Exhibit 10.1

 

AMENDMENT NO. 5 AND WAIVER, dated as of October 17, 2012 (this “Amendment and
Waiver”), to the Loan and Security Agreement (as amended, restated, supplemented
or modified, from time to time, the “Agreement”) dated January 14, 2010, by and
between Lakeland Industries, Inc., a Delaware corporation (“Borrower”) and TD
Bank, N.A., a national banking association (“Lender”).

 

RECITALS

 

WHEREAS, the Borrower has requested and the Lender has agreed, subject to the
terms and conditions of this Amendment and Waiver, to amend, and waive
compliance with, certain provisions of the Agreement as set forth herein;

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:

 

1.Amendments.

 

(a)          The following definitions in Section 1.1 of the Agreement are
hereby amended and restated in their entirety to provide as follows:

 

Consolidated EBITDA - For any period, Consolidated Net Income (or deficit) plus
(a) Consolidated Interest Expense, plus (b) Consolidated Depreciation Expense,
plus (c) Consolidated Amortization Expense, plus (d) Consolidated Tax Expense,
plus (e) non-cash expenses for equity compensation related to restricted stock
plans and stock options for employees and board members, plus (f) the
non-recurring expense accrual and related expenses in connection with the
Brazilian Settlement, up to a maximum amount of $7,874,000, plus (g) one-time
non-recurring foreign exchange losses arising as a result of the devaluation of
the Brazilian Real, in an aggregate amount not to exceed $900,000, minus (h)
consolidated non-recurring gains of Borrower and its Subsidiaries (including
with respect to a reverse or refund of the $1,583,247 Brazil value added tax
expense incurred during the fiscal quarter ended April 30, 2010, if applicable),
minus (i) consolidated non-recurring charges relating to the discontinuance and
shutdown of operations in India in an amount not to exceed $2,300,000, minus (j)
consolidated non-recurring charges relating to the discontinuance and shutdown
of operations in Missouri in an amount not to exceed $300,000, all as determined
on a rolling four quarter basis, in accordance with GAAP.

 

Loan Documents - Collectively, this Agreement, the Note, the Surety and Guaranty
Agreement, the Letter of Credit Documents, the Security Documents, the
Perfection Certificate, the Cash Management Agreement, the Negative Pledge
Agreements, the Mortgages and all agreements, instruments and documents executed
and/or delivered in connection therewith, all as may be supplemented, restated,
superseded, amended or replaced from time to time.

 

Maximum Revolving Credit Amount - The sum of Seventeen Million Five Hundred
Thousand and 00/100 Dollars ($17,500,000.00).

 

 

 

 

Revolving Credit Maturity Date – June 30, 2013.

 

Security Documents - The Pledge Agreements, the Security Agreement, the Negative
Pledge Agreements, the Mortgages, and other collateral security document
thereafter delivered to the Lender.

 

(b)          The following new definitions are hereby added to Section 1.1 of
the Agreement in their appropriate alphabetical order:

 

Brazil Premises – Rua do Luxemburgo, 260, Lotes 82/83, Condomicion Industrial
Presidente, Vargas, Piraja, Salvador Brahia 41230-130

 

Brazilian Settlement – that certain Settlement Agreement and Other Covenants
among the Elder Marcos Vieira da Conceiçao, Márcia Cristina Vieira da Conceiçao
Antunes (collectively, the “Settlement Creditors”), the Borrower and Lakeland
Brasil and certain other parties relating to the payment by the Borrower and
Lakeland Brasil to the Settlement Creditors.

 

Lakeland Brasil – Lakeland Brasil S.A, a Brazilian corporation and Subsidiary of
the Borrower.

 

Settlement Creditors – as defined in the definition of Brazilian Settlement.

 

(c)          The definition of the term “Permitted Indebtedness” in Section 1.1
of the Agreement is hereby amended to add the following text immediately prior
to the period at the end thereof:

 

“, (h) Indebtedness of the Borrower and Lakeland Brazil owing to the Settlement
Creditors in connection with the Brazilian Settlement, provided that such
Indebtedness shall not exceed $8,500,000, in the aggregate, (i) secured
Indebtedness of Lakeland Industries Europe Ltd. in an amount not to exceed
$1,500,000, in the aggregate and (j) secured Indebtedness of Lakeland Argentina
S.R.L. in an amount not to exceed $750,000, in the aggregate”

 

(d)          The definition of the term “Permitted Liens” in Section 1.1 of the
Agreement is hereby amended to add the following text immediately prior to the
period at the end thereof:

 

“(i) Liens by Lakeland Industries Europe Ltd. and Lakeland Argentina S.R.L. to
secure Indebtedness described in clauses “(i)” and “(j)”, respectively, of the
definition of “Permitted Indebtedness” and (j), provided that such Liens only
extend to assets or property of such Subsidiary and (j) a second mortgage on the
real property located at the Brazil Premises to secure the obligations of the
Borrower and Lakeland Brazil in connection with the Brazilian Settlement”

 

(e)          The definition of the term “Springing Mortgage” in Section 1.1 of
the Agreement is hereby amended and replaced with the following definition:

 

Mortgages – the Mortgages to be executed and delivered by the Borrower, in
accordance with Section 6.20 hereof, in connection with the Premises, as the
same may hereafter be amended, restated, supplemented or otherwise modified from
time to time.

 

 

 

 

 

(f)           The table in the definition of “Applicable Rate” in Section 1.1 of
the Agreement is hereby amended and replaced with the following table:

 

Applicable Ratio  LIBOR Margin   L/C Commission   Unused Rate  Greater than
3.00:1.00   3.50%   3.50%   .50% Less than or equal to 3.00:1.00, but greater
than 2.00:1.00   1.85%   1.85%   .30% Less than or equal to 2.00:1.00   1.70% 
 1.70%   .25%

 

(g)           Section 2.7 of the Agreement is hereby amended to add a new
subsection “(g)” at the end thereof as follows:

 

(g)          On the Amendment No. 5 Effective Date, Lender shall have fully
earned and Borrower shall unconditionally pay to Lender, a non-refundable waiver
fee of Fifty Thousand and 00/100 Dollars ($50,000.00) (the “Waiver Fee”).

 

(h)           The table in Section 6.8(a) of the Agreement (Consolidated Fixed
Charge Coverage Ratio) is hereby amended and restated in its entirety to provide
as follows:

 

Period   Maximum Ratio       October 31, 2012   not to be tested       January
31, 2013 and thereafter   1.20:1.00

  

(i)            The table in Section 6.8(b) of the Agreement (Consolidated
Leverage Ratio) is hereby amended and restated in its entirety to provide as
follows:

 

Period   Maximum Ratio       October 31, 2012   not to be tested       January
31, 2013   6.25:1.00       April 30, 2013   4.50:1.00       July 31, 2013 and
thereafter   3.50:1.00

  

(j)           The table in Section 6.8(c) of the Agreement (Consolidated EBITDA)
is hereby amended and restated in its entirety to provide as follows:

 

Period  Minimum Amount        October 31, 2012  $1,000,000         January 31,
2013  $2,500,000         April 30, 2013  $3,500,000         July 31, 2013 and
thereafter  $4,000,000 

  

 

 

 

(k)          Section 6.20 of the Loan Agreement is hereby amended and restated
in its entirety to provide as follows:

 

Section 6.20. Mortgages. On or prior to November 15, 2012, the Borrower shall
have delivered to the Lender, for each Premises: (a) a title policy and a
lender's title insurance binder issued by an insurance company authorized to
transact business in the state where the Premises referred to in such Mortgage
is located and acceptable to the Lender naming the Lender as insured and
insuring that the applicable Mortgage creates a continuing, valid lien on the
Property prior to all Liens (other than Permitted Liens), fully securing the
Loans and on terms and conditions satisfactory to the Lender, (b) a Mortgage,
duly executed by the Borrower, with respect to each Premises, in form and
substance satisfactory to the Lender; (c) copies of all environmental reports
with respect to the Premises, including an updated environmental report at the
reasonable option of the Lender, (d) evidence that such Premises is not located
in a Federally designated “special flood hazard area” or if such Premises is
located in a Federally designated “special flood hazard area,” a flood insurance
policy with terms and coverage satisfactory to the Lender, (e) a current legal
description and updated survey of each of the Premises, certified to the Lender
and the title company, (f) a certificate of insurance from an independent
insurance broker confirming the insurance required to be maintained pursuant to
the Mortgages, naming the Lender as mortgagee and loss payee with respect to
such insurance, and (g) such other documents, promissory notes, agreements and
information, including opinions of counsel, that the Lender may reasonably
request. The Borrower further agrees to pay all title insurance premiums,
recording and filing fees and charges and other expenses incurred by the Lender
in connection with the recording of the Mortgages and the delivery of the other
documents required pursuant to this Section 6.20.

 

2.           Waivers.

 

(a)           The Lender hereby waives compliance with Section 6.8(b) of the
Agreement, Consolidated Leverage Ratio, for the fiscal quarters ended April 30,
2012 and July 31, 2012, which required a Consolidated Leverage Ratio of not
greater than (i) 6.25:1.00, for the fiscal quarter ended April 30, 2012 and (ii)
5.50:1.00, for the fiscal quarter ended July 31, 2012.

 

(b)           The Lender hereby waives compliance with Section 6.8(c) of the
Agreement, Consolidated EBITDA, for the fiscal quarters ended April 30, 2012 and
July 31, 2012, which required Consolidated EBITDA of not less than (i)
$3,000,000, for the fiscal quarter ended April 30, 2012 and (ii) $3,500,000, for
the fiscal quarter ended July 31, 2012.

 

3.           Conditions of Effectiveness. This Amendment and Waiver shall become
effective as of the date hereof, upon receipt by the Lender of this Amendment
and Waiver, duly executed by the Borrower and the Guarantor, (b) the Waiver Fee,
(c) a second amended and restated Revolving Credit Note, substantially in the
form attached hereto as Exhibit 1, (d) a secretary’s certificate, substantially
in the form attached hereto as Exhibit 2 and (e) such documents and agreements
that the Lender shall request.

 

4.           Conforming Amendments. The Agreement, the Loan Documents and all
agreements, instruments and documents executed and delivered in connection with
any of the foregoing, shall each be deemed to be amended and supplemented hereby
to the extent necessary, if any, to give effect to the provisions of this
Amendment and Waiver. The Agreement and the other Loan Documents shall remain in
full force and effect in accordance with their respective terms.

 

 

 

 

5.            Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:

 

(a)           After giving effect to this Amendment and Waiver (i) each of the
representations and warranties set forth in Article V of the Agreement is true
and correct in all material respects on and as of the date hereof as if made on
and as of the date of this Amendment and Waiver except to the extent such
representations or warranties relate to an earlier date in which case they shall
be true and correct in all material respects as of such earlier date, and (ii)
no Default or Event of Default has occurred and is continuing as of the date
hereof or shall result from after giving effect to this Amendment and Waiver.

 

(b)           The Borrower has the power to execute, deliver and perform this
Amendment and Waiver and each of the other agreements, instruments and documents
to be executed by it in connection with this Amendment and Waiver. No
registration with or consent or approval of, or other action by, any
Governmental Authority is required in connection with the execution, delivery
and performance of this Amendment and Waiver and the other agreements,
instruments and documents executed in connection with this Amendment and Waiver
by the Borrower, other than registration, consents and approvals received prior
to the date hereof and disclosed to the Lender and which are in full force and
effect.

 

(c)           The execution, delivery and performance by the Borrower of this
Amendment and Waiver and each of the other agreements, instruments, and
documents to be executed by it in connection with this Amendment and Waiver, and
the execution and delivery by the Guarantor of the Consent to this Amendment and
Waiver, (i) have been duly authorized by all requisite corporate action, and
(ii) will not violate (A) any provision of law applicable to the Borrower or the
Guarantor, any rule or regulation of any Governmental Authority applicable to
the Borrower or the Guarantor or (B) the certificate of incorporation, by-laws,
or other organizational documents, as applicable, of the Borrower or of the
Guarantor.

 

(d)           This Amendment and Waiver and each of the other agreements,
instruments and documents executed in connection with this Amendment and Waiver
to which the Borrower or the Guarantor are a party have been duly executed and
delivered by the Borrower and the Guarantor, as the case may be, and constitutes
a legal, valid and binding obligation of the Borrower and the Guarantor
enforceable, as the case may be, in accordance with its terms, except to the
extent that enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors’ rights generally and by
equitable principles of general application, regardless of whether considered in
a proceeding in equity or at law.

 

6.            Miscellaneous.

 

Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as defined in the Agreement.

 

The amendments and waivers herein contained are limited specifically to the
matters set forth above and do not constitute directly or by implication an
amendment or a waiver of any other provision of Agreement or a waiver of any
Default or Event of Default which may occur or may have occurred under the
Agreement.

 

 

 

 

This Amendment and Waiver may be executed in one or more counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute but one Amendment and Waiver.

 

THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.

 

7.           Reaffirmation.

 

The Borrower hereby: (a) acknowledges and confirms that, notwithstanding the
consummation of the transactions contemplated by this Amendment and Waiver, (i)
all terms and provisions contained in the Security Documents are, and shall
remain, in full force and effect in accordance with their respective terms and
(ii) the liens heretofore granted, pledged and/or assigned to the Lender as
security for the Borrower’s obligations under the Note, the Agreement and the
other Loan Documents shall not be impaired, limited or affected in any manner
whatsoever by reason of this Amendment and Waiver; (b) reaffirms and ratifies
all the representations and covenants contained in each Security Document; and
(c) represents, warrants and confirms the non-existence of any offsets,
defenses, or counterclaims to its obligations under any Security Document.

 

[next page is the signature page]

 

 

 

 

IN WITNESS WHEREOF, the Borrower and the Lender have signed and delivered this
Amendment as of the date first written above.

 

  LAKELAND INDUSTRIES, INC.         By: /s/ Christopher J. Ryan   Name:
 Christopher J. Ryan   Title:   Chief Executive Officer and President

 

  TD BANK, N.A.         By: /s/ John Topolovec   Name: John Topolovec   Title:
Vice President

 

CONSENT

 

The undersigned, not as parties to the Agreement but as Guarantor under the
Guaranty and as a Grantor under the Security Agreement, hereby (a) accepts and
agrees to the terms of the foregoing Amendment, (b) acknowledges and confirms
that all terms and provisions contained in the Loan Documents to which it is
party are, and shall remain, in full force and effect in accordance with their
respective terms and (c) (i) all terms and provisions contained in the Loan
Document to which it is a party are and shall remain, in full force and effect
in accordance with their respective terms and (ii) the liens heretofore granted,
pledged and/or assigned to the Lender as security for the Obligations shall not
be impaired, limited or affected in any manner whatsoever by reason of this
Amendment and shall be deemed to extend to the Refinance Term Loan.

 

  LAIDLAW, ADAMS & PECK, INC.         By: /s/ Christopher J. Ryan   Name:
 Christopher J. Ryan   Title:   Chief Executive Officer and President