FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 (Fee Required)
For the fiscal year ended January 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 (No fee required)
For the transition period from _____________ to ______________
Commission File Number: 0 - 15535
LAKELAND INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3115216
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(State of Incorporation) (I.R.S. Employer
Identification Number)
711-2 Koehler Ave., Ronkonkoma, NY 11779
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(Address of Principal Executive Offices)
(631) 981-9700
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.01 Par Value
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S - K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10 - K or any
amendment to this Form 10 - K _ .
The aggregate market value of the Common Stock outstanding and held by
nonaffiliates (as defined in Rule 405 under the Securities Exchange Act of 1934)
of the Registrant, based upon the average high and low bid price of the Common
Stock on NASDAQ on April 17, 2000 was approximately $5,743,038 (based on
1,506,173 shares held by nonaffiliates).
The number of shares outstanding of the Registrant's common stock, $.01
par value, on April 29, 2000 was 2,644,000.
.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended
January 31, 2000 are incorporated by reference in Items 5-7A of Part II and
certain portions of the Registrant's Definitive Proxy Statement, for the Annual
Meeting of Stockholders to be held June 21, 2000, are incorporated by reference
in Items 10 - 13 of Part III of this Annual Report on Form 10-K.
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PART I
ITEM 1. BUSINESS
Lakeland Industries, Inc. (the"Company") believes that it is the
leading manufacturer of a comprehensive line of safety garments and accessories
for the industrial safety and protective clothing industries in the United
States. The Company's major product areas include disposable / limited use
protective industrial garments, specialty safety and industrial work gloves,
reusable woven industrial and medical apparel, fire and heat protective clothing
along with protective systems for personnel, and suits for use by toxic waste
clean up teams. Products are manufactured both domestically and internationally
by the Company and by contract manufacturers. Products are sold by Company
personnel and 44 independent sales representatives, primarily to a network of
500 safety and mill supply distributors.
The Company's protective garments are used primarily for: (i) safety
and hazard protection, to protect the wearer from contaminants or irritants,
such as, chemicals, pesticides, fertilizers, paint, grease, and dust and from
limited exposure to hazardous waste and toxic chemicals including acids,
asbestos, lead, and hydro-carbon's (PCB's) (ii) clean room environments, for the
prevention of human contamination of manufacturing processes in clean room
environments, (iii) hand and arm protection, to protect the wearer's hand and
arms from lacerations, heat and chemical irritants without sacrificing manual
dexterity or comfort, (iv) heat and fire protection, to protect municipal fire
fighters, military, airport and industrial fire fighting teams and for
maintenance of "hot" equipment, such as, coke ovens, kilns, glass furnaces,
refinery installations, and smelting plants, (v) protection from viral and
bacterial microbiologicals, to protect the wearer from contagious diseases, such
as AIDS and hepatitis, at hospitals, clinics and emergency rescue sites, and
(vi) protection from highly concentrated and powerful chemical and biological
toxins, to protect the wearer from toxic wastes at Super Fund sites, accidental
toxic chemical spills or biological discharges, the handling of chemical or
biological warfare weapons and the cleaning and maintenance of chemical, petro-
chemical and nuclear facilities.
These products are manufactured, distributed and sold through five
divisions and four wholly owned subsidiaries. The Company was incorporated in
New York in 1982 and later reincorporated in Delaware in 1986. A new subsidiary,
Fireland Industries, Inc. was formed during fiscal 1994 and to act as Trustee
and Sponsor of the Fireland Industries, Inc. Pension Plan. During fiscal 1998,
the name of this subsidiary was changed to Laidlaw, Adams & Peck, Inc. Effective
February 1, 1999, the China division, Weifang Lakeland Safety Products Co.,
Ltd., was incorporated in China as a wholly owned subsidiary of the Company.
Background and Market
The market for disposable industrial garments has increased
substantially in the past 20 years. In 1970, Congress enacted the Occupational
Safety and Health Act ("OSHA"), which requires employers to supply protective
clothing in certain work environments. At about the same time, DuPont developed
Tyvek(TM) which, for the first time, allowed for the economical production of
lightweight, disposable protective clothing. The attraction of disposable
garments grew in the late 1970's with the increases in both labor and material
costs of producing cloth garments and the promulgation of federal, state and
local regulations requiring that employees wear protective clothing to protect
against exposure to certain contaminants, such as asbestos and P.C.B.s.
The use of disposable garments avoids the continuing costs of
laundering and decontaminating woven cloth work garments and reduces the
overhead costs associated with handling, transporting and replacing such
garments. As manufacturers have become aware of the advantages of disposable
clothing, the demand for such garments has increased. This has allowed for
greater production volume and, in turn, has reduced the cost of manufacturing
disposable industrial garments.
The Company believes that this market will grow due to the extensive
government legislation which mandates the clean up of toxic waste sites and the
elimination of hazardous materials from the environment as promulgated under
prior Congressional Super Fund Acts. The Environmental Protection Agency ("EPA")
designated OSHA to be responsible for the health and safety of workers in and
around areas of hazardous materials and contaminated waste. OSHA responded by
formulating an all encompassing compendium of safety regulations that prescribe
operating standards for all aspects of OSHA projects. Almost 2 million people
are affected by OSHA Standards today. Various states have also enacted worker
safety laws which are equal to or go beyond OSHA standards and requirements, as
it affects the Company's products.
In 1990, additional standards proposed and developed by the National
Fire Protection Association ("NFPA") and the American Society for Testing and
Materials ("ASTM") were accepted by OSHA. NFPA Standard 1991 set performance
requirements for total-encapsulating vapor-proof chemical suits and includes
rigid chemical and flame resistance tests and a
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permeability test against 17 challenge chemicals. The basic OSHA Standards call
for 4 levels of protection, A through D, and specify in detail the equipment and
clothing required to adequately protect the wearer at corresponding danger
levels. A summary of these four levels follows:
NFPA 1991 / Level A calls for total encapsulation in a vapor-proof chemical
suit with self-contained breathing apparatus ("SCBA") and appropriate
accessories. Level B calls for SCBA or positive pressure supplied
respirator with escape SCBA, plus hooded chemical resistant clothing
(overalls, and long sleeved jacket; coveralls; one or two piece
chemical-splash suit; or disposable chemical-resistant overalls). Level C
requires hooded chemical-resistant clothing (overalls; two-piece
chemical-splash suit; disposable chemical-resistant overalls).
Level D is basically a work and/or training situation requiring minimal
coverall protection.
The growth in the markets for disposable/limited use garments in the
industrial safety market has resulted from the following factors:
o lower cost of disposable/limited use garments as opposed
to reusable woven and cloth garments due to the
elimination of costs associated with laundering,
decontaminating, handling, transporting and replacing
reusable woven or cloth garments;
o the promulgation of federal (OSHA) and state regulations
requiring that employees wear protective clothing to
protect against exposure to certain contaminants, such as,
asbestos, PCB(s), lead, acids and other numerous hazardous
chemicals and radioactive materials;
o increasing workmens' compensation claims and large class
action liability suits instituted by both present and
prior employees for failure to be protected against
hazardous agents found in the workplace.
In general, manufacturers of industrial and safety clothing are considered
to be highly fragmented, since they consist of a large number of closely held
small family businesses. Accordingly, the Company believes that the industries
encompassed by disposable/limited use protective garments, industrial work
gloves, reusable woven industrial and medical apparel and fire and heat
protective clothing could present attractive acquisition opportunities.
There are few, if any, dominant personal protective apparel manufacturers,
and the market is witnessing significant ongoing consolidation activity, both at
the manufacturing level and more significantly, at the safety distributor
customer level. Recently, safety distribution channels have experienced more
consolidation than the safety manufacturing segment, due to a number of large
distributors with access to capital acquiring smaller distributors.
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Products - General
The following table summarizes the principal products manufactured and/or
sold by the Company, organized by the respective fabric's principal markets/uses
therefore:
<TABLE>
<CAPTION>
Product Raw Material Protection Against User Industry
- ------- ------------ ------------------ -------------
<S> <C> <C> <C>
o Limited Use/Disposable o Tyvek(TM)and Tyvek(TM) Contaminants, irritants, o Chemical/petrochemical
Protective Clothing laminates chemicals, fertilizers, industries
pesticides, acids, o Automotive and
asbestos, PCB(s), lead pharmaceutical industries
and other hazardous o Public utilities
chemicals o Janitorial
o Gloves o Kevlar(TM)yarns Cuts, lacerations, heat o Chemical plants
o Arm guards o Spectra(TM)yarns and chemical irritants o Automotive, glass and
metal fabrication industries
o Fire fighting apparel o Neoprene Fire, burns and excessive o Municipal, corporate and
o Nomex(TM) heat volunteer fire departments
o Gortex(TM) o Airport crash rescue
o Heat protective o Aluminized Nomex(TM) Fire, burns and excessive Hot equipment maintenance
aluminized fire suits o Aluminized Kevlar(TM) heat personnel and industrial fire
departments
o Protective woven o Cotton Polyester blends o Protects manufactured o Hospital and Industrial
reusable garments o Cotton products from human Facilities
o Polyester contamination or static o clean room environments
o Staticsorb(TM)Carbon electrical charge o Emergency Medical
Thread C-3 Polyester o Bacteria, viruses and Ambulance Services
blood borne pathogens
o High end Chemical o TyChem(TM) Chemical spills o Hazardous material teams
protective suits o Teflon(TM) Toxic chemicals used in o Chemical and nuclear
o Other Company patented manufacturing processes industries-various uses
Co-Polymer Laminates
</TABLE>
Limited Use/Disposable Protective Clothing
The Company manufactures a complete line of disposable/limited use protective
garments at its U.S., Mexican and Chinese assembly facilities. These garments
are offered in coveralls, lab-coats, shirts, pants, hoods, aprons, sleeves and
smocks. The Company offers these garments in a number of sizes and styles to fit
the end users' needs. Limited-use garments can also be coated or laminated to
increase splash protection against many inorganic acids, bases, and other liquid
chemicals. Limited use garments are made from several non-woven fabrics
including Tyvek(TM), TyvekQC(TM), Tyvek/Saranex 23-P(TM), Pyrolon FR(TM), and
Polypropylene and Polyethylene materials and derivatives.
The Company incorporates many seaming techniques depending on the level of
hold-out needed in the end use application. Seam types utilized include standard
serge seam, bound seam, and heat sealed seam.
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Disposable/limited use industrial garments are used in a wide variety of
industries and applications. Typical industry users are chemical plants, petro
chemical refineries and related installations, automotive manufacturers,
pharmaceutical companies, coal and oil power generation utilities and telephone
utility companies. There are many smaller industries that use these garments for
specific safety applications unique to their situation.
The Company's limited use garments range in price from $.06 for
disposable/limited use shoe covers to approximately $12.00
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for Tyvek/Saranex 23-P laminated hood and booted coverall. The Company's largest
selling item, a standard white limited-use Tyvek coverall, costs the end user
approximately $2.75 to $3.25 per garment. By comparison, similar re-usable cloth
coveralls range in price from $20.00 to $60.00, exclusive of significant
laundering, maintenance and shrinkage expenses.
The Company cuts, warehouses and sells its disposable/limited use garments
primarily at its Decatur, Alabama facility. The fabric is first cut into
required patterns at this plant which is ISO 9002 certified. The cut fabric and
any necessary accessories, such as zippers or elastic, are then obtained from
the Company's plant by the Company's wholly owned assembly facilities or
independent sewing contractors. The Company's assembly facilities in China or
Mexico and independent contractors sew and package the finished garments at
their own facilities and return them to the Company's plant, normally within one
to eight weeks for immediate shipment to the customer.
The Company presently utilizes over 11 independent sewing contractors under
agreements that are terminable at will by either party. These contractors employ
approximately 140 people full-time (both domestically and internationally) and
operate and maintain their own industrial sewing machines. The Company believes
that it is the only customer of the majority of its independent sewing
contractors and considers its relations with such contractors to be excellent.
In the year ended January 31, 2000, no independent sewing contractors accounted
for more than 5% of the Company's production of disposable/limited use garments.
The Company believes that it can obtain adequate alternative production capacity
should any of its independent contractors become unavailable. The Company
believes that its manufacturing system permits it considerable flexibility.
Furthermore, by employing additional sewing contractors, the Company can
increase production without substantial additional capital expenditures.
While the Company has not experienced reduced demand for its disposable /
limited use garments, management believes that by its use of its facilities
complemented by the use of independent sewing contractors, the Company is
capable of reducing or alternately increasing by 20% its production capacity
without incurring large on-going costs typical of many manufacturing operations.
This allows the Company to react quickly to changing unit demand for its
products.
Gloves and Arm Guards
The Company manufacturers and sells speciality safety gloves and sleeves made
from Kevlar(TM). The Company is one of five companies licensed to sell 100%
Kevlar(TM) gloves. Kevlar(TM) is a cut and heat resistant, high-strength
lightweight, flexible and durable material produced by Dupont. Kevlar(TM), on an
equivalent weight basis, is five times stronger than steel and has increasingly
been used in manufacturing such diverse products as airplane fuselage components
and bullet-resistant vests.
Gloves made of Kevlar(TM) offer a better overall level of protection, lower
the injury rate and are more cost effective than work gloves made from such
traditional material as leather, canvas and coated gloves. Kevlar(TM) gloves can
withstand temperatures of up to 400 degrees F and are sufficiently cut-resistant
to allow workers to safely handle sharp or jagged unfinished sheet metal.
Kevlar(TM) gloves are used primarily in the automotive, glass and metal
fabrication industries.
The Company is devoting an increasing portion of its manufacturing capacity
to the production of Kevlar(TM) , Spectra(TM) and Company patented yarns to make
gloves, which carry a higher profit margin than commodity gloves. Spectra(TM) is
a cut resistant fiber made by Allied Signal, Inc. In order to maintain a full
line of gloves, however, the Company intends to continue to produce or import
commodity gloves as are necessary to meet customer demand for its glove
products. The Company believes that there are adequate and reliable foreign
manufacturers available to meet the Company's import requirements of commodity
gloves, if needed.
<PAGE>
The Company's Kevlar(TM) and Spectra(TM) gloves range in price from $37.00 to
$240.00 for a dozen pair.
The Company also manufactures gloves at its Decatur, Alabama facility.
Computerized robotic knitters are used to weave gloves from both natural and
synthetic materials, including Kevlar(TM)and Spectra(TM) on an automatic basis.
These robotic knitters are generally in operation 20 hours a day, 5-1/2 days a
week.
The Company's robotic knitters allow flexibility in production as they can be
easily reprogrammed in minutes to produce gloves and sleeves in different sizes,
styles, weights, weaves or combinations of materials. Additionally, these
robotic knitters can produce gloves and sleeves separately or as a one-piece
garment. Gloves and sleeves can also be knitted in different weights and
combinations of yarns, such as Kevlar(TM) mixed with cotton or polyester.
Heat Protective and Fire Fighting Apparel
The Company's products protect individuals that must work in high heat
environments and the Company has been the creator, innovator and inventor of
protective systems for high heat or hazardous occupations for the last 13 years.
The brand name
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FYREPEL(TM) is recognized nationally and internationally. The Company has
completed an intensive redesign and engineering study to address the ergonomic
needs of stressful occupations. The Company's protective aluminized fire suits
include:
Fire entry suit - for total flame entry for industries dealing with
volatile and highly flammable products.
Kiln Entry suit - to protect kiln maintenance workers from extreme heat.
Proximity suits - designed for performance in high heat areas to give
protection where exposure to hot liquids, steam or hot
vapors is possible.
Approach suits - for personnel engaged in maintenance, repair and
operational tasks where temperatures do not exceed 200F
degrees ambient, with a radiant heat exposure up to
2,000F degrees.
The Company also manufactures fire fighters protective apparel for domestic
and foreign fire departments and developed the popular Sterling Heights style
(short coat and bib pants) bunker gear. Crash Rescue has been a major market for
this product division, which was the first to produce and supply military and
civilian markets with protection worn at airports, petrochemical plants and in
the marine industry. Each of the fire suits range in cost to the end user from
$450 for standard fire department turn-out gear to $2,000 for the fire entry
suit.
Protective Woven Reusable Garments
The Company also manufactures and markets a line of reusable and
launderable woven cloth protective apparel which supplement the disposable /
limited use garments, giving the Company access to the much larger woven
industrial and health care related markets. Cloth re-usable garments are more
appropriate in certain situations or applications because of worker familiarity
with and acceptance of these fabrics and woven cloth's heavier weight,
durability and longevity. These products give the Company the flexibility to
supply and satisfy a wider range of safety and customer needs. The Company
designs and manufactures:
o special anti-static apparel, primarily for the automotive industry
(perceived as a premium-priced product)
o clean room apparel as used in the most sophisticated semiconductor
manufacturing facilities
o hospital garments for protection against blood borne pathogens
o jackets and bib overalls for use by emergency medical rescue teams
The Company's reusable wovens range in price from $10.00 to $80.00 per
garment.
The Company manufactures and sells woven cloth garments at its facility in
St. Joseph, Missouri. After the Company receives fabrics from suppliers,
principally blends of polyester and cotton, the Company cuts and sews the
fabrics at its own facilities to meet customer purchase orders.
High-End Chemical Protective Suits
The Company manufactures heavy duty fully encapsulated chemical suits
(three of which have been developed internally and are patented) using
proprietary co-polymer laminates or Viton(TM), butyl rubber, polyvinyl chloride
("PVC") and the Dupont TyChem(TM)and Barricade(TM) fabrics. These suits are worn
to protect the user from exposure to hazardous chemicals. Hazardous material
teams or individuals use chemical suits for toxic cleanups, chemical spills, or
<PAGE>
in industrial, chemical and electronic plants. The Company's line of chemical
suits range in cost from $80.00 for the Checkmate suits to $3,400 for its
Forcefield Teflon suits. The chemical suits can be used in conjunction with a
fire protective shell manufactured by the Company which will protect the user
from both chemical and flash fire hazards. The Company has introduced four
National Fire Protection Agency ("NFPA") approved garments for varying levels of
protection required depending on field conditions:
TyChem(TM) - 10,000 is a co-polymer film laminated to a durable spunbonded
substrate. It offers the broadest temperature range for limited use garments
- -25o F to 225o F. TyChem(TM) 10,000 meets all OSHA Level A requirements. It is
available in NFPA 1991-94 certified versions when worn with an aluminized over
cover.
TyChem(TM) - 9400 meets all OSHA Level B and all NFPA 1993 fabric
requirements and offers excellent splash protection against a wide array of
chemicals.
Forcefield(TM) - A heavyweight hazmat suit, totally encapsulized providing
greater mobility, visibility, dependability and versatility in dealing safely
and effectively with most types of chemical hazards. This product meets NFPA
1991 standards for a fully certified chemical protective suit. When combined
with an Aluminized PBI/Kevlar over cover, it provides NFPA 1991 / Level A
protection;
Interceptor(TM) - Model A meets all OSHA Level A requirements as a
vapor-proof suit. Model 1 meets and exceeds NFPA
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1991 requirements of certification for vapor-proof suit when used with an
Aluminized PBI / Kevlar over cover.
Checkmate(TM) - Is used for lower level chemical protection. This suit is
lightweight, tough, versatile, durable and cost effective and can be used for:
splash protection, basic clean up, toxic waste dumps and post fire monitoring of
toxic residue. It meets all NFPA requirements.
The Company manufactures chemical protective clothing at its facility in
Decatur, Alabama. After the Company obtains such materials as Barricade (R),
TyChem(R), Viton(R), butyl rubber, PVC or its own patented laminates, it
designs, cuts, glues and/or sews the materials to meet customer purchase orders.
Quality Control
To assure quality, Company employees monitor the sewing of disposable /
limited use garments at its own Mexican and Chinese facilities and at the
facilities of independent sewing contractors and also inspect the garment upon
delivery to the Company's facilities. Finished product that is below standard is
returned to the contractor for reworking. The Company has been required on a few
occasions to return product to its independent sewing contractors. The Company
also actively participates in the Industrial Safety Equipment Association's
(ISEA) frequent independent quality inspection programs. The Company conducts
quality control inspections of its industrial gloves, cloth, fire and chemical
garments throughout the manufacturing process. Both the Company's Alabama
disposable and China disposable facilities are ISO9002 certified. ISO standards
are internationally recognized quality manufacturing standards established by
the International Organization for Standardization based in Geneva, Switzerland.
To obtain its ISO registration, the Company's factories were independently
audited to ensure compliance with the applicable standards, and to maintain
registration, the factories receive regular announced inspections by an
independent certification organization. The Company believes that the ISO 9002
registration makes it more competitive in the marketplace, as customers are
increasingly recognizing the standard as an indication of product quality.
Marketing and Sales
The Company's products are sold primarily by over 500 safety and mill
supply distributors including four of the five leading North American
distributors. Sales of the Company's products are solicited by 16 agencies
engaging 44 independent sales representatives. The Company also employs an
in-house sales force of nine (9) people.
These independent representatives call on over 500 safety and industrial
distributors nationwide and promote and sell the Company's products to safety
and industrial distributors and provide product information. The distributors
buy the Company's products and maintain inventory at the local level in order to
assure quick response time and the ability to service accounts properly. The
independent representatives maintain regular interaction with end users and
decision makers at the distribution level, thereby providing the Company with
valuable feedback on market perception of the Company's products, as well as new
developments within the industry. During the year ended January 31, 2000, no one
distributor accounted for more than 5% of sales.
The Company's marketing plan is to maximize the efficiency of its
established distribution network by direct promotion at the end-user level.
Advertising is primarily through trade publications. Promotional activities
include sales catalogs, mailings to end users and a nationwide publicity
program. The Company exhibits at both regional and national trade shows and was
represented at the National Safety Congress in New Orleans, LA (Fall of 1999)
and at the American Industrial Hygienists Convention (Spring of 1999).
Research and Development
The Company has a history of new product development and innovation and has
introduced the Grapolator(TM) and Kut Buster(TM) glove and sleeve lines which
combine a stainless steel wire core combined with high strength man made fibers
providing the ultimate in cut protection without sacrificing dexterity, and
additionally the patented Thermbar Mock Twist(TM) which provides heat protection
for temperatures up to 600o F. The Company has ten patents on various fabrics
and production machinery. The Company plans to continue to be an innovator in
protective apparel fabrics, manufacturing equipment, and intends to introduce
new products to the market place in the future. Specifically, the Company plans
to develop new anti-static reusable gowns for the automotive industry made of
specially knit polyester with carbon threads and will continue to dedicate
resources to research and development.
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Suppliers and Materials
The Company does not have long-term, formal agreements with unaffiliated
suppliers of non-woven fabric raw materials used by the Company in the
production of its product lines. Tyvek(TM) and Kevlar(TM), however, are
purchased from Dupont under licensing agreements. Polypropylene, Polyethylene,
Polyvinyle Chloride and their derivatives are available from thirty or more
major mills, while flame retardant fabrics are also available from a number of
both domestic and international mills.
The accessories used in the production of the Company's disposable garments
such as snaps and elastics are obtained from unaffiliated suppliers. The Company
has not experienced difficulty in obtaining its requirements for these commodity
component items. The Company also has not experienced difficulty in obtaining
materials, including cotton, polyester and nylon, used in the production of
reusable non-wovens and commodity gloves. Kevlar(TM), used in the production of
the Company's specialty safety gloves, is obtained from independent mills that
purchase the fiber from Dupont. The Company has not experienced difficulty in
obtaining its requirements for its raw materials, fabrics or components on any
of the above described products. The Company obtains the Spectra(TM) yarn used
in its Dextra Guard(TM) gloves from mills that purchase the fiber from Allied
Signal Company, Inc. ("Allied"). The Company believes that Allied will be able
to meet the Company's needs for Spectra(TM).
In manufacturing its fire and heat protective suits, the Company uses glass
fabric, aluminized glass, Nomex(TM), aluminized Nomex(TM), Kevlar(TM),
aluminized Kevlar(TM), polybenzimidazole (PBI) and Gortex(TM), as well as
combinations utilizing neoprene coatings. The chemical protective suits are made
of Viton(TM), butyl rubber, PVC (available from multiple sources), proprietary
and Company patented laminates and Teflon(TM), Saranex(TM) Tyvek QC(TM),
TyChem(TM) and Barricade(TM) from Dupont. The Company has not experienced
difficulty obtaining any of the aforementioned materials.
Competition
The Company's business is in a highly competitive industry. The Company
believes that the barriers to entry in each of the fields in which it operates
are relatively low, except in Tyvek(TM) disposable limited use clothing because
of the limited number of Tyvek(TM) licensees. The Company faces competition in
some of its other product markets from large established companies that have
greater financial, managerial, sales and technical resources than the Company.
Where larger competitors offer products that are directly competitive with the
Company's products, particularly as part of an established line of products,
there can be no assurance that the Company can successfully compete for sales
and customers. Larger competitors also may be able to benefit from economics of
scale or to introduce new products that compete with the Company's products.
Seasonality
The Company's quarterly operating results have varied and are expected to
continue to vary in the future. These fluctuations may be caused by many
factors, including seasonal buying patterns, demand for the Company's products,
competitive pricing and services, the size and timing of individual sales, the
lengthening of the Company's sales and production cycle, competitive pricing
pressures, customer order deferrals in anticipation of new products, changes in
the mix of products and services sold, the timing of introductions and
enhancements of products by the Company or its competitors, market acceptance of
new products, technological changes in fabrics or production equipment used to
make the Company's products, changes in the Company's operating expenses,
changes in the mix of domestic and international revenues, the Company's ability
to complete fixed price government or private long-term contracts within a
budget, personnel changes, expansion of international operations, changes in the
Company's strategies, and general industry and economic conditions. The
Company's business has experienced, and is expected to continue to experience,
seasonal fluctuations due in large part to the cyclical nature of certain
industrial customers' businesses.
Patents and Trademarks
At this time, there are no patents or trademarks which are significant to
the Company's operations; however, the Company has one exclusive ten (10) year
licensing arrangement covering seven patents in the Company's name, three
Company developed patents, two additional patents in the application and
approval process with the U.S. Patent and Trademark office, and has one
non-exclusive agreement with Dupont regarding patented materials used in the
manufacture of chemical suits.
Employees
As of April 17, 2000, the Company had approximately 1,311 full-time
employees (1,078 or 82.2% of whom were international and 233 or 17.8% of whom
were domestic). The Company has experienced a low turnover rate among its
employees. The Company believes its employee relations to be excellent.
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ITEM 2
Properties
The Company leases two domestic manufacturing facilities, four foreign
manufacturing facilities, one foreign sales office, one Canadian warehouse
facility and a corporate office headquarters. The Company's 91,788 square foot
manufacturing facility and the new 40,000 square foot warehouse facility in
Decatur, Alabama, are used in the production and storage of disposable / limited
use garments. The Alabama facilities are leased entirely by the Company from
partnerships consisting primarily of certain stockholders of the Company,
pursuant to two lease agreements expiring on May 31 and August 31, 2004.
Highland and Chemland divisions relocated from Somerville, Alabama to this
Decatur facility in late 1999.
Early in 1999, the Company entered into a one year (renewable for four
additional one year terms) lease agreement with an officer of the Company, for
2400 sq. ft. customer service office. This is located next to the existing
Decatur, Alabama facility mentioned above.
In mid 1999, the Company entered into a five year lease agreement for a
40,000 sq. ft. warehouse facility (mentioned above)located next to the existing
facility in Decatur, Alabama from a limited liability partnership made up of the
Directors and certain officers of the Company. The annual rent for this facility
is $199,100 and the Company is the sole occupant of the facility. This lease
expires on May 31, 2004.
The Company leases 44,000 square feet of manufacturing space in St. Joseph,
Missouri, from a third party, which is used in the manufacturing of woven cloth
garments and other cloth products. This lease expires on October 31, 2001.
The Company's Mexican subsidiary leases two manufacturing facilities from
third parties totaling 33,816 square feet under one lease expiring on December
31, 2000 and the second smaller facility is leased on a month to month basis.
The Company also leases a 46,000 square foot manufacturing facility in China.
This lease agreement is with a partnership of American and Chinese individuals
(which include certain officers, employees and directors of the Company) who own
the buildings and who have leased the underlying real property for 50 years. The
partnership in turn leases the buildings and real property to the Company's
Chinese subsidiary as a sales, distribution and manufacturing facility. In
fiscal 2000, the lease was for eight months, expiring in April 2000, at an
annual rental of $48,972. A second auxiliary facility to this main facility was
rented on a month to month basis starting October 10,1999 at a monthly rent of
$670 for 16,000 square feet. This lease was terminated on April 30, 2000. A
small 2,000 sq. ft. sales office is also leased from a third party at an annual
rental of $8,000.
The Company leases a 5,600 square foot warehouse in Canada from a third
party under a lease expiring on November 30, 2002.
The Company leases 4,362 square feet of office space in Ronkonkoma, New
York, from a third party, in which its corporate, executive and sales offices
are located. This lease expires on June 30, 2002.
For the years ended January 31, 2000, 1999 and 1998, the Company paid total
rent on property and all leased equipment of approximately $827,000, $643,000
and $621,000, respectively. The Company believes that these facilities are
adequate for its present operations.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved as plaintiffs in certain
receivable collection actions and claims arising in the ordinary course of
business, none of which are of a material nature.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Reference is made to Page 5 ("Market for the Registrant's Common Stock and
Related Stockholder Matters") of the Registrant's 2000 Annual Report to
Shareholders filed as Exhibit 13 hereto and incorporated herein by reference.
(See Part IV, Item 14(c) Exhibits.)
A-9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to Page 1 ("Selected Financial Data") of the Registrant's
2000 Annual Report to Shareholders filed as Exhibit 13 hereto and incorporated
herein by reference. (See Part IV, Item 14(c) Exhibits.)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Reference is made to Page 2 ("Management's Discussion and Analysis of
Financial Condition and Results of Operations") of the Registrant's 2000 Annual
Report to Shareholders filed as Exhibit 13 hereto and incorporated herein by
reference. (See Part IV, Item 14(c) Exhibits.)
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Page 4 ("Quantitative and Qualitative Disclosures
about Market Risk") of the Registrant's 2000 Annual Report to Shareholders filed
as Exhibit 13 hereto and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements are incorporated herein by
reference to Pages 6 to 23 of the
Registrant's Annual Report to Shareholders for the year ended January 31,
2000:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - January 31, 2000 and 1999
Consolidated Statements of Income for the years ended January 31, 2000,
1999 and 1998
Consolidated Statement of Stockholders' Equity for the years ended January
31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended January 31, 2000,
1999 and 1998 Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the information under the caption "Election of Directors" in the
Company's Proxy Statement relating to the 2000 Annual Meeting of Stockholders
("Proxy Statement"), which information is included in Exhibit 20 hereto and
incorporated herein by reference. (See Part IV, Item 14(c) Exhibits.)
The following table sets forth the names and ages of all executive officers
of the Company, and all positions and offices within the Company presently held
by such executive officers. None of the directors, executive officers or
nominees for director has any family relationship with any other director,
executive officer or nominee for director of the Company.
Name Age Position Held
Raymond J. Smith 61 Chairman of the Board, President
and Director
Christopher J. Ryan 48 Executive Vice President - Finance &
Secretary and Director
Harvey Pride, Jr. 53 Vice President - Manufacturing
James M. McCormick 52 Vice President and Treasurer
A-10
<PAGE>
Mr. Smith, a co-founder of the Company, has been Chairman of the Board
and President since its incorporation. Prior to 1982, he was employed for 16
years by Disposables, Inc., a manufacturer of disposable garments, first as
sales manager, then as Executive Vice President and subsequently as President
and Director.
Mr. Christopher J. Ryan has served as Executive Vice President- Finance
and director since May, 1986 and Secretary since April 1991. From October 1989
until February 1991 Mr. Ryan was employed by Sands Brothers & Co. Ltd. and
Rodman & Renshaw, Inc., both investment banking firms. Prior to that, he was an
independent consultant with Laidlaw Holding Co., Inc., an investment banking
firm, from January 1989 until September 1989. From February, 1987 to January,
1989 he was employed as the Managing Director of Corporate Finance for Brean
Murray, Foster Securities, Inc.
Mr. Pride has been Vice President of the Company since May 1986. He was
Vice President of Ryland (the Company's former subsidiary) from May 1982 to June
1986, and President of Ryland until its merger into Lakeland on January 31,
1990.
Mr. McCormick has been Vice President and Treasurer since May 1986.
Between January 1986 and May 1986 he was the Company's Controller.
ITEM 11. EXECUTIVE COMPENSATION
See information under the caption "Compensation of Executive Officers"
in the Company's Proxy Statement, which information is included in Exhibit 20
hereto and incorporated herein by reference. (See Part IV, Item 14(c) Exhibits.)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the information under the caption "Voting Securities and Stock
Ownership of Officers, Directors and Principal Stockholders" in the Company's
Proxy Statement, which information is included in Exhibit 20 hereto and
incorporated herein by reference. (See Part IV, Item 14(c) Exhibits.)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the information under the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement, which information is included in
Exhibit 20 hearto and incorporated herein and by reference. (See Part IV, Item
14(c) Exhibits.)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8 - K
(a) Index to Consolidated Financial Statements and Schedule:
1. Financial Statements:
The following Consolidated Financial Statements of the
Registrant are incorporated herein by reference to the Registrant's
Annual Report to Shareholders for the year ended January 31, 2000, as
noted in Item 8 hereof:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - January 31, 2000 and 1999
Consolidated Statements of Income for the years ended January 31, 2000,
1999 and 1998
Consolidated Statement of Stockholders' Equity for the years ended
January 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended January 31,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
<PAGE>
2. Financial Statement Schedules
The following consolidated financial statement schedule is included in
Part IV of this report:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or not
require d, or because the required information is included in the consolidated
financial statements or notes thereto.
A-11
<PAGE>
(b) Reports on Form 8 - K.
No report on Form 8 - K has been filed for the quarter ended January
31, 2000.
(c) Exhibits:
3 (a) Restated Certificate of Incorporation*
3 (b) By-Laws, as amended*
10 (a) Lease agreements between POMS Holding Co., as lessor,
and the Company, as lessee, dated September 1, 1999
10 (b) Lease agreement between Southwest Parkway, Inc., as
lessor, and the Company, as lessee, dated June 11,
1996.
10 (c) The Company's Stock Option Plan*
10 (d) Asset Purchase Agreement, dated as of December 26,
1986, by and among the Company, Fireland, Fyrepel
Products, Inc. and John H. Weaver, James R. Gauerke
and Vernon W. Lenz**
10 (e) Asset Purchase Agreement, dated as of December 26,
1986, by and among the Company, Chemland, Siena
Industries, Inc. and John H. Weaver, James R. Gauerke,
Eugene R. Weir, John E. Oberfield and Frank Randles**
10 (f) Asset Purchase Agreement, dated September 30, 1987 by
and among the Company and Walter H. Mayer & Co.
(Incorporated by reference to the report on Form 8 - K
filed by the Company on October 14, 1987.)
10 (g) Employment agreement between the Company and Raymond
J. Smith, dated January 23, 1998.
10 (h) Employment agreement between the Company and Harvey
Pride, Jr., dated January 31, 1998.
10 (i) Lease between Lakeland Industries, Inc. and JBJ
Realty, dated April 16, 1999.
10 (j) Asset Purchase Agreement, dated November 19, 1990
by and among the Company, Mayer and WHM Acquisition
Corp. (Incorporated by reference to the report on Form
10 - Q for the quarter ended October 31, 1990, filed
by the Company on December 14, 1990).
10 (k) Employment agreement between the Company and
Christopher J. Ryan, dated February 14, 1997.
10 (l) Loan agreement dated December 12, 1997 between the
Company and Merrill Lynch.
10 (m) Consulting and License Agreements between the Company
and W. Novis Smith dated December 10, 1991.
10 (n) Agreement dated June 17, 1993 between the Company and
Madison Manpower and Mobile Storage, Inc.
<PAGE>
10 (o) Lease Agreement between River Group Holding Co., LLP,
as lessor, and the Company, as lessee,
dated June 1, 1999.
10 (p) Lease Agreement between Harvey Pride, Jr., as lessor,
and the Company, as lessee, dated March 1, 1999.
10 (q) Term loan and security agreement between the Company
and Merrill Lynch, dated November 1, 1999.
A-12
<PAGE>
11 Consent of Grant Thornton LLP dated April 14,2000***
13 Annual Report to Shareholders for the year ended
January 31, 2000
20 Proxy Statement of the Registrant for Annual Meeting
of Stockholders - June 21, 2000
22 Subsidiaries of the Company (wholly-owned): Lakeland
Protective Wear, Inc. Lakeland de Mexico S.A. de C.V.
Laidlaw, Adams & Peck, Inc. Weifang Lakeland Safety
Products Co. Ltd.
27 Financial Data Schedule
All other exhibits are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
- -----------------------
* Incorporated by reference to Registration Statement on Form S - 18 on file
with the Securities and Exchange Commission No.33-7512-NY.
** Incorporated by reference to report on Form 8 - K filed by the Company on
January 9, 1987.
*** Incorporated by reference to Registration Statement on Form S-8 on file with
the Securities & Exchange Commission No. 33-92564 - NY.
The Exhibits listed above (with the exception of the Annual Report to
Shareholders) have been filed separately with the Securities and Exchange
Commission in conjunction with this Annual Report on Form 10-K. On request,
Lakeland Industries, Inc. will furnish to each of its shareholders a copy of any
such Exhibit for a fee equal to Lakeland's cost in furnishing such Exhibit.
Requests should be addressed to the Office of the Secretary, Lakeland
Industries, Inc., 711-2 Koehler Avenue, Ronkonkoma, New York 11779.
A-13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: April 28, 2000
LAKELAND INDUSTRIES, INC.
By: /s/ Raymond J. Smith
---------------------
Raymond J. Smith , Chairman of the Board
and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
Raymond J. Smith Chairman of the Board, April 28, 2000
- ----------------------- President and Director
Raymond J. Smith (Principal Executive Officer)
Christopher J. Ryan Executive V. P.- Finance April 28, 2000
- ------------------------ & Secretary and Director
Christopher J. Ryan
James M. McCormick Vice President and Treasurer April 28, 2000
- -------------------- (Principal Financial and
James M. McCormick Accounting Officer)
Eric O. Hallman Director April 28, 2000
- ------------------------
Eric O. Hallman
John J. Collins Director April 28, 2000
- ------------------------
John J. Collins,Jr.
Walter J. Raleigh Director April 28, 2000
- ------------------------
Walter J. Raleigh
</TABLE>
A-14
EXHIBIT 10 (a)
This Agreement between
POMS Holding Co., a New York partnership, c/o Murphy, Bartol & O'Brien, LLP, 22
Jericho Turnpike, Suite 103, Mineola, NY 11501-2976
as Landlord
and Lakeland Industries, Inc., a Delaware corporation with offices at 711-2
Koehler Avenue, Ronkonkoma, N.Y. 11779
as Tenant
Witnesseth: The Landlord hereby leases to the Tenant the following premises:
approximately 91,788 square feet of the building located at and known at 202
Pride Lane, Decatur, Alabama 35603 for the term of to commence for the 1st day
of September, 1999 and to end on the 31st day of August, 2004 to be used and
occupied only for Office, light manufacturing and warehouse space upon the
conditions and covenants following:
1st. That the Tenant shall pay the annual rent of Three Hundred Sixty-Four
Thousand Nine Hundred ($364,900.00) Dollars said rent to be pain in equal
monthly payments in advance on the day of each and every month during the term
aforesaid, as follows: Thirty Thousand Four Hundred Eight and 33/100
($30,408.33) Dollars on September 1st, 1999 and monthly thereafter
non-structural
2nd. That the Tenant shall take good care of the premises and shall, at the
Tenant's own cost and expense make all/repairs including, but not limited to,
repairs of the plumbing, heating and electrical systems, and at the end or other
expiration of the term, shall deliver up the demised premises in good order or
condition, damages by the elements excepted.
3rd. That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules orders, regulations and requirements of the Federal, State and
Local Governments and of any and all their Departments and Bureaus applicable to
said premises, for the correction, prevention and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters, or any other similar
body, at the Tenant's own cost and expense.
4th. That the Tenant, successors, heirs, executors and administrators shall not
assign this agreement , or underlet or underlease the premises, or any part
thereof, or make any alterations on the premises, without the Landlord's consent
in writing; or occupy, or permit or suffer the same to be occupied for any
business or purpose deemed disreputable or extra-hazardous on account of fire,
under the penalty of damages and forfeiture, and in the event of a breach
thereof, the term herein shall immediately cease and determine at the option of
th Landlord as if it were the expiration of the original term.
5th. Tenant must give Landlord prompt notice of fire, accident, damage or
dangerous or defective condition. If the Premises can not be used because of
fire or other casualty, Tenant is not required to pay rent for the time the
Premises are unusable. If part of the Premises can not be used, Tenant must pay
rent for the usable part. Landlord shall have the right to decide which part of
the Premises is usable. Landlord need only repair the damaged structural parts
of the Premises. Landlord is not required to repair or replace any equipment ,
fixtures, furnishings or decorations unless originally installed by Landlord.
Landlord is not responsible for delays due to settling insurance claims,
obtaining estimates, labor and supply problems or any other cause not fully
under Landlords control.
<PAGE>
If the fire or other casualty is caused by an act or neglect of Tenant, Tenant's
employees or invitees, or at the time of the fire or casualty Tenant is in
default in any term of this Lease, then all repairs will be made at Tenant's
expense and Tenant must pay the full rent with no adjustment. The cost of the
repairs will be added rent.
Landlord has the right to demolish or rebuild the Building if there is
substantial damage by fire or other casualty. Landlord may cancel this Lease
within 30 days after the substantial fire or casualty by giving Tenant notice of
Landlord's intention to demolish or rebuild. The Lease will end 30 days after
Landlord's cancellation notice to the Tenant. Tenant must deliver the Premises
to the Landlord on or before the cancellation date in the notice and pay all
rent due to the date of the fire or casualty. If the Lease is cancelled Landlord
is not required to repair the Premises or Building. The cancellation does not
release Tenant of liability in connection with the fire or casualty. This
Section is intended to replace the terms of New York Real Property Law Section
227.
6th. The said Tenant agrees that the said Landlord and the Landlord's agents and
other representatives shall have the right to enter into and upon said premises,
or any part thereof, at all reasonable hours for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof.
7th. The Tenant also agrees to permit the Landlord or the Landlord's agents to
show the premises to persons wishing to hire or purchase the same; and the
Tenant further agrees that on and after the sixth month, next preceding the
expiration of the term hereby granted, the Landlord or the Landlord's agents
shall have the right to place notices on the front of said premises, or any part
thereof, offering the premises "To Let" or "For Sale", and the Tenant hereby
agrees to permit the same to remain thereon without hindrance or molestation.
8th. That if the said premises, or any part thereof shall be deserted or become
vacant during said term, or if any default be made in the payment of the said
rent or any part thereof, or if any default be made in the performance of any of
the covenants herein contained, the Landlord or representatives may re-enter the
said premises by force, summary proceedings or otherwise, and remove all persons
therefrom, without being liable to prosecution therefor, and the Tenant hereby
expressly waives the service of any notice in writing of intention to re-enter,
and the Tenant shall pay at the same time as the rent becomes payable under the
terms hereof a sum equivalent to the rent reserved herein, and the Landlord may
tent the premises on behalf of the Tenant, reserving the right to rent the
premises for a longer period of time than fixed in the original lease without
releasing the original Tenant from any liability, applying any moneys collected,
first to the expense of resuming or obtaining possession, second to restoring
the premises to a rentable condition, and then to the payment of the rent and
all other charges due and to grow due to the Landlord, any surplus to be paid to
the Tenant, who shall remain liable for any deficiency.
9th. Landlord may replace, at the expense of Tenant, any and all broken glass in
and about demised premises. Landlord may insure, and keep insured, all plate
glass in the demised premises for and in the name of Landlord. Bills, for the
premiums therefor shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due for, and payable by Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rental.
Damage and injury to the said premises, caused by the carelessness, negligence
or improper conduct on the part of the said Tenant or the Tenant's agents or
employees shall be repaired as speedily as possible by the Tenant at the
Tenant's own cost and expense.
<PAGE>
10th. That the Tenant shall neither encumber nor obstruct the sidewalk in front
of, entrance to, or halls and stairs of said premises, nor allow the same to be
obstructed or encumbered in any manner.
11th. The Tenant shall neither place, or cause or allow to be placed, any sign
or signs of any kind whatsoever at, in or about the entrance to said premises or
any other part of same, except in or at such place or places as may be indicated
by the Landlord and consented to by the Landlord in writing. And in case the
Landlord or the Landlord's representatives shall deem it necessary to remove any
such sign or signs in order to paint the said premises or the building wherein
same is situated or make any other repairs , alterations or improvements in or
upon said premises or building or any part thereof, the Landlord shall have the
right to do so, providing the same be removed and replaced at the Landlord's
expense, whenever the said repairs, alterations or improvements shall be
completed.
12th. That the Landlord is exempt from any and all liability for any damage or
injury to person or property caused by or resulting from steam, electricity,
gas, water, rain, ice or snow, or any leak or flow from or into any part of said
building or from any damage or injury resulting or arising from any other cause
or happening whatsoever unless said damage or injury be caused by or be due to
the negligence of the Landlord.
13th. That if default be made in any of the covenants herein contained, then it
shall be lawful for the said Landlord to re-enter the said premises, and the
same to have again, re-possess and enjoy. The said Tenant hereby expressly
waives the service of any notice in writing of intention to re-enter.
14th. That this instrument shall not be a lien against said premises in respect
to any mortgages that are now on or that hereafter may be placed against said
premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this lease,
irrespective of the date of recording and the Tenant agrees to execute without
cost, any such instrument which may be deemed necessary or desirable to further
effect the subordination of this lease to any such mortgage or mortgages, and a
refusal to execute such instrument shall entitle the Landlord, or the Landlord's
assigns and legal representatives to the option of cancelling this lease without
incurring any expense or damage and the term hereby granted is expressly limited
accordingly.
15th. The Tenant has this day deposited with the Landlord the sum of $ -0- as
security for the full and faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part to be performed,
which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on Tenant's part to be
performed. In the event of a bona fide sale, subject to this lease, the Landlord
shall have the right to transfer the security to the vendee for the benefit of
the Tenant and the Landlord shall be considered released by the Tenant from all
liability for the return of such security; and the Tenant agrees to look to the
new Landlord solely for the return of the said security, and it is agreed that
this shall apply to every transfer or assignment made of the security to a new
Landlord.
16th. That the security deposited under this lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
<PAGE>
17th. It is expressly understood and agreed that in case the demised premises
shall be deserted or vacated, or if default be made in the payment of the rent
or any part thereof as herein specified, or if, without the consent of the
Landlord, the Tenant shall sell, assign, or mortgage this lease or if defaults
be made in the performance of any of the covenants and agreements in this lease
contained on the part of the Tenant to be kept and performed, or if the Tenant
shall fail to comply with any of the statutes, ordinances, rules, orders
regulations and requirements of the Federal, State and Local Governments or of
any and all their Departments and Bureaus, applicable to said premises, or if
the Tenant shall file or there be filed against Tenant a petition in bankruptcy
or arrangement, or Tenant be adjudicated a bankrupt or make an assignment for
the benefit of creditors or take advantage of any insolvency act, the Landlord
may, if the Landlord so elects, at any time thereafter terminate this lease and
the term hereof, on giving to the Tenant five days' notice in writing of the
Landlord's intention so to do, and this lease and the term hereof shall expire
and come to an end on the date fixed in such notice as if the said date were the
date originally fixed in this lease for the expiration hereof. Such notice may
be given by mail to the Tenant addressed to the demised premises.
18th. Tenant shall pay to the Landlord the rent or charge, which may, during the
demised term , be assessed or imposed for the water used or consumed in or on
the said premises, whether determined by meter or otherwise, as soon as and when
the same may be assessed or imposed, and will also pay the expenses for the
setting of a water meter in the said premises should the latter be required.
Tenant shall pay Tenant's proportionate part of the sewer rent or charge imposed
upon the building. All such rents or charges or expenses shall be paid as
additional rent and shall be added to the next month's rent thereafter to become
due.
19th. That the Tenant will not nor will the Tenant permit undertenants or other
person to do anything in said premises, or bring anything into said premises, or
permit anything to be brought into said premises or to be kept therein, which
will in any way increase the rate of fire insurance on said demised premises,
nor use the demised premises or any part thereof, nor suffer or permit their use
for any business or purpose which would cause an increase in the rate of fire
insurance on said building, and the Tenant agrees to pay on demand any such
increase.
20th. The failure of the Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that the Landlord may have, and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained. This instrument may not be charged, modified, discharged or
terminated orally.
21st. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim against
Landlord for the value of any unexpired term of said lease. No part of any award
shall belong to the Tenant.
22nd. If after default in payment of rent of violation or any other provision of
this lease, or upon the expiration of this lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of lease, or prior to the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
<PAGE>
23rd. In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay in
monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the Landlord during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected if any, shall become due and payable in monthly payments
during the remainder of the unexpired term, as the amounts of such difference or
deficiency shall from time to time be ascertained; and it is mutually agreed
between Landlord and Tenant that the respective parties hereto shall and hereby
do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other on any matters whatsoever arising out of
or in any way connected with this lease, the Tenant's use or occupancy of said
premises, and/or any claim of injury or damage.
24th. The Tenant waives all rights to redeem under any law.
25th. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection with a National
Emergency or in connection with any rule, order or regulation of any department
or subdivision thereof of any governmental agency or by reason of the condition
of supply and demand which have been or are effected by war or other emergency.
26th. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its appliances, nor for any space
taken to comply with any law, ordinance or order of a governmental authority. In
respect to the various "services," if any, herein expressly or impliedly agreed
to be furnished by the Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of the rent, or any other compensation, for
interruption or curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or repairs desirable or
necessary to be made or to inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other cause, not gross
negligence on the part of the Landlord. No such interruption or curtailment of
such "service" shall be deemed a constructive eviction. The Landlord shall not
be required to furnish, and the Tenant shall not be entitled to receive, any of
such "services" during any period wherein the Tenant shall be in default in
respect to the payment of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs, improvements or decorations to
the demised premises after the date above fixed for the commencement of the
term, it is being understood that rent shall, in any, commence to run as such
date so above fixed.
27th. Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy or because a prior Tenant or any other person is wrongfully
holding over or is in wrongful possession, or for any other reason. The rent
shall not commence until possession is given or is available, but the term
herein shall not be extended.
<PAGE>
Additional Provisions on Rider attached Herein.
And the said Landlord doth covenant that the Tenant on paying the said yearly
rent, and performing the covenants aforesaid, shall and may peacefully and
quietly have, hold and enjoy the said demised premises for the term aforesaid,
provided however, that this covenant shall be conditioned upon the retention of
title to the premises by the Landlord. And it is mutually understood and agreed
that the covenants and agreements contained in the within lease shall be binding
upon the parties hereto and upon their respect successors, heirs, executors and
administrators. In Witness Whereof, the parties have interchangeably set their
hands and seals (or caused these presents to be signed by their proper corporate
officers and caused their proper corporate seal to be hereto affixed) this day
of 1999 Poms holding Co., as Landlord
By:
Lakeland Industries, INc.
By: /s/Raymond J. Smith
-------------------
Raymond J. Smith, President
Signed, sealed and delivered in the presence of
State of New York,
County of
S.S.
On the day of 19 , before me personally came to me known and known to me to be
the individual described in, and who executed, the foregoing instrument, and
acknowledged to me that he executed the same.
State of New York,
County of
S.S.
On the day of 19 , before me personally came to me known, who, being by me duly
sworn, did depose and say that he resides at No.
that he is the of the corporation mentioned in, and which executed, the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of said corporation; and that he signed h name thereto by
like order.
POMS HOLDING CO./
Landlord,
- -with-
LAKELAND INDUSTRIES, INC.,
Tenant.
<PAGE>
Lease
Dated, September, 1999
In Consideration of the letting of the premises within mentioned to the within
named Tenant and the sum of $1.00 paid to the undersigned by the within named
Landlord, the undersigned do hereby covenant and agree, to and with the Landlord
and the Landlord's legal representatives, that if default shall at any time be
made by the said Tenant in the payment of the rent and the performance of the
covenants contained in the within lease, on the Tenant's part to be paid and
performed, that the undersigned will well and truly pay the said rent, or any
arrears thereof, that may remain due unto the said Landlord, and also pay all
damages that may arise in consequences of the non-performance of said covenants,
or either of them, without requiring notice of any such default from the said
Landlord. The undersigned hereby waives all right to trial by jury in any action
or proceeding hereinafter instituted by the Landlord, to which the undersigned
may be a party.
In Witness Whereof, the undersigned has set hand and seal this day of , 19
WITNESS L.S.
RIDER TO LEASE
Dated: September 1, 1999
between
POMS HOLDING CO., as Landlord
and
LAKELAND INDUSTRIES, INC., as Tenant
28th. Wherever there is a conflict between the printed and typewritten portions
of this lease, the typewritten portions shall govern.
29th. Tenant, at its own expense, shall maintain plateglass and comprehensive
general public liability insurance protecting Landlord and Tenant and naming
Landlord as an additional insured with respect to personal injury or property
damage due to negligence occurring in or about the leased premises with minimum
limits of $300,000.00 for personal injury to any one person, and $500,000.00 for
personal injury to any number of persons arising out of one accident, and
$100,000.00 for property damage. Said insurance shall be taken out with a
company licensed to do business in the State of New York and the State of
Alabama and proof of such insurance shall be delivered to the Landlord upon the
commencement of this lease. Annual proof of payment shall thereafter be
submitted to the Landlord. The original policy, upon Landlord's request, shall
be exhibited to the Landlord by the Tenant within thirty (30) days after
commencement of the term of this agreement. Upon failure of the Tenant to so
deposit said policy, the Landlord shall have the privilege to procure said
insurance on his own application therefor, and the amount of the premium, if
paid by the Landlord, shall be due and payable with the rent reserved hereunder,
collectible with the same remedies as if originally reserved as rent hereunder.
30th. Notwithstanding anything else contained in this lease, it is understood
and agreed that the Tenant shall provide his own heat and pay his own
electricity bills. All of the utilities shall be supplied by the Tenant at his
own cost and expense.
31st. Notwithstanding anything else contained in this lease, upon the expiration
of same for amy reason whatsoever, Tenant covenants and agrees that the premises
will be redelivered to the Landlord broom clean.
<PAGE>
32nd. The Tenant shall make no physical improvements, changes, modifications,
alterations or additions to the leased premises without the written consent of
the Landlord. All alterations, repairs, improvements, extensions or additions
which may be made to the demised premises by the Tenant shall immediately become
the property of the Landlord and become a part of the demised premises
hereunder, excepting, however, removable trade fixtures. It is, however, agreed
that when trade fixtures are removed, the demised premises are to be placed, at
the Tenant's expense, in their original condition.
33rd. The Tenant shall pay as additional rent during the term hereof without any
set off or deduction whatsoever, all taxes on the entire building of which the
leased premises are a part, including, but not limited to, ad valorem taxes,
real estate taxes and water charges. Such payment shall be hade within thirty
(30) days of the demand therefor by the Landlord and receipted tax bills shall
be sufficient evidence of the amount of such taxes.
34th. Tenant shall pay as additional rent during the term hereof without any set
off or deduction whatsoever, all fire insurance premiums on the entire building
of which the leased premises are a part within thirty (30) days of the date of
receipt by Tenant from Landlord of a bill therefor.
35th. Tenant shall have the right to sublet all or any portion of the demised
premises provided the following conditions are complied with:
(a) At the time of such subletting, this lease must be in full force
and effect without any breach or default thereunder on the part of the Tenant.
(b) A copy of sublease shall be mailed to Landlord within ten (10) days
from the effective date of such subletting.
(c) Such subletting shall be upon and subject to all the provisions,
terms, covenants and conditions of this lease and Tenant shall continue to be
and remain liable hereunder.
(d) Notwithstanding the foregoing, if the Tenant proposes to sublet all
or substantially all of the demised premises, Tenant shall so notify the
Landlord and Landlord shall have the option to cancel and terminate this lease
as of the date proposed by Tenant for such subletting, which options shall be
exercisable within fifteen (5) days after receipt of such notice by Landlord of
the proposed subletting.
(e) Tenant shall not assign this lease without the consent of Landlord
first hand received, which consent Landlord agrees not to unreasonably withhold
or delay; provided, however, that Tenant shall have the right, without the
consent of Landlord, to assign this lease to (i) a subsidiary or affiliated
corporation, either of which may have a normal capital; (ii) any corporation
resulting from a reorganization of Tenant or its parent company with any one or
more corporations; (iii) any corporation resulting from the consolidation of
Tenant with or into any one or more corporations.
36th. Throughout the term of this lease, Tenant shall indemnify Landlord and
save it harmless against and from any and all liability, losses, damages, costs,
expenses and claims by or on behalf of any person, firm, corporation,
governmental authority or other entity incurred by Landlord with respect to the
leased premises, including, without limitation, burdens resulting from any and
all acts of commission or omission on the part of Tenant or of anyone holding
by, through or under Tenant, and any and all of its agents, servants, employees,
invitees and contractors, and against and from any injury or damage to any
person, or to any property of any person, except as a result of Landlord's own
acts of commission or omission.
<PAGE>
37th. Tenant shall be responsible for, and hereby relieves and shall save
landlord harmless of and from any and all liability by reason of any injury or
damage to any person or property in the leased premises, whether such property
belongs to Tenant or to any persons, firms, corporations or other entity caused
by any fire, installation or from water, rain or show that may leak into, issue
or flow from any part of said leased premises, or from the drains, pipes or
plumbing work of the said leased premises, or from any place or quarter and from
the use, misuse or abuse of any hoists, conveyors, hatches, openings, platforms,
stairways, machinery or equipment of any kind whatever which may exist at the
time of the date of this lease or thereafter be installed in or on the leased
premises, and from any and all kinds of injury and damage which may arise in or
upon the leased premises from any other cause, unless such damage, injury, use,
misuse or abuse shall have been caused by or result from the negligence of
Landlord, its agents, servants or employees during the continuance of this lease
by acts of commission or omission.
38th. It is hereby understood and agreed that in the event the Tenant leaves any
property on the leased premises subsequent to the expiration of the within lease
that said property is hereby deemed abandoned and the Landlord may dispose of
said property at its option without any liability on the part of the Landlord.
It is further understood and agreed that the Tenant waives any and all rights,
title and interest to said property, releases and waives any and all claims
thereto, and further agrees that the Tenant will be responsible to the Landlord
for any and all expenses incurred by the Landlord concerning said property.
39th. Whenever under the terms of this lease any sum of money is required to be
paid by Tenant in addition to the rental herein reserved, and said additional
amount so to be paid is not designated as "additional," or provision is not made
in the paragraph covering such payment for the collection of said amount as
"additional rental," then said amount shall nevertheless, at the option of
Landlord if not paid when due, be deemed "additional rental," and collectible as
such with any installment of rental thereafter falling due hereunder, but
nothing herein contained shall be deemed to suspend or delay the payment of any
sum at the time the same becomes due and payable hereunder or limit any other
remedy of Landlord.
40th. This lease contains the entire agreement between Landlord and Tenant and
shall not be modified in any manner except by an instrument in writing signed by
Landlord and Tenant.
POMS HOLDING CO., Landlord
By: Raymond J. Smith
-----------------
Raymond J. Smith, President
LAKELAND INDUSTRIES, INC., Tenant
By:
<PAGE>
Exhibit (l)
Merrill Lynch TERM LOAN AND SECURITY AGREEMENT
TERM LOAN AND SECURITY AGREEMENT NO. 9909550501 ("Loan Agreement") dated as of
September 9, 1999, between LAKELAND INDUSTRIES, INC., a corporation organized
and existing under the laws of the State of Delaware having its principal office
at 711-2 Koehler Avenue, Ronkonkoma, NY 11779-7410 ("Customer"), and MERRILL
LYNCH BUSINESS FINANCIAL SERVICES INC., a corporation organized and existing
under the laws of the State of Delaware having its principal office at 222 North
LaSalle Street, Chicago, IL 60601 ("MLBFS").
In consideration of the mutual covenants of the parties hereto, Customer and
MLBFS hereby agree as follows:
Article 1. DEFINITIONS
1.1 Specific Terms. In addition to terms defined elsewhere in this Loan
Agreement, when used herein the following terms shall have the following
meanings:
(a) "Account Debtor" shall mean any party who is or may become obligated with
respect to an Account or Chattel Paper.
(b) "Additional Agreements" shall mean all agreements, instruments, documents
and opinions other than this Loan Agreement, whether with or from Customer or
any other party, which are contemplated hereby or otherwise reasonably required
by MLBFS in connection herewith, or which evidence the creation, guaranty or
collateralization of any of the Obligations or the granting or perfection of
liens or security interests upon the Collateral or any other collateral for the
Obligations, and shall include, without limitation, the Note.
(c) "Bankruptcy Event" shall mean any of the following: (i) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt or
receivership law or statute shall be filed or consented to by Customer or any
Guarantor; or (ii) any such proceeding shall be filed against Customer or any
Guarantor and shall not be dismissed or withdrawn within sixty (60) days after
filing; or (iii) Customer or any Guarantor shall make a general assignment for
the benefit of creditors; or (iv) Customer or any Guarantor shall generally fail
to pay or admit in writing its inability to pay its debts as they become due; or
(v) Customer or any Guarantor shall be adjudicated a bankrupt or insolvent.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.
(e) "Closing Date" shall mean the date upon which all conditions precedent to
MLBFS' obligation to make the Loan shall have been met to the satisfaction of
MLBFS.
(f) "Collateral" shall mean all Accounts, Chattel Paper, Contract Rights,
Inventory, Equipment, Fixtures, General Intangibles, Deposit Accounts,
Documents, Instruments, Investment Property and Financial Assets of Customer,
howsoever arising, whether now owned or existing or hereafter acquired or
arising, and wherever located; together with all parts thereof (including spare
parts), all accessories and accessions thereto, all books and records (including
computer records) directly related thereto, all proceeds thereof (including,
without limitation, proceeds in the form of Accounts and insurance proceeds),
and the additional collateral described in Section 3.6 (c) hereof.
(g) "Commitment Expiration Date" shall mean October 9, 1999.
(h) "Commitment Fee" shall mean a fee of $7,500.00 due to MLBFS in connection
with this Loan Agreement.
(i) "Default" shall mean either an "Event of Default" as defined in Section 3.5
hereof, or an event which with the giving of notice, passage of time, or both,
would constitute such an Event of Default.
(j) "General Funding Conditions" shall mean each of the following conditions to
each loan or advance by MLBFS hereunder: (i) no Default shall have occurred and
be continuing or would result from the making of any such loan or advance
hereunder by MLBFS; (ii) there shall not have occurred and be continuing any
material adverse change in the business or financial condition of Customer or
any Guarantor; (iii) all representations and warranties of Customer or any
Guarantor herein or in any Additional Agreements shall then be true and correct
in all material respects; (iv) MLBFS shall have received this Loan Agreement and
all Additional Agreements, duly executed and filed or recorded where applicable,
all of which shall be in form and substance reasonably satisfactory to MLBFS;
(v) the Commitment Fee shall have been paid in full; (vi) MLBFS shall have
received, as and to the extent applicable, copies of invoices, bills of sale,
loan payoff letters and/or other evidence reasonably satisfactory to it that the
proceeds of the Loan will satisfy the Loan Purpose; (vii) MLBFS shall have
received evidence reasonably satisfactory to it as to the ownership of the
Collateral and the perfection and priority of MLBFS' liens and security
interests thereon, as well as the ownership of and the perfection and priority
of MLBFS' liens and security interests on any other collateral for the
Obligations furnished pursuant to any of the Additional Agreements; (viii) MLBFS
shall have received evidence reasonably satisfactory to it of the insurance
required hereby or by any of the Additional Agreements; and (ix) any additional
conditions specified in the "Term Loan Approval" letter executed by MLBFS with
respect to the transactions contemplated hereby shall have been met to the
reasonable satisfaction of MLBFS.
(k) "Guarantor" shall mean a person or entity who has either guaranteed or
provided collateral for any or all of the Obligations; and "Business Guarantor"
shall mean any such Guarantor that is a corporation, partnership,
proprietorship, limited liability company or other entity regularly engaged in a
business activity.
<PAGE>
(l) "Loan" shall mean a five-year term installment loan in an amount equal to
the lesser of: (A) 100% of the amount required by Customer to satisfy or fulfill
the Loan Purpose, (B)the aggregate amount which Customer shall request be
advanced by MLBFS on account of the Loan Purpose or (C)$3,000,000.00.
(m) "Loan Purpose" shall mean the purpose for which the proceeds of the Loan
will be used; to wit: Partial term out WCMA line of credit no. 849-07230.
(n) "Location of Tangible Collateral" shall mean the address of Customer set
forth at the beginning of this Loan Agreement together with any other address or
addresses set forth on an exhibit hereto as being a Location of Tangible
Collateral.
(o) "Obligations" shall mean all liabilities, indebtedness and obligations of
Customer to MLBFS, howsoever created, arising or evidenced, whether now existing
or hereafter arising, whether direct or indirect, absolute or contingent, due or
to become due, primary or secondary or joint or several, and, without limiting
the foregoing, shall include interest accruing after the filing of any petition
in bankruptcy, and all present and future liabilities, indebtedness and
obligations of Customer under the Note and this Loan Agreement and under that
certain WCMA Note Loan and Security Agreement No. 849-07230.
(p) "permitted Liens" shall mean with respect to the Collateral: (i) liens for
current taxes not delinquent, other non-consensual liens arising in the ordinary
course of business for sums not due, and, if MLBFS' rights to and interest in
the Collateral are not materially and adversely affected thereby, any such liens
for taxes or other non consensual liens arising in the ordinary course of
business being contested in good faith by appropriate proceedings; (ii) liens in
favor d MLBFS; liens which will be discharged with the proceeds of the initial
WCMA Loan; and (iv) any other liens expressly permitted in writing by MLBFS.
1.2 Other Terms. Except as otherwise defined herein, all terms used in this Loan
Agreement which are defined in the Uniform Commercial Code of Illinois ("UCC")
shall have the meanings set forth in the UCC.
Article 11. THE LOAN
2.1 Commitment. Subject to the terms and conditions hereof, MLBFS hereby agrees
to make the Loan to Customer for the Loan Purpose, and Customer agrees to borrow
all amounts borrowed to satisfy the Loan Purpose from MLBFS. The entire proceeds
of the Loan shall be disbursed on the Closing Date either directly to the
applicable third party or parties on account of the Loan Purpose or to reimburse
Customer for amounts directly expended by it; all as directed by Customer in a
Closing Certificate to be executed by Customer and delivered to MLBFS prior to
the Closing Date.
2.2 Note. The Loan will be evidenced by and repayable in accordance with that
certain Collateral Installment Note made by Customer payable to the order of
MLBFS and issued pursuant to this Loan Agreement ("the Note"). The Note is
hereby incorporated as a part hereof as if fully set forth herein.
2.3 Conditions of MLBFS' Obligation. The Closing Date and MLBFS' obligation to
make the Loan on the Closing Date are subject to the prior fulfillment of each
of the following conditions (a) MLBFS shall have received a written request from
Customer that the Loan be funded in accordance with the terms hereof, together
with a written direction from Customer as to the method of payment and payee(s)
of the proceeds of the Loan, which request and direction shall have been
received by MLBFS not less than two Business Days prior to any requested funding
date; (b) MLBFS shall have received a copy of invoices, bills of sale, payoff
letters or other applicable evidence reasonably satisfactory to it that the
proceeds of the Loan will satisfy or fulfill the Loan Purpose; (c) the
Commitment Expiration Date shall not then have occurred; and (d) each of the
General Funding Conditions shall then have been met or satisfied to the
reasonable satisfaction of MLBFS.
2.4 Use of Loan Proceeds. The proceeds of the Loan shall be used by Customer
solely for a Loan Purpose, or, with the prior written consent of MLBFS, for
other lawful business purposes of Customer not prohibited hereby. Customer
agrees that under no circumstances will the proceeds of the Loan be used: (a)
for personal, family or household purposes of any person whatsoever, or (b) to
purchase, carry or trade in securities, or repay debt incurred to purchase,
carry or trade in securities, or (c) unless otherwise consented to in writing by
MLBFS, to repay any debt to Merrill Lynch and Co., or any of its subsidiaries.
2.5 Commitment Fee. In consideration of the agreement by MLBFS to extend the
Loan to Customer in accordance with and subject to the terms hereof, Customer
has paid or shall, on or before the Closing Date pay, the Commitment Fee to
MLBFS. Customer acknowledges and agrees that the Commitment Fee has been fully
earned by MLBFS, and that it will not under any circumstances be refundable.
Article III. GENERAL PROVISIONS
3.1 REPRESENTATIONS AND WARRANTIES
Customer represents and warrants to MLBFS that:
(a) Organization and Existence. Customer is a corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware and is
qualified to do business and in good standing in each other state where the
nature of its business or the property owned by it make such qualification
necessary; and, where applicable, each Business Guarantor is duly organized,
validly existing and in good standing under the laws of the state of its
formation and is qualified to do business and in good standing in each other
state where the nature of its business or the property owned by it make such
qualification necessary.
(b) Execution, Delivery and Performance. The execution, delivery and performance
by Customer of this Loan Agreement and by Customer and each Guarantor of such of
the Additional Agreements to which it is a party: (I) have been duly authorized
by all requisite action, (ii) do not and will not violate or conflict with any
law or other governmental requirement, or any of the agreements, instruments or
documents which formed or govern Customer or any such Guarantor, and (iii) do
not and will not breach or violate any of the provisions of, and will not result
in a default by Customer or any such Guarantor under, any other agreement,
instrument or document to which it is a party or by which it or its properties
are bound.
2
<PAGE>
(c) Notices and Approvals. Except as may have been given or obtained, no notice
to or consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by Customer or any
Guarantor of such of this Loan Agreement, the Note and the other Additional
Agreements to which it is a party.
(d) Enforceability. This Loan Agreement, the Note and such of the other
Additional Agreements to which Customer or any Guarantor is a party are the
respective legal, valid and binding obligations of Customer and such Guarantor,
enforceable against it or them, as the case may be, in accordance with their
respective terms, except as enforceability may be limited by bankruptcy and
other similar laws affecting the rights of creditors generally or by general
principles of equity.
(e) Collateral. Except for any Permitted Liens: (I) Customer has good and
marketable title to the Collateral, (ii) none of the Collateral is subject to
any lien, encumbrance or security interest, and (iii) upon the filing of all
Uniform Commercial Code financing statements executed by Customer with respect
to the Collateral in the appropriate jurisdiction(s) and/or the completion of
any other action required by applicable law to perfect its liens and security
interests, MLBFS will have valid and perfected first liens and security
interests upon all of the Collateral.
(f) Financial Statements. Except as expressly set forth in Customer's or any
Business Guarantor's financial statements, all financial statements of Customer
and each Business Guarantor furnished to MLBFS have been prepared in conformity
with generally accepted accounting principles, consistently applied, are true
and correct in all material respects, and fairly present the financial condition
of it as at such dates and the results of its operations for the periods then
ended (subject, in the case of interim unaudited financial statements, to normal
year-end adjustments); and since the most recent date covered by such financial
statements, there has been no material adverse change in any such financial
condition or operation. All financial statements furnished to MLBFS of any
Guarantor other than a Business Guarantor are true and correct in all material
respects and fairly represent such Guarantor's financial condition as of the
date of such financial statements (subject, in the case of interim unaudited
financial statements of a Business Guarantor, to normal year-end adjustments),
and since the most recent date of such financial statements, there has been no
material adverse change in such financial condition.
(g) Litigation. No litigation, arbitration, administrative or governmental
proceedings are pending or, to the knowledge of Customer, threatened against
Customer or any Guarantor, which would, if adversely determined, materially and
adversely affect the liens and security interests of MLBFS hereunder of under
any of the Additional Agreements, the financial condition of Customer or any
such Guarantor or the continued operations of Customer or any Business
Guarantor.
(h) Tax Returns. All federal, state and local tax returns, reports and
statements required to be filed by Customer and each Guarantor have been filed
with the appropriate governmental agencies and all taxes due and payable by
Customer and each Guarantor have been timely paid (except to the extent that any
such failure to file or pay will not materially and adversely affect either the
liens and security interests of MLBFS hereunder or under any of the Additional
Agreements, the financial condition of Customer or any Guarantor, or the
continued operations of Customer or any Business Guarantor).
(i) Collateral Location. All of the tangible Collateral is located at a Location
of Tangible Collateral.
(j) No Outside Broker. Except for employees of MLBFS, MLPF&S or one of their
affiliates, Customer has not in connection with the transactions contemplated
hereby directly or indirectly engaged or dealt with, and was not introduced or
referred to MLBFS by, any broker or other loan arranger.
Each of the foregoing representations and warranties: (I) has been and will be
relied upon as an inducement to MLBFS to make the Loan, and (ii) is continuing
and shall be deemed remade by Customer on the Closing Date.
3.2 FINANCIAL AND OTHER INFORMATION
(a) Customer shall furnish or cause to be furnished to MLBFS during the term of
this Loan Agreement all of the following:
(i) Annual Financial Statements. Within 120 days after the close of each fiscal
year of Customer, a copy of the annual audited financial statements of Customer,
including in reasonable detail, a balance sheet and statement of retained
earnings as at the close of such fiscal year and statements of profit and loss
and cash flow for such fiscal year;
(ii) Interim Financial Statements. Within 45 days after the close of each fiscal
quarter of Customer, a copy of the interim financial statements of Customer for
such fiscal quarter (including in reasonable detail both a balance sheet as of
the close of such fiscal period, and statement of profit and loss for the
applicable fiscal period);
(iii) A/R Agings. Within 15 days after the close of each fiscal year of
Customer, a copy of the Accounts Receivable Aging of Customer as of the end of
such fiscal year;
(iv) Inventory Report. Within 15 days after the close of each fiscal year of
Customer, a copy of the Inventory Report of Customer as of the end of such
fiscal year; and
(v) Other Information. Such other information as MLBFS may from time to time
reasonably request relating to Customer, any Guarantor or the Collateral.
(b) General Agreements With Respect to Financial Information. Customer agrees
that except as otherwise specified herein or otherwise agreed to in writing by
MLBFS: (I) all annual financial statements required to be furnished by Customer
to MLBFS hereunder will be prepared by either the current independent
accountants for Customer or other independent accountants reasonably acceptable
to MLBFS, and (ii) all other financial information required to be furnished by
Customer to MLBFS hereunder will be certified as correct by the party who has
prepared such information, and, in the case of internally prepared information
with respect to Customer or any Business Guarantor, certified as correct by
their respective chief financial officer.
3
<PAGE>
3.3 OTHER COVENANTS
Customer further agrees during the term of this Loan Agreement that:
(a) Financial Records; Inspection. Customer and each Business Guarantor will:
(I) maintain at its principal place of business complete and accurate books and
records, and maintain all of its financial records in a manner consistent with
the financial statements heretofore furnished to MLBFS, or prepared on such
other basis as may be approved in writing by MLBFS; and (ii) permit MLBFS or its
duly authorized representatives, upon reasonable notice and at reasonable times,
to inspect its properties (both real and personal), operations, books and
records.
(b) Taxes. Customer and each Guarantor will pay when due all taxes, assessments
and other governmental charges, howsoever designated, and all other liabilities
and obligations, except to the extent that any such failure to pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder or under any of the Additional Agreements, the financial condition of
Customer or any Guarantor or the continued operations of Customer or any
Business Guarantor.
(c) Compliance With Laws and Agreements. Neither Customer nor any Guarantor will
violate any law, regulation or other governmental requirement, any judgment or
order of any court or governmental agency or authority, or any agreement,
instrument of document to which it is a party or by which it is bound, if any
such violation will materially and adversely affect either the liens and
security interests of MLBFS hereunder or under any of the Additional Agreements,
the financial condition of Customer or any Guarantor, or the continued
operations of Customer or any Business Guarantor.
(d) No Use of Merrill Lynch Name. Except prior written consent of MLBFS, neither
Customer nor any Guarantor will directly or indirectly publish, disclose or
otherwise use in any advertising or promotional material, or press release or
interview, the name, logo or any trademark of MLBFS, MLPF&S, Merrill Lynch and
Co., Incorporated or any of their affiliates.
(e) Notification By Customer. Customer shall provide MLBFS with prompt written
notification of: (I) any Default; (ii) any materially adverse change in the
business, financial condition or operations of Customer or any Business
Guarantor; (iii)any information which indicates that any financial statements of
Customer or any Guarantor fail in any material respect to present fairly the
financial condition and results of operations purported to be presented in such
statements; and (iv) any change in Customer's outside accounts. Each
notification by Customer pursuant hereto shall specify the event or information
causing such notification, and, to the extent applicable, shall specify the
steps being taken to rectify or remedy such event or information.
(f) Notice of Change. Customer shall give MLBFS not less than 30 days prior
written notice of any change in the name (including any fictitious name) or
principal place of business or residence of Customer or any Guarantor.
(g) Continuity. Except upon the prior written consent of MLBFS, which consent
will not be unreasonably withheld: (I) neither Customer nor any Business
Guarantor shall be a party to any merger or consolidation with, or purchase or
otherwise acquire all or substantially all of the assets of, or any material
stock, partnership, joint venture or other equity interest in, any person or
entity, or sell, transfer or lease all or any substantial part of its assets, if
any such action would result in either: (A) a material change in the principal
business, ownership or control of Customer or such Business Guarantor, or (B) a
material adverse change in the financial condition or operations of Customer or
such Business Guarantor; (ii) Customer and each Business Guarantor shall
preserve their respective existence and good standing in the jurisdiction(s) of
establishment and operation; (iii) neither Customer nor any Business Guarantor
shall engage in any material business substantially different from their
respective business in effect as of the date of application by Customer for
credit from MLBFS, or cease operating any such material business; (iv) neither
Customer nor any Business Guarantor shall cause or permit any other person or
entity to assume or succeed to any material business or operations of Customer
or such Business guarantor; and (v) neither Customer nor any Business Guarantor
shall cause or permit any material change in its controlling ownership.
(h) Minimum Tangible Net Worth. Customer's "tangible net worth" shall at all
times exceed $11,000,000.00. For the purposes hereof, the term "tangible net
worth" shall mean Customer's net worth as shown on Customer's regular financial
statements prepared in a manner consistent with the terms hereof, but excluding
an amount equal to (I) any assets which are ordinarily classified as
"intangible" in accordance with generally accepted accounting principles, and
(ii) any amounts now or hereafter directly or indirectly owing to Customer by
officers, shareholders or affiliates of Customer.
3.4 COLLATERAL
(a) Pledge of Collateral. To secure payment and performance of the Obligations,
Customer hereby pledges, assigns, transfers and sets over to MLBFS, and grants
to MLBFS first liens and security interests in and upon all of the Collateral,
subject only to Permitted Liens.
(b) Liens. Except upon the prior written consent of MLBFS, Customer shall not
create or permit to exist any lien, encumbrance or security interest upon or
with respect to any Collateral now owned or hereafter acquired other than
Permitted Liens.
(c) Performance of Obligations. Customer shall perform all of its obligations
owing on account of or with respect to the Collateral; it being understood that
nothing herein, and no action or inaction by MLBFS, under this Loan Agreement or
otherwise, shall be deemed an assumption by MLBFS of any of Customer's said
obligations.
(d) Sales and Collections. So long as no Event of Default shall have occurred
and be continuing, Customer may in the ordinary course of its business: (I) sell
any Inventory normal held by Customer for sale, (ii) use or consume any
materials and supplies normally held by Customer for use or consumption, and
(iii) collect all of its Accounts. Customer shall take such action with respect
to protection of its Inventory and the other Collateral and the collection of
its Accounts as MLBFS may from time to time reasonably request.
(e) Account Schedules. Upon the request of MLBFS, made now or at any reasonable
time or times hereafter, Customer shall deliver to MLBFS, in addition to the
other information required hereunder, a schedule identifying, for each Account
and all Chattel Paper subject to MLBFS' security interests.
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hereunder, each Account Debtor by name and address and amount, invoice or
contract number and date of each invoice or contract. Customer shall furnish to
MLBFS such additional information with respect to the Collateral, and amounts
received by Customer as proceeds of any of the Collateral, as MLBFS may from
time to time reasonably request.
(f) Alterations and Maintenance. Except upon the prior written consent of MLBFS
Customer shall not make or permit any material alterations to any tangible
Collateral which might materially reduce or impair its market value or utility.
Customer shall at all times keep the tangible Collateral in good condition and
repair, reasonable wear and tear excepted, and shall pay or cause to be paid all
obligations arising from the repair and maintenance of such Collateral, as well
as all obligations with respect to any Location of Tangible Collateral, except
for any such obligations being contested by Customer in good faith by
appropriate proceedings.
(g) Location. Except for movements required in the ordinary course of Customer's
business, Customer shall give MLBFS 30 days' prior written notice of the placing
at or movement of any tangible Collateral to any location of her than a Location
of Tangible Collateral. In no event shall Customer cause or permit any material
tangible Collateral to be removed from the United States without the express
prior written consent of MLBFS.
(h) Insurance. Customer shall insure all of the tangible Collateral under a
policy or policies of physical damage insurance providing that losses will be
payable to MLBFS as its interest may appear pursuant to a Lender's Loss Payable
Endorsement and containing such other provisions as may be reasonably required
by MLBFS. Customer shall further provide and maintain a policy or policies of
comprehensive public liability insurance naming MLBFS as an additional party
insured. Customer and each Business Guarantor shall maintain such other
insurance as may be required by law or is customarily maintained by companies in
a similar business or otherwise reasonably required by MLBFS. All such insurance
policies shall provide that MLBFS will receive not less than 10 days prior
written notice of any cancellation, and shall otherwise be in form and amount
and with an insurer or insurers reasonably acceptable to MLBFS. Customer shall
furnish MLBFS with a copy or certificate of each such policy or policies and,
prior to any expiration or cancellation, each renewal or replacement thereof.
(i) Event of Loss. Customer shall at its expense promptly repair all repairable
damage to any tangible Collateral. In the event that any tangible Collateral is
damaged beyond repair, lost, totally destroyed or confiscated (an "Event of
Loss") and such Collateral had a value prior to such Event of Loss of $25,000.00
or more, then, on or before the first to occur of (I) 90 days after the
occurrence of such Event of Loss, or (ii) 10 Business Days after the date on
which either Customer of MLBFS shall receive any proceeds of insurance on
account of such Event of Loss, Customer shall, at Customer's option, either
replace the Collateral subject to such Event of Loss with comparable Collateral
free of all liens other than Permitted Liens (in which event Customer shall be
entitled to utilize the proceeds of insurance on account of such Event of Loss
for such purpose, and may retain any excess proceeds of such insurance), or
prepay the Loan by an amount equal to the actual cash value of such Collateral
as determined by either the insurance company's payment (plus any application
deductible) or, in absence of insurance company payment, as reasonably
determined by MLBFS. Notwithstanding the foregoing, if at any time of occurrence
of such Event of Loss or any time thereafter prior to replacement or prepayment,
as aforesaid, an Event of Default shall have occurred and be continuing
hereunder, then MLBFS may at its sole option, exercisable at any time while such
Event of Default shall be continuing, require Customer to either replace such
Collateral or make a prepayment on account of the Loan, as aforesaid. Any
partial prepayment of the Loans shall be applied to installments due in inverse
order of maturity.
(j) Notice of Certain Events. Customer shall give MLBFS immediate notice of any
attachment, lien, judicial process, encumbrance or claim affecting or involving
$25,000.00 or more of the Collateral.
(k) Indemnification. Customer shall indemnify, defend and save MLBFS harmless
from and against any and all claims, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) of any
nature whatsoever which may be asserted against or incurred by MLBFS arising out
of or in any manner occasioned by (I) the ownership, collection, possession, use
or operation of any Collateral, or (ii) any failure by Customer to perform any
of its obligations hereunder; excluding, however, from said indemnity any such
claims, liabilities, etc. arising directly out of the willful wrongful act or
active gross negligence of MLBFS. This indemnity shall survive the expiration or
termination of this Loan Agreement as to all matters arising or accruing prior
to such expiration or termination.
3.5 EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:
(a) Failure to Pay. Customer shall fail to pay when due any amount owing by
Customer to MLBFS under the Note or this Loan Agreement, or shall fail to pay
when due any other Obligations, and any such failure shall continue for more
than five (5) Business Days after written notice thereof shall have been given
by MLBFS to Customer.
(b) Failure to Perform. Customer or any Guarantor shall default in the
performance or observance of any covenant or agreement on its part to be
performed or observed under this Loan Agreement, the Note or any of the other
Additional Agreements (not constituting an Event of Default under any other
clause of this Section), and such default shall continue unremedied for ten (10)
Business Days after written notice thereof shall have been given by MLBFS to
Customer.
(c) Breach of Warranty. Any representation or warranty made by Customer or any
Guarantor contained in this Loan Agreement, the Note or any of the other
Additional Agreements shall at any time prove to have been incorrect in any
material respect when made.
(d) Default Under Other Agreement. A default or Event of Default by Customer or
any Guarantor shall occur under the terms of any other agreement, instrument or
document with or intended for the benefit of MLBFS, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S") or any of their affiliates, and any
required notice shall have been given and required notice shall have been given
and required passage of time shall have elapsed.
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(e) Bankruptcy Event. Any Bankruptcy Event shall occur.
(f) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of full payment or performance
by Customer or any Guarantor of any of their respective liabilities or
obligations under this Loan Agreement, the Note or any of the other Additional
Agreements to which Customer or such Guarantor is a party has been materially
impaired. The existence of such a material impairment shall be determined in a
manner consistent with the intent of Section 1-208 of the UCC.
(g) Acceleration of Debt to Other Creditors. Any event shall occur which results
in the acceleration of the maturity of any indebtedness of $100,000.00 or more
of Customer or any Guarantor to another creditor under any indenture, agreement,
undertaking or otherwise.
(h) Seizure or Abuse of Collateral. The Collateral, or any material part
thereof, shall be or become subject to any material abuse or misuse, or any
levy, attachment, seizure or confiscation which is not released within ten (10)
Business Days.
3.6 REMEDIES
(a) Remedies Upon Default. Upon the occurrence and during the continuance of any
Event of Default, MLBFS may at its sole option do any one or more to all of the
following, at such time and in such order as MLBFS may in its sole discretion
choose:
(i) Termination. MLBFS may without notice terminate its obligation to make the
Loan (if the Loan has not then been funded) or otherwise extend any credit to or
for the benefit of Customer (it being understood, however, that upon the
occurrence of any Bankruptcy Event all such obligations shall automatically
terminate without any action on the part of MLBFS); and upon any such
termination MLBFS shall be relieved of all such obligations.
(ii) Acceleration. MLBFS may declare the principal of and interest and any
premium on the Note, and all other Obligations to be forthwith due and payable,
whereupon all such amounts shall be immediately due and payable, without
presentment, demand for payment, protest and notice of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate or other notice
or formality of any kind, all of which are hereby expressly waived; provided,
however, that upon the occurrence of any Bankruptcy Event all such principal,
interest, premium and other Obligations shall automatically become due and
payable without any action on the part of MLBFS.
(iii) Exercise Other Rights. MLBFS may exercise any or all of the remedies of a
secured party under applicable law, including, but not limited to, the UCC, and
any or all of its other rights and remedies under this Loan Agreement and the
Additional Agreements.
(iv) Possession. MLBFS may require Customer to make the Collateral and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS which is reasonably convenient to Customer, or may take possession of the
Collateral and the records pertaining to the Collateral without the use of any
judicial process and without any prior notice to Customer.
(v) Sale. MLBFS may sell any or all of the Collateral at public or private sale
upon such terms and conditions as MLBFS may reasonably deem proper. MLBFS may
purchase any Collateral at any such public sale. The net proceeds of any such
public or private sale and all other amounts actually collected or received by
MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection, collection and
sale of the Collateral, will be applied to the payments of the Obligations, with
any remaining proceeds paid to Customer or whoever else may be entitled thereto,
and with Customer and each Guarantor remaining jointly and severally liable for
any amount remaining unpaid after such application.
(vi) Delivery of Cash, Checks, Etc. MLBFS may require Customer to forthwith upon
receipt, transmit and deliver to MLBFS in the form received, all cash, checks,
drafts and other instruments for the payment of money (properly endorsed, where
required, so that such items may be collected by MLBFS) which may be received by
Customer at any time in full or partial payment of any Collateral, and require
that Customer not commingle any such items which may be so received by Customer
with any other of its funds or property but instead hold them separate and apart
and in trust for MLBFS until deliver is made to MLBFS.
(vii) Notification of Account Debtors. MLBFS may notify any Account Debtor that
its Account or Chattel Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect to such Account or Chattel Paper; and MLBFS may enforce payment and
collect, by legal proceedings or otherwise, such Account or Chattel Paper.
(viii) Control of Collateral. MLBFS may otherwise take control in any lawful
manner of any cash or non-cash items of payment or proceeds of Collateral and of
any rejected, returned, stopped in transit or repossessed goods included in the
Collateral and endorse Customer's name on any item of payment on or proceeds of
the Collateral
(b) Collection Fee. If following any acceleration of the Note and other
Obligations pursuant to Section 3.6 (a) (ii) hereof Customer shall fail to pay
the entire balance of the Note and all such other Obligations in full within ten
(10) Business Days after Customer is notified of such acceleration, then
Customer shall pay to MLBFS, in addition to al other sums payable hereunder, a
collection fee in an amount equal to the lesser of: (I) five percent (5%) of the
sum of the then outstanding balance of the Note and then outstanding
Obligations, or (ii) the maximum collection fee permitted by law. Such
collection fee, which is intended to compensate MLBFS for its administrative
costs incident to the collection of the Note and other Obligations following an
Event of Default and acceleration, shall be payable on demand.
(c) Set-Off. MLBFS shall have the further right upon the occurrence and during
the continuance of an Event of Default to set-off, appropriate and apply toward
payment of any of the Obligations, in such order of application as MLBFS may
from time to time and at any time elect, any cash, credit, deposits,
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accounts, financial assets, investment property, securities and any other
property of Customer which is in transit to or in the possession, custody or
control of MLBFS, MLPF&S or any agent, bailee, or affiliate of MLBFS or MOPF&S.
Customer hereby collaterally assigns and grants to MLBFS a continuing security
interest in all such property ass additional Collateral.
(d) Power of Attorney. Effective upon the occurrence and during the continuance
of an Event of Default, Customer hereby irrevocably appoints MLBFS as its
attorney-in-fact, with full power of substitution, in its place and stead and in
its name or in the name of MLBFS, to from time to time in MLBFS; sole discretion
take any action and to execute any instrument which MLBFS may deem necessary or
advisable to accomplish the purposes of this Loan Agreement, including, but not
limited to, to receive, endorse and collect all checks, drafts and other
instruments for the payment of money made payable to Customer included in the
collateral.
(e) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Note, the other Additional Agreements, at law or in
equity, and any one or more of such rights and remedies may be exercised
simultaneously or successively.
(f) Notices. To the fullest extent permitted by applicable law, Customer hereby
irrevocably waives and releases MLBFS of and from any and all liabilities and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed upon MLBFS relating to notices of sale, holding of sale or reporting of
any sale, and Customer waives all rights of redemption or reinstatement from any
such sale. Any notices required under applicable law shall be reasonably and
properly given to Customer if given by any of the methods provided herein at
least 5 Business Days prior to taking action. MLBFS shall have the right to
postpone or adjourn any sale or other disposition of Collateral at any time
without giving notice of any such postponed or adjourned date. In the event
MLBFS seeks to take possession of any or all of the Collateral by court process,
Customer further irrevocably waives to the fullest extent permitted by law any
bonds and any surety or security relating thereto by any statute, court rule or
otherwise as an incident to such possession, and any demand for possession prior
to the commencement of any suit or action.
3.7 MISCELLANEOUS
(a) Non-Waiver. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement, the Note or any of the
other Additional Agreements shall operate as a waiver thereof, and no single or
partial exercise of any such right, power or remedy shall preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
Neither any waiver of any provision of this Loan Agreement, the Note or any of
the other Additional Agreements, nor any consent to any departure by Customer
therefrom, shall be effective unless the same shall be in writing and signed by
MLBFS. Any waiver of any provision of this Loan Agreement, the Note or any of
the other Additional Agreements shall be effective only in the specific instance
and for the specific purpose for which given. Except as otherwise expressly
provided herein, no notice to or demand on Customer shall in any case entitle
Customer to any other or further notice or demand in similar or other
circumstances.
(b) Disclosure. Customer hereby irrevocably authorizes MLBFS and each of its
affiliates, including without limitation, MLPF&S, to at any time (whether or not
an Event of Default shall have occurred) obtain from and disclose to each other
any and all financial and other information about Customer.
(c) Communications. All notices and other communications required or permitted
hereunder shall be in writing, and shall be either delivered personally, mailed
by postage prepaid certified mail or sent by express overnight courier or by
facsimile. Such notices and communications shall be deemed to be given on the
date of personal delivery, facsimile transmission or actual delivery of
certified mail, or one Business Day after delivery to an express overnight
courier. Unless otherwise specified in a notice sent or delivered in accordance
with the terms hereof, notices and other communications in writing shall be
given to the parties hereto at their respective addresses set forth at the
beginning of this Loan Agreement, or, in the case of facsimile transmission, to
the parties at their respective regular facsimile telephone number.
(d) Costs, Expenses and Taxes. Customer shall upon demand pay or reimburse MLBFS
for: (I) all Uniform Commercial Code and other filing and search fees and
expenses incurred by MLBFS in connection with the verification, perfection or
preservation of MLBFS; rights hereunder or in the Collateral or any other
collateral for the Obligations; (ii) any and all stamp, transfer and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery and/or recording of this Loan Agreement or any of the Additional
Agreements; and (iii) all reasonable fees and out-of-pocket expenses (including,
but not limited to, reasonable fees and expenses of outside counsel) incurred by
MLBFS in connection with the collection of any sum payable hereunder or under
any of the Additional Agreements not paid when due, the enforcement of this Loan
Agreement or any of the Additional Agreements and the protection of MLBFS;
rights hereunder or thereunder, excluding, however, salaries and normal overhead
attributable to MLBFS' employees. The obligations of customer under this
paragraph shall survive the expiration or termination of this Loan Agreement and
the discharge of the other Obligations.
(e) Right to Perform Obligations. If Customer shall fail to do any act or thing
which it has covenanted to do under this Loan Agreement or any representation or
warranty on the part of Customer contained in this Loan Agreement shall be
breached, MLBFS may, in its sole discretion, after 5 Business Days written
notice is sent to Customer (or such lesser notice including no notice, as is
reasonable under the circumstances), do the same or cause it to be done or
remedy any such breach, and may expend its funds for such purpose. Any and all
reasonable amounts so expended by MLBFS shall be repayable to MLBFS by Customer
upon demand, with interest at the "Interest Rate" (as that item is defined in
the Note) during the period from and including the date funds are so expended by
MLBFS to the date of repayment, and all such amounts shall be additional
Obligations. The payment or performance by MLBFS of any of Customer's
obligations hereunder shall not relieve Customer of said obligations or of the
consequences of having failed to pay or perform the same, and shall not waive or
be deemed a cure of any Default.
(f) Further Assurances. Customer agrees to do such further acts and things and
to execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonable require or deem advisable to effectuate the
purposes of this Loan Agreement, the Note or any of the other Additional
Agreements, or to establish, perfect and maintain MLBFS' security interests and
liens upon the Collateral, including but not limited to: (I)
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executing financing statements or amendments thereto when and as reasonably
requested by MLBFS; and (ii) if in the reasonable judgment of MLBFS it is
required by local law, causing the owners and/or mortgagees of the real property
on which any Collateral may be located to execute and deliver to MLBFS waivers
or subordinations reasonably satisfactory to MLBFS with respect to any rights in
such Collateral.
(g) Binding Effect. This Loan Agreement, the Note and the other Additional
Agreements shall be binding upon, and shall inure to the benefit of MLBFS,
Customer and their respective successors and assigns. Customer shall not assign
any of its rights or delegate any of its obligations under this Loan Agreement,
the Note or any of the other Additional Agreements without the prior written
consent of MLBFS. Unless otherwise expressly agreed to in a writing signed by
MLBFS, no such consent shall in any event relieve Customer of any of its
obligations under this Loan Agreement, the Note or any of the other Additional
Agreements.
(h) Headings. Captions and section and paragraph headings in this Loan Agreement
are inserted only as a matter of convenience, and shall not affect the
interpretation hereof.
(i) Governing Law. This Loan Agreement, the Note, and unless otherwise expressly
provided therein, each of the other Additional Agreements, shall be governed in
all respects by the laws of the State of Illinois.
(j) Severability of Provisions. Whenever possible, each provision of this Loan
Agreement, the Note and the other Additional Agreements shall be interpreted in
such manner as to be effective and valid under applicable law. Any provision of
this Loan Agreement, the Note or any of the other Additional Agreements which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Loan Agreement, the Note
and the other Additional Agreements or affecting the validity or enforceability
of such provision in any other jurisdiction.
(k) Term. This Loan Agreement shall become effective when accepted by MLBFS at
its office in Chicago, Illinois, and subject to the terms hereof, shall continue
in effect so long thereafter as there shall be any moneys owing hereunder of
under the Note, or there shall be any other Obligations outstanding.
(l) Counterparts. This Loan Agreement may be executed in one or more
counterparts which, when taken together, constitute one and the same agreement.
(m) Jurisdiction; Waiver. CUSTOMER ACKNOWLEDGES THAT THIS LOAN AGREEMENT IS
BEING ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS SOLE DISCRETION, TO ENFORCE THIS LOAN AGREEMENT, THE NOTE AND THE OTHER
ADDITIOAL AGREEMENTS IN EITHER THE STATE OF ILLINOIS OR IN ANY OTHER
JURISDICTION WHERE CUSTOMER OR ANY COLLATERAL FOR THE OBLIGATIONS MAY BE
LOCATED. CUSTOMER CONSENTS TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN
ANY STATE OR FECERAL COURT IN THE COUNTY OF COOK FOR SUCH PURPOSES, AND CUSOMER
WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE. CUSTOMER
FURTHER WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST MLBFS IN ANY
JURISDICTION EXCEPT IN THE COUNTY OF COOK AND STATE OF ILLINOIS. MLBFS AND
CUSTOMER HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDINGOR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST
THE OTHER PARTY WITH RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THE LOAN, THE NOTE, THIS LOAN AGREEMENT, ANY OTHER ADDITIONAL
GREEMENTS AND/OR ANY OF THE TRANSACTIONW WHICH ARE THE SUBJECT MATTER OF THIS
LOAN AGREEMENT.
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(n) Integration. THIS LOAN AGREEMENT, TOGETHER WITH THE NOTE AND THE OTHER
ADDITIONAL AGREEMENTS, CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS THE
FULL AND FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN AGREEMENTS OR
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. WITHOUT LIMITING THE FOREGOING,
CUSTOMER ACKNOWLEDGES THAT: (I) NO PROMISE OR COMMITMENT HAS BEEN MADE TO IT BY
MLBFS, MLPF&S OR ANY OF THEIR RESPECTIVE EMPLOYEES, AGENTS OR REPRESENTATIVES TO
MAKE THE LOAN ON ANY TERMS OTHER THAN AS EXPRESSLY SET FORTH HEREIN AND IN THE
NOTE, OR TO MAKE ANY OTHER LOAN OR OTHERWISE EXTEND ANY OTHER CREDIT TO CUSTOMER
OR ANY OTHER PARTY; AND (II) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HREIN, THIS
LOAN AGREEMENT SUPERSEDES AND REPLACES ANY AND ALL PROPOSALS, LETTERS OF INTENT
AND APPROVAL AND COMMITMENT LETTERS FROM MLBFS TO CUTOMER, NONE OF WHICH SHALL
BE CONSIDERED AN ADDITIONAL AGREEMENT. NO AMENDMENT OR MODIFICATION OF THIS
AGREEMENT OR ANY OF THE ADDITIONAL AGREEMENTS TO WHICH CUSTOMER IS A PARTY SHALL
BE EFFECTIVE UNLESS IN A WRITING SIGNED BY BOTH MLBFS AND CUSTOMER.
IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and year
first above written.
LAKELAND INDUSTRIES, INC.
By: /s/ Raymond J. Smith /s/Christopher J. Ryan
----------------------------------------------------
Signature (1) Signature (2)
Raymond J Smith Christopher J. Ryan
----------------------------------------------------
Printed Name Printed Name
President Exec V.P. & Secretary
----------------------------------------------------
Title Title
Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
By:
---------------------------------
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EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF TERM LOAN AND SECURITY AGREEMENT NO.
9909550501 BETWEEN MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND LAKELAND
INDUSTRIES, INC.
Additional Locations of Tangible Collateral:
1. Lakeland Industries, Inc.
711-2 Koehler Ave.
Ronkonkoma, NY 11779
(Landlord JBJ Realty - Peter Hofrichor)
2. Lakeland Industries, Inc.
2451 Highway 67 South
Somerville, AL 35670
(Landlord - Harvey Pride)
3. Lakeland Industries, Inc.
3420 Valley Ave. S.W.
Decatur, AL
(Landlord - River Group Holding Co. LLC - Harvey Pride, General Manager)
4. Lakeland Industries, Inc.
202 Pride Lane S.W.
Decatur, AL 35603
(Landlord - POMS Holding Co., a partnership - Harvey Pride, General Partner)
5. Lakeland Industries, Inc.
2401 Southwest Parkway
St. Joseph, MO 64503
(Landlord - Southwest Parkway, Inc. - S.C. Crawford)
<PAGE>
Merrill Lynch No. 9909550501
$3,000,000.00 September 9, 1999
COLLATERAL INSTALLMENT NOTE
FOR VALUE RECEIVED, LAKELAND INDUSTRIES, INC., a corporation organized and
existing under the laws of the State of Delaware ("Customer") hereby promises to
pay to the order of MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a
corporation organized and existing under the laws of the State of Delaware
("MLBFS"), in lawful money of the United States, the principal sum of Three
Million Dollars ($3,000,000.00), or if more or less, the aggregate amount
advanced by MLBFS to Customer pursuant to the Loan Agreement (the "Loan
Amount"); together with interest on the unpaid balance of the Loan Amount, from
the Closing Date until payment, at the Interest Rate (or, if applicable, at the
Default Interest Rate), as follows:
1. DEFINITIONS
(a) In addition to terms defined elsewhere in this Note, as used herein, the
following terms shall have the following meanings:
(i) "Closing Date" shall mean the date of advancement of funds hereunder.
(ii) "Default Interest Rate" shall mean a rate equal to the sum of the "Interest
Rate", as determined below, plus two percent (2%) per annum.
(iii) "Excess Interest" shall mean any amount of interest in excess of the
maximum amount of interest permitted to be charged by law.
(iv) "Interest Rate" shall mean a variable per annum rate equal to the sum of
(I) 2.45% per annum, and (ii) the interest rate from time to time published in
the "Money Rates" section of The Wall Street Journal for 30-day high-grade
unsecured notes sold through dealers by major corporations (the "30-day Dealer
Commercial Paper Rate"). The Interest Rate will change as of the date of
publication in The Wall Street Journal of a 30-day Dealer Commercial Paper Rate
that is different from that published on the preceding Business Day. In the
event that The Wall Street Journal shall, for any reason, fail or cease to
publish the 30-day Dealer Commercial paper Rate, MLBFS will choose a reasonably
comparable index or source to use as the basis for the Interest Rate. Upon the
occurrence and during the continuance of a Default, the Interest Rate May be
increased to the "Default Interest Rate", as herein provided.
(v) "Loan Agreement" shall mean that certain TERM LOAN AND SECURITY AGREEMENT
NO. 9909550501 between Customer and MLBFS, as the same may have been or may
hereafter be amended or supplemented.
(vi) "Note" shall mean THIS COLLATERAL INSTALLMENT NOTE.
2. PAYMENT OR OTHER TERMS. Customer shall pay the indebtedness under this Note
in 60 consecutive monthly installments commencing on the first day of the second
calendar month following the Closing Date and continuing on the first day of
each calendar month thereafter until this Note shall be paid in full. Each such
installment in an amount equal to the sum of (I) accrued interest, and (ii)
1/60th of the Loan Amount (with the first such installment including interest
accrued from the date of funding).
Each payment received hereunder shall be applied first to any fees and expenses
of MLBFS payable by Customer under the terms of the Loan Agreement (including,
without limitation, collection fees), next to accrued interest at the Interest
Rate and/or Default Interest Rate, as applicable, with the balance applied on
account of the unpaid principal hereof. Upon the occurrence and during the
continuance of any Default, but without limiting the rights and remedies
otherwise available to MLBFS or waiving such Default, the interest payable by
Customer hereunder shall be at the option of MLBFS accrue and be payable at the
Default Interest Rate. The Default Interest Rate, once implemented, shall
continue to apply to this Note and be payable by Customer until the date such
Default is either cured or waived in writing by MLBFS. All interest shall be
computed on the basis of actual days elapsed over a 360-day year. All sums
payable hereunder shall be payable at the office of MLBFS at 222 North LaSalle
Street, Chicago, Illinois 60601, or at such other place or places as the holder
hereof may from time to time appoint in writing.
Customer may prepay this Note at any time in whole or in part; provided,
however, that if any such prepayment is made from the proceeds of a refinancing
of this Note by another lender, such prepayment shall: (I) if made prior to the
end of the first "year" after the Closing Date, be accompanied by a premium
equal to 3% of the amount prepaid; (ii) if made during the second year following
the Closing Date be accompanied by a premium equal to 2% of the amount prepaid;
and (iii) if made thereafter be accompanied by a premium equal to 1% of the
amount prepaid. A "year" for the purposes of this clause is a 365-366 day period
commencing on the Closing Date or any anniversary of the Closing Date. Any
partial prepayment shall be applied to installments of the Loan Amount in
inverse order of maturity.
This Note is the Collateral Installment Note referred to in, and is entitled to
all of the benefits of the Loan Agreement and any Additional Agreements. If
Customer shall fail to pay when due any installment or other sum due hereunder,
and any such failure shall continue for more than five (5) Business Days after
written notice thereof shall have been given by the holder hereof to Customer,
or if any other Event of Default shall have occurred and be continuing, then at
the option of the holder hereof (or, upon the occurrence of any Bankruptcy
Event, automatically, without any action on the part of the holder hereof), and
in addition to all other rights and remedies available to such holder under the
Loan Agreement, any Additional Agreements, and otherwise, the entire Loan Amount
<PAGE>
at such time remaining unpaid, together with accrued interest thereon and all
other sums then owing by Customer under the Loan Agreement, may be declared to
be and thereby become immediately due and payable.
It is expressly understood, however, that nothing contained in the Loan
Agreement, any other agreement, instrument or document executed by Customer, or
otherwise, shall affect or impair the right, which is unconditional and
absolute, of the holder hereof to enforce payment of all sums due under this
Note at or after maturity, whether by acceleration or otherwise, or shall affect
the obligation of Customer, which is also unconditional and absolute, to pay the
sums payable under this Note in accordance with its terms. Except as otherwise
expressly set forth herein or in the Loan Agreement, Customer hereby waives
presentment, demand for payment, protest and notice of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate and all other
notices and formalities in connection with this Note.
Wherever possible each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Note. Notwithstanding any provision to the contrary in this Note, the Loan
Agreement or any of the Additional Agreements, no provision of this Note, the
Loan Agreement or any of the Additional Agreements shall require the payment or
permit the collection of any Excess Interest. If any Excess Interest is provided
for, or is adjudicated as being provided for, in this Note, the Loan Agreement
or any of the Additional Agreements, then: (a) Customer shall not be obligated
to pay any Excess Interest; and (b) any Excess interest that MLBFS may have
received under this Note, the Loan Agreement or any of the Additional Agreements
shall, at the option of MLBFS, be: (I) applied as a credit against the then
unpaid principal balance of this Note, or accrued interest hereon not to exceed
the maximum amount permitted by law, or both, (ii) refunded to the payor
thereof, of (iii) any combination of the foregoing.
This Note shall be construed in accordance with the laws of the State of
Illinois and may be enforced by the holder hereof in any jurisdiction in which
the Loan Agreement may be enforced.
IN WITNESS WHEREOF, this Note has been executed by Customer as of the day and
year first above written.
LAKELAND INDUSTRIES, INC.
By: /s/ Raymond J. Smith /s/Christopher J. Ryan
----------------------------------------------------
Signature (1) Signature (2)
Raymond J Smith Christopher J. Ryan
----------------------------------------------------
Printed Name Printed Name
President Exec V.P. & Secretary
----------------------------------------------------
Title Title
<PAGE>
Exhibit 10(o)
This Agreement between
River Group Holding Co., LLP, c/o Harvey Pride Jr., 202 Pride Lane, SW, Decatur,
AL 35603
as Landlord
and Lakeland Industries, Inc., a Delaware corporation with offices at 711-2
Koehler Avenue, Ronkonkoma, N.Y. 11779
as Tenant
Witnesseth: The Landlord hereby leases to the Tenant the following premises: The
premises located at 3428 Valley Avenue (2011/2 Pride Lane), Decatur, AL
consisting of approximately 91,788 square feet. for the term of five (5) years.
to commence from the 1st day of June, 1999 and to end on the 31st day of May,
2004 to be used and occupied only for Office, light manufacturing and warehouse
space upon the conditions and covenants following:
1st. That the Tenant shall pay the annual rent of One Hundred Ninety Nine
Thousand One Hundred ($199,100.00) Dollars said rent to be pain in equal monthly
payments in advance on the first day of each and every month during the term
aforesaid, as follows: Sixteen Thousand Five Hundred and Ninety Two ($16,592.00)
Dollars on June 1st, 1999 and monthly thereafter non-structural
2nd. That the Tenant shall take good care of the premises and shall, at the
Tenant's own cost and expense make all/repairs including, but not limited to,
repairs of the plumbing, heating and electrical systems, and at the end or other
expiration of the term, shall deliver up the demised premises in good order or
condition, damages by the elements excepted.
3rd. That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules orders, regulations and requirements of the Federal, State and
Local Governments and of any and all their Departments and Bureaus applicable to
said premises, for the correction, prevention and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters, or any other similar
body, at the Tenant's own cost and expense.
4th. That the Tenant, successors, heirs, executors and administrators shall not
assign this agreement , or underlet or underlease the premises, or any part
thereof, or make any alterations on the premises, without the Landlord's consent
in writing; or occupy, or permit or suffer the same to be occupied for any
business or purpose deemed disreputable or extra-hazardous on account of fire,
under the penalty of damages and forfeiture, and in the event of a breach
thereof, the term herein shall immediately cease and determine at the option of
th Landlord as if it were the expiration of the original term.
5th. Tenant must give Landlord prompt notice of fire, accident, damage or
dangerous or defective condition. If the Premises can not be used because of
fire or other casualty, Tenant is not required to pay rent for the time the
Premises are unusable. If part of the Premises can not be used, Tenant must pay
rent for the usable part. Landlord shall have the right to decide which part of
the Premises is usable. Landlord need only repair the damaged structural parts
<PAGE>
of the Premises. Landlord is not required to repair or replace any equipment ,
fixtures, furnishings or decorations unless originally installed by Landlord.
Landlord is not responsible for delays due to settling insurance claims,
obtaining estimates, labor and supply problems or any other cause not fully
under Landlords control. If the fire or other casualty is caused by an act or
neglect of Tenant, Tenant's employees or invitees, or at the time of the fire or
casualty Tenant is in default in any term of this Lease, then all repairs will
be made at Tenant's expense and Tenant must pay the full rent with no
adjustment. The cost of the repairs will be added rent. Landlord has the right
to demolish or rebuild the Building if there is substantial damage by fire or
other casualty. Landlord may cancel this Lease within 30 days after the
substantial fire or casualty by giving Tenant notice of Landlord's intention to
demolish or rebuild. The Lease will end 30 days after Landlord's cancellation
notice to the Tenant. Tenant must deliver the Premises to the Landlord on or
before the cancellation date in the notice and pay all rent due to the date of
the fire or casualty. If the Lease is cancelled Landlord is not required to
repair the Premises or Building. The cancellation does not release Tenant of
liability in connection with the fire or casualty. This Section is intended to
replace the terms of New York Real Property Law Section 227.
6th. The said Tenant agrees that the said Landlord and the Landlord's agents and
other representatives shall have the right to enter into and upon said premises,
or any part thereof, at all reasonable hours for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof.
7th. The Tenant also agrees to permit the Landlord or the Landlord's agents to
show the premises to persons wishing to hire or purchase the same; and the
Tenant further agrees that on and after the sixth month, next preceding the
expiration of the term hereby granted, the Landlord or the Landlord's agents
shall have the right to place notices on the front of said premises, or any part
thereof, offering the premises "To Let" or "For Sale", and the Tenant hereby
agrees to permit the same to remain thereon without hindrance or molestation.
8th. That if the said premises, or any part thereof shall be deserted or become
vacant during said term, or if any default be made in the payment of the said
rent or any part thereof, or if any default be made in the performance of any of
the covenants herein contained, the Landlord or representatives may re-enter the
said premises by force, summary proceedings or otherwise, and remove all persons
therefrom, without being liable to prosecution therefor, and the Tenant hereby
expressly waives the service of any notice in writing of intention to re-enter,
and the Tenant shall pay at the same time as the rent becomes payable under the
terms hereof a sum equivalent to the rent reserved herein, and the Landlord may
tent the premises on behalf of the Tenant, reserving the right to rent the
premises for a longer period of time than fixed in the original lease without
releasing the original Tenant from any liability, applying any moneys collected,
first to the expense of resuming or obtaining possession, second to restoring
the premises to a rentable condition, and then to the payment of the rent and
all other charges due and to grow due to the Landlord, any surplus to be paid to
the Tenant, who shall remain liable for any deficiency.
9th. Landlord may replace, at the expense of Tenant, any and all broken glass in
and about demised premises. Landlord may insure, and keep insured, all plate
glass in the demised premises for and in the name of Landlord. Bills, for the
premiums therefor shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due for, and payable by Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rental.
<PAGE>
Damage and injury to the said premises, caused by the carelessness, negligence
or improper conduct on the part of the said Tenant or the Tenant's agents or
employees shall be repaired as speedily as possible by the Tenant at the
Tenant's own cost and expense.
10th. That the Tenant shall neither encumber nor obstruct the sidewalk in front
of, entrance to, or halls and stairs of said premises, nor allow the same to be
obstructed or encumbered in any manner.
11th. The Tenant shall neither place, or cause or allow to be placed, any sign
or signs of any kind whatsoever at, in or about the entrance to said premises or
any other part of same, except in or at such place or places as may be indicated
by the Landlord and consented to by the Landlord in writing. And in case the
Landlord or the Landlord's representatives shall deem it necessary to remove any
such sign or signs in order to paint the said premises or the building wherein
same is situated or make any other repairs , alterations or improvements in or
upon said premises or building or any part thereof, the Landlord shall have the
right to do so, providing the same be removed and replaced at the Landlord's
expense, whenever the said repairs, alterations or improvements shall be
completed.
12th. That the Landlord is exempt from any and all liability for any damage or
injury to person or property caused by or resulting from steam, electricity,
gas, water, rain, ice or snow, or any leak or flow from or into any part of said
building or from any damage or injury resulting or arising from any other cause
or happening whatsoever unless said damage or injury be caused by or be due to
the negligence of the Landlord.
13th. That if default be made in any of the covenants herein contained, then it
shall be lawful for the said Landlord to re-enter the said premises, and the
same to have again, re-possess and enjoy. The said Tenant hereby expressly
waives the service of any notice in writing of intention to re-enter.
14th. That this instrument shall not be a lien against said premises in respect
to any mortgages that are now on or that hereafter may be placed against said
premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this lease,
irrespective of the date of recording and the Tenant agrees to execute without
cost, any such instrument which may be deemed necessary or desirable to further
effect the subordination of this lease to any such mortgage or mortgages, and a
refusal to execute such instrument shall entitle the Landlord, or the Landlord's
assigns and legal representatives to the option of cancelling this lease without
incurring any expense or damage and the term hereby granted is expressly limited
accordingly.
15th. The Tenant has this day deposited with the Landlord the sum of $ -0- as
security for the full and faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part to be performed,
which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on Tenant's part to be
performed. In the event of a bona fide sale, subject to this lease, the Landlord
shall have the right to transfer the security to the vendee for the benefit of
the Tenant and the Landlord shall be considered released by the Tenant from all
liability for the return of such security; and the Tenant agrees to look to the
new Landlord solely for the return of the said security, and it is agreed that
this shall apply to every transfer or assignment made of the security to a new
Landlord.
<PAGE>
16th. That the security deposited under this lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
17th. It is expressly understood and agreed that in case the demised premises
shall be deserted or vacated, or if default be made in the payment of the rent
or any part thereof as herein specified, or if, without the consent of the
Landlord, the Tenant shall sell, assign, or mortgage this lease or if defaults
be made in the performance of any of the covenants and agreements in this lease
contained on the part of the Tenant to be kept and performed, or if the Tenant
shall fail to comply with any of the statutes, ordinances, rules, orders
regulations and requirements of the Federal, State and Local Governments or of
any and all their Departments and Bureaus, applicable to said premises, or if
the Tenant shall file or there be filed against Tenant a petition in bankruptcy
or arrangement, or Tenant be adjudicated a bankrupt or make an assignment for
the benefit of creditors or take advantage of any insolvency act, the Landlord
may, if the Landlord so elects, at any time thereafter terminate this lease and
the term hereof, on giving to the Tenant five days' notice in writing of the
Landlord's intention so to do, and this lease and the term hereof shall expire
and come to an end on the date fixed in such notice as if the said date were the
date originally fixed in this lease for the expiration hereof. Such notice may
be given by mail to the Tenant addressed to the demised premises.
18th. Tenant shall pay to the Landlord the rent or charge, which may, during the
demised term , be assessed or imposed for the water used or consumed in or on
the said premises, whether determined by meter or otherwise, as soon as and when
the same may be assessed or imposed, and will also pay the expenses for the
setting of a water meter in the said premises should the latter be required.
Tenant shall pay Tenant's proportionate part of the sewer rent or charge imposed
upon the building. All such rents or charges or expenses shall be paid as
additional rent and shall be added to the next month's rent thereafter to become
due.
19th. That the Tenant will not nor will the Tenant permit undertenants or other
person to do anything in said premises, or bring anything into said premises, or
permit anything to be brought into said premises or to be kept therein, which
will in any way increase the rate of fire insurance on said demised premises,
nor use the demised premises or any part thereof, nor suffer or permit their use
for any business or purpose which would cause an increase in the rate of fire
insurance on said building, and the Tenant agrees to pay on demand any such
increase.
20th. The failure of the Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that the Landlord may have, and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained. This instrument may not be charged, modified, discharged or
terminated orally.
21st. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim against
Landlord for the value of any unexpired term of said lease. No part of any award
shall belong to the Tenant.
<PAGE>
22nd. If after default in payment of rent of violation or any other provision of
this lease, or upon the expiration of this lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of lease, or prior to the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
23rd. In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay in
monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the Landlord during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected if any, shall become due and payable in monthly payments
during the remainder of the unexpired term, as the amounts of such difference or
deficiency shall from time to time be ascertained; and it is mutually agreed
between Landlord and Tenant that the respective parties hereto shall and hereby
do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other on any matters whatsoever arising out of
or in any way connected with this lease, the Tenant's use or occupancy of said
premises, and/or any claim of injury or damage.
24th. The Tenant waives all rights to redeem under any law.
25th. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection with a National
Emergency or in connection with any rule, order or regulation of any department
or subdivision thereof of any governmental agency or by reason of the condition
of supply and demand which have been or are effected by war or other emergency.
26th. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its appliances, nor for any space
taken to comply with any law, ordinance or order of a governmental authority. In
respect to the various "services," if any, herein expressly or impliedly agreed
to be furnished by the Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of the rent, or any other compensation, for
interruption or curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or repairs desirable or
necessary to be made or to inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other cause, not gross
negligence on the part of the Landlord. No such interruption or curtailment of
such "service" shall be deemed a constructive eviction. The Landlord shall not
be required to furnish, and the Tenant shall not be entitled to receive, any of
<PAGE>
such "services" during any period wherein the Tenant shall be in default in
respect to the payment of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs, improvements or decorations to
the demised premises after the date above fixed for the commencement of the
term, it is being understood that rent shall, in any, commence to run as such
date so above fixed.
27th. Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy or because a prior Tenant or any other person is wrongfully
holding over or is in wrongful possession, or for any other reason. The rent
shall not commence until possession is given or is available, but the term
herein shall not be extended.
Additional Provisions on Rider attached Herein.
And the said Landlord doth covenant that the Tenant on paying the said yearly
rent, and performing the covenants aforesaid, shall and may peacefully and
quietly have, hold and enjoy the said demised premises for the term aforesaid,
provided however, that this covenant shall be conditioned upon the retention of
title to the premises by the Landlord. And it is mutually understood and agreed
that the covenants and agreements contained in the within lease shall be binding
upon the parties hereto and upon their respect successors, heirs, executors and
administrators. In Witness Whereof, the parties have interchangeably set their
hands and seals (or caused these presents to be signed by their proper corporate
officers and caused their proper corporate seal to be hereto affixed) this day
of 1999 Poms holding Co., as Landlord
By:
Lakeland Industries, INc.
By: /s/Harvey Pride, Jr.
--------------------
Harvey Pride, Jr.
Signed, sealed and delivered in the presence of
State of New York,
County of
S.S.
On the day of 19 , before me personally came
to me known and known to me to be the individual described in, and who executed,
the foregoing instrument, and acknowledged to me that he executed the same.
State of New York,
County of
S.S.
On the day of 19 , before me personally came to me known, who, being by me duly
sworn, did depose and say that he resides at No.
that he is the of
the corporation mentioned in, and which executed, the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the Board of said
corporation; and that he signed h name thereto by like order.
POMS HOLDING CO./
Landlord,
- -with-
LAKELAND INDUSTRIES, INC.,
Tenant.
Lease
Dated, September, 1999
In Consideration of the letting of the premises within mentioned to the within
named Tenant and the sum of $1.00 paid to the undersigned by the within named
Landlord, the undersigned do hereby covenant and agree, to and with the Landlord
and the Landlord's legal representatives, that if default shall at any time be
made by the said Tenant in the payment of the rent and the performance of the
covenants contained in the within lease, on the Tenant's part to be paid and
performed, that the undersigned will well and truly pay the said rent, or any
arrears thereof, that may remain due unto the said Landlord, and also pay all
damages that may arise in consequences of the non-performance of said covenants,
or either of them, without requiring notice of any such default from the said
Landlord. The undersigned hereby waives all right to trial by jury in any action
or proceeding hereinafter instituted by the Landlord, to which the undersigned
may be a party.
In Witness Whereof, the undersigned ha set hand and seal this day of , 19
WITNESS L.S.
RIDER TO LEASE
Dated: September 1, 1999
between
POMS HOLDING CO., as Landlord
and
LAKELAND INDUSTRIES, INC., as Tenant
28th. Wherever there is a conflict between the printed and typewritten portions
of this lease, the typewritten portions shall govern.
29th. Tenant, at its own expense, shall maintain plateglass and comprehensive
general public liability insurance protecting Landlord and Tenant and naming
Landlord as an additional insured with respect to personal injury or property
damage due to negligence occurring in or about the leased premises with minimum
limits of $300,000.00 for personal injury to any one person, and $500,000.00 for
personal injury to any number of persons arising out of one accident, and
$100,000.00 for property damage. Said insurance shall be taken out with a
company licensed to do business in the State of New York and the State of
Alabama and proof of such insurance shall be delivered to the Landlord upon the
commencement of this lease. Annual proof of payment shall thereafter be
submitted to the Landlord. The original policy, upon Landlord's request, shall
be exhibited to the Landlord by the Tenant within thirty (30) days after
commencement of the term of this agreement. Upon failure of the Tenant to so
deposit said policy, the Landlord shall have the privilege to procure said
insurance on his own application therefor, and the amount of the premium, if
paid by the Landlord, shall be due and payable with the rent reserved hereunder,
collectible with the same remedies as if originally reserved as rent hereunder.
30th. Notwithstanding anything else contained in this lease, it is understood
and agreed that the Tenant shall provide his own heat and pay his own
electricity bills. All of the utilities shall be supplied by the Tenant at his
own cost and expense.
31st. Notwithstanding anything else contained in this lease, upon the expiration
of same for amy reason whatsoever, Tenant covenants and agrees that the premises
will be redelivered to the Landlord broom clean.
32nd. The Tenant shall make no physical improvements, changes, modifications,
alterations or additions to the leased premises without the written consent of
the Landlord. All alterations, repairs, improvements, extensions or additions
which may be made to the demised premises by the Tenant shall immediately become
the property of the Landlord and become a part of the demised premises
hereunder, excepting, however, removable trade fixtures. It is, however, agreed
that when trade fixtures are removed, the demised premises are to be placed, at
the Tenant's expense, in their original condition.
33rd. The Tenant shall pay as additional rent during the term hereof without any
set off or deduction whatsoever, all taxes on the entire building of which the
leased premises are a part, including, but not limited to, ad valorem taxes,
real estate taxes and water charges. Such payment shall be hade within thirty
(30) days of the demand therefor by the Landlord and receipted tax bills shall
be sufficient evidence of the amount of such taxes.
34th. Tenant shall pay as additional rent during the term hereof without any set
off or deduction whatsoever, all fire insurance premiums on the entire building
of which the leased premises are a part within thirty (30) days of the date of
receipt by Tenant from Landlord of a bill therefor.
35th. Tenant shall have the right to sublet all or any portion of the demised
premises provided the following conditions are complied with:
(a) At the time of such subletting, this lease must be in full force
and effect without any breach or default thereunder on the part of the Tenant.
(b) A copy of sublease shall be mailed to Landlord within ten (10) days
from the effective date of such subletting.
(c) Such subletting shall be upon and subject to all the provisions,
terms, covenants and conditions of this lease and Tenant shall continue to be
and remain liable hereunder.
(d) Notwithstanding the foregoing, if the Tenant proposes to sublet all
or substantially all of the demised premises, Tenant shall so notify the
Landlord and Landlord shall have the option to cancel and terminate this lease
as of the date proposed by Tenant for such subletting, which options shall be
exercisable within fifteen (5) days after receipt of such notice by Landlord of
the proposed subletting.
(e) Tenant shall not assign this lease without the consent of Landlord
first hand received, which consent Landlord agrees not to unreasonably withhold
or delay; provided, however, that Tenant shall have the right, without the
consent of Landlord, to assign this lease to (i) a subsidiary or affiliated
corporation, either of which may have a normal capital; (ii) any corporation
resulting from a reorganization of Tenant or its parent company with any one or
more corporations; (iii) any corporation resulting from the consolidation of
Tenant with or into any one or more corporations.
36th. Throughout the term of this lease, Tenant shall indemnify Landlord and
save it harmless against and from any and all liability, losses, damages, costs,
expenses and claims by or on behalf of any person, firm, corporation,
governmental authority or other entity incurred by Landlord with respect to the
leased premises, including, without limitation, burdens resulting from any and
all acts of commission or omission on the part of Tenant or of anyone holding
by, through or under Tenant, and any and all of its agents, servants, employees,
invitees and contractors, and against and from any injury or damage to any
person, or to any property of any person, except as a result of Landlord's own
acts of commission or omission.
37th. Tenant shall be responsible for, and hereby relieves and shall save
landlord harmless of and from any and all liability by reason of any injury or
damage to any person or property in the leased premises, whether such property
belongs to Tenant or to any persons, firms, corporations or other entity caused
by any fire, installation or from water, rain or show that may leak into, issue
or flow from any part of said leased premises, or from the drains, pipes or
plumbing work of the said leased premises, or from any place or quarter and from
the use, misuse or abuse of any hoists, conveyors, hatches, openings, platforms,
stairways, machinery or equipment of any kind whatever which may exist at the
time of the date of this lease or thereafter be installed in or on the leased
premises, and from any and all kinds of injury and damage which may arise in or
upon the leased premises from any other cause, unless such damage, injury, use,
misuse or abuse shall have been caused by or result from the negligence of
Landlord, its agents, servants or employees during the continuance of this lease
by acts of commission or omission.
38th. It is hereby understood and agreed that in the event the Tenant leaves any
property on the leased premises subsequent to the expiration of the within lease
that said property is hereby deemed abandoned and the Landlord may dispose of
said property at its option without any liability on the part of the Landlord.
It is further understood and agreed that the Tenant waives any and all rights,
title and interest to said property, releases and waives any and all claims
thereto, and further agrees that the Tenant will be responsible to the Landlord
for any and all expenses incurred by the Landlord concerning said property.
39th. Whenever under the terms of this lease any sum of money is required to be
paid by Tenant in addition to the rental herein reserved, and said additional
amount so to be paid is not designated as "additional," or provision is not made
in the paragraph covering such payment for the collection of said amount as
"additional rental," then said amount shall nevertheless, at the option of
Landlord if not paid when due, be deemed "additional rental," and collectible as
such with any installment of rental thereafter falling due hereunder, but
nothing herein contained shall be deemed to suspend or delay the payment of any
sum at the time the same becomes due and payable hereunder or limit any other
remedy of Landlord.
40th. This lease contains the entire agreement between Landlord and Tenant and
shall not be modified in any manner except by an instrument in writing signed by
Landlord and Tenant.
POMS HOLDING CO., Landlord
By: /s/Raymond J. Smith
-------------------
Raymond J. Smith, President
LAKELAND INDUSTRIES, INC., Tenant
By:
<PAGE>
Exhibit 10(o)
This Agreement between
River Group Holding Co., LLP, c/o Harvey Pride Jr., 202 Pride Lane, SW, Decatur,
AL 35603
as Landlord
and Lakeland Industries, Inc., a Delaware corporation with offices at 711-2
Koehler Avenue, Ronkonkoma, N.Y. 11779
as Tenant
Witnesseth: The Landlord hereby leases to the Tenant the following premises: The
premises located at 3428 Valley Avenue (2011/2 Pride Lane), Decatur, AL
consisting of approximately 91,788 square feet. for the term of five (5) years.
to commence from the 1st day of June, 1999 and to end on the 31st day of May,
2004 to be used and occupied only for Office, light manufacturing and warehouse
space upon the conditions and covenants following:
1st. That the Tenant shall pay the annual rent of One Hundred Ninety Nine
Thousand One Hundred ($199,100.00) Dollars said rent to be pain in equal monthly
payments in advance on the first day of each and every month during the term
aforesaid, as follows: Sixteen Thousand Five Hundred and Ninety Two ($16,592.00)
Dollars on June 1st, 1999 and monthly thereafter non-structural
2nd. That the Tenant shall take good care of the premises and shall, at the
Tenant's own cost and expense make all/repairs including, but not limited to,
repairs of the plumbing, heating and electrical systems, and at the end or other
expiration of the term, shall deliver up the demised premises in good order or
condition, damages by the elements excepted.
3rd. That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules orders, regulations and requirements of the Federal, State and
Local Governments and of any and all their Departments and Bureaus applicable to
said premises, for the correction, prevention and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters, or any other similar
body, at the Tenant's own cost and expense.
4th. That the Tenant, successors, heirs, executors and administrators shall not
assign this agreement , or underlet or underlease the premises, or any part
thereof, or make any alterations on the premises, without the Landlord's consent
in writing; or occupy, or permit or suffer the same to be occupied for any
business or purpose deemed disreputable or extra-hazardous on account of fire,
under the penalty of damages and forfeiture, and in the event of a breach
thereof, the term herein shall immediately cease and determine at the option of
th Landlord as if it were the expiration of the original term.
5th. Tenant must give Landlord prompt notice of fire, accident, damage or
dangerous or defective condition. If the Premises can not be used because of
fire or other casualty, Tenant is not required to pay rent for the time the
Premises are unusable. If part of the Premises can not be used, Tenant must pay
rent for the usable part. Landlord shall have the right to decide which part of
the Premises is usable. Landlord need only repair the damaged structural parts
<PAGE>
of the Premises. Landlord is not required to repair or replace any equipment ,
fixtures, furnishings or decorations unless originally installed by Landlord.
Landlord is not responsible for delays due to settling insurance claims,
obtaining estimates, labor and supply problems or any other cause not fully
under Landlords control. If the fire or other casualty is caused by an act or
neglect of Tenant, Tenant's employees or invitees, or at the time of the fire or
casualty Tenant is in default in any term of this Lease, then all repairs will
be made at Tenant's expense and Tenant must pay the full rent with no
adjustment. The cost of the repairs will be added rent. Landlord has the right
to demolish or rebuild the Building if there is substantial damage by fire or
other casualty. Landlord may cancel this Lease within 30 days after the
substantial fire or casualty by giving Tenant notice of Landlord's intention to
demolish or rebuild. The Lease will end 30 days after Landlord's cancellation
notice to the Tenant. Tenant must deliver the Premises to the Landlord on or
before the cancellation date in the notice and pay all rent due to the date of
the fire or casualty. If the Lease is cancelled Landlord is not required to
repair the Premises or Building. The cancellation does not release Tenant of
liability in connection with the fire or casualty. This Section is intended to
replace the terms of New York Real Property Law Section 227.
6th. The said Tenant agrees that the said Landlord and the Landlord's agents and
other representatives shall have the right to enter into and upon said premises,
or any part thereof, at all reasonable hours for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof.
7th. The Tenant also agrees to permit the Landlord or the Landlord's agents to
show the premises to persons wishing to hire or purchase the same; and the
Tenant further agrees that on and after the sixth month, next preceding the
expiration of the term hereby granted, the Landlord or the Landlord's agents
shall have the right to place notices on the front of said premises, or any part
thereof, offering the premises "To Let" or "For Sale", and the Tenant hereby
agrees to permit the same to remain thereon without hindrance or molestation.
8th. That if the said premises, or any part thereof shall be deserted or become
vacant during said term, or if any default be made in the payment of the said
rent or any part thereof, or if any default be made in the performance of any of
the covenants herein contained, the Landlord or representatives may re-enter the
said premises by force, summary proceedings or otherwise, and remove all persons
therefrom, without being liable to prosecution therefor, and the Tenant hereby
expressly waives the service of any notice in writing of intention to re-enter,
and the Tenant shall pay at the same time as the rent becomes payable under the
terms hereof a sum equivalent to the rent reserved herein, and the Landlord may
tent the premises on behalf of the Tenant, reserving the right to rent the
premises for a longer period of time than fixed in the original lease without
releasing the original Tenant from any liability, applying any moneys collected,
first to the expense of resuming or obtaining possession, second to restoring
the premises to a rentable condition, and then to the payment of the rent and
all other charges due and to grow due to the Landlord, any surplus to be paid to
the Tenant, who shall remain liable for any deficiency.
9th. Landlord may replace, at the expense of Tenant, any and all broken glass in
and about demised premises. Landlord may insure, and keep insured, all plate
glass in the demised premises for and in the name of Landlord. Bills, for the
premiums therefor shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due for, and payable by Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rental.
<PAGE>
Damage and injury to the said premises, caused by the carelessness, negligence
or improper conduct on the part of the said Tenant or the Tenant's agents or
employees shall be repaired as speedily as possible by the Tenant at the
Tenant's own cost and expense.
10th. That the Tenant shall neither encumber nor obstruct the sidewalk in front
of, entrance to, or halls and stairs of said premises, nor allow the same to be
obstructed or encumbered in any manner.
11th. The Tenant shall neither place, or cause or allow to be placed, any sign
or signs of any kind whatsoever at, in or about the entrance to said premises or
any other part of same, except in or at such place or places as may be indicated
by the Landlord and consented to by the Landlord in writing. And in case the
Landlord or the Landlord's representatives shall deem it necessary to remove any
such sign or signs in order to paint the said premises or the building wherein
same is situated or make any other repairs , alterations or improvements in or
upon said premises or building or any part thereof, the Landlord shall have the
right to do so, providing the same be removed and replaced at the Landlord's
expense, whenever the said repairs, alterations or improvements shall be
completed.
12th. That the Landlord is exempt from any and all liability for any damage or
injury to person or property caused by or resulting from steam, electricity,
gas, water, rain, ice or snow, or any leak or flow from or into any part of said
building or from any damage or injury resulting or arising from any other cause
or happening whatsoever unless said damage or injury be caused by or be due to
the negligence of the Landlord.
13th. That if default be made in any of the covenants herein contained, then it
shall be lawful for the said Landlord to re-enter the said premises, and the
same to have again, re-possess and enjoy. The said Tenant hereby expressly
waives the service of any notice in writing of intention to re-enter.
14th. That this instrument shall not be a lien against said premises in respect
to any mortgages that are now on or that hereafter may be placed against said
premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this lease,
irrespective of the date of recording and the Tenant agrees to execute without
cost, any such instrument which may be deemed necessary or desirable to further
effect the subordination of this lease to any such mortgage or mortgages, and a
refusal to execute such instrument shall entitle the Landlord, or the Landlord's
assigns and legal representatives to the option of cancelling this lease without
incurring any expense or damage and the term hereby granted is expressly limited
accordingly.
15th. The Tenant has this day deposited with the Landlord the sum of $ -0- as
security for the full and faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part to be performed,
which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on Tenant's part to be
performed. In the event of a bona fide sale, subject to this lease, the Landlord
shall have the right to transfer the security to the vendee for the benefit of
the Tenant and the Landlord shall be considered released by the Tenant from all
liability for the return of such security; and the Tenant agrees to look to the
new Landlord solely for the return of the said security, and it is agreed that
this shall apply to every transfer or assignment made of the security to a new
Landlord.
<PAGE>
16th. That the security deposited under this lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
17th. It is expressly understood and agreed that in case the demised premises
shall be deserted or vacated, or if default be made in the payment of the rent
or any part thereof as herein specified, or if, without the consent of the
Landlord, the Tenant shall sell, assign, or mortgage this lease or if defaults
be made in the performance of any of the covenants and agreements in this lease
contained on the part of the Tenant to be kept and performed, or if the Tenant
shall fail to comply with any of the statutes, ordinances, rules, orders
regulations and requirements of the Federal, State and Local Governments or of
any and all their Departments and Bureaus, applicable to said premises, or if
the Tenant shall file or there be filed against Tenant a petition in bankruptcy
or arrangement, or Tenant be adjudicated a bankrupt or make an assignment for
the benefit of creditors or take advantage of any insolvency act, the Landlord
may, if the Landlord so elects, at any time thereafter terminate this lease and
the term hereof, on giving to the Tenant five days' notice in writing of the
Landlord's intention so to do, and this lease and the term hereof shall expire
and come to an end on the date fixed in such notice as if the said date were the
date originally fixed in this lease for the expiration hereof. Such notice may
be given by mail to the Tenant addressed to the demised premises.
18th. Tenant shall pay to the Landlord the rent or charge, which may, during the
demised term , be assessed or imposed for the water used or consumed in or on
the said premises, whether determined by meter or otherwise, as soon as and when
the same may be assessed or imposed, and will also pay the expenses for the
setting of a water meter in the said premises should the latter be required.
Tenant shall pay Tenant's proportionate part of the sewer rent or charge imposed
upon the building. All such rents or charges or expenses shall be paid as
additional rent and shall be added to the next month's rent thereafter to become
due.
19th. That the Tenant will not nor will the Tenant permit undertenants or other
person to do anything in said premises, or bring anything into said premises, or
permit anything to be brought into said premises or to be kept therein, which
will in any way increase the rate of fire insurance on said demised premises,
nor use the demised premises or any part thereof, nor suffer or permit their use
for any business or purpose which would cause an increase in the rate of fire
insurance on said building, and the Tenant agrees to pay on demand any such
increase.
20th. The failure of the Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that the Landlord may have, and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained. This instrument may not be charged, modified, discharged or
terminated orally.
21st. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim against
Landlord for the value of any unexpired term of said lease. No part of any award
shall belong to the Tenant.
<PAGE>
22nd. If after default in payment of rent of violation or any other provision of
this lease, or upon the expiration of this lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of lease, or prior to the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
23rd. In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay in
monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the Landlord during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected if any, shall become due and payable in monthly payments
during the remainder of the unexpired term, as the amounts of such difference or
deficiency shall from time to time be ascertained; and it is mutually agreed
between Landlord and Tenant that the respective parties hereto shall and hereby
do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other on any matters whatsoever arising out of
or in any way connected with this lease, the Tenant's use or occupancy of said
premises, and/or any claim of injury or damage.
24th. The Tenant waives all rights to redeem under any law.
25th. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection with a National
Emergency or in connection with any rule, order or regulation of any department
or subdivision thereof of any governmental agency or by reason of the condition
of supply and demand which have been or are effected by war or other emergency.
26th. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its appliances, nor for any space
taken to comply with any law, ordinance or order of a governmental authority. In
respect to the various "services," if any, herein expressly or impliedly agreed
to be furnished by the Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of the rent, or any other compensation, for
interruption or curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or repairs desirable or
necessary to be made or to inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other cause, not gross
negligence on the part of the Landlord. No such interruption or curtailment of
such "service" shall be deemed a constructive eviction. The Landlord shall not
be required to furnish, and the Tenant shall not be entitled to receive, any of
<PAGE>
such "services" during any period wherein the Tenant shall be in default in
respect to the payment of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs, improvements or decorations to
the demised premises after the date above fixed for the commencement of the
term, it is being understood that rent shall, in any, commence to run as such
date so above fixed.
27th. Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy or because a prior Tenant or any other person is wrongfully
holding over or is in wrongful possession, or for any other reason. The rent
shall not commence until possession is given or is available, but the term
herein shall not be extended.
Additional Provisions on Rider attached Herein.
And the said Landlord doth covenant that the Tenant on paying the said yearly
rent, and performing the covenants aforesaid, shall and may peacefully and
quietly have, hold and enjoy the said demised premises for the term aforesaid,
provided however, that this covenant shall be conditioned upon the retention of
title to the premises by the Landlord. And it is mutually understood and agreed
that the covenants and agreements contained in the within lease shall be binding
upon the parties hereto and upon their respect successors, heirs, executors and
administrators. In Witness Whereof, the parties have interchangeably set their
hands and seals (or caused these presents to be signed by their proper corporate
officers and caused their proper corporate seal to be hereto affixed) this day
of 1999 Poms holding Co., as Landlord
By:
Lakeland Industries, INc.
By: /s/Harvey Pride, Jr.
--------------------
Harvey Pride, Jr.
Signed, sealed and delivered in the presence of
State of New York,
County of
S.S.
On the day of 19 , before me personally came
to me known and known to me to be the individual described in, and who executed,
the foregoing instrument, and acknowledged to me that he executed the same.
State of New York,
County of
S.S.
On the day of 19 , before me personally came to me known, who, being by me duly
sworn, did depose and say that he resides at No.
that he is the of
the corporation mentioned in, and which executed, the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the Board of said
corporation; and that he signed h name thereto by like order.
POMS HOLDING CO./
Landlord,
- -with-
LAKELAND INDUSTRIES, INC.,
Tenant.
Lease
Dated, September, 1999
In Consideration of the letting of the premises within mentioned to the within
named Tenant and the sum of $1.00 paid to the undersigned by the within named
Landlord, the undersigned do hereby covenant and agree, to and with the Landlord
and the Landlord's legal representatives, that if default shall at any time be
made by the said Tenant in the payment of the rent and the performance of the
covenants contained in the within lease, on the Tenant's part to be paid and
performed, that the undersigned will well and truly pay the said rent, or any
arrears thereof, that may remain due unto the said Landlord, and also pay all
damages that may arise in consequences of the non-performance of said covenants,
or either of them, without requiring notice of any such default from the said
Landlord. The undersigned hereby waives all right to trial by jury in any action
or proceeding hereinafter instituted by the Landlord, to which the undersigned
may be a party.
In Witness Whereof, the undersigned ha set hand and seal this day of , 19
WITNESS L.S.
RIDER TO LEASE
Dated: September 1, 1999
between
POMS HOLDING CO., as Landlord
and
LAKELAND INDUSTRIES, INC., as Tenant
28th. Wherever there is a conflict between the printed and typewritten portions
of this lease, the typewritten portions shall govern.
29th. Tenant, at its own expense, shall maintain plateglass and comprehensive
general public liability insurance protecting Landlord and Tenant and naming
Landlord as an additional insured with respect to personal injury or property
damage due to negligence occurring in or about the leased premises with minimum
limits of $300,000.00 for personal injury to any one person, and $500,000.00 for
personal injury to any number of persons arising out of one accident, and
$100,000.00 for property damage. Said insurance shall be taken out with a
company licensed to do business in the State of New York and the State of
Alabama and proof of such insurance shall be delivered to the Landlord upon the
commencement of this lease. Annual proof of payment shall thereafter be
submitted to the Landlord. The original policy, upon Landlord's request, shall
be exhibited to the Landlord by the Tenant within thirty (30) days after
commencement of the term of this agreement. Upon failure of the Tenant to so
deposit said policy, the Landlord shall have the privilege to procure said
insurance on his own application therefor, and the amount of the premium, if
paid by the Landlord, shall be due and payable with the rent reserved hereunder,
collectible with the same remedies as if originally reserved as rent hereunder.
30th. Notwithstanding anything else contained in this lease, it is understood
and agreed that the Tenant shall provide his own heat and pay his own
electricity bills. All of the utilities shall be supplied by the Tenant at his
own cost and expense.
31st. Notwithstanding anything else contained in this lease, upon the expiration
of same for amy reason whatsoever, Tenant covenants and agrees that the premises
will be redelivered to the Landlord broom clean.
32nd. The Tenant shall make no physical improvements, changes, modifications,
alterations or additions to the leased premises without the written consent of
the Landlord. All alterations, repairs, improvements, extensions or additions
which may be made to the demised premises by the Tenant shall immediately become
the property of the Landlord and become a part of the demised premises
hereunder, excepting, however, removable trade fixtures. It is, however, agreed
that when trade fixtures are removed, the demised premises are to be placed, at
the Tenant's expense, in their original condition.
33rd. The Tenant shall pay as additional rent during the term hereof without any
set off or deduction whatsoever, all taxes on the entire building of which the
leased premises are a part, including, but not limited to, ad valorem taxes,
real estate taxes and water charges. Such payment shall be hade within thirty
(30) days of the demand therefor by the Landlord and receipted tax bills shall
be sufficient evidence of the amount of such taxes.
34th. Tenant shall pay as additional rent during the term hereof without any set
off or deduction whatsoever, all fire insurance premiums on the entire building
of which the leased premises are a part within thirty (30) days of the date of
receipt by Tenant from Landlord of a bill therefor.
35th. Tenant shall have the right to sublet all or any portion of the demised
premises provided the following conditions are complied with:
(a) At the time of such subletting, this lease must be in full force
and effect without any breach or default thereunder on the part of the Tenant.
(b) A copy of sublease shall be mailed to Landlord within ten (10) days
from the effective date of such subletting.
(c) Such subletting shall be upon and subject to all the provisions,
terms, covenants and conditions of this lease and Tenant shall continue to be
and remain liable hereunder.
(d) Notwithstanding the foregoing, if the Tenant proposes to sublet all
or substantially all of the demised premises, Tenant shall so notify the
Landlord and Landlord shall have the option to cancel and terminate this lease
as of the date proposed by Tenant for such subletting, which options shall be
exercisable within fifteen (5) days after receipt of such notice by Landlord of
the proposed subletting.
(e) Tenant shall not assign this lease without the consent of Landlord
first hand received, which consent Landlord agrees not to unreasonably withhold
or delay; provided, however, that Tenant shall have the right, without the
consent of Landlord, to assign this lease to (i) a subsidiary or affiliated
corporation, either of which may have a normal capital; (ii) any corporation
resulting from a reorganization of Tenant or its parent company with any one or
more corporations; (iii) any corporation resulting from the consolidation of
Tenant with or into any one or more corporations.
36th. Throughout the term of this lease, Tenant shall indemnify Landlord and
save it harmless against and from any and all liability, losses, damages, costs,
expenses and claims by or on behalf of any person, firm, corporation,
governmental authority or other entity incurred by Landlord with respect to the
leased premises, including, without limitation, burdens resulting from any and
all acts of commission or omission on the part of Tenant or of anyone holding
by, through or under Tenant, and any and all of its agents, servants, employees,
invitees and contractors, and against and from any injury or damage to any
person, or to any property of any person, except as a result of Landlord's own
acts of commission or omission.
37th. Tenant shall be responsible for, and hereby relieves and shall save
landlord harmless of and from any and all liability by reason of any injury or
damage to any person or property in the leased premises, whether such property
belongs to Tenant or to any persons, firms, corporations or other entity caused
by any fire, installation or from water, rain or show that may leak into, issue
or flow from any part of said leased premises, or from the drains, pipes or
plumbing work of the said leased premises, or from any place or quarter and from
the use, misuse or abuse of any hoists, conveyors, hatches, openings, platforms,
stairways, machinery or equipment of any kind whatever which may exist at the
time of the date of this lease or thereafter be installed in or on the leased
premises, and from any and all kinds of injury and damage which may arise in or
upon the leased premises from any other cause, unless such damage, injury, use,
misuse or abuse shall have been caused by or result from the negligence of
Landlord, its agents, servants or employees during the continuance of this lease
by acts of commission or omission.
38th. It is hereby understood and agreed that in the event the Tenant leaves any
property on the leased premises subsequent to the expiration of the within lease
that said property is hereby deemed abandoned and the Landlord may dispose of
said property at its option without any liability on the part of the Landlord.
It is further understood and agreed that the Tenant waives any and all rights,
title and interest to said property, releases and waives any and all claims
thereto, and further agrees that the Tenant will be responsible to the Landlord
for any and all expenses incurred by the Landlord concerning said property.
39th. Whenever under the terms of this lease any sum of money is required to be
paid by Tenant in addition to the rental herein reserved, and said additional
amount so to be paid is not designated as "additional," or provision is not made
in the paragraph covering such payment for the collection of said amount as
"additional rental," then said amount shall nevertheless, at the option of
Landlord if not paid when due, be deemed "additional rental," and collectible as
such with any installment of rental thereafter falling due hereunder, but
nothing herein contained shall be deemed to suspend or delay the payment of any
sum at the time the same becomes due and payable hereunder or limit any other
remedy of Landlord.
40th. This lease contains the entire agreement between Landlord and Tenant and
shall not be modified in any manner except by an instrument in writing signed by
Landlord and Tenant.
POMS HOLDING CO., Landlord
By: /s/Raymond J. Smith
-------------------
Raymond J. Smith, President
LAKELAND INDUSTRIES, INC., Tenant
By:
<PAGE>
Exhibit 10(p)
This Agreement between
Harvey Pride Jr.
as Landlord
and Lakeland Industries, Inc., a Delaware corporation with offices at 711-2
Koehler Avenue, Ronkonkoma, N.Y. 11779
as Tenant
Witnesseth: The Landlord hereby leases to the Tenant the following premises: The
premises located at 201 Pride Lane, SW, Decatur, Alabama consisting of
approximately 24,000 square feet of office space. for the term of one (1) year,
renewable by Tenant for four (4) one year terms. to commence from the 1st day of
March, 1999 and to end on the 31st day of March, 2004 to be used and occupied
only for Office, light manufacturing and warehouse space upon the conditions and
covenants following:
1st. That the Tenant shall pay the annual rent of Eighteen Thousand and no/00
dollars ($18,000.00) said rent to be pain in equal monthly payments in advance
on the first day of each and every month during the term aforesaid, as follows:
Fifteen Hundred and no/00 ($1,500.00) dollars on March 1st, 1999 and monthly
thereafter non-structural
2nd. That the Tenant shall take good care of the premises and shall, at the
Tenant's own cost and expense make all/repairs including, but not limited to,
repairs of the plumbing, heating and electrical systems, and at the end or other
expiration of the term, shall deliver up the demised premises in good order or
condition, damages by the elements excepted.
3rd. That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules orders, regulations and requirements of the Federal, State and
Local Governments and of any and all their Departments and Bureaus applicable to
said premises, for the correction, prevention and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters, or any other similar
body, at the Tenant's own cost and expense.
4th. That the Tenant, successors, heirs, executors and administrators shall not
assign this agreement , or underlet or underlease the premises, or any part
thereof, or make any alterations on the premises, without the Landlord's consent
in writing; or occupy, or permit or suffer the same to be occupied for any
business or purpose deemed disreputable or extra-hazardous on account of fire,
under the penalty of damages and forfeiture, and in the event of a breach
thereof, the term herein shall immediately cease and determine at the option of
th Landlord as if it were the expiration of the original term.
5th. Tenant must give Landlord prompt notice of fire, accident, damage or
dangerous or defective condition. If the Premises can not be used because of
fire or other casualty, Tenant is not required to pay rent for the time the
Premises are unusable. If part of the Premises can not be used, Tenant must pay
rent for the usable part. Landlord shall have the right to decide which part of
the Premises is usable. Landlord need only repair the damaged structural parts
of the Premises. Landlord is not required to repair or replace any equipment ,
<PAGE>
fixtures, furnishings or decorations unless originally installed by Landlord.
Landlord is not responsible for delays due to settling insurance claims,
obtaining estimates, labor and supply problems or any other cause not fully
under Landlords control. If the fire or other casualty is caused by an act or
neglect of Tenant, Tenant's employees or invitees, or at the time of the fire or
casualty Tenant is in default in any term of this Lease, then all repairs will
be made at Tenant's expense and Tenant must pay the full rent with no
adjustment. The cost of the repairs will be added rent. Landlord has the right
to demolish or rebuild the Building if there is substantial damage by fire or
other casualty. Landlord may cancel this Lease within 30 days after the
substantial fire or casualty by giving Tenant notice of Landlord's intention to
demolish or rebuild. The Lease will end 30 days after Landlord's cancellation
notice to the Tenant. Tenant must deliver the Premises to the Landlord on or
before the cancellation date in the notice and pay all rent due to the date of
the fire or casualty. If the Lease is cancelled Landlord is not required to
repair the Premises or Building. The cancellation does not release Tenant of
liability in connection with the fire or casualty. This Section is intended to
replace the terms of New York Real Property Law Section 227.
6th. The said Tenant agrees that the said Landlord and the Landlord's agents and
other representatives shall have the right to enter into and upon said premises,
or any part thereof, at all reasonable hours for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof.
7th. The Tenant also agrees to permit the Landlord or the Landlord's agents to
show the premises to persons wishing to hire or purchase the same; and the
Tenant further agrees that on and after the sixth month, next preceding the
expiration of the term hereby granted, the Landlord or the Landlord's agents
shall have the right to place notices on the front of said premises, or any part
thereof, offering the premises "To Let" or "For Sale", and the Tenant hereby
agrees to permit the same to remain thereon without hindrance or molestation.
8th. That if the said premises, or any part thereof shall be deserted or become
vacant during said term, or if any default be made in the payment of the said
rent or any part thereof, or if any default be made in the performance of any of
the covenants herein contained, the Landlord or representatives may re-enter the
said premises by force, summary proceedings or otherwise, and remove all persons
therefrom, without being liable to prosecution therefor, and the Tenant hereby
expressly waives the service of any notice in writing of intention to re-enter,
and the Tenant shall pay at the same time as the rent becomes payable under the
terms hereof a sum equivalent to the rent reserved herein, and the Landlord may
tent the premises on behalf of the Tenant, reserving the right to rent the
premises for a longer period of time than fixed in the original lease without
releasing the original Tenant from any liability, applying any moneys collected,
first to the expense of resuming or obtaining possession, second to restoring
the premises to a rentable condition, and then to the payment of the rent and
all other charges due and to grow due to the Landlord, any surplus to be paid to
the Tenant, who shall remain liable for any deficiency.
9th. Landlord may replace, at the expense of Tenant, any and all broken glass in
and about demised premises. Landlord may insure, and keep insured, all plate
glass in the demised premises for and in the name of Landlord. Bills, for the
premiums therefor shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due for, and payable by Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rental.
Damage and injury to the said premises, caused by the carelessness, negligence
or improper conduct on the part of the said Tenant or the Tenant's agents or
employees shall be repaired as speedily as possible by the Tenant at the
Tenant's own cost and expense.
<PAGE>
10th. That the Tenant shall neither encumber nor obstruct the sidewalk in front
of, entrance to, or halls and stairs of said premises, nor allow the same to be
obstructed or encumbered in any manner.
11th. The Tenant shall neither place, or cause or allow to be placed, any sign
or signs of any kind whatsoever at, in or about the entrance to said premises or
any other part of same, except in or at such place or places as may be indicated
by the Landlord and consented to by the Landlord in writing. And in case the
Landlord or the Landlord's representatives shall deem it necessary to remove any
such sign or signs in order to paint the said premises or the building wherein
same is situated or make any other repairs , alterations or improvements in or
upon said premises or building or any part thereof, the Landlord shall have the
right to do so, providing the same be removed and replaced at the Landlord's
expense, whenever the said repairs, alterations or improvements shall be
completed.
12th. That the Landlord is exempt from any and all liability for any damage or
injury to person or property caused by or resulting from steam, electricity,
gas, water, rain, ice or snow, or any leak or flow from or into any part of said
building or from any damage or injury resulting or arising from any other cause
or happening whatsoever unless said damage or injury be caused by or be due to
the negligence of the Landlord.
13th. That if default be made in any of the covenants herein contained, then it
shall be lawful for the said Landlord to re-enter the said premises, and the
same to have again, re-possess and enjoy. The said Tenant hereby expressly
waives the service of any notice in writing of intention to re-enter.
14th. That this instrument shall not be a lien against said premises in respect
to any mortgages that are now on or that hereafter may be placed against said
premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this lease,
irrespective of the date of recording and the Tenant agrees to execute without
cost, any such instrument which may be deemed necessary or desirable to further
effect the subordination of this lease to any such mortgage or mortgages, and a
refusal to execute such instrument shall entitle the Landlord, or the Landlord's
assigns and legal representatives to the option of cancelling this lease without
incurring any expense or damage and the term hereby granted is expressly limited
accordingly.
15th. The Tenant has this day deposited with the Landlord the sum of $ -0- as
security for the full and faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part to be performed,
which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on Tenant's part to be
performed. In the event of a bona fide sale, subject to this lease, the Landlord
shall have the right to transfer the security to the vendee for the benefit of
the Tenant and the Landlord shall be considered released by the Tenant from all
liability for the return of such security; and the Tenant agrees to look to the
new Landlord solely for the return of the said security, and it is agreed that
this shall apply to every transfer or assignment made of the security to a new
Landlord.
16th. That the security deposited under this lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
<PAGE>
17th. It is expressly understood and agreed that in case the demised premises
shall be deserted or vacated, or if default be made in the payment of the rent
or any part thereof as herein specified, or if, without the consent of the
Landlord, the Tenant shall sell, assign, or mortgage this lease or if defaults
be made in the performance of any of the covenants and agreements in this lease
contained on the part of the Tenant to be kept and performed, or if the Tenant
shall fail to comply with any of the statutes, ordinances, rules, orders
regulations and requirements of the Federal, State and Local Governments or of
any and all their Departments and Bureaus, applicable to said premises, or if
the Tenant shall file or there be filed against Tenant a petition in bankruptcy
or arrangement, or Tenant be adjudicated a bankrupt or make an assignment for
the benefit of creditors or take advantage of any insolvency act, the Landlord
may, if the Landlord so elects, at any time thereafter terminate this lease and
the term hereof, on giving to the Tenant five days' notice in writing of the
Landlord's intention so to do, and this lease and the term hereof shall expire
and come to an end on the date fixed in such notice as if the said date were the
date originally fixed in this lease for the expiration hereof. Such notice may
be given by mail to the Tenant addressed to the demised premises.
18th. Tenant shall pay to the Landlord the rent or charge, which may, during the
demised term , be assessed or imposed for the water used or consumed in or on
the said premises, whether determined by meter or otherwise, as soon as and when
the same may be assessed or imposed, and will also pay the expenses for the
setting of a water meter in the said premises should the latter be required.
Tenant shall pay Tenant's proportionate part of the sewer rent or charge imposed
upon the building. All such rents or charges or expenses shall be paid as
additional rent and shall be added to the next month's rent thereafter to become
due.
19th. That the Tenant will not nor will the Tenant permit undertenants or other
person to do anything in said premises, or bring anything into said premises, or
permit anything to be brought into said premises or to be kept therein, which
will in any way increase the rate of fire insurance on said demised premises,
nor use the demised premises or any part thereof, nor suffer or permit their use
for any business or purpose which would cause an increase in the rate of fire
insurance on said building, and the Tenant agrees to pay on demand any such
increase.
20th. The failure of the Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that the Landlord may have, and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained. This instrument may not be charged, modified, discharged or
terminated orally.
21st. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim against
Landlord for the value of any unexpired term of said lease. No part of any award
shall belong to the Tenant.
22nd. If after default in payment of rent of violation or any other provision of
this lease, or upon the expiration of this lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of lease, or prior to the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
<PAGE>
23rd. In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay in
monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the Landlord during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected if any, shall become due and payable in monthly payments
during the remainder of the unexpired term, as the amounts of such difference or
deficiency shall from time to time be ascertained; and it is mutually agreed
between Landlord and Tenant that the respective parties hereto shall and hereby
do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other on any matters whatsoever arising out of
or in any way connected with this lease, the Tenant's use or occupancy of said
premises, and/or any claim of injury or damage.
24th. The Tenant waives all rights to redeem under any law.
25th. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of governmental preemption in connection with a National
Emergency or in connection with any rule, order or regulation of any department
or subdivision thereof of any governmental agency or by reason of the condition
of supply and demand which have been or are effected by war or other emergency.
26th. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its appliances, nor for any space
taken to comply with any law, ordinance or order of a governmental authority. In
respect to the various "services," if any, herein expressly or impliedly agreed
to be furnished by the Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of the rent, or any other compensation, for
interruption or curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or repairs desirable or
necessary to be made or to inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other cause, not gross
negligence on the part of the Landlord. No such interruption or curtailment of
such "service" shall be deemed a constructive eviction. The Landlord shall not
be required to furnish, and the Tenant shall not be entitled to receive, any of
such "services" during any period wherein the Tenant shall be in default in
respect to the payment of rent. Neither shall there be any abatement or
diminution of rent because of making of repairs, improvements or decorations to
the demised premises after the date above fixed for the commencement of the
term, it is being understood that rent shall, in any, commence to run as such
date so above fixed.
27th. Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy or because a prior Tenant or any other person is wrongfully
holding over or is in wrongful possession, or for any other reason. The rent
shall not commence until possession is given or is available, but the term
herein shall not be extended.
<PAGE>
Additional Provisions on Rider attached Herein.
And the said Landlord doth covenant that the Tenant on paying the said yearly
rent, and performing the covenants aforesaid, shall and may peacefully and
quietly have, hold and enjoy the said demised premises for the term aforesaid,
provided however, that this covenant shall be conditioned upon the retention of
title to the premises by the Landlord. And it is mutually understood and agreed
that the covenants and agreements contained in the within lease shall be binding
upon the parties hereto and upon their respect successors, heirs, executors and
administrators. In Witness Whereof, the parties have interchangeably set their
hands and seals (or caused these presents to be signed by their proper corporate
officers and caused their proper corporate seal to be hereto affixed) this day
of 1999 Poms holding Co., as Landlord
By:
Lakeland Industries, INc.
By: /s/Raymond J. Smith
--------------------
Raymond J. Smith, President
Signed, sealed and delivered in the presence of
State of New York,
County of
S.S.
On the day of 19 , before me personally came
to me known and known to me to be the individual described in, and who executed,
the foregoing instrument, and acknowledged to me that he executed the same.
State of New York,
County of
S.S.
On the day of 19 , before me personally came to me known, who, being by me duly
sworn, did depose and say that he resides at No. that he is the of
the corporation mentioned in, and which executed, the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the Board of said
corporation; and that he signed h name thereto by like order.
POMS HOLDING CO./
Landlord,
- -with-
LAKELAND INDUSTRIES, INC.,
Tenant.
<PAGE>
Lease
Dated, September, 1999
In Consideration of the letting of the premises within mentioned to the within
named Tenant and the sum of $1.00 paid to the undersigned by the within named
Landlord, the undersigned do hereby covenant and agree, to and with the Landlord
and the Landlord's legal representatives, that if default shall at any time be
made by the said Tenant in the payment of the rent and the performance of the
covenants contained in the within lease, on the Tenant's part to be paid and
performed, that the undersigned will well and truly pay the said rent, or any
arrears thereof, that may remain due unto the said Landlord, and also pay all
damages that may arise in consequences of the non-performance of said covenants,
or either of them, without requiring notice of any such default from the said
Landlord. The undersigned hereby waives all right to trial by jury in any action
or proceeding hereinafter instituted by the Landlord, to which the undersigned
may be a party.
In Witness Whereof, the undersigned has set hand and seal this day of , 19
WITNESS L.S.
RIDER TO LEASE
Dated: September 1, 1999
between
POMS HOLDING CO., as Landlord
and
LAKELAND INDUSTRIES, INC., as Tenant
28th. Wherever there is a conflict between the printed and typewritten portions
of this lease, the typewritten portions shall govern.
29th. Tenant, at its own expense, shall maintain plateglass and comprehensive
general public liability insurance protecting Landlord and Tenant and naming
Landlord as an additional insured with respect to personal injury or property
damage due to negligence occurring in or about the leased premises with minimum
limits of $300,000.00 for personal injury to any one person, and $500,000.00 for
personal injury to any number of persons arising out of one accident, and
$100,000.00 for property damage. Said insurance shall be taken out with a
company licensed to do business in the State of New York and the State of
Alabama and proof of such insurance shall be delivered to the Landlord upon the
commencement of this lease. Annual proof of payment shall thereafter be
submitted to the Landlord. The original policy, upon Landlord's request, shall
be exhibited to the Landlord by the Tenant within thirty (30) days after
commencement of the term of this agreement. Upon failure of the Tenant to so
deposit said policy, the Landlord shall have the privilege to procure said
insurance on his own application therefor, and the amount of the premium, if
paid by the Landlord, shall be due and payable with the rent reserved hereunder,
collectible with the same remedies as if originally reserved as rent hereunder.
30th. Notwithstanding anything else contained in this lease, it is understood
and agreed that the Tenant shall provide his own heat and pay his own
electricity bills. All of the utilities shall be supplied by the Tenant at his
own cost and expense.
<PAGE>
31st. Notwithstanding anything else contained in this lease, upon the expiration
of same for amy reason whatsoever, Tenant covenants and agrees that the premises
will be redelivered to the Landlord broom clean.
32nd. The Tenant shall make no physical improvements, changes, modifications,
alterations or additions to the leased premises without the written consent of
the Landlord. All alterations, repairs, improvements, extensions or additions
which may be made to the demised premises by the Tenant shall immediately become
the property of the Landlord and become a part of the demised premises
hereunder, excepting, however, removable trade fixtures. It is, however, agreed
that when trade fixtures are removed, the demised premises are to be placed, at
the Tenant's expense, in their original condition.
33rd. The Tenant shall pay as additional rent during the term hereof without any
set off or deduction whatsoever, all taxes on the entire building of which the
leased premises are a part, including, but not limited to, ad valorem taxes,
real estate taxes and water charges. Such payment shall be hade within thirty
(30) days of the demand therefor by the Landlord and receipted tax bills shall
be sufficient evidence of the amount of such taxes.
34th. Tenant shall pay as additional rent during the term hereof without any set
off or deduction whatsoever, all fire insurance premiums on the entire building
of which the leased premises are a part within thirty (30) days of the date of
receipt by Tenant from Landlord of a bill therefor.
35th. Tenant shall have the right to sublet all or any portion of the demised
premises provided the following conditions are complied with:
(a) At the time of such subletting, this lease must be in full force
and effect without any breach or default thereunder on the part of the Tenant.
(b) A copy of sublease shall be mailed to Landlord within ten (10) days
from the effective date of such subletting.
(c) Such subletting shall be upon and subject to all the provisions,
terms, covenants and conditions of this lease and Tenant shall continue to be
and remain liable hereunder.
(d) Notwithstanding the foregoing, if the Tenant proposes to sublet all
or substantially all of the demised premises, Tenant shall so notify the
Landlord and Landlord shall have the option to cancel and terminate this lease
as of the date proposed by Tenant for such subletting, which options shall be
exercisable within fifteen (5) days after receipt of such notice by Landlord of
the proposed subletting.
(e) Tenant shall not assign this lease without the consent of Landlord
first hand received, which consent Landlord agrees not to unreasonably withhold
or delay; provided, however, that Tenant shall have the right, without the
consent of Landlord, to assign this lease to (i) a subsidiary or affiliated
corporation, either of which may have a normal capital; (ii) any corporation
resulting from a reorganization of Tenant or its parent company with any one or
more corporations; (iii) any corporation resulting from the consolidation of
Tenant with or into any one or more corporations.
<PAGE>
36th. Throughout the term of this lease, Tenant shall indemnify Landlord and
save it harmless against and from any and all liability, losses, damages, costs,
expenses and claims by or on behalf of any person, firm, corporation,
governmental authority or other entity incurred by Landlord with respect to the
leased premises, including, without limitation, burdens resulting from any and
all acts of commission or omission on the part of Tenant or of anyone holding
by, through or under Tenant, and any and all of its agents, servants, employees,
invitees and contractors, and against and from any injury or damage to any
person, or to any property of any person, except as a result of Landlord's own
acts of commission or omission.
37th. Tenant shall be responsible for, and hereby relieves and shall save
landlord harmless of and from any and all liability by reason of any injury or
damage to any person or property in the leased premises, whether such property
belongs to Tenant or to any persons, firms, corporations or other entity caused
by any fire, installation or from water, rain or show that may leak into, issue
or flow from any part of said leased premises, or from the drains, pipes or
plumbing work of the said leased premises, or from any place or quarter and from
the use, misuse or abuse of any hoists, conveyors, hatches, openings, platforms,
stairways, machinery or equipment of any kind whatever which may exist at the
time of the date of this lease or thereafter be installed in or on the leased
premises, and from any and all kinds of injury and damage which may arise in or
upon the leased premises from any other cause, unless such damage, injury, use,
misuse or abuse shall have been caused by or result from the negligence of
Landlord, its agents, servants or employees during the continuance of this lease
by acts of commission or omission.
38th. It is hereby understood and agreed that in the event the Tenant leaves any
property on the leased premises subsequent to the expiration of the within lease
that said property is hereby deemed abandoned and the Landlord may dispose of
said property at its option without any liability on the part of the Landlord.
It is further understood and agreed that the Tenant waives any and all rights,
title and interest to said property, releases and waives any and all claims
thereto, and further agrees that the Tenant will be responsible to the Landlord
for any and all expenses incurred by the Landlord concerning said property.
39th. Whenever under the terms of this lease any sum of money is required to be
paid by Tenant in addition to the rental herein reserved, and said additional
amount so to be paid is not designated as "additional," or provision is not made
in the paragraph covering such payment for the collection of said amount as
"additional rental," then said amount shall nevertheless, at the option of
Landlord if not paid when due, be deemed "additional rental," and collectible as
such with any installment of rental thereafter falling due hereunder, but
nothing herein contained shall be deemed to suspend or delay the payment of any
sum at the time the same becomes due and payable hereunder or limit any other
remedy of Landlord.
40th. This lease contains the entire agreement between Landlord and Tenant and
shall not be modified in any manner except by an instrument in writing signed by
Landlord and Tenant.
POMS HOLDING CO., Landlord
By:
LAKELAND INDUSTRIES, INC., Tenant
By:
EXHIBIT 11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 14, 2000, accompanying the consolidated
financial statements and schedule included in the Annual Report of Lakeland
Industries, Inc. and Subsidiaries on Form 10-K for the fiscal year ended January
31, 2000. We hereby consent to the incorporation by reference of said report in
the Registration Statement of Lakeland Industries, Inc. and Subsidiaries on Form
S-8 (File No. 33-92564, effective May 15, 1995).
/s/ GRANT THORNTON LLP
- ----------------------
GRANT THORNTON LLP
Melville, New York
April 14, 2000
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(In thousands, except per share and share amounts)
For the Years Ended January 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $58,644 $54,655 $47,263 $41,792 $40,189
Gross profit 10,488 10,374 9,195 7,237 6,288
Operating expenses 7,191 6,451 6,157 5,212 4,882
Operating profit 3,297 3,923 3,038 2,024 1,406
Income before income taxes 2,509 3,222 2,590 1,576 956
Net income 1,748 2,080 1,600 1,063 587
Earnings per share - Basic (1) $.66 $.79 $.63 $.42 $.23
==== ==== ==== ==== ====
Earnings per share - Diluted (1) $.65 $.77 $.61 $.41 $.22
==== ==== ==== ==== ====
Weighted average common shares
outstanding:
Basic 2,653,950 2,642,170 2,558,541 2,550,000 2,550,000
Diluted 2,673,449 2,690,920 2,627,425 2,609,700 2,635,506
BALANCE SHEET DATA (at end of year):
Working capital $15,859 $12,403 $18,903 $14,018 $13,618
Total assets 34,770 27,160 25,812 18,573 19,263
Current liabilities 16,601 12,915 5,007 2,920 3,894
Long-term liabilities 2,709 465 9,217 5,746 6,492
Stockholders' equity $15,405 $13,725 $11,518 $9,825 $8,762
</TABLE>
- --------------------------------------------------------------------------------
(1) Earnings per share has been restated in accordance with SFAS No. 128,
"Earnings Per Share".
1
<PAGE>
CAUTIONARY STATEMENTS
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are all statements other
than statements of historical fact included in this report, including,
without limitation, the statements under the headings "Business,"
"Properties," "Market for Registrant's Common Stock and Related Stockholder
Matters," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding the Company's financial position and
liquidity, the Company's strategic alternatives, future capital needs,
development and capital expenditures (including the amount and nature
thereof), future net revenues, business strategies, and other plans and
objectives of management of the Company for future operations and
activities.
Forward-looking statements are based on certain assumptions and
analyses made by the Company in light of its experience and its perception
of historical trends, current conditions, expected future developments and
other factors it believes are appropriate under the circumstances. These
statements are subject to a number of assumptions, risks and uncertainties,
and factors in the Company's other filings with the Securities and Exchange
Commission (the "Commission"), general economic and business conditions,
the business opportunities that may be presented to and pursued by the
Company, changes in law or regulations and other factors, many of which are
beyond the control of the Company. Readers are cautioned that these
statements are not guarantees of future performance, and that actual
results or developments may differ materially from those projected in the
forward-looking statements. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these cautionary statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations may include forward-looking statements
with respect to the Company's future financial performance. These
forward-looking statements are subject to various risks and uncertainties,
including the factors described elsewhere in this Report, that could cause
actual results to differ materially from historical results or those
currently anticipated.
Overview
The Company derives the majority of its revenues from the sale of its
Tyvek disposable limited/use garments and secondarily from the sales of its
cut and heat resistant gloves, woven reusable garments, heat and fire
protective clothing, and chemical suits all to safety and mill supply
distributors.
The Company generally recognizes revenues when it ships its product to
its customers. Cost of goods sold includes all direct costs to manufacture
the finished product, plus related costs associated with inland or ocean
freight on incoming raw materials, customs duty and warehousing, and
manufacturing overhead expenses. Selling expenses include all salaries for
sales and marketing staffs together with other related expenses such as
sales commissions, travel costs, trade shows, advertising and delivery
expenses. General and administrative expenses include salaries for
executives and administrative and MIS staff, together with related expenses
such as travel costs, non-manufacturing facilities costs and consulting and
professional fees.
2
<PAGE>
Result of Operations
The following table sets forth items in the Company's consolidated
statement of operations as a percentage of revenues for the periods
indicated.
Years Ended January 31,
2000 1999 1998
---- ---- ----
Revenues 100.0% 100.0% 100.0%
Cost of Goods Sold 82.1 81.0 80.4
Selling, general and administrative expenses 12.3 11.8 13.0
Depreciation and amortization expense 1.0 1.0 .9
Operating profit 5.6 7.2 6.4
Interest expense, net 1.4 1.3 1.0
Income tax expense 1.3 2.1 2.1
Net income 3.0 3.8 3.4
EBITDA margin (1) 6.7 8.2 7.4
----------------------
(1) EBITDA (earnings before interest, taxes, depreciation and amortization)
margin represents EBITDA expressed as a percentage of revenues.
Fiscal Year Ended January 31, 2000 Compared to Fiscal Year Ended January 31,
1999
Net Sales. Net sales for the year ended January 31, 2000 increased
$3,989,000 or 7.3% to $58,644,000 from $54,655,000 for the year ended January
31, 1999. The increase in sales was principally attributable to the Company's
ability to increase its production capacity and maintain higher inventory
levels.
Gross Profit. Gross profit for the year ended January 31, 2000 increased by
$114,000, or 1.1% to $10,488,000, or 18% of net sales, from $10,374,000, or 19%
of net sales, for the year ended January 31, 1999. Gross profit was relatively
consistent between years as a result of global manufacturing efficiencies,
however, the current year was negatively affected by relocation and expansion
which temporarily decreased these efficiencies. This industry is highly
competitive and margins (historically and) in the current year were vulnerable
to erosion resulting from new competition reduced selling prices.
Operating Expenses. Operating expenses for the year ended January 31, 2000
increased by $740,000 or 11.5%, to $7,191,000, or 12.3% of net sales, from
$6,451,000, or 11.8% of net sales, for the year ended January 31, 1999.
Operating expenses as a percentage of net sales increased to 12.3%, from 11.8%
as a result of increased sales volume. The increase in operating expenses was
mainly attributable to greater payroll expenses, increased sales commissions and
increased freight out, and the addition of in-house regional sales managers.
Interest Expense. Interest expense for the year ended January 31, 2000
increased by $47,619, or 6.2% to $821,333 from $773,714 for the year ended
January 31, 1999. The increase in interest expense was mainly due to higher
interest costs reflecting an increase in average borrowings under the Company's
credit facility and increasing interest rates.
Income Tax Expense. The effective tax rate of 30.8% deviates from the
Federal statutory rate of 34%, mainly attributable to foreign income generating
no current taxes or foreign jurisdiction with lower tax rates and the effect of
state income taxes.
<PAGE>
Net Income. As a result of the foregoing, net income for the year ended
January 31, 2000 decreased by $332,000 or 16%, to net income of $1,748,000 from
net income of $2,080,000 for the year ended January 31, 1999.
Fiscal Year Ended January 31, 1999 Compared to Fiscal Year Ended January
31, 1998.
Net Sales. Net sales for the year ended January 31, 1999 increased
$7,392,000 or 15.6% to $54,655,000 from $47,263,000 for the year ended January
31, 1998. The increase in sales was principally attributable to the Company's
ability to increase its production capacity and maintain higher inventory levels
and the institution of a price increase on its Tyvek(TM) lines on March 1, 1998.
3
<PAGE>
Gross Profit. Gross profit for the year ended January 31, 1999 increased by
$1,179,000, or 12.8% to $10,374,000, or 19% of net sales, from $9,195,000, or
19.5% of net sales, for the year ended January 31, 1998. Gross profit was
consistent between years as a result of global manufacturing efficiencies which
were offset by certain expense reclassifications.
Operating Expenses. Operating expenses for the year ended January 31, 1999
increased by $294,000 or 4.8%, to $6,451,000, or 11.8% of net sales, from
$6,157,000, or 13% of net sales, for the year ended January 31, 1998. Operating
expenses as a percentage of net sales decreased to 11.8%, from 13% as a result
of increased sales volume and the reclassification of certain expenses described
above. The increase in operating expenses was mainly attributable to greater
payroll expenses, increased sales commissions and increased freight out.
Interest Expense. Interest expense for the year ended January 31, 1999
increased by $275,975, or 55.4% to $773,714 from $497,739 for the year ended
January 31, 1998. The increase in interest expense was mainly due to higher
interest costs reflecting an increase in average borrowings under the Company's
credit facility.
Income Tax Expense. The effective tax rate of 35.4% deviates from the
Federal statutory rate of 34%, mainly attributable to state income taxes.
Net Income. As a result of the foregoing, net income for the year ended
January 31, 1999 increased by $480,000 or 30%, to net income of $2,080,000 from
net income of $1,600,000 for the year ended January 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources. The Company's working capital is equal to
$15,859,000 at January 31, 2000. The Company's primary sources of funds for
conducting its business activities have been from cash flow provided by
operations and borrowings under its credit facilities. The Company requires
liquidity and working capital primarily to fund increases in inventories and
accounts receivable associated with sales growth and, to a lesser extent, for
capital expenditures.
Net cash used in operating activities was $2,858,000 for the year ended
January 31, 2000 and was due primarily to the increase in inventories of
$6,356,000, and accounts receivable of $1,636,000, offset by the increase in
accounts payable and net income from operations of $1,748,000.
Net cash provided by financing activities of $3,122,000 was primarily
attributable to net borrowings of $3,242,000 during the year in connection with
the term loan and revolving credit facility.
The revolving credit facility permits the Company to borrow up to a maximum
of $13 million. The revolving credit agreement expires on November 30, 2000 and
has therefore been classified as a short-term liability in the accompanying
balance sheet at January 31, 2000. Borrowings under the revolving credit
facility amounted to approximately $11,070,000 at January 31, 2000. The five
year $3 million term-loan agreement entered into in November 1999, expires on
October 31, 2004.
The Company believes that cash flow from operations and the revolving
credit facility (upon renewal) will be sufficient to meet its currently
anticipated operating, capital expenditures and debt service requirements for at
least the next 12 months.
Foreign Currency Activity
The Company's foreign exchange exposure is principally limited to the
relationship of the U.S. Dollar to the Canadian Dollar.
Year 2000 Compliance
The Company did not experience any difficulties with its' computer
systems on January 31, 2000 or subsequently.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is exposed to market risk, including changes in interest rates
and currency exchange rates. To manage the volatility relating to these
exposures, the Company seeks to limit, to the extent possible its non-U.S.
dollar denominated purchases and sales. Foreign exchange risk occurs principally
only with regard to Canadian subsidiary sales.
4
<PAGE>
Foreign Exchange Risk Management
As a multinational corporation, the Company is exposed to changes in
foreign exchange rates. As the Company's non- denominated U.S. dollar
international sales grow, exposure to volatility in exchange rates could have an
adverse impact on the Company's financial results. The Company's risk from
exchange rate changes is presently related to non-dollar denominated sales in
Canada.
Interest Rate Risk
The Company is exposed to interest rate change market risk with respect to
its term loan and revolving credit facility with a financial institution which
is priced based upon LIBOR or 30 day commercial paper interest rates. At January
31, 2000, $13,970,000 was outstanding under the term-loan and revolving credit
facilities. Changes in the above described interest rates during fiscal 2000
will have a positive or negative effect on the Company's interest expense. Each
1% fluctuation in one or both of the above rates will increase or decrease
interest expense for the Company by approximately $140,000. In addition, the
Company had $90,000 USD on deposit in a Chinese financial institution earning
interest at the rate of 4.3% and a $47,000 Money Market account in a Canadian
financial institution earning interest at the rate of 4.7%. Each 1% fluctuation
in interest rates earned would not increase or decrease interest income on these
deposits by a significant amount.
MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
The Common Stock is listed on the Nasdaq National Market under the symbol
"LAKE". The following table sets forth for the periods indicated the high and
low sales prices for the Common Stock as reported by the Nasdaq National Market.
The Company has a January 31, fiscal year end.
Price Range
of Common Stock
High Low
Fiscal 2000
First Quarter ended April 30, 1999......................$6 3/4 $4
Second Quarter ended July 31, 1999..................... 6 3/4 4 3/4
Third Quarter ended October 31, 1999.................... 7 3/8 2 7/8
Fourth Quarter ended January 31, 2000................... 4 3/4 2 15/16
First Quarter Fiscal 2001 (through April 20, 2000)...... 4 3/4 3 13/16
Fiscal 1999
First Quarter ended April 30, 1998......................$10 1/2 $7 3/4
Second Quarter ended July 31, 1998...................... 11 3/8 9
Third Quarter ended Oct. 31, 1998....................... 9 7/8 5 7/8
Fourth Quarter ended January 31, 1999................... 8 5 7/8
As of April 17, 2000, there were approximately 106 record holders of shares
of Common Stock. There are believed to be in excess of 500 beneficial
shareholders in addition to those of record, since over 1.0 million shares are
held in "street" name by Cede & Co., a large financial clearing house.
The Company has never paid cash dividends on its common stock and does not
expect to pay such dividends in the foreseeable future. The Company currently
intends to retain any future earnings, for the operation and expansion of its
business. The payment and rate of future dividends, if any, are subject to the
discretion of the Board of Directors of the Company and will depend upon the
Company's earnings, financial condition, capital requirements, contractual
restrictions under its agreement with its institutional lender and other
factors.
5
<PAGE>
CORPORATE INFORMATION
- ----------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Directors: Officers: Counsel:
Raymond J. Smith, Chairman Raymond J. Smith, President Law Offices of Thomas J. Smith
Christopher J. Ryan Christopher J. Ryan 14 Briarwood Lane
John J. Collins, Jr. Executive Vice President of Suffern, NY 10901-3602
Eric O. Hallman Finance and Secretary
Walter J. Raleigh James M. McCormick
. Vice President and Treasurer Transfer Agent:
Harvey Pride, Jr.
Market Makers: Vice President, Manufacturing Registrar and Transfer Company
10 Commerce Drive
Neuberger & Berman Cranford, NJ 07016
Herzog, Heine, Geduld, Inc. Auditors: NASDAQ symbol: LAKE
Donald & Co.
Knight Securities Grant Thornton LLP Executive Offices:
INCA Suite 3S01
USLD One Huntington Quadrangle 711-2 Koehler Ave.
ISLD Melville, NY 11747-4464 Ronkonkoma, NY 11779
STRK (516) 981-9700
.
Subsidiaries:
Lakeland Protective Wear, Inc.
Lakeland de Mexico S.A. de C.V.
Laidlaw, Adams & Peck, Inc.
Weifang Lakeland Safety Products,
Co. Ltd.
</TABLE>
Exhibits to Lakeland Industries, Inc.'s fiscal 2000 Form 10 - K are
available to shareholders for a fee equal to Lakeland's cost in furnishing such
exhibits, on written request to the Secretary, Lakeland Industries, Inc., 711-2
Koehler Avenue, Ronkonkoma, New York 11779.
Thermbar(TM), Kut Buster(TM), Grapolator Mock Twist (TM), Safeguard
"76"(TM), Zone Guard(TM), RyTex(TM), TomTex(TM), DextraGard (TM), Forcefield
(TM), Interceptor (TM), Checkmate (TM), Heatex (TM), Pyrolon (TM), Sterling
Heights (TM), Fyrepel (TM), Highland (TM), Chemland (TM) and Uniland (TM) are
trademarks of Lakeland Industries, Inc. Tyvek (TM), Viton (TM), Barricade (TM),
Nomex (TM), Kevlar (TM), Delrin (TM), TyChem (TM) and Teflon (TM) are registered
trademarks of E.I.DuPont de Nemours and Company. Saranex (TM) is a registered
trademark of Dow Chemical. Spectra (TM) is a registered trademark of Allied
Signal, Inc.
6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Lakeland Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Lakeland
Industries, Inc. and Subsidiaries (the "Company") as of January 31, 2000 and
1999, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended January 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of January 31, 2000 and 1999, and the consolidated results of their
operations and their consolidated cash flows for each of the three years in the
period ended January 31, 2000, in conformity with accounting principles
generally accepted in the United States.
We have also audited Schedule II - Valuation and Qualifying Accounts for each of
the three years in the period ended January 31, 2000. In our opinion, this
schedule presents fairly, in all material respects, the information required to
be set forth therein.
/s/ GRANT THORNTON LLP
- ----------------------
GRANT THORNTON LLP
Melville, New York
April 14, 2000
7
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
January 31,
<TABLE>
<CAPTION>
ASSETS 2000 1999
------------ --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 650,541 $ 1,436,083
Accounts receivable, net of allowance for doubtful accounts of
$200,000 at January 31, 2000 and 1999, respectively 8,379,477 6,743,341
Inventories 22,467,395 16,110,910
Deferred income taxes 661,000 567,000
Other current assets 301,698 461,231
------------ ------------
Total current assets 32,460,111 25,318,565
PROPERTY AND EQUIPMENT, net 1,851,964 1,326,261
Excess of cost over fair value of net assets
acquired, net of accumulated amortization of $256,000
and $236,000 at January 31, 2000 and 1999, respectively 288,810 308,798
OTHER ASSETS 169,365 206,847
------------ ------------
$34,770,250 $27,160,471
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,242,874 $ 1,455,190
Accrued compensation and benefits 502,785 429,874
Other accrued expenses 135,883 252,274
Current portion of long-term liabilities 11,719,681 10,777,863
---------- ----------
Total current liabilities 16,601,223 12,915,201
LONG-TERM LIABILITIES 2,708,643 464,762
DEFERRED INCOME TAXES 55,000 56,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
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; 2,644,000 and
2,660,500 shares issued and
outstanding at January 31, 2000 and 1999, respectively 26,440 26,605
Additional paid-in capital 6,132,491 6,199,656
Retained earnings 9,246,453 7,498,247
----------- -----------
15,405,384 13,724,508
---------- ----------
$34,770,250 $27,160,471
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Fiscal year ended January 31,
<TABLE>
<CAPTION>
2000 1999 1998
------------ ------------ -------
<S> <C> <C> <C>
Net sales $58,644,181 $54,655,135 $47,262,519
Cost of goods sold 48,155,753 44,281,126 38,067,351
---------- ---------- ----------
Gross profit 10,488,428 10,374,009 9,195,168
---------- ---------- -----------
Operating expenses
Selling and shipping 4,177,171 3,334,609 3,001,500
General and administrative 3,013,780 3,116,745 3,155,605
----------- ----------- -----------
Total operating expenses 7,190,951 6,451,354 6,157,105
----------- ----------- -----------
Operating profit 3,297,477 3,922,655 3,038,063
----------- ----------- -----------
Other (expense) income
Interest expense (821,333) (773,714) (497,739)
Interest income 25,716 46,176 35,371
Other income - net 7,346 26,968 14,179
-------------- ------------- -------------
Total other expense (788,271) (700,570) (448,189)
------------- ------------ ------------
Income before income taxes 2,509,206 3,222,085 2,589,874
Income tax expense (761,000) (1,142,000) (990,000)
------------- ----------- ------------
NET INCOME $ 1,748,206 $ 2,080,085 $ 1,599,874
=========== =========== ===========
Net income per common share
Basic .66 $.79 $.63
=== === ===
Diluted .65 $.77 $.61
=== === ===
Weighted average common shares outstanding
Basic 2,653,950 2,642,170 2,558,541
=========== =========== ===========
Diluted 2,673,449 2,690,920 2,627,425
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Fiscal years ended January 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
Common stock Additional
------------------------ paid-in Retained
Shares Amount capital earnings Total
---------- ------ -------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1997 2,550,000 $25,500 $5,981,226 $3,818,288 $9,825,014
Net income 1,599,874 1,599,874
Exercise of stock options 60,472 605 92,132 92,737
----------- -------- ---------- --------------- ------------
Balance, January 31, 1998 2,610,472 $26,105 $6,073,358 $5,418,162 $11,517,625
Net income 2,080,085 2,080,085
Exercise of stock options 50,028 500 126,298 126,798
----------- -------- ---------- --------------- ------------
Balance, January 31, 1999 2,660,500 26,605 6,199,656 7,498,247 13,724,508
Net income 1,748,206 1,748,206
Purchase and retirement of common stock (16,500) (165) (67,165) (67,330)
----------- -------- ----------- --------------- -------------
Balance, January 31, 2000 2,644,000 $26,440 $6,132,491 $9,246,453 $15,405,384
========= ====== ========= ========= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
10
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal year ended January 31,
<TABLE>
<CAPTION>
2000 1999 1998
------------ ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 1,748,206 $ 2,080,085 $ 1,599,874
Adjustments to reconcile net income to net cash
used in operating activities
Deferred income taxes (95,000) (71,000) (53,000)
Depreciation and amortization 598,095 534,673 435,849
(Increase) decrease in operating assets
Accounts receivable (1,636,136) 210,197 (1,059,944)
Inventories (6,356,485) (252,858) (5,963,896)
Other current assets 159,533 (236,785) (54,602)
Other assets (20,823) (18,808) 23,688
Increase (decrease) in operating liabilities
Accounts payable 2,787,684 (2,839,051) 1,759,242
Accrued expenses and other liabilities (43,480) 84,143 355,463
------------- ------------ -----------
Net cash used in operating activities (2,858,406) (509,404) (2,957,326)
----------- ----------- ----------
Cash flows from investing activities
Purchases of property and equipment - net (1,049,124) (388,393) (803,487)
Principal payments on note receivable 140,251 7,104
----------------- ----------- -------------
Net cash used in investing activities (1,049,124) (248,142) (796,383)
----------- ----------- -----------
Cash flows from financing activities
Net borrowings under credit agreements 3,241,818 1,911,631 3,416,232
Proceeds from exercise of stock options 126,798 92,737
Purchase and retirement of common stock (67,330)
Deferred financing costs (52,500) (67,500) (37,500)
------------- ------------ ------------
Net cash provided by financing activities 3,121,988 1,970,929 3,471,469
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (785,542) 1,213,383 (282,240)
Cash and cash equivalents at beginning of year 1,436,083 222,700 504,940
---------- ----------- -----------
Cash and cash equivalents at end of year $ 650,541 $ 1,436,083 $ 222,700
============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
11
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2000, 1999 and 1998
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
1. Business
Lakeland Industries, Inc. and Subsidiaries (the "Company"), a Delaware
corporation, organized in April 1982, is engaged primarily in the
manufacture of personal safety protective work clothing. The principal
market for the Company's products is in the United States. No customer
accounted for more than 10% of net sales during the fiscal years ended
January 31, 2000, 1999 and 1998.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries, Laidlaw, Adams &
Peck, Inc. and Subsidiary (formerly Fireland Industries, Inc.),
Lakeland Protective Wear, Inc. (a Canadian corporation), Weifang
Lakeland Safety Products Co. Ltd. (a Chinese Corporation) and Lakeland
de Mexico S.A. de C.V. (a Mexican corporation). All significant
intercompany accounts and transactions have been eliminated.
3. Inventories
Inventories are stated at the lower of cost or market. Cost is
determined on the first-in, first-out method.
4. Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are provided for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service lives,
on a straight-line basis. Leasehold improvements and leasehold costs
are amortized over the term of the lease or service lives of the
improvements, whichever is shorter. The costs of additions and
improvements which substantially extend the useful life of a particular
asset are capitalized. Repair and maintenance costs are charged to
expense.
5. Excess of Cost Over the Fair Value of Net Assets Acquired
The excess of cost over the fair value of net assets acquired
(goodwill) is amortized on a straight-line basis over a 30-year period.
On an ongoing basis, management reviews the valuation and amortization
of goodwill to determine possible impairment by considering current
operating results and comparing the carrying value to the anticipated
undiscounted future cash flows of the related assets.
6. Income Taxes
Deferred income taxes are recognized for temporary differences between
financial statement and income tax bases of assets and liabilities and
loss carryforwards and tax credit carryforwards for which income tax
benefits are expected to be realized in future years. A valuation
allowance would be established to reduce deferred tax assets if it is
more likely than not that all, or some portion of, such deferred tax
assets will not be realized. The effect on deferred taxes of a change
in tax rates is recognized in income in the period that includes the
enactment date.
12
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE A (continued)
7. Earnings Per Share
Basic earnings per share are based on the weighted average number of
common shares outstanding without consideration of potential common
shares. Diluted earnings per share are based on the weighted average
number of common and potential common shares outstanding. The potential
common shares for the years ended January 31, 2000, 1999 and 1998 were
19,499, 48,750 and 68,884, respectively, representing the dilutive
effect of stock options. The diluted earnings per share calculation
takes into account the shares that may be issued upon exercise of stock
options, reduced by the shares that may be repurchased with the funds
received from the exercise, based on the average price during the
fiscal year.
8. Statement of Cash Flows
The Company considers highly liquid temporary cash investments with an
original maturity of three months or less to be cash equivalents. Cash
equivalents consist of money market funds. The market value of the cash
equivalents approximates cost. Foreign dominated cash and cash
equivalents were $476,000 and $1,253,000 at January 31, 2000 and 1999,
respectively.
Supplemental cash flow information for the fiscal years ended January
31, is as follows:
2000 1999 1998
------- ------- ------
Interest paid $783,664 $ 771,294 $446,550
Income taxes paid 693,456 1,387,778 825,648
9. Concentration of Credit Risk
Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of trade receivables.
Concentration of credit risk with respect to these receivables is
generally diversified due to the large number of entities comprising
the Company's customer base and their dispersion across geographic
areas principally within the United States. The Company routinely
addresses the financial strength of its customers and, as a
consequence, believes that its receivable credit risk exposure is
limited.
10. Foreign Operations and Foreign Currency Translation
The Company maintains manufacturing operations and uses independent
contractors in Mexico and the People's Republic of China. It also
maintains a sales and distribution entity located in Canada. The
Company is vulnerable to currency risks in these countries.
<PAGE>
The monetary assets and liabilities of the Company's foreign operations
are translated into U.S. dollars at current exchange rates, while
nonmonetary items are translated at historical rates. Revenues and
expenses are generally translated at average exchange rates for the
year. Transaction gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the
functional currency are included in the results of operations as
incurred.
13
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE A (continued)
11. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
year-end and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
significant estimates include the allowance for doubtful accounts and
inventory reserves. It is reasonably possible that events could occur
during the upcoming year that could change such estimates.
NOTE B - INVENTORIES
Inventories consist of the following at January 31:
2000 1999
------------ ------------
Raw materials $ 3,180,556 $ 2,461,225
Work-in-process 5,538,608 3,618,901
Finished goods 13,748,231 10,030,784
---------- ----------
$22,467,395 $16,110,910
========== ==========
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at January 31:
<TABLE>
<CAPTION>
Useful life
in years 2000 1999
----------- ----------- ----------
<S> <C> <C> <C>
Machinery and equipment 3 - 10 $3,993,315 $3,432,145
Furniture and fixtures 3 - 10 255,790 249,423
Leasehold improvements Lease term 666,692 263,269
---------- ----------
4,915,797 3,944,837
Less accumulated depreciation and amortization 3,063,833 2,618,576
--------- ---------
$1,851,964 $1,326,261
========== =========
</TABLE>
14
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's principal financial instrument consists of its outstanding
revolving credit facility and term loan. The Company believes that the
carrying amount of such debt approximates the fair value as the variable
interest rates approximate the current prevailing interest rate.
NOTE E - LONG-TERM LIABILITIES
Long-term liabilities consist of the following at January 31:
2000 1999
----------- -----------
Revolving credit facility $11,069,681 $10,727,863
Term loan 2,900,000
Pension liability (Note H) 458,643 514,762
------------ ------------
14,428,324 11,242,625
Less current portion 11,719,681 10,777,863
---------- ----------
Long-term liabilities $ 2,708,643 $ 464,762
=========== ============
During 1997, the Company entered into a $10,000,000 secured revolving
credit facility (the "credit facility") with a financial institution with
an initial expiration date of November 30, 1999. On May 1, 1998, the credit
facility was increased to $13,000,000. Effective September 23, 1998, the
credit facility was amended to provide for a temporary increase to
$16,000,000 through August 31, 1999. Amounts outstanding under the
$3,000,000 temporary credit facility were repaid on August 31, 1999. In
November 1999, the $13,000,000 credit facility was renewed for one year,
and a $3,000,000, five-year term loan (the "term loan") was entered into,
which replaced the repaid temporary credit facility. Borrowings under the
credit facility bear interest at a rate per annum equal to the one-month
LIBOR or the 30-day commercial paper rate, as defined, plus 1.75%, with
interest payable monthly. At January 31, 2000, interest on outstanding
credit facility borrowings was based on the commercial paper rate option
(7.47% at January 31, 2000). The term loan is payable in monthly
installments of $50,000 plus interest payable at the 30-day commercial
paper rate plus 2.45% (8.03% at January 31, 2000). The credit facility and
term loan are collateralized by substantially all the assets of the Company
and guaranteed by certain of the Company's subsidiaries. The credit
facility and term loan require the Company to maintain a minimum tangible
net worth, at all times.
The maximum amounts borrowed under the credit facility during the fiscal
years ended January 31, 2000 and 1999 were $12,900,000 and $12,800,000,
respectively, and the average interest rates during the periods were 7.3%
and 7.1%, respectively.
15
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE F - STOCKHOLDERS' EQUITY AND STOCK OPTIONS
The Nonemployee Directors' Option Plan (the "Directors' Plan") provides for
an automatic one-time grant of options to purchase 5,000 shares of common
stock to each nonemployee director elected or appointed to the Board of
Directors. Under the Directors' Plan, 60,000 shares of common stock have
been authorized for issuance. Options are granted at not less than fair
market value, become exercisable commencing six months from the date of
grant and expire six years from the date of grant. In addition, all
nonemployee directors re-elected to the Company's Board of Directors at any
annual meeting of the stockholders will automatically be granted additional
options to purchase 1,000 shares of common stock on each of such dates. In
April 1997, the Company extended the term on 5,000 expiring options for an
additional six years.
The Company's 1986 Incentive and Nonstatutory Stock Option Plan (the
"Plan") provides for the granting of incentive stock options and
nonstatutory options. The Plan provides for the grant of options to key
employees and independent sales representatives to purchase up to 400,000
shares of the Company's common stock, upon terms and conditions determined
by a committee of the Board of Directors, which administers the plan.
Options are granted at not less than fair market value (110 percent of fair
market value as to incentive stock options granted to ten percent
stockholders) and are exercisable over a period not to exceed ten years
(five years as to incentive stock options granted to ten percent
stockholders).
The Company has adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). The Company applies
APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for its plans and does not recognize
compensation expense for its stock-based compensation plans. If the Company
had elected to recognize compensation expense based upon the fair value at
the date of grant for awards under these plans, consistent with the
methodology prescribed by SFAS 123, the effect on the Company's net income
and earnings per share as reported would be reduced for the years ended
January 31, 1999 and 1998 to the pro forma amounts indicated below:
1999 1998
----------- --------------
Net income
As reported $2,080,085 $1,599,874
Pro forma 2,073,495 1,584,144
Basic earnings per common share
As reported $.79 $.63
Pro forma .79 .62
Diluted earnings per common share
As reported $.77 $.61
Pro forma .77 .60
<PAGE>
The fair value of these options was estimated at the date of grant using
the Black-Scholes option-pricing model with the following assumptions for
the years ended January 31, 1999 and 1998, respectively: expected
volatility of 60% and 52%; risk-free interest rates of 5.6% and 6.5%; and
expected life of six years for all periods.
16
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE F (continued)
Additional information with respect to the Company's plans for the fiscal
years ended January 31, 2000, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
2000
----------------------------------------------------------------
Directors' Plan Plan
---------------------------- --------------------------
Weighted- Weighted-
Number average Number average
Of exercise of exercise
Shares price shares price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares under option
Outstanding at beginning of year 8,000 $4.81 52,500 $3.06
----- ------
Outstanding and exercisable at end of year 8,000 4.81 52,500 3.06
===== ======
Weighted-average remaining contractual
life of options outstanding 2.6 years 5 years
</TABLE>
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------
Directors' Plan Plan
---------------------------- --------------------------
Weighted- Weighted-
Number average Number average
Of exercise of exercise
Shares price shares price
-------- -------------- --------- -----------
<S> <C> <C> <C> <C>
Shares under option
Outstanding at beginning of year 10,000 $ 3.85 99,528 $2.77
Granted 1,000 10.75 - -
Exercised (3,000) 3.58 (47,028) 2.47
------- -------
Outstanding and exercisable at end of year 8,000 4.81 52,500 3.06
======= =======
Weighted-average remaining contractual
life of options outstanding 3.6 years 6 years
Weighted-average fair value per share
of options granted during 1999 $ 6.59 -
</TABLE>
17
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE F (continued)
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Directors' Plan Plan
---------------------------- -------------------------
Weighted- Weighted-
Number average Number average
Of exercise of exercise
Shares price shares price
-------- -------------- --------- -----------
<S> <C> <C> <C> <C>
Shares under option
Outstanding at beginning of year 18,000 $1.90 150,000 $2.36
Granted 7,000 3.78 - -
Exercised (10,000) 1.44 (50,472) 1.54
Expired (5,000) 1.56 - -
-------- -------------
Outstanding and exercisable at end of year 10,000 3.85 99,528 2.77
======= ========
Weighted-average remaining contractual
life of options outstanding 4.5 years 3.5 years
Weighted-average fair value per share
of options granted during 1998 $2.25 -
</TABLE>
Summarized information about stock options outstanding under the two plans
at January 31, 2000 is as follows:
<TABLE>
<CAPTION>
Options outstanding and exercisable
--------------------------------------------------------
Weighted-
Number average
Outstanding remaining Weighted-
at contractual average
Range of January life in exercise
exercise prices 31, 2000 years price
--------------- ------------- ----------- ----------
<S> <C> <C> <C>
$2.25 - $3.38 21,500 3.90 $2.39
3.39 - 5.12 38,000 5.10 3.61
10.75 1,000 4.50 10.75
------
$2.25 - $10.75 60,500 4.69 3.29
======
</TABLE>
18
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE G - INCOME TAXES
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
Year ended January 31,
--------------------------------------------------
2000 1999 1998
----------- ----------- ----------
<S> <C> <C> <C>
Current
Federal $ 756,000 $1,116,000 $ 938,000
State 100,000 97,000 105,000
-------- ----------- ----------
856,000 1,213,000 1,043,000
Deferred (95,000) (71,000) (53,000)
------- ----------- -----------
$ 761,000 $1,142,000 $ 990,000
======== ========= ==========
</TABLE>
The following is a reconciliation of the effective income tax rate to the
Federal statutory rate:
<TABLE>
<CAPTION>
Year ended January 31,
----------------------------------------------
2000 1999 1998
--------- --------- ------
<S> <C> <C> <C>
Statutory rate 34.0% 34.0% 34.0%
State income taxes, net of Federal tax benefit 2.7 2.0 2.7
Nondeductible expenses .8 .3 .5
Foreign operating results generating no current tax
(provision) benefit (2.4) (.6) 2.5
Change in deferred assets (3.8) (2.0)
Other (.5) (.3) .5
------ ---- ------
Effective rate 30.80% 35.4% 38.2%
===== ==== ====
</TABLE>
19
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE G (continued)
The tax effects of temporary differences which give rise to deferred tax
assets at January 31, 2000 and 1999 are summarized as follows:
<TABLE>
<CAPTION>
January 31,
------------------------------
2000 1999
--------- ---------
<S> <C> <C>
Deferred tax assets
Inventories $385,000 $265,000
Net operating loss carryforward - foreign subsidiaries 89,000 102,000
Accounts receivable 76,000 75,000
Accrued compensation and other 111,000 125,000
------- -------
Gross deferred tax assets 661,000 567,000
------- -------
Deferred tax liabilities
Depreciation 55,000 56,000
-------- --------
Gross deferred tax liabilities 55,000 56,000
-------- --------
Net deferred tax asset $606,000 $511,000
======= =======
</TABLE>
Net operating loss carryforwards of $255,000 applicable to the foreign
subsidiaries expire in fiscal 2002 through 2007.
20
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE H - BENEFIT PLANS
Defined Benefit Plan
The Company has a frozen defined benefit pension plan that covers former
employees of an acquired entity. The Company's funding policy is to
contribute annually the recommended amount based on computations made by
its consulting actuary.
The following table sets forth the plan's funded status for the fiscal
years ended January 31:
<TABLE>
<CAPTION>
2000 1999
---------- -------
<S> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 960,634 $ 917,791
Service cost 1,613 1,613
Interest cost 70,579 67,649
Actuarial (gain)loss (32,185) 5,202
Benefits paid (39,149) (31,621)
---------- ---------
Benefit obligation at end of year $ 961,492 $ 960,634
======== ========
Change in plan assets
Fair value of plan assets at beginning of year $ 445,872 $ 467,354
Actual return on plan assets 87,626 (1,779)
Employer contributions 8,500 11,918
Benefits paid (39,149) (31,621)
---------- ---------
Fair value of plan assets at end of year $ 502,849 $ 445,872
======== ========
Funded status (underfunded)/accrued pension liability $(458,643) $(514,762)
======= ========
</TABLE>
21
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE H (continued)
The components of net periodic pension cost for the fiscal years ended
January 31 are summarized as follows:
<TABLE>
<CAPTION>
2000 1999 1998
--------- ---------- -------
<S> <C> <C> <C>
Service cost $ 1,613 $ 1,613 $ 1,613
Interest cost 70,579 67,649 63,772
Actual return on plan assets (87,626) 1,779 (16,168)
Net amortization and deferral 62,896 (39,469) (10,771)
------- ------- -------
Net periodic pension cost $ 47,462 $ 31,572 $ 38,446
======= ======= =======
</TABLE>
An assumed discount rate of 7.5% was used in determining the actuarial
present value of benefit obligations for all periods presented. The
expected long-term rate of return on plan assets was 8% for all periods
presented. At January 31, 2000, approximately 83% of the plan's assets was
held in mutual funds invested primarily in equity securities, 7% was
invested in equity securities and debt instruments and 10% was invested in
money market and other instruments.
Defined Contribution Plan
Pursuant to the terms of the Company's 401(k) plan, substantially all U.S.
employees over 21 years of age with a minimum period of service are
eligible to participate. The 401(k) plan is administered by the Company and
provides for voluntary employee contributions ranging from 1% to 15% of the
employee's compensation. The Company made discretionary contributions of
$57,642, $55,332 and $18,950 in the fiscal years ended January 31, 2000,
1999 and 1998 respectively.
NOTE I - MAJOR SUPPLIER
The Company purchased approximately 74% of its raw materials from one
supplier under licensing agreements for each of the years ended January 31,
2000, 1999 and 1998. The Company expects this relationship to continue for
the foreseeable future. If required, similar raw materials could be
purchased from other sources; although, the Company's competitive position
in the marketplace could be affected.
22
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE J - COMMITMENTS AND CONTINGENCIES
1. Employment Contracts
The Company has employment contracts with three principal officers
expiring through January 2003. Such contracts are automatically
renewable for one- or two-year terms unless, 30 to 120 days' notice is
given by either party. Pursuant to such contracts, the Company is
committed to aggregate base remuneration of $612,500, $215,000 and
$215,000 for the fiscal years ended January 31, 2001, 2002 and 2003,
respectively.
2. Leases
The Company leases the majority of its premises under various operating
leases expiring through fiscal 2005. The leases for the manufacturing
facilities (located in Decatur, Alabama) are with two partnerships
whose partners are principal officers and stockholders of the Company.
One lease expires on August 31, 2004 and requires annual payments of
approximately $365,000 plus certain operating expenses and the second
lease expires on May 31, 2004 and requires annual payments of $199,104
plus certain operating expenses. The Company also leases one customer
service facility pursuant to a one-year lease (renewable at the
Company's option for four additional one-year terms), from an officer
of the Company. Monthly payments are $1,500. In addition, the Company
has several operating leases for machinery and equipment.
The Company has a one-year lease with a related partnership for a
manufacturing facility in the People's Republic of China. The related
lessor is a partnership in which the Company's directors, one officer
and four employees hold partnership interests. This related party
leasing arrangement requires monthly payments of approximately $4,081.
Total rental expense under all operating leases is summarized as
follows:
Total Rentals
Gross Sublease paid to
rental Rental related
expense income parties
-------- ------- --------
Year ended January 31,
2000 $808,852 $10,578 $545,136
1999 643,174 4,611 402,096
1998 621,162 9,704 405,120
23
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 31, 2000, 1999 and 1998
NOTE J (continued)
Minimum annual rental commitments for the remaining term of the
Company's noncancellable operating leases relating to manufacturing
facilities, office space and equipment rentals at January 31, 2000 are
summarized as follows:
Year ending January 31,
2001 $ 794,000
2002 719,000
2003 632,000
2004 607,000
2005 282,000
----------
$3,034,000
==========
Certain leases require additional payments based upon increases in
property taxes and other expenses.
3. Services Agreement
Pursuant to the terms of a services agreement with an affiliated
entity, principally owned by a principal officer and stockholder of the
Company, the affiliate provided professional and/or skilled labor to
the Company, as needed, at contractual rates of compensation. Such
agreement was cancelable by either the Company or the affiliate upon
thirty-days' written notice. Costs incurred by the Company in
connection with such agreement aggregated $509,000 and $552,000 for the
fiscal years ended January 31, 1999 and 1998, respectively. This
agreement was terminated as of February 1, 1999.
4. Litigation
The Company is involved in various litigation arising during the normal
course of business which, in the opinion of the management of the
Company, will not have a material adverse effect on the consolidated
financial position or results of operations of the Company.
5. Self-insurance
The Company maintains a self-insurance program for that portion of
health care costs not covered by insurance. The Company is liable for
claims up to defined limits. Self-insurance costs are based upon the
aggregate of the liability for reported claims and an estimated
liability for claims incurred but not reported.
24
<PAGE>
Lakeland Industries, Inc.
and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
----------------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
of period expenses accounts Deductions period
----------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended January 31, 2000
Allowance for doubtful
accounts (a) $200,000 $20,700 $20,700 (b) $200,000
======= ====== ====== =======
Year ended January 31, 1999
Allowance for doubtful
accounts (a) $203,000 $60,263 $63,263 (b) $200,000
======= ====== ====== =======
Year ended January 31, 1998
Allowance for doubtful
accounts (a) $150,000 $69,421 $16,421 (b) $203,000
======= ====== ====== =======
</TABLE>
(a) Deducted from accounts receivable.
(b) Uncollectible accounts receivable charged against allowance.
25
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
LAKELAND INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
May 12, 2000
Dear Stockholder,
I am pleased to extend to you my personal invitation to attend the
2000 Annual Meeting of Stockholders of Lakeland Industries, Inc. (the
"Company") on Wednesday, June 21, 2000 at 9:30 a.m. at the Holiday Inn, 3845
Veterans Memorial Highway, Ronkonkoma, NY 11779.
The accompanying Notice of Annual Meeting and Proxy Statement
contain a description of the formal business to be acted upon by the
stockholders. At the meeting, I intend to discuss the Company's performance
for its fiscal year ended January 31, 2000 and its plans for the current
fiscal year. Certain members of the Company's Board of Directors and
officers of the Company, as well as a representative of Grant Thornton LLP,
the Company's independent auditors, will be available to answer any
questions you may have, or to make a statement if they wish to.
While I am looking forward to seeing you at the meeting, it is very
important that those of you who cannot personally attend assure your shares
are represented. I urge you therefore to sign and date the enclosed form of
proxy and return it promptly in the accompanying envelope. If you attend the
meeting, you may, if you wish, withdraw any proxy previously given and vote
your shares in person.
Sincerely,
/s/ Raymond J. Smith
--------------------
Raymond J. Smith
President and Chairman of the Board
<PAGE>
LAKELAND INDUSTRIES, INC.
NOTICE OF
2000 ANNUAL MEETING OF STOCKHOLDERS
June 21, 2000
TO THE STOCKHOLDERS OF LAKELAND INDUSTRIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Lakeland Industries, Inc., a Delaware corporation (the "Company"), will be held
on Wednesday, June 21, 2000 at 9:30 a.m. at the Holiday Inn, 3845 Veterans
Memorial Highway, Ronkonkoma, NY 11779 for the following purposes:
1. To elect two Class II members of the Board of Directors, and
2. To transact such other business as properly may come before the
meeting or any adjournment thereof.
Each share of the Company's Common Stock will be entitled to one vote
upon all matters described above. Stockholders of record at the close of
business on April 29, 2000 will be entitled to notice and to vote at the
meeting.
May 12, 2000
BY ORDER OF THE BOARD OF DIRECTORS
Christopher J. Ryan, Secretary
PLEASE DATE, VOTE AND SIGN THE ENCLOSED PROXY AND RETURN PROMPTLY. AN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THIS
PURPOSE.
<PAGE>
LAKELAND INDUSTRIES, INC.
711-2 Koehler Ave.
Ronkonkoma, New York 11779
PROXY STATEMENT
2000 Annual Meeting of Stockholders
June 21, 2000
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
by the Board of Directors of Lakeland Industries, Inc. (the "Company") of
proxies from the holders of the Company's $.01 par value Common Stock (the
"Common Stock") for use at the 2000 Annual Meeting of Stockholders to be held on
June 21, 2000, and at any adjournment thereof (the "Annual Meeting").
This proxy statement, the accompanying form of proxy and the Company's
2000 Form 10-K (which includes the Company's Annual Report to Stockholders) are
first being sent to the Company's stockholders on or about May 12, 2000.
The accompanying proxy may be revoked by the person giving it at any
time prior to its being voted; such revocation may be accomplished by a letter,
or by a properly signed proxy bearing a later date, filed with the Secretary of
the Company prior to the Annual Meeting. If the person giving the proxy is
present at the meeting and wishes to vote in person, he or she may withdraw his
or her proxy at that time.
The Company has borne all costs of solicitation of proxies. In addition
to solicitation by mail, there may be incidental personal solicitations made by
directors, officers and regular employees of the Company and its subsidiaries.
The cost of solicitation, including the payments to nominees who at the request
of the Company mail such material to their customers, will be borne by the
Company.
VOTING SECURITIES AND STOCK OWNERSHIP OF OFFICERS,
DIRECTORS AND PRINCIPAL STOCKHOLDERS
All holders of record of the Common Stock at the close of business on
April 29, 2000, are entitled to notice of and to vote at the Annual Meeting. At
the close of business on April 29, 2000, there were 2,644,000 shares of
outstanding Common Stock, each entitled to one vote per share on all matters to
be voted upon at the Annual Meeting. The Company's stockholders do not have
cumulative voting rights.
2
<PAGE>
The following table sets forth information as of April 29, 2000, with
respect to beneficial ownership of the Company's Common Stock by all persons
known by the Company to own beneficially more than 5% of the Common Stock, each
director and nominee for director of the Company and all directors and officers
of the Company as a group. All persons listed have sole voting and investment
power with respect to their shares of Common Stock.
<TABLE>
<CAPTION>
Name and Address Number of Common Percent of
Beneficial Owner Shares Beneficially Owned of Class
------------------- ------------------------- -----------
<S> <C> <C> <C>
Raymond J. Smith 579,500 (1) 21.92%
711-2 Koehler Ave.
Ronkonkoma, NY 11779
Christopher J. Ryan 251,977 (2) (6) 9.53%
711-2 Koehler Ave.
Ronkonkoma, NY 11779
Joseph P. Gordon 134,500 5.09%
177-23 Union Tpke.,
Flushing, NY 11366
John J. Collins, Jr. 123,400 (3) 4.67%
Eric O. Hallman 47,500 (3) 1.80%
Walter J. Raleigh 7,000 (4) .27%
All officers and directors
as a group (7 persons) 1,063,827 (5) 40.24%
</TABLE>
- --------------------------
Included in the above are fully exercisable options to purchase the Company's
common stock, as follows:
(1) 9,000 shares granted on June 5, 1996;
(2) 4,050 shares granted on January 1, 1994;
(3) 1,000 shares granted on June 15, 1994 and 1,000 shares
granted on June 18, 1997 to each of Mr. Hallman and Mr.
Collins;
(4) 3,000 shares granted on April 18, 1997 and 1,000 shares
granted June 17, 1998;
(5) 60,500 shares granted between January, 1, 1994 and June
17, 1998
(6) Mr. Ryan disclaims beneficial ownership of 15,000 shares
owned by his wife.
3
<PAGE>
Proposal 1 -
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for three classes
of directors with staggered terms of office and provides that upon the
expiration of the terms of office for a class of directors, nominees for each
class shall be elected for a term of three years to serve until the election and
qualification of their successors or until their earlier resignation, death or
removal from office. The Company currently has one Class I director, two Class
II directors and two Class III directors. At the 2000 Annual Meeting there are
two nominees for director in Class II. The incumbent Class III and Class I
directors have one year and two years, respectively, remaining on their terms of
office.
The Company has no reason to believe that either of the nominees will
be disqualified or unable to serve, or will refuse to serve if elected. However,
if a nominee is unable or unwilling to accept election, the proxies will be
voted for such substitute as the Board of Directors may select. It is intended
that the shares represented by proxies will be voted, in the absence of contrary
instructions, for the election as director of the nominees for Class II named in
the following table. The Board of Directors has nominated and Management
recommends the election of the persons listed in the following table as Class II
directors. The table also sets forth the names of the two directors in Class III
and the one directors in Class I whose terms of office have not expired, their
ages, their positions with the Company and the period each has served as a
director of the Company. There are no family relationships among the Board
members.
Position
With the Director
Name Age Company Since
- --------------------------------------------------------------------------------
NOMINEES FOR DIRECTOR - CLASS
II (Nominee for three year Term
Expiring in June, 2003)
------------------------------------------
John J. Collins, Jr. 57 Director 1986
Eric O. Hallman 56 Director 1982
INCUMBENT DIRECTORS - CLASS
III (One year remaining on Term
Expiring in June, 2001)
-----------------------------------------
Raymond J. Smith 61 Chairman of the Board, 1982
President and Director
Walter J. Raleigh 72 Director 1991
INCUMBENT DIRECTOR - CLASS I
(Two years remaining on Term Expiring in June, 2002)
-----------------------------------------
Christopher J. Ryan 48 Executive Vice President 1986
Finance, Secretary and
Director
4
<PAGE>
The principal occupations and employment of the nominees for director
and for the directors continuing in office are set forth below:
John J. Collins, Jr. was Executive Vice President of Chapdelaine GSI, a
government securities firm from 1977 to January 1987. He was Senior Vice
President of Liberty Brokerage, a government securities firm between January
1987 and November 1998. Presently, Mr. Collins is self-employed, managing a
direct investment portfolio of small business enterprises for his own accounts.
Eric O. Hallman has been a director of the Company since its
incorporation. He was President of Naess Hallman Inc., a shipbrokering firm,
between 1984 and 1991. Mr. Hallman was also affiliated between 1991 and 1992
with Finanshuset (U.S.A.), Inc., a shipbrokering and international financial
services and consulting concern, and was an officer of Sylvan Lawrence, a real
estate development company, between 1992 and 1998. Mr. Hallman is presently
President of PREMCO, a real estate management company.
Raymond J. Smith, a co-founder of the Company, has been Chairman of the
Board of Directors and President since its incorporation in 1982.
Walter J. Raleigh is a director of CMI Industries, Inc., the successor
company to Clinton Mills, Inc. and was president of Clinton Mills Sales, Co.
Division, N.Y. from 1974 to 1995. Clinton Mills was a textile manufacturer of
woven fabrics. Mr. Raleigh retired from Clinton Mills in 1995 and now is a
Senior Adviser to CMI Industries, Inc. Mr. Raleigh is a former director of Kerry
Petroleum Company, an oil and gas development company.
Christopher J. Ryan has served as Executive Vice President-Finance and
director since May, 1986 and Secretary since April 1991. From October 1989 until
February 1991 Mr. Ryan was employed by Sands Brothers and Rodman & Renshaw,
Inc., both investment banking firms. Prior to that, he was an independent
consultant with Laidlaw Holding Co., Inc., an investment banking firm, from
January 1989 until September 1989. From February, 1987 to January, 1989 he was
employed as the Managing Director of Corporate Finance for Brean Murray, Foster
Securities, Inc. He was employed from June, 1985 to March, 1986 as a Senior Vice
President with the investment banking firm of Laidlaw Adams Peck, Inc., a
predecessor firm to Laidlaw Holdings, Inc. Mr. Ryan has been a director of
Auerback, Pollack & Richardson and Lessing, Inc. since 1996.
During the year ended January 31, 2000, the Board of Directors of the
Company met two times, and four of the five members of the Board of Directors
attended at least 75% of the aggregate of (1) the total number of meetings of
the Board of Directors held during the period when he was a director, and (2)
the total number of meetings held by all committees of the Board of Directors on
which he served (during the periods when he served).
Potential Anti-Takeover Effect
The Board of Directors has the authority, without further approval of
the Company's shareholders, to issue preferred shares (the "Preferred Shares")
having such rights, preferences and privileges as the Board of Directors may
determine. Any such issuance of Preferred Shares could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company and may adversely affect the rights of holders of Common Stock. In
addition, the Company is subject to Delaware statutes regulating business
combinations, takeovers and control share acquisitions which might hinder or
delay a change in control of the Company. Anti-takeover provisions that could be
included in the Preferred Shares when issued and the Delaware statutes
regulating business combinations, takeovers and control share acquisitions can
have a depressive effect on the market price of the Company's securities and can
limit shareholders' ability to receive a premium on their shares by discouraging
takeover and tender offer bids.
5
<PAGE>
The Directors of the Company serve staggered three-year terms. The
Company's Restated Certificate of Incorporation sets forth a provision that
requires certain business combinations to be approved by at least 66.66% of the
Company's voting securities, unless 66.66% of the members of the Board of
Directors have approved the transaction, and require approval of holders of
66.66% of the Company's voting shares to amend these provisions. In addition,
the Company has an Employee Stock Ownership Plan ("ESOP"). In the past, other
companies have used similar plans to hinder or prevent a takeover situation. The
Company has also entered into employment contracts with certain executive
officers providing for lump sum payments of contracted salaries pursuant to
various formulas, should there be a change in control of the Company. These
factors could have an anti-takeover effect by making it more difficult to
acquire the Company by means of a tender offer, a proxy contest or otherwise or
the removal of incumbent officers and directors. These provisions could delay,
deter or prevent a tender offer or takeover attempt that a shareholder might
consider in his or her best interest, including those attempts that might result
in a premium over the market price for the Common Stock held by the Company's
shareholders.
6
<PAGE>
Committees of the Board of Directors are as follows:
1- The Stock Option and Compensation Committee is responsible for
evaluating the performance of the Company's management, fixing or determining
the method of fixing compensation of the Company's salaried employees,
administering the Company's Stock Option and 401K/ESOP Plans, and reviewing
significant amendments to a subsidiary's employee pension benefit plan. The
Committee also, in conjunction with the Chief Executive Officer, considers the
qualifications of prospective Directors of the Company and, as vacancies occur,
recommends nominees to the Board of Directors. The Stock Option and Compensation
Committee (which also functions as a nominating committee for nominations to the
Board) will consider nominees to the Board recommended by stockholders. Such
recommendations must be in writing and sent to the Secretary of the Company no
later than January 31st of the year in which the Annual Meeting is to be held,
accompanied by a brief description of the proposed nominee's principal
occupation and his or her other qualifications which, in the stockholder's
opinion, make such person a suitable candidate for nomination to the Board. This
Committee met once during the year ended January 31, 2000. The committee members
are:
John J. Collins, Jr., Eric O. Hallman, and Walter J. Raleigh
Compensation Committee Interlocks and Insider Participation
Members of the Stock Option and Compensation Committee are outside
directors who do not serve in any other capacity with respect to the Company or
any of its subsidiaries. Messrs. Collins and Hallman are partners of POMS
Holding Co. See "Certain Relationships and Related Transactions".
2- The Audit Committee was formed in September, 1987 and is
responsible for recommending to the Board of Directors the appointment of
independent auditors for the fiscal year, reviewing with the independent
auditors the scope of their proposed and completed audits, and reviewing with
the Company's financial management and its independent auditors other matters
relating to audits and to the adequacy of the Company's internal control
structure. This Committee met once during the year ended January 31, 2000.
The committee members are: John J. Collins, Jr., Eric O. Hallman, and
Christopher J.Ryan
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth all salary, bonus and all other compensation
paid to the Company's chief executive officer and each of the Company's other
executive officers (who earned more than $100,000 per year in salary and bonus)
for the years ended January 31, 2000, 1999 and 1998:
Name and All Other
Principal Position Year Salary Bonus Compensation
Raymond J. Smith, 2000 $262,500 $92,500 $6,716
Chairman, President and CEO 1999 262,500 25,000 5,899
1998 225,000 3,089
Christopher J. Ryan, 2000 $175,000 $16,000 $3,252
Executive V.P.-Finance 1999 175,000 20,000 3,724
and Secretary 1998 169,003 7,750 1,262
Harvey Pride, Jr. 2000 $135,000 $12,800 $3,864
Vice President- 1999 135,000 3,465
Manufacturing 1998 115,000 23,000 910
James M. McCormick 2000 $115,000 $16,500 $4,139
VP - Treasurer 1999 115,000 13,500 4,214
1998 115,000 8,450 2,138
7
<PAGE>
There are four executive officers with salary and bonus individually
exceeding $100,000. There were no pension or retirement plans or other benefits,
payable or accrued, for such persons during fiscal year 2000. The Company has
entered into employment contracts with certain executive officers providing for
annual compensation of $262,500 for Mr. Smith and $215,000 for Mr. Ryan and
$135,000 for Mr. Pride. Messrs. Smith and Pride each have a three year contract
which expires on January 31, 2001, Mr. Ryan has a three year contract which
expires on February 13, 2001. All contracts are automatically renewable for one
or two year terms, unless in various instances 30 to 120 days notice is given by
either party. The above named executives participate in the Company's 401-K Plan
which commenced on January 1, 1995. The Company has made a contribution to this
plan totaling $57,642, during the plan year ended December 31, 1999.
These employment contracts are similar in nature and include disability
benefits, vacation time, non-compete and confidentiality clauses. There are no
provisions for retirement. Messrs. Smith, Ryan and Pride's contracts have an
additional provision for annual bonus based on the Company's performance and
based upon earnings per share formulas determined by the Stock Option and
Compensation Committee of the Board of Directors of the Company. Accordingly,
the annual bonus accrued at January 31, 2000 (for payment in May 2000) for
Messrs. Smith, Ryan and Pride were $62,500, $0 and $0, respectively. All
contracts provide for lump sum payments of contracted salaries pursuant to
various formulas should there be a change in control of the Company.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Policies: The compensation policy of the Company is to provide its executive
officers and management with a level of pay and benefits that will assure the
Company's competitiveness and continued growth, and allow the Company to retain
key executives critical to this long-term success and attract and retain
qualified personnel. The Company competes for talented executives in a market
segment where successful entrepreneurial executives are highly compensated. It
also competes for executives with a background in manufacturing and selling
protective safety garments. As a result, to obtain and retain highly qualified
and motivated executives, the Compensation Committee has deemed it desirable to
structure employment arrangements which compensate highly for high profitability
and performance and to enter into written employment agreements with its senior
executive officers.
The Compensation Committee's responsibilities include overseeing the
Company's compensation policies, supervising compensation for management and
employee benefits and administering the Company's stock option and other
employee benefit plans.
The Compensation Committee also develops and negotiates employment
agreements with key executive officers. These employment agreements include base
salaries and incentive compensation arrangements designed to reward management
for achieving certain production or performance levels. The Compensation
Committee is also responsible for developing or reviewing incentive compensation
arrangements which the Company enters into with executive officers and key
individuals, other than those senior executives who have written employment
agreements. See "Compensation of Executive Officers".
In order to determine appropriate levels of executive compensation, the
Compensation Committee reviews various factors, including individual
performance, and evaluates the progress of the Company towards attaining its
long-term profit and return on equity goals. Compensation packages for senior
executive officers have been structured to attempt to compensate them to a
<PAGE>
substantial extent based on both the profitability of the Company as a whole and
the productivity of their individual departments.
Particulars: Messrs. Eric O. Hallman, John J. Collins, Jr. and Walter
J. Raleigh were members of the Company's Stock Option and Compensation Committee
when it ratified Mr. Smith's and Mr. Pride's employment contracts in January
1998, and Mr. Ryan's which was ratified on February 14, 1997. Mr. Walter J.
Raleigh joined the Board of Directors on April 18, 1991, as a third outside
director and with Messrs. Hallman and Collins, these three outside directors
presently make up the Stock Option and Compensation Committee.
8
<PAGE>
Messrs. Smith, Pride and Ryan were awarded base compensations of
$262,500, $215,000 and $135,000, for fiscal 2001, respectively. In addition, the
Committee reviewed what was normally paid the President and Chairman in Mr.
Smith's case and Executive Vice President Finance and In-House Counsel in Mr.
Ryan's case and the Chief Manufacturing Executive in Mr. Pride's case, in public
companies of Lakeland's size and concluded that the compensation package
represented close to the median of what other officers were being compensated in
like public companies of comparable size after reviewing Growth Resources
Officer Compensation Report Eleventh Edition - Panel Publications.
These contracts also provide for bonuses in addition to salary based
upon the Company's increase in earnings. (See Directors and Principal
Stockholders.) The Stock Option and Compensation Committee believes that the
contracts covering Messrs. Smith, Pride and Ryan are appropriately tied to their
respective levels of expertise, were constructed at or below industry norms, and
any increases in compensation were and will be tied to increases in the
Company's earnings. The Stock Option and Compensation Committee also took into
consideration that since the inception of the Company 15 years ago there have
been no executive pension plans, deferred compensation plans, or other
compensation or benefit plans for executives of the Company other than the
Company's Stock Option Plan and the 401-K/ESOP Plan, the latter of which went
into effect January 1, 1995.
The Board Compensation Committee Report on Executive Compensation shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Performance Graph
The Corporate Performance Graph, appearing on the following page,
obtained from Media General Financial Services of Virginia, compares the five
year cumulative total return of the Company's common stock with that of a broad
equity market index, including dividend reinvestment and with that of a peer
group:
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS,
INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 1/31/1995 1/31/1996 1/31/1997 1/30/1998 1/29/1999 1/31/2000
Lakeland Industries 100.00 90.13 66.45 171.05 134.21 90.79
Customer Selected Stock List 100.00 66.38 70.52 79.53 63.18 47.77
S&P Industrials 100.00 137.27 173.41 218.77 300.28 339.59
</TABLE>
Option/SAR Grants in Last Fiscal Year - No stock options were granted to any
employee in fiscal 2000 and no SAR grants have been made since inception of the
Stock Option Plan. See "Directors' Compensation".
Stock Option Plan
Messrs. Smith, Ryan, Pride and McCormick participate in the Company's
Incentive Stock Option Plan (common stock). The outstanding incentive stock
options as of January 31, 2000 are as follows:
<TABLE>
<CAPTION>
No. of Date(s) Grant
Name of Shares Option of Expiration Date
Executive Granted Price Grant Date(s) Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Smith 9,000 $ 3.50 6/5/96 6/4/06 $31,500
Mr. Ryan 4,050 $2.25 1/1/94 1/1/04 $9,113
Mr. Pride 29,600 $2.25 - 3.50 6/5/96 & 1/1/94 6/4/06 & 1/1/04 $91,600
Mr. McCormick 9,850 $2.25 - 3.50 6/5/96 & 1/1/94 6/4/06 & 1/1/04 $28,413
</TABLE>
There are currently 250,000 option shares available for future grant
under this plan. During the year ended January 31, 2000, no stock options were
granted or exercised.
9
<PAGE>
DIRECTORS' COMPENSATION
Members of the Board of Directors, in their capacity as directors, are
reimbursed for all travel expenses to and from meetings of the Board. Outside
Directors received $750 for each meeting as compensation for serving on the
Board. There are no charitable award or director legacy programs. Messrs.
Collins, Hallman and Raleigh participate in the Company's Non-employee
Directors' Option Plan as follows:
# of Option Date of Expiration
Director Shares Price Grant Date
Mr. Collins 1,000 $5.125 6/18/97 6/18/2003
Mr. Collins 1,000 3.88 6/15/94 6/15/2000
Mr. Hallman 1,000 5.125 6/18/97 6/18/2003
Mr. Hallman 1,000 3.88 6/15/94 6/15/2000
Mr. Raleigh 3,000 3.25 4/18/97 4/18/2003
Mr. Raleigh 1,000 10.75 6/17/98 6/17/2004
There are currently 39,000 option shares available for future grant
under this plan. During the year ended January 31, 2000, no stock options were
granted or exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
POMS Holding Co. ("POMS", a partnership consisting of Raymond J. Smith,
Eric O. Hallman, John J. Collins, Jr., Joseph P. Gordon, Harvey Pride, Jr. and
certain other stockholders of the Company) leases to the Company a 91,788 square
foot disposable garment manufacturing facility in Decatur, Alabama. Under a
lease effective September 1, 1999 and expiring on August 31, 2004, the Company
pays an annual rent of $364,900 and is the sole occupant of the facility.
On March 1, 1999, the Company entered into a one year (renewable for
four additional one year terms) lease agreement with Harvey Pride, Jr., an
officer of the Company, for 2400 sq. ft. customer service office. This is
located next to the existing Decatur, Alabama facility mentioned above.
On June 1, 1999, the Company entered into a five year lease agreement
with River Group Holding Co., L.L.P. for a 40,000 sq. ft. warehouse facility
located next to the existing facility in Decatur, Alabama. River Group Holding
Co., L.L.P. is a limited liability partnership made up of the Directors and
certain officers of the Company. The annual rent for this facility is $199,100
and the Company is the sole occupant of the facility.
During November 1999 Highland and Chemland divisions relocated from
Somerville, Alabama to the above mentioned Decatur facility. Highland had paid
$1,500 on a month to month lease for 12,000 sq. ft. of manufacturing space.
Chemland had paid $1,600 on a month to month lease, also for 12,000 sq. ft. That
Somerville facility was owned by Harvey Pride, Jr., an officer of the Company.
The Company believes that all rents paid to POMS, River Group Holding
Co., L.L.P. and Harvey Pride, Jr. by the Company, Highland and Chemland
Divisions are comparable to what would be charged by an unrelated third party.
The net rent paid to POMS, River Group Holding Co., L.L.P. by the Company for
the year ended January 31, 2000, amounted to $497,636 and the total rent paid to
Harvey Pride, Jr. by the Company for use by its Highland, Chemland divisions and
the customer service office, for the year ended January 31, 2000, amounted to
$47,500.
An Qiu Holding Co., LLC ("An Qiu" a partnership consisting of all the
Directors of the Company and one officer) entered into a eight month lease
expiring April 2000 through its majority ownership interest in a Chinese Foreign
Joint Venture Holding Company, leasing a 46,000 square foot building in China at
an annual rental fee of $48,972 to the Company.
The Company paid or accrued legal fees of $843 for the fiscal year
ended January 31, 2000 to the Law Offices of Thomas J. Smith, the Company's
General Counsel. Mr. Thomas J. Smith, is the brother of Raymond J. Smith.
10
<PAGE>
OTHER MATTERS
The Board of Directors knows of no matters other than those described
above that may come before the Annual Meeting. As to other matters, if any, that
properly may come before the Annual Meeting, the Board of Directors intends that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals for inclusion in the Company's Proxy Statement
for the 2001 Annual Meeting of Stockholders must be received by the Company not
later than January 31, 2001. The person submitting the proposal must have been a
record or beneficial owner of the Company's Common Stock for at least one year
and must continue to own such securities through the date on which the meeting
is held, and the securities so held must have a market value of at least $1,000.
Any such proposal will be included in the Proxy Statement for such Annual
Meeting if the rules of the Securities and Exchange Commission are complied with
as to the timing and form of such proposal, and the content of such
stockholder's proposal is determined by the Company to be appropriate under
rules promulgated by the Commission.
By the Order of the Board of Directors
/s/ Christopher J. Ryan,
------------------------
Christopher J. Ryan,
Secretary
May 12, 2000
11
<PAGE>
REVOCABLE PROXY
LAKELAND INDUSTRIES, INC.
711-2 Koehler Avenue, Ronkonkoma, New York 11779-7410
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Raymond J. Smith and Christopher J. Ryan as
proxies, each with power to appoint his substitute, and hereby authorizes them
to represent and to vote, as designated hereon, all the shares of common stock
of Lakeland Industries, Inc., held of record by the undersigned on April 29,
2000 at the annual meeting of stockholders to be held on June 21, 2000 or any
adjournment there of.
1. Election of Directors
John J. Collins, Jr. and Eric O. Hallman
With- For All
[ ] For [ ] hold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. Other Business 1. 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 IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1.
Please sign exactly as your name appears on this card. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
-----------------------------------
Date
-----------------------------------
Stockholder sign above
-----------------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
LAKELAND INDUSTRIES, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1999 JAN-31-2000
<PERIOD-END> JAN-31-1999 JAN-31-2000
<CASH> 1,436,083 650,541
<SECURITIES> 0 0
<RECEIVABLES> 6,743,341 8,379,477
<ALLOWANCES> 0 0
<INVENTORY> 16,110,910 22,467,395
<CURRENT-ASSETS> 25,318,565 32,460,111
<PP&E> 1,326,261 1,851,964
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 27,160,471 34,770,250
<CURRENT-LIABILITIES> 12,915,201 16,601,223
<BONDS> 0 0
0 0
0 0
<COMMON> 26,605 26,440
<OTHER-SE> 13,697,903 15,378,944
<TOTAL-LIABILITY-AND-EQUITY> 27,160,471 34,770,250
<SALES> 54,655,135 58,644,181
<TOTAL-REVENUES> 54,655,135 58,644,181
<CGS> 44,281,126 48,155,753
<TOTAL-COSTS> 6,451,354 7,190,951
<OTHER-EXPENSES> (26,968) (7,346)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 727,538 795,617
<INCOME-PRETAX> 3,222,085 2,509,206
<INCOME-TAX> 1,142,000 761,000
<INCOME-CONTINUING> 2,080,085 1,748,206
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,080,085 1,748,206
<EPS-BASIC> .79 .66
<EPS-DILUTED> .77 .65
</TABLE>
