Lakeland Industries, Inc. EXHIBIT 10.7
(19 pages)
Employment Agreement
This agreement ("Agreement") has been entered into this 1st day of February
2004, by and between Lakeland Industries, Inc., a Delaware corporation
("Company"), and Xxxxxxxxxxx X. Xxxx, and 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 of Section 13 (d) (3) or 14 (d)
(2) of the Exchange Act) of ownership of 30% or more 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
(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 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
(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
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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.
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. (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(l) "DISABILITY EFFECTIVE DATE" has the meaning set forth in Section 3.2
of this Agreement.
1.1(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of an Operating
Line of Business that is or becomes a separate corporation,
limited liability
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corporation, partnership or other business entity, the sale,
exchange, transfer, distribution or other disposition of the
ownership, either beneficially or of record or both, by the
Company of more than 50% of either (a) the then outstanding
shares of common stock (or the equivalent equity interests)
of such Operating Line of Business, or (b) the combined
voting power of the then outstanding voting securities of
such Operating Line of Business entitled to vote generally
in the election of the Board or the equivalent governing
body of the Operating Line of Business;
(ii) when used with reference to the merger or consolidation
of an Operating Line of Business that is or becomes a
separate corporation, limited liability corporation,
partnership or other business entity, any such transaction
that results in the Company owning, either beneficially or
of record or both, less that 50% of either (a) the then
outstanding shares of common stock (or the equivalent equity
interests) of such Operating Line of Business, or (b) the
combined voting power of the then outstanding voting
securities of such Operating Lines of Business entitled to
vote generally in the election of the Board or the
equivalent governing body of the Operating Line of Business;
or
(iii) when used with reference to the assets of an Operating
Line of Business, the sale, exchange, transfer, liquidation,
distribution or other disposition of assets of such
Operating Line of Business (a) having a fair market value
(as determined by the Incumbent Board) aggregating more than
50% of the aggregate fair market value of all of the assets
of such Operating Line of Business as of the Triggering
Transaction Date, (b) accounting for more than 50% of the
aggregate book value (net of depreciation and amortization)
of all of the assets of such Operating Line of Business, as
would be shown on a balance sheet for such Operating Line of
Business, prepared in accordance with generally accepted
accounting principles then in effect, as of the Triggering
Transaction Date; or (c) accounting for more than 50% of the
net income of such Operating Line of Business, as would be
shown on an income statement, prepared in accordance with
generally accepted accounting principles then in effect, for
the 12 months ending on the last day of the month
immediately preceding the month in which the Triggering
Transaction Date occurs.
1.1 (n) "EFFECTIVE DATE" means the date of this Agreement.
1.1 (o) "EMPLOYMENT PERIOD" means the period beginning on the Effective
Date and ending on the later of (i) February 1, 2006, or (ii) February 1 of
any succeeding fiscal year during which notice is given by
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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.
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 (i) 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(w) "OPERATING LINES OF BUSINESS" means the following lines of business
of the Company, whether operated as a division or as a separate subsidiary:
(i) provides disposable and woven protective apparel and accessory items
manufacturing and marketing, which manufactures and sell uniforms, gloves,
chemical suits, fire turnout and aluminized fire protective apparel, PVC
aprons, medical disposable gowns and all nature of safety apparel to a wide
variety of distributors, institutions and businesses in the United States,
Canada and internationally.
1.1(x) "OTHER BENEFITS" has the meaning set forth in Section 4.1 (d) of
this Agreement.
1.1 y) "OUTSTANDING COMPANY COMMON STOCK" has the meaning set forth in
Section 1.1 (f) (i) of this Agreement.
1.1 (z) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning set forth
in Section 1.1 (f) (i) of this Agreement.
1.1 (aa) "PAYMENT" has the meaning set forth in Section 4.2 (e) of this
Agreement
1.1 (bb) "PERSON" has the meaning set forth in Sections 13 (d) and 14 (d)
of the Exchange Act.
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1.1 (cc) "SUPPLEMENTAL PLAN" has the meaning set forth in Section 4.2 (e)
of this Agreement.
1.1 (dd) "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
1,2006 or February 1 of any renewal term as set forth in Section 2.1 of
this Agreement.
1.1 (ee) "TRIGGERING TRANSACTION" means (i) a Change of Control of the
Company or (ii) a Disposition of a Major Part of two or more of the
Company's Operating Lines of Business.
1.1 (ff) "TRIGGERING TRANSACTION DATE" shall mean the date of the
Triggering Transaction.
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 terms and
provisions of this Agreement. This Agreement will automatically renew for two
year periods unless either party gives the other written notice, by October 28,
2005, or October 28 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 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
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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 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 (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 Company in accordance with this Agreement or
violate the Company's conflict of interest policy as in effect
immediately prior to the Effective 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 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 year within the Term of this
Agreement, the Executive shall receive an annual salary ("Annual Base
Salary") of $295,000 between February 1, 2004 and February 1, 2005;
$335,000 between February 1, 2005 and February 1, 2006 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 or 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 $2500.00 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, but
in no case shall such target
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annual Incentive Bonus which the Executive will have the opportunity to
earn be reduced below Twenty Thousand Dollars ($20,000).
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 to other peer executives of the Company. 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
expenses 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 the lease of an automobile bi-annually
or Company purchase for a 4-year period, title to remain in the Company
and whole life insurance in the face amount of $500,000 paid by the
Company. Executive agrees where necessary to be responsible for any and
all federal, state and local taxes owning as a result of such life
insurance being provided.
2.4 (g) VACATION. Throughout the Term of this Agreement, the Executive
shall be entitled to paid vacation for four (4) 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
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Executive's employment with the Company shall terminate effective on the
thirtieth (30th) 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 by 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
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 commission of an act constituting a
criminal offense involving moral turpitude, dishonesty, or breach of trust, or
(iii) 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, 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 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;
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 or disability plan to which the
Executive is entitled as specified in Section 2.4, (ii) the taking of
any action by the Company which
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would adversely affect the Executive's participation in, or materially
reduce the Executive's benefits under, any plans described 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 (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).
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;
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 a basis 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 or 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
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by reason of death or Disability, the Date of Termination shall 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 of 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 other 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).
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
contract 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
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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 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, 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.
4.1 (b) Annual Base Salary and Target Bonus Continuation. For the
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remainder of the Employment Period, the Company shall pay to the
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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 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
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years beginning on the Date of Termination, or such longer period as
any plan, program, practice or policy may provide, 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,
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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 (i) the Company
shall
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terminate the Executive's employment without Cause, or (ii) 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 of the requisite events is as set forth in
subsection (a) above or (z) 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 to 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
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after the Entitlement Date, 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 to 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.
13
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 to
as the "Excise Tax"), then the Executive shall be
entitled to receive an 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 Executive is informed in
writing of such claim by the Internal Revenue 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 date 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 (i) payment of Accrued Obligations (as defined in Section 4.1 (a))
(which shall be paid to the Executive's estate or
14
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
of the Executive's Disability during the Employment Period (either prior or
subsequent to a Triggering Transaction), this Agreement shall terminate without
further obligations to the Executive, other than for (i) 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) and
(ii) the timely payment or provision of Other Benefits (as defined in Section
4.1 (d)) including Disability benefits pursuant to the terms of any plan, policy
or arrangement of the Company.
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
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) and the timely payment or
provision of Other Benefits (as defined in Section 4.1 (d)). 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 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
15
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 not 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 of, 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 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) It is agreed that during the period beginning on the date the
Term of this Agreement expires and ending 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 or 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.
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
16
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
enterprise.
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 further more, 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 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, 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 violation 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. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
SECTIONS 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
17
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.
SECTION 7: MISCELLANEOUS.
7.1 OTHER AGREEMENTS. The Board may, from time to time, in the future,
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 enforce ability of any other
provision of 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.
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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. This
agreement may be countersigned separately by individual members of the
Compensation Committee.
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
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