Exhibit 10(k)
[LETTERHEAD OF LAKELAND INDUSTRIES, INC.]
February 14, 1997
Mr. Christopher J. Ryan
136 West Bayberry Rd.
Islip, NY 11751
Dear Mr. Ryan:
The purpose of this letter is to confirm your continuing employment with
Lakeland Industries Inc. on the following terms and conditions:
1. THE PARTIES
This is an agreement between Christopher J. Ryan residing at 136 West
Bayberry Rd., Islip 11751 (hereinafter referred to as "you") and Lakeland
Industries, Inc., a Delaware corporation, with principal place of business
located at 711-2 Koehler Avenue, Ronkonkoma, NY 11779-7410 (hereinafter the
Company).
2. TERM; RENEWAL
The term of the agreement shall be for a 3 year period from February
14, 1997 through and including February 13, 2000 which term shall be
automatically renewed for a maximum of 2 successive annual periods unless either
party notifies the other 120 days prior to the expiration of the original term
or renewal thereof, that the agreement will not be renewed.
3. CAPACITY
You shall be employed in the capacity of Executive Vice President,
Secretary and In-House General Counsel of Lakeland Industries, Inc. and such
other senior executive title or titles as may from time to time be determined by
the Board of Directors of the Company. You shall be nominated for election to
serve as a member of the Board of Directors of the Company, so long as this
agreement shall remain in effect. You shall be directly responsible to the Board
of Directors of the Company and to the President of Lakeland.
4. COMPENSATION
As full compensation for your services you shall receive following from
the Company:
(a) A base annual salary of $175,000 per year payable bi-weekly; and
(b) Participation when eligible in any of the Company's Pension, Profit
Sharing Plans, medical and disability plans, stock appreciation rights plan or
stock option plans and ESOP-401(K) plans when any such plans become effective:
(c) Such other benefits as are consistent with the personnel benefits
provided by the Company to its other officers and employees; provided however
that your vacation shall be for a period of no less than 5 weeks; and
(d) You shall be entitled to an automobile allowance consistent with
the allowance you have been receiving; and
(e) Reimbursement for any dues and expenses incurred by you that are
necessary and proper in the conduct of the Company's business; and
(f) An annual bonus as set forth in this agreement.
5. ANNUAL BONUS
In May of each year commencing in 1998 you shall be awarded an annual
bonus based on the performance of the Company in the previous fiscal year. The
bonus to be awarded in May of 1998, 1999 and 2000 shall be based upon the
following formula by pro rata increments for each cents per share earnings
measured upwardly from fiscal 1997 earnings per share. For each .01(cents)
earnings per share increase over fiscal year and 1997 earnings per share, you
shall receive $1000.00 in bonus. Thus, if EPS 1997 are .37(cents) then if EPS
for fiscal 1998 are .50(cents) you shall receive a bonus of 13 x 1,000 or
$13,000.00. Further, if EPS for fiscal 1998 are .60(cents), the fiscal 1999
bonus will be .60(cents) - .50(cents) the '99 earnings minus the '98 earnings =
10 x $1,000 = $10,000 and so on.
The earnings per share shall be the earnings per share of common stock
of the Company as determined by the Company's auditors in the preparation of the
annual audit and reported to the Company's shareholders. If during the fiscal
year commencing February 1, 1997 or thereafter, the Company acquires all of the
stock and/or assets of a separate business entity or divests itself of one or
more subsidiaries or is involved in a recapitalization or other public offering
of the Company's securities, then in that event the amount of the aforesaid
annual bonus will be adjusted to reflect such change or changes. The adjustment
to the annual bonus and any additional discretionary bonus will be made by the
Compensation Committee of the Board of Directors of the Company.
The decision of the Compensation Committee of the Board of Directors as
to any matter relating to the annual bonus or any additional discretionary bonus
shall be final, binding and conclusive and shall not be subject to any further
review.
6. NON-COMPETITION
During the term of this Agreement and for six months thereafter, you
shall not either directly or indirectly as an agent, employee, partner,
stockholder, director, investor, or otherwise engage in any activity in
competition with the activities of the Company, its subsidiaries or affiliates.
You acknowledge that the Company's products are marketed throughout North
America and therefore, for the duration of this non-competition period you shall
not compete with the Company in any location therein whatsoever.
7. CONFIDENTIALITY
Except as required in your duties to the Company, you shall not at any
time during your employment and for a period of twelve months thereafter,
directly or indirectly, use or disclose any confidential information relating to
the Company or its business which is disclosed to you or known by you as a
consequence of or through your employment by the Company and which is not
otherwise generally obtainable by the public.
8. CHANGE IN CONTROL
Upon the occurrence of a change in control (as hereinafter defined) you
shall have the right to terminate at your option this agreement within 30 days
after the occurrence of such change in control
(provided such ten day period shall not begin to run until you have actual
knowledge of the change in control). Upon the effective date of such
termination, you shall be entitled to receive a lump sum severance payment in an
amount equal to the greater of the present value (determined by applying a
discount factor of 6% effective annual interest rate) of (I) the balance of your
Base Salary of the Term of the Agreement, plus your estimated Annual Bonus for
the fiscal year in which such termination occurs, or (ii) two times your Base
Salary, plus your estimated Annual Bonus for the fiscal year in which such
termination occurs. The estimated amount of your Annual Bonus in this Agreement
for the fiscal year during which the termination occurs shall be determined in
good faith by the Compensation Committee of the Board of Directors of the
Company based upon the Company's results of operations for the partial fiscal
year through the effective date of the termination and the Company's historical
results of operations.
A "change of control" shall have occurred (I) upon any person or group
becoming directly or indirectly, the beneficial owner of 50% or more of the
Company's then outstanding securities or (ii) upon the disposition by the
Company (whether direct or indirect by sale of assets or stock, merger,
consolidation or otherwise) of all or substantially all of the Company's
business and/or assets.
For purposes of this paragraph, "person" means such term as used in
Section 13(d) (1) of the Securities Exchange Act of 1934 (the "1934 Act");
"beneficial owner" means such term as defined in Rule 13d-3 of the SEC under the
1934 Act; and "group" means such term as defined in Section 13(d) (3) of the
1934 Act.
In the event of a disposition by the Company (whether direct or
indirect by sale of assets or stock, merger, consolidation or otherwise) of all
or substantially all of its business and/or assets the Company will require any
successor to expressly assume and agree to perform this agreement in the same
manner and to the same extent that the Company would be required to perform, if
no such disposition had taken place.
9. TERMINATION
You or the Company may terminate your employment prior to the end of
the Term for any reason upon written notice to the other party in accordance
with the following provisions;
a) Termination of Employment for Cause or Without Good Reason. If,
before the end of the Term, the Company terminates your employment for Cause (as
defined below) or you quit without Good Reason (as defined below), the Company
shall pay you, within thirty days of such termination, (I) that portion of your
Base Salary which is accrued but unpaid as of the date of such termination, and
(ii) any other benefits accrued prior to the date of termination under this
Agreement, but you will not be entitled to receive any portion of your Annual
Bonus for the year in which said termination occurs or any other compensation or
benefits under this Agreement. If the Company terminates your employment for
Cause, the written notice of such termination shall set forth the effective date
of your termination (which shall not be prior to the date such notice is
delivered) and a reasonable detailed description of the facts and circumstances
giving rise to the Cause for termination.'
"Cause" means a written finding by the Board or the Company, acting
through an authorized officer, that you were convicted of, or entered a plea of
nolo contendere to a charge of, committing a felony involving moral turpitude,
or you were grossly negligent in performing your duties and responsibilities
(other than on account of "total disability" as referred to in sub-Paragraph c
below), or that you committed an act of fraud, embezzlement, or gross neglect
of duty. Cause shall not mean (I) the exercise of bad judgment alone, (ii)
negligence not amounting to gross negligence, (iii) any act or omission
believed by you in good faith to have been in or not opposed to the interest of
the Company (without intent of you to gain therefrom, directly or indirectly, a
profit to which you were not legally entitled), or (iv) any act or omission
with respect to which
notice of the termination of your employment is given to you more than 12 months
after the earliest date on which any member of the Board who is not a party to
the act or omission, knew of such act or omission.
"Good Reason" means any of the following events: (I) the assignment to
you of any duties materially and adversely inconsistent with your position,
responsibilities, duties, or officer ships, as required under Section 3 hereof,
(ii) the liquidation or dissolution of the Company, (iii) any material breach
by the Company of the provisions of this Agreement, or (iv) the Company's
requiring, without your written consent, that you be based in an office or
location other than the Company's principal business location at Ronkonkoma,
New York.
b) Death. Your employment shall terminate on the date of your death.
Your Base Salary (as in effect on the date of death) shall continue through the
last day of the month in which your death occurs. Payment of your Base Salary
shall be made to your estate or your beneficiary as designated in writing to the
Company. Your estate or designated beneficiaries, as applicable, shall also
receive a pro-rata portion of the Annual Bonus, if any, determined for the
fiscal year up to and including the date of death which shall be determined in
good faith by the Compensation Committee of the Board of Directors. Your
beneficiaries shall also be entitled to all other benefits generally paid by the
Company on an employee's death.
c) Total Disability. Your employment shall terminate if you become
totally disabled. You shall be deemed to be totally disabled if you are unable,
for any reason, to substantially perform your duties to the Company for a period
of (sixty consecutive days). In the event of your Total Disability, you shall
receive 100% of your Base Salary for the greater of (I) the remainder of the
Term of this Agreement or (ii) one year, such amount shall be reduced by the
amount of any disability insurance payments received by you under any disability
insurance policy maintained by the Company. For the six months thereafter, you
shall receive 50% of your Base Salary reduced by the amount of any such
disability insurance payments.
d) Termination Without Cause or for Good Reason. If, before the end of
the Term, the Company terminates your employment without Cause or you quit with
Good Reason, the Company shall:
(i) Pay you within 10 days of the termination of your
employment, a lump sum amount equal to the then present value of your Base
Salary (as in effect on the date of your termination) though the remainder of
the Term, determined by applying a discount factor of 6% effective annual
interest rate.
(ii) Pay you within 10 days of the termination of your
employment, a lump sum amount equal to a pro-rata portion of the Annual Bonus,
if any, that you would have received for the fiscal year in which such
termination occurs determined in good faith by the Compensation Committee of the
Board of Directors.
(iii) Pay you within 10 days of the termination of your
employment, a lump sum amount equal to the present value of (two) times your
Base Salary (as in effect of the date of your termination), determined by
applying a discount factor of 6% effective annual interest rate.
(iv) Continue to provide to you for a period equal to the
greater of (i) the remainder of the Term of this Agreement or (ii) one year,
benefits under any of the following welfare benefit programs of the Company as
in effect from time to time during the Term of this Agreement: long term
disability insurance, life insurance, accidental death and dismemberment
insurance, and health and major medical benefits, pursuant to COBRA.
10. TAX GROSS-UP
If it is determined that as a result of any payments provided to you
under this Agreement, you will incur an excise tax under Section 4999 of the
Internal Revenue Code on "excess parachute payments" or any similar tax payable
under any federal, state, local or other law, as a result of payments made to
you under this Agreement, then the Company shall pay to you an amount necessary
to reimburse you for such excise taxes and the tax due on such reimbursement
payments. All determinations and payments hereunder shall be made in adequate
time to permit you to prepare and file your individual tax returns in a timely
fashion.
11. MITIGATION
In no event shall you, subsequent to the termination of your
employment, be obligated to seek other employment arrangements or take any other
action by way of mitigation of the amounts payable to you under and provision of
this Agreement, nor shall the amount of any payment, hereunder be reduced by any
compensation earned by you as a result of a subsequent contract with or
employment by another employer.
12. ASSIGNMENT AND SUCCESSORS
The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors of the Company.
This Agreement may not be assigned by the Company unless the assignee or
successor (as the case may be) expressly assumes the Company's obligations
hereunder in writing or unless, in the opinion of counsel for the Company
addressed to you, the obligations of the Company under this Agreement become the
obligations of the successor to the Company by operation of law. In the event of
a successor to the Company or the assignment of the Agreement, the term
"Company" as used herein shall include any such successor or assignee.
13. CONSTRUCTION
This Agreement shall be interpreted and construed in accordance with
the laws of the State of New York without regard to its choice of law
principles. In case of any dispute or disagreement arising out of or connected
with this Agreement, the parties hereto hereby agree to resolve such dispute or
disagreement in a court of competent jurisdiction within the State of New York.
The Company shall reimburse you for all reasonable legal fees and expenses
incurred by you in an effort to establish entitlement to fees and benefits under
this Agreement. If you do not prevail (after exhaustion of all available
judicial remedies), and a court of competent jurisdiction decides that you had
no reasonable basis for bringing you action or there was an absence of good
faith for bringing your action, no further reimbursement for legal fees and
expenses shall be due to you, and you shall repay the Company for any amounts
previously paid by the Company. It is understood that in all events, the Company
shall be responsible for its own legal fees and expenses incurred for any action
brought hereunder.
14. NOTICES
Any notices required to be given under this Agreement shall unless
otherwise agreed to by you and the Company be in writing and by certified mail,
return receipt requested and mailed to the Company at its headquarters at 711-2
Koehler Avenue Ronkonkoma, NY 11779-7410 or to you at your home address at 136
W. Bayberry Rd., Islip, NY 11751.
15. WAIVER OR MODIFICATION
No waiver or modification in whole or in part of this agreement or any
term or condition hereof, shall be effective against any party unless in writing
and duly signed by the party sought to be bound. Any waiver of any breach of any
provision hereof or right or power by any party on one occasion shall not be
construed as a waiver of or a bar to the exercise of such right or power on any
other occasion or as a waiver of any subsequent breach.
16. SEPARABILITY
Any provision of this agreement which is unenforceable or invalid in
any respect in any jurisdiction shall be ineffective in such jurisdiction to the
extent that it is unenforceable or invalid without effecting the remaining
provisions hereof, which shall continue in full force and effect. The
unenforceability or invalidity of any provision of the agreement in one
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
LAKELAND INDUSTRIES, INC.
/s/ Christopher J. Ryan
- ------------------------ ----------------------------------
Christopher J. Ryan By: John J. Collins
Executive Vice President
/s/ Eric O. Hallman
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By: Eric O. Hallman
/s/ W. James Raleigh
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By: W. James Raleigh
Board of Directors
Compensation Committee
Raymond J. Smith
/s/ Raymond J. Smith
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Chairman of the Board and President
of Lakeland Industries, Inc.