securities of the Company, than the Company shall register such
securities within 120 days of the their termination. In the event that there
is a Change of Control, Messrs. L. Densen and A. Densen shall be paid
within 30 days thereof a one-time bonus equal to their total minimum base
salary for the next three (3) years.
Messrs. L. Densen and A. Densen, and also A. Towell, in modification
agreements to their Employment Agreements dated as of June 30, 1996 (the
"1996 Modification Agreements"), have waived: (i) their right to bonuses
based upon the Company's earnings before interest and taxes for the fiscal
years ended June 30, 1996 through June 30, 2000; (ii) their exercise rights
on options and warrants and compensation payable in the event of a Change in
Control with respect two private placements completed in 1996 and the
Company's Rights and Standby Offering in 1996.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
10% of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% beneficial owners are
required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended June 30,
1998, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were complied with.
STATEMENT PURSUANT TO SECTION 726(d) BUSINESS CORPORATION LAW
The Company has obtained from National Union Insurance Company a Directors
and Officers Liability and Company Reimbursement Policy for the period
September 16, 1998 to September 16, 1999. The policy provides annual coverage
of $5,000,000 per loss with an aggregate of $5,000,000 for all claims for
directors and officers liability. Coverage is in accordance with the terms
of the policy and is subject to various exceptions contained therein. The
insurance is on a claims-made basis. The premium paid for this insurance is
$47,000. This statement is delivered pursuant to Section 726(d) of the
Business Corporation Law of the State of New York.
COMPENSATION COMMITTEE, INTERLOCKS AND INSIDER PARTICIPATION
Anthony P. Towell, a senior vice president of the Company served as a member
of the Compensation Committee during the fiscal year ended June 30, 1998.
REPORT OF THE COMPENSATION COMMITTEE TO THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee (the "Committee") approves compensation objectives
and policy for the Company's executive officers, including the individuals
named in the Summary Compensation Table.
The Committee is comprised of Messrs. Charles Holzberg and Martin Fleisher,
independent outside directors, and Anthony P. Towell. The Committee seeks to
provide rewards that are linked to Company and individual performance, and
ensure that compensation and benefits are at levels that enable the Company
to attract and retain the high-quality employees it needs.
The Compensation Committee believes that stock options and restricted stock
play an important role in attracting, retaining, and motivating executives.
Stock options also provide executives with a means of increasing Company
stock ownership, which is a key objective of the executive compensation
program and serves to align executives' interest with those of stockholders.
The Company has lost money during its two (2) previous years ended June 30,
1998. Accordingly, the Company's CEO and executive officers, where
applicable, have waived their bonuses for fiscal 1998. The Compensation
Committee believes in fiscal 1999 that executive remuneration should be more
directly linked to the Company's results. The Committee intends to monitor
the Company's activities and review compensation during fiscal 1999 to
ascertain whether or not the results of the Company, considering all other
factors such as costs, competition and otherwise, support the compensation
being paid.
STOCK PERFORMANCE GRAPH
The following is a performance graph comparing, over a five-year period,
the performance of the Common Stock of the Company against the Nasdaq US
Index and a group of peer issuers, which group is comprised of Angelica
Corp., Cyrk Inc., Lakeland Industries Inc. and Salant Corp.
<TABLE>
<CAPTION>
ANNUAL RETURN PERCENTAGE
<S> Years Ending
- ---------------------------------------------------------------------------
Company Name/Index Jun94 Jun95 Jun96 Jun97 Jun98
- ---------------------------------------------------------------------------
Eastco Industrial <C> <C> <C> <C> <C>
Safety Corp. -84.78 0.00 -55.37 -65.60 -11.61
Nasdaq US Index 0.96 33.49 28.39 21.38 32.21
Peer Group 8.82 31.09 10.24 -17.73 2.62
INDEXED RETURNS
Years Ending
- ---------------------------------------------------------------------------
Company Name/ Base
Index Period
Jun93 Jun94 Jun95 Jun96 Jun97 Jun98
- ---------------------------------------------------------------------------
Eastco Indus-
trial Safety
Corp.
100 15.22 15.22 6.79 2.34 2.07
Nasdaq US
Index 100 100.96 134.77 173.03 210.03 277.69
Peer Group 100 108.82 74.99 82.67 68.01 69.79
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A group of investors (the "Associates") holds a first mortgage on the
Company's executive offices and warehouse facility in Huntington Station, New
York in the principal amount of $404,985 as of June 30, 1998 and security
interest on the Company's personal property. The wives of Alan E. Densen and
Anthony P. Towell, executive officers and directors of the Company, and
Charles Holzberg, a director of the Company, together own approximately 38%
thereof. During the fiscal year ended June 30, 1998, the Company paid
Associates $74,674 in principal and interest on the mortgage, of which
$45,923 constituted interest.
The first mortgage held by Associates, which was dated in 1992 and upon which
interest was being paid at the rate of 14%, was scheduled to come due on July
1, 1997 in the amount of approximately $434,000. Associates and the Company
have agreed to extend the mortgage for five (5) years from July 1, 1997 with
interest at 12% per annum or 3% over prime, whichever is greater. At the end
of five (5) years, the mortgage will come due in the amount of approximately
$275,000. The Company continues to explore the refinancing of this mortgage
with various lenders.
Considering the circumstances of each transaction, the Company believes that
all transactions heretofore with officers/directors and shareholders of the
Company and their affiliates have been made, and in the future will be made,
on terms no less favorable to the Company than those available from
unaffiliated parties and will be approved by a majority of the disinterested
directors.
PROPOSAL TO APPROVE AMENDMENT TO CERTIFICATE OF INCORPORATION
On September 25, 1998, the Board of Directors adopted a resolution amending,
subject to stockholder approval, Article First of the Company's Certificate
of Incorporation to change the name of the Company from Eastco Industrial
Safety Corp. to Worksafe Industries Inc.(the "Amendment"). The Board of
Directors believes it is desirable to change the name of the Company to
reflect the Company's emphasis on manufacturing, production and marketing, as
well as to symbolize its new image.
Approval by stockholders of the Amendment shall include granting the officers
of the Company the authority to take all such further actions as may be
required to effectuate such name change, including, but not limited to, the
filing of a formal Certificate of Amendment to the Certificate of
Incorporation on behalf of the Company with the Secretary of State of the
State of New York.
The Board of Directors approved this Amendment on September 25, 1998.
Approval of the Amendment shall require a vote of a majority of all
outstanding shares entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
Effective June 4, 1998, the Company's Board of Directors replaced Cornick,
Garber & Sandler, LLP as its independent public accountants with Arthur
Andersen LLP. On June 4, 1998, the Company filed a Form 8-K with the
Securities and Exchange Commission to notify the Commission of the change of
the Company's independent public accountants. This Form 8-K is incorporated
herein by reference. The Board of Directors of the Company appointed and
proposed ratification of the firm of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending June 30, 1999. Arthur
Andersen LLP has advised the Company that it has no financial interest of
any kind in the Company and has had no connection with the Company at any
time in the past except for the professional relationship between auditor and
client.
The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Annual Meeting will be required for approval of the
auditors. In accordance with New York State law, abstentions are not counted
in determining the votes cast in connection with the selection of auditors.
If such approval is not obtained, selection of independent auditors will be
reconsidered by the Board of Directors.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so, and shall be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS ITS INDEPENDENT AUDITORS.
PROCEDURE FOR SUBMISSION OF 1999 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the 1999 annual meeting proxy
statement must be received by Eastco Industrial Safety Corp. at 130 West 10th
Street, Huntington Station, New York 11746, Attention: Anthony P. Towell,
prior to September 16, 1999. All such proposals are subject to the
applicable rules and requirements of the Securities and Exchange Commission.
OTHER MATTERS
So far as the Board of Directors is aware, only the aforementioned matters
will be acted upon at the meeting. If any other matters properly come before
the meeting, it is intended that the accompanying proxy may be voted on for
such other matters in accordance with the best judgment of the person or
persons voting said proxy.
By order of the Board of Directors.
Dated: October 28, 1998
LAWRENCE DENSEN
President
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EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
December 16, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints LAWRENCE DENSEN and ARTHUR WASSERSPRING and
each or either of them (with power of substitution) and proxies for the
undersigned, to vote all shares of Common Stock of record on November 9, 1998
of EASTCO INDUSTRIAL SAFETY CORP. which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders to be held
on December 16, 1998 at 3:30 p.m. local time, or at any adjournment thereof,
upon the matters set forth in the Notice of Annual Meeting of Stockholders
and Proxy Statement for said meeting, copies of which have been received by
the undersigned, and, in their discretion, upon all other matters which may
properly come before said meeting. Without otherwise limiting the generality
of the foregoing said proxies are directed to vote as follows:
No. 1: ELECTION OF DIRECTORS
To serve for the term continuing through the Annual Meeting following
the fiscal year ending June 30, 2000 and qualification of their
respective successors.
Alan E. Densen, Lawrence Densen and Anthony P. Towell
[ ] FOR all nominees listed above (except as withheld in the space
below.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
(Instruction: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
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No. 2: APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
Proposal to approve the Amendment to Article First of the Certificate of
Incorporation to effectuate a change of name to Worksafe Industries Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
No. 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal to ratify the appointment of Arthur Andersen LLP, Certified
Public Accountants, as the independent auditors to examine the financial
statements of the Company for the fiscal year ended June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO CONTRARY DIRECTION IS GIVEN ABOVE, AND THIS PROXY IS
PROPERLY SIGNED, THE SHARES WILL BE VOTED FOR THE PROPOSALS LISTED ABOVE.
Your proxy is important to assure a quorum at the meeting whether or not you
plan to attend in person. You may revoke this proxy at any time, and the
giving of it will not affect your right to attend the meeting and vote in
person.
Dated _________________________, 1998
_____________________________________________
Signature
_____________________________________________
Signature, if held jointly
_____________________________________________
Number of Shares as of November 9, 1998
This proxy must be signed exactly as name appears. When shares are held by
joint tenants, both must sign. When signing as attorney or as trustee,
executor or guardian, please give full title as such. If a corporation,
please sign the full corporate name by the president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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