Lakeland Industries, Inc. Employment Agreement
Exhibit
10.5
Lakeland
Industries, Inc.
This agreement (“Agreement”) has been
entered into this 11th day April, 2008, by and between Lakeland Industries,
Inc., a Delaware corporation (“Company”), and Xxxxxxxxxxx X. Xxxx, an individual
(“Executive”).
IT IS
AGREED AS FOLLOWS
SECTION
1:
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1.1
(a)
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“CHANGE
IN CONTROL” means:
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(i)
The acquisition by any individual, entity or group, or a Person (within
the meaning of Section 13 (d) (3) or 14 (d) (2) of the Exchange Act) of
ownership of more than 50% of either (a) the then outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or
(b) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”);
or
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(ii)
Individuals who, as the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, as a member of the Incumbent Board, any such individual
whose initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
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(iii)
Approval by the stockholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger
or consolidation, (a) more than 50% of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such
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1
reorganization,
merger or consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or consolidation, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (b) no Person beneficially owns, directly or indirectly, 30%
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation, entitled to vote generally in the election of directors and (c) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
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(iv)
Approval by the stockholders of the Company of (a) a complete liquidation
or dissolution of the Company or (b) the sale or other disposition of all
or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other
disposition, (1) more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sales or other
disposition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (2) no Person beneficially
owns, directly or indirectly, 30% or more of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (3) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the
Company.
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1.1
(b)
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“EMPLOYMENT
PERIOD” means the period beginning on April 11, 2008 and ending on April
11, 2010.
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1.1
(c)
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“PERSON”
has the meaning set forth in Sections 13 (d) and 14 (d) of the Exchange
Act.
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1.1
(d)
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“TERM”
means the period that begins on April 11, 2008 and ends on the earlier of:
(i) the Date of Termination as defined in Section 3.6 of this Agreement,
or (ii) the close of business on April 11,
2010.
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1.1
(e)
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“TRIGGERING
TRANSACTION” means a Change of Control of the
Company.
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1.1
(f)
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“TRIGGERING
TRANSACTION DATE” shall mean the date of the Triggering
Transaction.
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2
1.2
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APPLICABLE
LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflict of law principles.
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SECTION
2:
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2.2
(a)
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Throughout
the Term of this Agreement, the Executive shall serve as a Director of the
Board and President, General Counsel and Secretary of the Company, subject
to reasonable directions and nominations of the Board. The
Executive shall have such authority and shall perform such duties as are
specified by the By-laws of the Company for the office to which he has
been appointed hereunder and shall so serve, subject to the control
exercised by the Board from time to time. Additionally, each
year throughout the Term of the Executive’s service as a Director, the
Executive shall be nominated to serve as member of the
Board.
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2.2
(b)
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Throughout
the Term of this Agreement (but excluding any periods of vacation and sick
leave to which the Executive is entitled), the Executive shall devote his
full business time and attention to the business and affairs of the
Company and shall use his best efforts to perform faithfully and
efficiently such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be a violation
of this paragraph for the Executive to serve on corporate, civic or
charitable boards or committees, so long as such activities do not
interfere with the performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement or violate the
Company’s conflict of interest
policy.
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2.3
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SITUS
OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive’s services shall be performed at the location where the
Executive was employed immediately prior to the Effective Date, or any
office of the Company which is located on Long Island or the New York City
metropolitan area. It is understood and agreed by the Executive
that the Executive will be required at the discretion of the Board of
Directors, to engage in substantial business
travel.
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2.4
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3
SECTION
3:
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4
3.4
(a)
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the
assignment to the Executive of any duties inconsistent in any respect with
the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 2.2 (a) or any other action by the Company which results in a
material diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the
Executive;
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3.4
(b)
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(i)
in the event of and after the occurrence of a Triggering Transaction, the
failure by the Company to continue in effect any benefit or compensation
plan, stock ownership plan, life insurance plan, health and accident plan
or disability plan to which the Executive is entitled as specified in
Section 2.4,
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(ii)
the taking of any action by the Company which would adversely affect the
Executive’s participation in, or materially reduce the Executive’s
benefits under, any plans to which the Executive is entitled as specified
in Section 2.4, or deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section 2.4 (f),
or
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(iii)
the failure by the Company to provide the Executive with paid vacation to
which the Executive is entitled as described in Section 2.4
(g).
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5
3.4
(c)
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in
the event of and after the occurrence of a Triggering Transaction, the
Company’s requiring the Executive to be based at any office or location
other than that described in Section
2.3;
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3.4
(d)
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a
material breach by the Company of any provision of this Agreement; such
breach by the Company shall require Executive to provide the Company a
written notice describing with specificity the nature of the contractual
breach and the Company shall have 30 days to cure such
breach.
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3.4
(e)
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within
a period ending at the close of business on the date one (1) year after
the Triggering Transaction Date of any Change in Control, if the Company
has failed to comply with and satisfy Section 6.2 on or after such
Triggering Transaction Date.
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SECTION
4:
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6
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In
addition, on the date that Incentive Bonuses are paid to other peer
executives for the year in which the Executive’s employment is terminated,
the Executive will be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive Bonus is
paid prior to the Date of Termination and denominator of which is
365. For purposes of this Agreement, the term “Current Target
Bonus” means the Incentive Bonus that would have been paid to the
Executive for the fiscal year in which the termination of employment
occurred, if the Executive’s employment had not been so terminated and the
Executive had earned 100% of the Incentive Bonus that he could have earned
for that year.
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7
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For
the purpose of this Section, the term “Accrued Compensation” means the sum
of (i) the Executive’s Annual Base Salary through the Date of Termination
to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay; in each case, to the extent
not previously paid.
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SECTION
5:
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5.1(a)
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It
is agreed that during the Term of this Agreement and for a period of two
(2) years thereafter, the Executive shall not, without prior written
approval of the Board, become an officer, employee, agent, partner,
consultant, beneficial/owner, agent, investor, or director of any business
enterprise in substantial direct competition (as defined in Section
5.1(b)) with the Company; provided that, if the Executive is terminated by
the Company without Cause or if the Executive terminates his employment
for Good Reason, then he will not be subject to the restrictions of this
Section.
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5.1
(b)
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For
purposes of Section 5.1, a business enterprise with which the Executive
becomes associated as an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor or director shall be considered in
substantial direct competition, if such entity competes with the Company
in any business in which the Company is engaged and is within the
Company’s market area as of the date that the Term of this Agreement
expires.
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5.1
(c)
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The
above constraint shall not prevent the Executive from making passive
investments, not to exceed five percent (5%), in any
enterprise.
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5.1(d)
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It
is agreed that during the Term of this Agreement and for a period of two
(2) years thereafter, the Executive shall not, directly or indirectly,
hire, offer to hire, or otherwise solicit the employment of any employee
of the Company on behalf of himself or any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
Company.
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5.1
(f)
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The
Executive agrees that the foregoing restrictions are reasonable and shall
not prevent the Executive from earning a livelihood, and furthermore, if
any court of competent jurisdiction deems any of the provisions of the
foregoing invalid, this Agreement shall be enforced to the full extent
that such provisions are valid and such court may modify such restrictions
to afford the Company the maximum applicable protection permitted under
the law.
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5.1(g)
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Should
Executive be adjudicated by a court of competent jurisdiction to be in
violation of this Section 5.1, all amounts owed Executive pursuant to this
Agreement shall be forfeited, and the Company shall be entitled to
injunctive or such other equitable relief as is necessary to restrain
Executive’s breaching conduct.
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5.2
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DEVELOPMENTS. It
is agreed that all developments, including inventions, whether patentable
or otherwise, trade secrets, formulations, discoveries, concepts,
processes, improvements, ideas or writings, or know-how related thereto,
which directly or indirectly relate to or may be useful in the design,
manufacture, packaging or marketing of the Company’s products or otherwise
in the business of the Company or which directly or indirectly result from
or are related to any services the Executive has rendered, is or will be
engaged in rendering for the Company which the Executive, either by
himself or in conjunction with any other person or persons, shall
conceive, make, develop, acquire or acquire knowledge of during the
employment relationship or because of the employment relationship (the
“developments”), shall become and remain the sole and exclusive property
of the Company. The Executive hereby assigns, transfers and
conveys all of his right, title and interest in and to any and all such
developments and to promptly disclose all such developments to the
Company. Upon the request of the Company, the Executive will
execute and deliver any and all instruments, documents and papers, give
evidence and do any and all other acts which are or may be necessary or
desirable to document such transfer or to enable the Company to file and
prosecute applications for and to acquire, maintain and enforce any and
all patents, trademark registrations or copyrights under United States or
foreign law with respect to any such developments or to obtain any
extension, validation, reissue, continuance or renewal of any such patent,
trademark or copyright. The Company will be responsible for the
preparation of any such proceedings and will reimburse the Executive for
reasonable expenses incurred complying with the provisions of this
paragraph.
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SECTIONS
6:
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10
SECTION
7:
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Notice to
Executive:
------------------------
Xxxxxxxxxxx
X. Xxxx
000 Xxxx
Xxxxxxxx Xxxx
Xxxxx, XX
00000
Notice to
Company:
-----------------------
Lakeland
Industries, Inc.
000-0
Xxxxxxx Xxx.
Xxxxxxxxxx,
XX 00000
11
By:
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/s/ Xxxxxxxxxxx X.
Xxxx
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Xxxxxxxxxxx
X. Xxxx
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Members
BOD Compensation Committee
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By:
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/s/ Xxxx X.
Xxxxxxx
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Xxxx
X. Xxxxxxx
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By:
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/s/ X. X.
Xxxxxxx
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Xxxx
X. Xxxxxxx
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By:
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/s/ A. Xxxx
Xxxxx
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A.
Xxxx Xxxxx
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By:
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/s/ Xxxxxxx
Xxxxxxx
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Xxxxxxx
Xxxxxxx
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By:
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/s/ Xxxxxxx
Xxxxxxxxx
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Xxxxxxx
Xxxxxxxxx
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12
Exhibit
1
Xxxxxxxxxxx X.
Xxxx
NEW CONTRACT 2008 –
2010
Exhibit
1
On May
25th
of each year commencing in 2009 and 2010, the Executive may be awarded a bonus
based on an increase in after tax earnings for the most recently ended fiscal
year above a minimum goal amount established for each year by the Compensation
Committee, subject to a partial cap amount. Said bonus shall be
calculated as follows: for each xxxxx increase in earnings after tax
above the minimum goal amount, a bonus of $3,000 in cash with adjustments for
stock splits or dividends or other such dilution in EPS during the fiscal year,
up to a partial cap amount above which $1500 in cash will be awarded per xxxxx
EPS in excess of the partial cap amount.
For FY
2009, the minimum goal amount shall be 70 cents per share, the partial cap
amount shall be 93 cents per share. A new minimum goal amount and
partial cap amount for FY 2010 shall be set by April 2009 and attached hereto as
an addendum.
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