Lakeland Industries, Inc.
Employment Agreement
This agreement ("Agreement") has been entered into this 1st day of
February. 2000, by and between Lakeland Industries, Inc., a Delaware corporation
("Company"), and Xxxxxxxxxxx X. Xxxx, individual ("Executive").
IT IS AGREED AS FOLLOWS
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS. For purposes of this Agreement, the following words
and phrases, whether or not capitalized, shall have the meanings
specified below, Unless the context plainly requires a different
meaning.
1,1(a) "ACCRUED COMPENSATION" has the meaning set forth in Section
4.5 of this Agreement.
1.1(b) "ACCRUED OBLIGATIONS" has the meaning set forth in Section
4.1 (a) of this Agreement.
1.1(c) "ANNUAL BASE SALARY" has the meaning set forth in Section
2.4 (a) of this Agreement.
1.1(d) "BOARD" means the Board of Directors of the Company.
1.1(e) "CAUSE" has the meaning set forth in Section 3.3 of this
Agreement
1.1(f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual, entity or group, or
a Person (within the meaning on 13 (d) 3) or 14 (d)
(2) of the Exchange Act) of a controlling interest of
either (a) the then outstanding common stock of the
Company (the "Outstanding Company Common Stock") or
(b) the combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally on the election of directors (the
"Outstanding Company Voting Securities"); or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board: provided,
however, that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders
was approved by a vote of at least a majority of the
directors then
comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of
office occurs as a result of either an actual or
threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii)Approval by the stockholders of the Company of a
reorganization. merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (a) more than 50';/0 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, o' the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as
their ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (b) no
Person beneficially owns, directly or indirectly, 30%
or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such
reorganization, merge' or consolidation or the
combined voting power of the then outstanding voting
securities of such corporation, entitled to vote
generally in the election of directors and (c) at
least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation were members
of the Incumbent Board at the time of the execution of
the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the stockholders of the Company of (a) a
complete liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the Come (any,
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 o1 directors is then beneficially owned,
directly or indirectly, by all or
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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 a$ 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.
1.1(g) "COMPANY" has the meaning set forth in the first paragraph
of this Agreement and, with regard to successors, in
Section 6.2 of this Agreement.
1.1(h) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.1(i) "CURRENT TARGET BONUS" has the meaning set forth in Section
4.1 (a) of this Agreement.
1.1(j) "DATE OF TERMINATION" has the meaning set forth in Section
3.6 of this Agreement.
1.1(k) "DISABILITY" has the meaning set forth in Section 3.2 of
this Agreement.
1.1(1) "DISABILITY EFFECTIVE DATE" has the meaning set forth in
Section 3.2 of this Agreement.
1.1(m) [INTENTIONALLY DELETED]
1.1(n) "EFFECTIVE DATE" means the date of this Agreement.
1.1(0) "EMPLOYMENT PERIOD" means the period beginning on the
Effective Date and ending on the later of (i) February 1,
2003, or (ii) February 1 of any succeeding fiscal year
during which notice is given by either party (as described
in Section 1.1 (dd) of this Agreement) of such party's
intent not to renew this Agreement.
1.1(p) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
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1.1(q) "EXCISE TAX" has the meaning set forth in Section 4.2 (e)
of this Agreement.
1.1(r) "GOOD REASON' has the meaning set forth in Section 3.4 of
this Agreement.
1.1(s) "GROSS-UP PAYMENT" has the meaning set forth in Section 4.2
(e) of this Agreement.
1.1(t) "INCENTIVE BONUS" has the meaning set forth in Section 2.4
(b) of this Agreement.
1.1(u) "NOTICE OF TERMINATION" has the meaning set forth in
Section 3.5 of this Agreement.
1.1(v) [INTENTIONALLY DELETED]
1.1(w) "OTHER BENEFITS" has the meaning set forth in Section 4.1
(d) of this Agreement.
1.1(x) "OUTSTANDING COMPANY COMMON STOCK" has the meaning set
forth in Section 1.1 (f) (i) of this Agreement.
1.1(y) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning set
forth in Section 1.1 (f) (i) of this Agreement.
1.1(z) "PAYMENT" has the meaning set forth in Section 4.2 (e) of
this Agreement
1.1(aa) "PERSON" has the meaning set forth in Sections 13 (d) and
14 (d) of the Exchange Act.
1.1(bb) [INTENTIONALLY DELETED]
1.1(cc) "TERM" means the period that begins on the Effective Date
and ends on the earlier of (i) the Date of Termination as
defined in Section 3.6 of this Agreement, or (ii) the close
of business on the later of February 1, 2003 or February 1
any renewal term as set forth in Section 2.1 of this
Agreement.
1.1(dd) "TRIGGERING TRANSACTION" means a Change of Control of the
Company
1.1(ee) "TRIGGERING TRANSACTION DATE" shall mean the date of the
Triggering Transaction.
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1.2. GENDER AND NUMBER. When appropriate, pronouns in this Agreement
used in the masculine gender include the feminine gender, words in
the singular include the plural, and words in the plural include
the singular.
1.3. HEADINGS. All headings in this Agreement are included solely for
ease of reference and do not bear on the interpretation of the
text. Accordingly, as used in this Agreement, the terms "Article"
and "Section" mean the text that accompanies the specified Article
and Section of the Agreement.
1.4. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1. PERIOD OF EMPLOYMENT. The Executive shall remain in the employ of
the Company throughout the Term of this Agreement in accordance
with the term s and provisions of this Agreement. This Agreement
will automatically renew for two year periods unless either party
gives the other written notice, by October 30, 20C2, or October 30
of any succeeding year, of such party's intent not to renew this
Agreement.
2.2. POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive shall
serve as a Director of the Board and Executive Vice
President, General Counsel and Secretary of the Company,
subject to reasonable directions and nominations of the
Board. The Executive shall have such authority and shall
perform such duties as are specified by the By-laws of the
Company for the office to which he has been appointed
hereunder and shall so serve, subject to the control
exercised by the Board from time to time, Additionally,
each year throughout the Term of the Executive's service as
a Director, the Executive shall be nominated to serve as
member of the Board.
2.2(b) Throughout the Term of this Agreement (but excluding any
periods of vacation and sick leave to which the Executive
is entitled), the Executive shall devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and
efficiently such responsibilities all 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 ;o (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures or fulfill
speaking engagements, or (iii) manage personal investments,
so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as
an employee of the
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Company in accordance with this Agreement or violate the
Company's conflict of interest policy as in effect
immediately prior to the Elective Date.
2.3. SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the
Executive 3 was employed immediately prior to the Effective Date,
or any office of the Company which is located in the greater Long
Island areas. It is understood and agreed by the Executive that
the Executive will be required at the discretion of the Board of
Directors, to engage in substantial business travel.
2.4. COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first calendar year within the
Term of this Agreement, the Executive shall receive an
annual salary ("Annual Base Salary") of Two Hundred and
Fifteen Thousand Dollars ($215,000) which shall be paid in
equal or substantially equal semi-monthly installments.
During the Term of this Agreement, the Annual Base ; Salary
payable to the Executive shall be reviewed at least
annually and shall be increased at the discretion of the
Board of the Compensation Committee of the Board but shall
not be reduced.
2.4(b) INCENTIVE BONUSES, In addition to Annual Base Salary, the
Executive shall be awarded the opportunity to earn an
incentive bonus on an annual basis ("Incentive Bonus")
under an incentive compensation plan which equals $1300.00
for each xxxxx of additional after tax earnings
incrementally earned over the prior year's fiscal earnings,
which shall be calculated from the Company's certified
audited financial statements. During the Term of this
Agreement, the annual target Incentive Bonus which the
Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the
discretion of the Board or the Compensation Committee of
the Board.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the
Term of this Agreement, the Executive shall be entitled to
participate in all incentive, savings and retirement plans
generally available to other peer executives of the
Company.
2.4(d) WELFARE BENEFIT PLANS, Throughout the Term of this
Agreement (and thereafter, subject to Sections 4.1 (c)
hereof), the Executive and /or the Executive's family, as
the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance
plans and programs) to the extent generally available
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to other peer executives of the Company but only to the
extent that such persons are eligible for coverage under
the terms of such Plan. As it affects Sections 2.4(c) and
2.4(d) above, the Company shall always; have the right to
alter its benefit plan providers.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable expanses incurred by the Executive in
accordance with the policies, practices and procedures
generally applicable to other peer executives of the
Company, The Executive agrees to submit receipts and or
vouchers in support of all requests for reimbursement.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement, the
Executive shall be entitled to an automobile allowance of
$4000.00 annually and term life insurance of $500,000 paid
by the Company. Executive agrees to be solely responsible
for any and all federal, state and local taxes owing as a
result of such term life insurance being provided.
2.4(g) VACATION. Throughout the Term of this Agreement, the
Executive shall be entitled to paid vacation for three (3)
weeks each year.
SECTION 3: TERMINATION OF EMPLOYMENT
3.1. DEATH. The Executive's employment shall terminate automatically
upon the Executive's death during the Employment Period.
3.2. DISABILITY. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
the Company may give to the Executive written notice in accordance
with Section 7.2 of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company shall terminate effective on the thirtieth (30) day after
receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such
receipt the Executive shall not have returned to full-time
performance of the Executive's duties - For purposes of this
Agreement, "Disability" shall mean that the Executive has been
unable to perform the services required of the Executive hereunder
on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental
condition. "Disability" shall be deemed to exist when certified 3y
a physician paid for and selected by the Company and acceptable to
the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make
any such Disability determination.
3.3. TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause", which shall
mean
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termination based upon: (i) the Executive's willful and continued
failure to substantially perform his duties with the Company (other than
as a result of incapacity due to physical or mental condition), after a
written demand for substantial performance is delivered to the Executive
by the Company, which specifically identifies the manner in which the
Executive has not substantially performed his duties, (ii) the
Executive's arrest or indictment for any felony or any act constituting
a criminal offense involving moral turpitude, dishonesty, or breach of
trust, or (ill) the Executive's material breach of any provision of this
Agreement. For purposes of this Section, no act, or failure to act on
the Executive's part shall be considered "willful" unless done, or
omitted to be done, without good faith and without reasonable belief
that the act or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until (i) he receives a Notice of
Termination from the Company, (ii) he is given the opportunity, with
counsel to be heard before the Board (except in the event he is
incarcerated, in which case his appearance shall not be necessary); and
(iii) the Board finds, in its good faith opinion, the Executive was
guilty of the conduct set forth in the Notice of Termination.
3.4. GOOD REASON. The Executive may terminate his employment with the
Company for "Good Reason", which shall mean:
3.4(a) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 2.2 (a) or any other action by the Company which
results in material diminution in such position, authority,
duties or responsibilities excluding for this purpose any
action not taken in bad faith and which remedied by the
Company promptly after receipt of notice thereof given by
the Executive;
3.4(b) (i) in the event of and after the occurrence of a
Triggering Transaction, the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident
plan disability plan to which the Executive is entitled as
specified in Section 2.' (ii) the taking of any action by
the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive
benefits under, any plans described in Section 2.4, or
deprive the Executive of any material fringe benefit
enjoyed by the Executive described in Section 2.4 (f) or
(iii) the failure by the Company to provide the Executive
with paid vacation to which the Executive is entitled s
described in Section 2.4 (g).
3.4(c) in the event of and after the occurrence of a Triggering
Transaction, the Company's requiring the Executive to be
based at any office or location other than that described
in Section 2.3;
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3.4(d) a material breach by the Company of any provision of this
Agreement; Such breach by the Company shall require
Executive to provide the Company a written notice
describing with specificity the nature of the contractual
breach and the Company shall have 30 days to cure such
breach.
3.4(e) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
3.4(f) within a period ending at the close of business on the date
one (1; year after the Triggering Transaction Date of any
Change in Control, if the Company has failed to comply with
and satisfy Section 6.2 on or after such Triggering
Transaction Date. For purposes of this Section, any good
faith determination of "Good Reason" made by the Executive
shall be conclusive.
3.5. NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in
accordance with Section 7.2. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide an oasis for
termination of the Executive's employment under the provision so
indicated, and (iii) if the Date of Termination (as defined in
Section 3.6 hereof) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not
more than thirty (30) days after the giving of such notice). The
failure by the Executive o- the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or
the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6. DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the Date of Termination shall be
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's
employment is terminated by reason of death or Disability, the
Date of Termination ;5hall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if
the Executive's employment is terminated by the Company other than
for Cause, death, or Disability, the Date of Termination shall be
the date of receipt o1 the Notice of Termination; provided that if
within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the ether
party that a dispute exists concerning the termination, the Date
of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
by a final Judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected)
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SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON NOT IN CONNECTION
WITH A TRIGGERING TRANSACTION. If, prior to a Triggering
Transaction during the Employment Period (except in the event that
one of the following terminations of employment occurs within the
six-month period prior to the earlier of (a) a Triggering
Transaction or (b) the execution of a definitive agreement or
contrast that eventually results in a Triggering Transaction,
which shall result in the payment of severance benefits set forth
in Section 4.2 of this Agreement): (i) the Company shall terminate
the Executive's employment without Cause, or (ii) the Executive
shall terminate employment with the Company for Good Reason, the
Executive shall be entitled to the payment of the benefits
provided below as of the Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30) days after the Date
of Termination, the Company shall pay to the Executive the
sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent it not previously paid,
(2) the accrued benefit payable to the Executive under any
deferred compensation plan, program or arrangement in which
the Executive is a participant subject to the computation
of benefits provisions of such plan, program or
arrangement, and (3) any accrued vacation pay; in each case
to the extent not previously paid (the "Accrued
Obligation"). In addition, on the date that Incentive
Bonuses are paid to other peer executives for the year in
which the Executive's employment is terminated, the
Executive will be paid an amount equal to the product of
the Current Target Bonus multiplied by a fraction, the
numerator of which is the number of days during the fiscal
year for which the Incentive Bonus is paid prior to the
Date of Termination and denominator of which is 365. For
purposes of this Agreement, the term "Current Target Bonus"
means the Incentive Bonus that would have been paid to the
Executive for the fiscal year in which the termination of
employment occurred, of the Executive's employment had not
been so terminated and the Executive had earned 100% of the
Incentive Bonus that he could have earned for that year.
4.1(b) Annual Base Salary and Target Bonus Continuation. For the
remainder of the Employment Period, the Company shall pay
to the Executive, the Executive's then-current Annual Base
Salary and Current Target Bonus as would have been paid to
the Executive had the Executive remained in the Company's
employ throughout the Employment Period; provided that in
all cases the Executive shall receive, at minimum, the
then-current Annual Base Salary and Current Target Bonus
for the remainder of the Employment Period, or for a period
beginning on the Date of Termination and ending two years
thereafter, whichever is longer. The Company at any time
may elect to pay the balance of such payments then
remaining in
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a lump sum, in which case the total of such payments shall
be discounted to present value on the basis of the
applicable Federal short-term monthly rate as determined
according to Code Section 1274 (s) for the month in which
the Executive's Date of Termination occurred.
4.1(c) Medical and Health Benefit Continuation. For a period of
two years beginning on the Date of Termination, or such
longer period as any plan, program, practice or policy may
provide, but only to the extent allowable under such Plan,
the Company shall continue medical and health benefits to
the Executive and/or the Executive's family at least equal
to those which would have been provided to them in
accordance with the plans, programs, practices and policies
described in Section 2.4 (d) if the Executive's employment
had not been terminated, in accordance with the plans,
practices, programs or policies of the Company as those
provided generally to other peer executives and their
families; provided, however, that if the Executive becomes
re-employed with another employer and is eligible to
receive medical or health benefits under another
employer-provided plan, the medical and health benefits
described herein shall be secondary to those provided under
such other plan during such applicable period of
eligibility. In the event Executive is able to obtain
medical and health care coverage from a third party for the
duration of such coverage period that is at least as good
in all material respects as that described in the
immediately preceding sentence. Executive agrees to accept,
in lieu of such Company provided medical and health
benefits, a lump sum cash payment in an amount equal in
value to the entire cost to Executive on an after-tax basis
of such alternate medical and health care coverage.
4.1(d) Other Benefits. To the extent not previously paid or
provided the Company shall timely pay or provide to the
Executive and/or the Executive's family any other amounts
or benefits required to be paid or provided for which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer
executives and their families ("Other Benefits").
4.2. BENEFITS UPON TERMINATION IN CONNECTION WITH A TRIGGERING
TRANSACTION. If (a) a Triggering Transaction occurs during the
Employment Period and within three years after the Triggering
Transaction Date ( ) the Company shall terminate the Executive's
employment without Cause, or (n] the Executive shall terminate
employment with the Company for Good Reason, or alternatively,
(b) if one of the above-described terminations of employment
occurs within the six-month period prior to the earlier of (i) a
Triggering Transaction or (ii) the execution of a definitive
agreement or contract that eventually results in a Triggering
Transaction, then the Executive shall become entitled to the
payment of the benefits as provided below as of either (y) the
Date of Termination, in the case where the sequence
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of the requisite events is as set forth in subsection (a) above or
(2) the Triggering Transaction Date, in the case where the
sequence of the requisite events occurred as set forth in
subsection (b) above (the relevant date for purposes of
entitlement "o the benefits set forth in this Section 4.2 is
hereinafter referred to as the "Entitlement Date"):
4.2(a) Accrued Obligations. Within thirty (30) days after the
Entitlement Data, the Company shall pay to the Executive
the Accrued Obligation. In addition, on the date that
Incentive Bonuses are paid for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Target
Bonus multiplied by a fraction, the numerator of which is
the number of days during the fiscal year for which the
Incentive Bonus is paid prior t3 the Date of Termination
and the denominator of which is 365.
4.2(b) Severance Amount. Within thirty (30) days after the
Entitlement Date, the Company shall pay to the Executive as
liquidated damages severance pay in a lump sum, in cash, an
amount equal to 2.99 times an amount equal to his
then-current Annual Base Salary and Current Target Bonus.
4.2(c) Stock Options. To the extent not otherwise provided for
under the terms of the Company's stock option plans or the
Executive's stock option agreements, all stock options held
by the Executive that have not expired in accordance with
their respective terms shall vest and become fully
exercisable as of the Entitlement Date.
4.2(d) Other Benefits. To the extent not previously paid or
provided, the Company shall timely pay or provide to the
Executive and/or the Executive's family any Other Benefits
required to be paid or provided for which the Executive
and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program,
policy or practice or contract or agreement of the Company
to be implemented by the Company during the term of this
Agreement, such as deferred compensation or retirement
plans.
4.2(e) Excess Parachute Payment. Anything in this Agreement to the
contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by the Company
to or for the benefit of Executive (whether paid or payable
or distributed or distributable pursuant to the terms of
this Agreement or otherwise but determined without regard
to any additional payments required under this Section 4.2
(e) (a "Payment") would be subject to the excise tax
imposed by Code Section 4999 (or any successor provision)
or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter
collectively referred 13 as the "Excise Tax"), then the
Executive shall be entitled to receive an
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additional payment (a "Gross-up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes
(and any interest or penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment on
an after-tax basis equal to the Excise Tax imposed upon the
Payment. The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than thirty (30) business days
after the The Internal Revenue informs executive in writing
of such claim Service and the notification shall apprise
the Company of the nature of the claim and the date on
which such claim is required to be paid. The Executive
shall not pay such claim prior to the expiration of a
thirty (30) day period following the date on which the
Executive has given such notification to the Company (or
such shorter period ending on the xxxx that any payment of
taxes with respect to such claim is required). If the
Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall cooperate with the Company in so
contesting: provided, however, that the Company shall bear
and pay all costs and expenses, (including additional
interest and penalties) incurred in connection with such
contest, on an after-tax basis to the Executive.
4.3. DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the employment Period (either prior
or subsequent to a Triggering Transaction), this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of
Accrued Obligations (as defined in Section 4.1 (a)) (which shall
be paid 13 the Executive's estate or beneficiary, as applicable,
in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other
Benefits (as defined in Section 4.1(d)), including death benefits
pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4. DISABILITY. If the Executive's employment is terminated by reason
' if the Executive's Disability during the Employment Period
(either prior or subsequent to a Triggering Transaction), this
Agreement shall terminate without further obligations :o the
Executive, other than for payment of Accrued Obligations as
defined in Section 4.1 (a)) which shall be paid to the Executive
in a lump sum in cash within thirty (30) days of the Date of
Termination).
4.5. TERMINATION FOR CAUSE; OTHER THAN GOOD REASON, if the Executive's
employment shall be terminated for Cause during the Employment
Period (either prior or subsequent to a Triggering Transaction),
this Agreement shall terminate
13
without further obligations to the Executive other than the
obligations to pay to the Executive his Accrued Compensation (as
defined in this Section). If the Executive terminates employment
with the Company during the Employment Period, (excluding a
termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for the
payment of Accrued Compensation (as defined in this Section). In
such case, all Accrued Compensation shall be paid to the Executive
in a lump sum in cash within thirty (30) days of the Date of
Termination.
For the purpose of this Section, the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary pro-rated
through the Date of Termination to the extent not previously paid,
(ii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), and
(iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6. NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN BENEFITS.
Except as provided in Section 4.1 (c) and in this Section 4.6,
nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement
with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive Under any plan, policy,
practice or program of, or any contract or agreement with, the
Company at or subsequent to the Date of Termination, shall be
payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this
Agreement.
4.7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1 (c), such amounts shall
rot be reduced whether or not the Executive obtains other
employment. In the event of and after the occurrence of a
Triggering Transaction, the Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability 3f, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by
the Executive regarding the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Code Section 7872 (f)
(2) (A).
4.8. RESOLUTION OF DISPUTES. If there shall be any dispute between the
Company and the Executive (i) in the event of any termination of
the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the
14
event of any termination of employment by the Executive, whether
Good Reason existed, then, unless and until there is a final,
non-appealable judgment by a court of competent Jurisdiction
declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was
not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's
family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section
4.1 as though such termination were by the Company without Cause
or by the Executive with Good Reason; provided, however, that the
Company shall not be required to pay any disputed amounts pursuant
to this Section except upon receipt of an undertaking by or on
behalf of the Executive to repay all such amounts to which the
Executive is ultimately adjudged by such court not to be entitled.
SECTION 5: NON-COMPETITION.
5.1. NON-COMPETE AGREEMENT
5.1(a) (a) It is agreed that during the period beginning on the
date the Term of this Agreement expires and ending two (2)
years (the "Non-Compete Term") thereafter, the Executive
shall not, without prior written approval of the Board,
become an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor, or director of any
entity located anywhere in the world which is engaged in
the same business as the Company is engaged at any time
during the Non-Competition Term provided that, if the
Executive is terminated by the Company without Cause or if
the Executive terminates his employment for Good Reason,
after a Triggering Transaction, then he will not be subject
to the restrictions of this Section.
5.1(b) For purposes of Section 5.1, a business enterprise with
which the Executive becomes associated as an officer,
employee, agent, partner, consultant, beneficial/owner,
agent, investor or director shall be considered in
substantial direct competition, if such entity competes
with the Company in any business in which the Company is
engaged and is within the Company's market area as of the
date that the Employment Period expires.
5.1(c) The above constraint shall not prevent the Executive from
making passive investments, not to exceed five percent
(5%), in any publicly traded company.
5.1(d) The Executive agrees that the foregoing restrictions, in
the absence of a Triggering Transaction are reasonable and
may not prevent the Executive from earning a livelihood and
furthermore, if any court of competent jurisdiction deems
any of the provisions of the foregoing invalid, this
Agreement shall be enforced to the full extent that such
other provisions
15
are valid and such court may modify such restrictions to
afford the Company the maximum applicable protection
permitted under the law.
5.1(e) Should Executive be adjudicated by a court of competent
Jurisdiction to be in violation of this Section 5.1 or
Section 5.2 below, all amounts owed Executive pursuant to
this Agreement shall be forfeited and the Company shall be
entitled to injunctive or such other equitable relief as is
necessary to restrain Executive's breaching conduct.
5.2. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which
shall have been obtained by the Executive during the Executive's
employment by the Company and which shall not be or become public
knowledge (other than by acts by the Executive or representatives
of the Executive in xxxxx' ion of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the
Company, or as; may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it (nor
shall Executive use such information in any way). SECTION 6:
SUCCESSORS.
6.1. SUCCESSORS OF EXECUTIVE. This Agreement is personal to the
Executive and, without the prior written consent of the Company,
the rights (but not the obligations) shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
6.2. SUCCESSORS OF COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Triggering Transaction
Date for Good Reason. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise. After such
obligations are agreed to be assumed by such successor, the
Company shall have no further obligations thereunder or hereunder.
16
SECTION 7: MISCELLANEOUS.
7.1. OTHER AGREEMENTS. The Board may, from time to time, in the
fixture, provide other incentive programs and bonus arrangements
to the Executive with respect to the occurrence of a Triggering
Event that will be in addition to the benefits required to be paid
in the designated circumstances in connection with the occurrence
of a Triggering Transaction. Such additional incentive programs
and/or bonus arrangements will affect or abrogate the benefits to
be paid under this Agreement only in the manner and to the extent
explicitly agreed to by the Executive in any such subsequent
program or arrangement.
7.2. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or
mailed by certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses as set
forth below; provided that all notices to the Company shall be
directed to the attention of the Chairman of the Board, or to such
other address as one party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
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
7.3. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of
any other provision o this Agreement.
7.4, WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for
Good Reason pursuant to Section 3.4 shall not be deemed to be a
waiver of such provision or right or any other provision or right
of this Agreement.
* * *
17
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written.
By: /s/ Xxxxxxxxxxx X. Xxxx
-----------------------
Xxxxxxxxxxx X. Xxxx
Members BOD Compensation Committee
By: /s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
By: /s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
