LAKELAND INDUSTRIES, INC.
Statement of Company Policy on
Insider Trading and Compliance
It is the unbending policy of Lakeland Industries, Inc. (herein after referred to as “LII”) to comply fully, and to assist its directors, officers and other employees in complying fully, with all federal and state securities laws applicable to transactions involving the Company's securities. In this regard, the Company depends upon the conduct and diligence of the directors, officers and other employees of the Company, in both their professional and personal capacities, to ensure all compliance with this policy. It is personal obligation and responsibility of each such person to act in a manner consistent with the following policy regarding compliance with the insider trading provisions of the federal securities laws. It is the policy of LII that, except in the case of a transaction with the Company, no director, officer or other employee of the Company, nor any affiliate of such person, may buy or sell any security issued by the Company, or any option or similar right to buy or sell such a security, while in possession of material nonpublic information regarding the company. In addition, every director, officer and other employee of the Company shall maintain the confidentiality of material nonpublic information that he or she may possess, shall not “tip” such information to others who may trade and shall not give advice or make recommendations regarding investments in the Company. No director, officer or other employee of the Company shall permit persons under his or her supervision, or entities under his or her control, to act inconsistently with any affiliate of any such person, may, while in possession of material nonpublic information about another company, trade in the securities of such other company or disclose such information to any other person. The foregoing prohibitions similarly apply to the spouse and each family member and other members of the household of the directors, officers and other employees. The following guidelines have been adopted for the purpose of implementing and monitoring the Company's policy on insider trading.
1. Why We Need a Statement of Policies and Procedures
The Securities and Exchange Commission (the “SEC”) and federal prosecutors have been very aggressive in recent years in enforcing the federal insider trading and anti-fraud rules. Under the Federal Insider Trading and Securities Fraud Enforcement Act of 1988 , penalties for violations were significantly increased as follows:
The penalties for any individual who engages in insider trading are:
· A civil penalty of up to three times the profit gained or loss avoided
· A criminal penalty (no matter how small the profit) of up to $1 million
· A jail term of up to 10 years
The penalties for a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent insider trading are:
· A civil penalty of up to $1 million or three times the profit gained or loss avoided—whichever is greater
· A criminal penalty of up to $2.5 million
You should understand that the above penalties apply even if you have derived no benefit from another's actions. The SEC has imposed larger penalties on “tippers” – even though they neither traded themselves nor received any money from the friends or relation to whom they “tipped” inside information.
The best way to protect each of us—as well as the Company—is to follow at all times the policies and procedures described in this Statement. In addition, we are adopting them to avoid even the appearance of improper conduct on the part of anyone employed by or associated with the Company (not just so-called “insiders”). We have all worked hard to establish our reputation for integrity and ethical conduct. We cannot afford to have it damaged.
2. Our Policy For All Employees
No Trading or Tipping While in Possession of “Material Nonpublic Information”. If at anytime whatsoever you possess so-called “material nonpublic information” (see addendum for definitions and examples) about the Company, you are prohibited from (1) buying or selling Company securities (or securities which are convertible into or exchangeable for Company securities) and (2) engaging in any other actions to take advantage of, or to communicate to others, such information ( i.e ., “tipping”).
The company's no trading and no tipping policy also applies if you possess “material nonpublic information” about a company other than the Company that you have learned during the course of you employment at the Company.
These very same restrictions apply to your family members, and others, living in your household. You are expected to be responsible for their compliances as well as your own.
3. Additional Restrictions for “Designated Individuals”
Preclearance Required for All Trades by Designated Individuals. Additionally, executive officers and directors of the Company, members of their households and affiliates of each of the foregoing (“Designated Individuals”) must preclear with the CEO and/or Company's outside legal counsel, all proposed trades in the Company's securities at anytime whatsoever. The CEO will be in a position to determine if there is material nonpublic information that precludes the Designated Individual from trading.
Notwithstanding the foregoing prohibitions in this Policy, any Designated Individual may buy or sell the Company's securities, while in possession of material nonpublic information about the Company, if any such transaction is made pursuant to a written plan that has been approved in advance in writing by the Company CEO and/or outside legal counsel and that meets all of the requirements of Securities and Exchange Commission rules and regulations, including Rule 10b5-1 under the Securities Exchange Act of 1934.
4. Other Persons With Access to Insider Information. Under special
circumstances, certain employees who are not Designated Individuals may gain access to material nonpublic information. In such cases, the Company, in its discretion, may determine that such employees also need to preclear any proposed trades with either the CEO or his designee prior to any trading in the Company's securities. Such employees will be notified and will be subject to the preclearance procedure for such period of time as the Company deems appropriate.
5. Imposition of “Black Out” Periods Possible. In addition and in order to
promote the purposes of this Policy, the Company has the right, from time to time as it deems necessary or appropriate, to impose mandatory periods during which no trading whatsoever in Company securities shall be permitted by any employee. In such an event, the Company will notify all employees.
6. Persons Involved in Negotiations. If the Company is in the process of
negotiating a significant sale contract, transaction or joint venture with another company, employees, officers and directors are cautioned not to trade in the stock of that company if they are in possession of material nonpublic information concerning such company. If an officer or director is not certain whether it is permissible to trade in the stock of such company, the employee, officer or director should contact the CEO before making any trades.
7. Non-Disclosure of Material Nonpublic Information. If an employee, officer
or director is in possession of material nonpublic information concerning the Company, that individual shall maintain the confidentiality of that information and shall not “tip” such information to others who may trade. In maintaining the confidentiality of the information, the employee, officer or director shall not, among other things, affirm or deny statements made by others, either directly or through electronic means, if such affirmation or denial would result in the disclosure of material nonpublic information. If an officer or director is not certain whether information is material or nonpublic, the employee, officer or director should contact the CEO or outside legal counsel before disclosing that information.
8. Inadvertent Disclosure of Material Nonpublic Information . If material
nonpublic information is inadvertently disclosed, no matter what the circumstances, by any Company director, officer or employee, the person making or discovering that disclosure should immediately report the facts to the Company's CEO.
9. This Policy applies to any and all employees of all current or future affiliated
entities of the Company.
The following procedures should be followed in handling inquiries regarding material nonpublic information concerning the Company:
1. Referral to Designated Spokesperson. Generally, a designated spokesperson should deal with inquires from the media, stock exchanges and others regarding rumors, unusual trading activity, acquisition or disposition activities and other material information. Accordingly, when an inquiry is received regarding information that may be material, it should be referred to the designated spokesperson (currently Christopher J. Ryan, President & CEO) and only such other members of senior management as may be specifically designated by the President or the Chairman to speak on behalf of the Company.
2. Formulation of Response. The designated spokesperson generally should not comment until an appropriate response is formulated based on the existing facts and circumstances. The response should be formulated by parties who may reasonably be expected to know substantially all of the information on the subject within the Company's possession.
3. Nature of Response: In many, if not most, instances involving rumors and other statements not generated by the Company or its employees or agents, the most effective response will be a simple statement that the Company's policy is not to comment on matters of that nature. In all situations, care should be taken not to make affirmative statements where the facts may be unknown or in doubt.
An explanation of what information is considered “material” and “nonpublic” is contained in the Addendum to this Statement of Policy. Every director, officer and other employee of the Company and any of its subsidiaries shall be provided with a copy of such memorandum and shall be requested to certify that such person has read this Statement of Company Policy and the attached memorandum.
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Any questions concerning this Policy should be addressed to Christopher J. Ryan, President & CEO (631)981-9700 or the Company's outside counsel Harold Poster – Gilmartin, Poster & Shafto (212) 425-3220 hsposter@lawpost-nyc.com or in the absence of both Gary Pokrassa, Lakeland's CFO (631) 981-9700.
ADDENDUM TO LII INSIDER TRADING POLICY
WHEN INFORMATION IS “MATERIAL” In general, information is “material” if its disclosure to the public would likely affect investors' decisions to purchase or sell the securities of the issuer in question or might have an effect on the market for the issuer's securities generally. At this time, information relating to the financial condition of LII should be presumed to be material information for purposes of this Policy. In addition, information concerning the following events may be “material”:
a. Unpublished financial reports or projection;
b. The gain or loss of significant contract or customer;
c. Extraordinary borrowings;
d. Financial liquidity problems;
e. Defaults under agreements or actions by creditors, customers, or suppliers relating to a company's credit standing;
f. Major changes in previously disclosed financial information;
g. The possibility of mergers, acquisitions, or takeovers or the possible initiation of a proxy fight;
h. Information about current or proposed significant changes in operations or business plans (such as marketing and pricing plans), or about a significant financial restructuring;
i. Decreases or increases in dividends;
j. Declarations of stock splits and stock dividends;
k. Significant changes in management or relations among major stockholders;
l. The purchase or sale of substantial assets;
m. The possibility of a recapitalization or other reorganization;
n. Significant personnel changes; and
o. Significant litigation.
WHEN INFORMATION IS “NONPUBLIC” Information that has not been disclosed to the public generally is nonpublic. To show that information is public, you should be able to point to some evidence that it is widely disseminated. Information would generally be deemed widely disseminated if it has been disclosed, for example, in the Dow Jones broad tape; news wire services such as AP, UPI or Reuters; radio or television; newspapers or magazines; or widely circulated public disclosure documents filed with the SEC, such as prospectuses or 10-KSB reports. On the other hand, information may be nonpublic if it is available only to certain employees or an issuer or to a select group of analysts, brokers and institutional investors. 
