Exhibit 10.1

 

SHARES TRANSFER AGREEMENT

 

This SHARES TRANSFER AGREEMENT (this “Agreement”) is made as of June 18th, 2015
by and between:

 

LAKELAND INDUSTRIES, INC. (“Transferor”), a Company duly organized under the
laws of the State of Delaware, United States of America, with its head office
located at 3555 Veterans Memorial Hwy, Suit C, Ronkonkoma, NY, 117779-7410,
herein represented by its Legal Representative, CHRISTOPHER JAMES RYAN, American
citizen, married, executive, Passport number 482515842, domiciled in 136 W.
Bayberry Road, Islip, NY, United States of America, ZIP code 11751;

 

ZAP COMÉRCIO DE BRINDES CORPORATIVOS LTDA. (“Transferee”), a limited liability
company duly organized under the laws of Brazil, with its head office located at
Rua Raimundo Ademar, 26, São Paulo, SP, 02208-030, enrolled before the Brazilian
Taxpayers Registry (C.N.P.J./M.F.) under the Number 13.259.812/0001-06, herein
represented by its Attorney, JACK ANTUNES NEMER; and

 

as intervening parties,

 

LAKE BRASIL INDÚSTRIA E COMÉRCIO DE ROUPAS E EQUIPAMENTOS DE PROTEÇÃO INDIVIDUAL
LTDA. (“Lakeland Brazil”), a limitada duly organized under the laws of Brazil,
with its head office located at Rua Luxemburgo, 260, Lotes 82/83 – Bloco O,
Loteamento Granjas Rurais, Salvador – BA, Brazil, 41230-130, enrolled before the
Brazilian Taxpayers Registry (C.N.P.J./M.F.) under the Number
04.011.170/0001-22, herein represented by its Legal Representative, EDUARDO
FERNADES TAVARES (“ETavares”), Brazilian citizen, married, executive, enrolled
before the Brazilian Taxpayers Registry (C.P.F./M.F.) under the number
112.583.238-00, resident and domiciled at Rua Serra do Japi, 259, apt. 104, Vila
Gomes Cardim, São Paulo, SP, 03.309-000; and

 

JACK ANTUNES NEMER (“JNemer”), Brazilian citizen, married, bearer of the
Brazilian ID document (R.G.) number 11.463.521-3 from SSP/SP, enrolled before
the Brazilian Taxpayers Registry (C.P.F./M.F.) under the number 023.143.378-67,
resident and domiciled at Rua Paulo Franco, 142, apt. 43, Vila Leopoldina, São
Paulo, SP, CEP 05305-030;

 

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R E C I T A L S

 

WHEREAS, Transferor desires to transfer and assign to Transferee, and Transferee
desires to receive and accept from Transferor, the LB Shares (as hereinafter
defined).

 

WHEREAS, Lakeland Brazil acknowledges that it shall be responsible for the
payment of any and all liabilities of the Brazilian Business (as hereinafter
defined) and wishes to hold Transferor and any of its respective Affiliates
harmless for any losses relating to any such liabilities.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants herein
contained and intending to be legally bound hereby, the parties hereto hereby
agree as follows:

 

Article I
DEFINITIONS

 

1.1          Defined Terms

 

For the purposes of this Agreement, the following terms shall have the following
meanings:

 

“Action” means any claim, action, suit, arbitration, inquiry, charge, citation,
complaint, proceeding or investigation.

 

“Affiliate” of any Person means any Person that controls, is controlled by, or
is under common control with, such Person. As used herein, the term “control”
(including the terms “controlling”, “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities or other interests, by contract or otherwise;
provided, however, that for purposes of this Agreement neither Lakeland Brazil
or JNemer shall not be considered an Affiliate of Transferor, and Transferor
shall not be considered an Affiliate of either Lakeland Brazil or JNemer.

 

“Brazilian Business” means the entire business carried by Lakeland Brazil in
Brazil.

 

“Brazilian Business Records” means the Business Records pertaining to the
Brazilian Business.

 

“Business Day” means a day that is not a Saturday, a Sunday or a statutory or
civic holiday in Brazil or United States of America.

 

“Business Records” means all books, records, ledgers and files or other similar
information used or held for use primarily in the operation or conduct of the
Brazilian Business, including price lists, customer lists, vendor lists, mailing
lists, warranty information, catalogs, sales promotion literature, advertising
materials, brochures, records of operation, standard forms of documents, manuals
of operations or business procedures, research materials and product testing
reports, including without limitation, reports required by any national,
federal, state, provincial or local court, administrative body or other
Governmental Body of any country, Licenses and Governmental Permits.

 

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“Closing” means the closing of the transactions described in Article VII.

 

“Closing Date” means the date of the Closing as determined pursuant to
Section 7.3.

 

“Contracts” means all contracts, agreements, leases, subleases, Licenses, supply
contracts, purchase orders, sales orders and instruments that will be in effect
on the Closing Date and to which, Lakeland Brazil is a party, including without
limitation, (i) for the lease of machinery, equipment, motor vehicles, furniture
or office equipment, (ii) for the provision of goods or services to the Lakeland
Brazil, (iii) for the sale by the Lakeland Brazil of goods or the performance by
the Lakeland Brazil of services, or (iv) for the sale and distribution of
products of the Lakeland Brazil, and any such contracts, agreements,
instruments, Licenses and leases referred to in clauses (i) through (iv),
inclusive, entered into in accordance with, and without violation of, Section
5.2 between the date hereof and outstanding as of the Closing Date by Lakeland
Brazil.

 

“GAAP” means Brazilian generally accepted accounting principles.

 

“Governmental Body” means any legislative, executive or judicial unit of any
governmental entity (federal, state, local, foreign or supranational) or any
court, department, commission, board, agency, bureau, official or other
regulatory, administrative or judicial authority thereof.

 

“Governmental Permits” means all governmental permits and licenses, certificates
of inspection, applications, approvals or other authorizations necessary for the
lawful operation and conduct of the Brazilian Business as currently operated or
conducted under applicable Laws.

 

“Joint Bank Account” means a joint bank account to be opened by Lakeland Brazil
and Multiplica, which shall require the signature of legal representatives of
both Lakeland Brazil and Multiplica to make any payment and/or withdraw funds.

 

“Lakeland Brazil” means Lake Brasil Indústria e Comércio de Roupas e
Equipamentos de Proteção Individual Ltda., a company duly organized under the
laws of Brazil, with its head office located at Rua Luxemburgo, 260, Lotes 82/83
– Bloco O, Loteamento Granjas Rurais, Salvador – BA, Brazil, 41230-130, enrolled
before the Brazilian Taxpayers Registry (C.N.P.J./M.F.) under the Number
04.011.170/0001-22 and registered before the Commercial Registry of the
Brazilian State of Bahia under the number 29.3.0002691-3 and any of its
Affiliates and/or successors and lawful assigns.

 

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“Law” means any federal, state, local, foreign or supranational law (including
common law), statute, ordinance, rule, regulation, code, order, judgment,
injunction, decree or other requirement, and any rule or regulation of any stock
exchange on which the relevant party’s securities are listed.

 

“LB Shares” means Forty-Five Million, Seven Hundred and Twenty-One Thousand
Seven Hundred Sixteen (45,721,716) shares of Lakeland Brazil already owned by
Transferor plus the shares to be issued pursuant to Section 2.5(a)(ii).

 

“Licenses” means all licenses, agreements and other arrangements under which
Lakeland Brazil has the right to use any Proprietary Subject Matter of a Third
Party.

 

“Multiplica” means Multiplica Soluções Empresariais Ltda. a company duly
organized under the laws of Brazil, with its head office located at Rua Rego
Barros, 570, apt. 104, block D, Bairro Jardim Vila Formosa, CEP 03460-000 and
enrolled before the Brazilian Taxpayers Registry (C.N.P.J./M.F.) under the
Number 14.782.440/0001-52. Multiplica is a service provider that advises the
management of Lakeland Brazil in relation to securing financing in order for
Lakeland Brazil to avoid cash flow constraints that are restricting its return
to profitability; assistance in negotiation and revision of VAT tax issues; and
participating in a Managing Committee to discuss and advise payment of invoices,
financing of accounts receivable, factoring and negotiation with suppliers and
banks.

 

“Multiplica Agreement” means that agreement titled Business Consulting Agreement
Renew 2015, dated May 1, 2015, between Lakeland Brazil and Multiplica.

 

“Person” means any individual, corporation, limited liability company,
partnership, firm, association, joint venture, joint stock company, trust,
unincorporated organization or other entity, or any government or regulatory,
administrative or political subdivision or agency, department or instrumentality
thereof.

 

“Pre-Closing Tax Period” means any Tax period(or portion thereof) ending on or
before the Closing Date.

 

“Proprietary Subject Matter” means: (i) all information (whether or not
protectable by patent, copyright, mask work or trade secret rights) not
generally known to the public, including know-how and show-how, specifications,
technical manuals and data, libraries, blueprints, drawings, proprietary
processes, product information, development work-in-process, inventions,
discoveries and trade secrets; (ii) patentable subject matter, patented
inventions and inventions subject to patent applications; (iii) industrial
models and industrial designs; (iv) works of authorship, software and
copyrightable subject matter; (v) mask works; and (vi) trademarks, trade names,
service marks, emblems, logos, insignia and related marks.

 

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“Real Estate” means the real estate properties pertaining to Lakeland Brazil
enrolled before the Second Real Estate Registry Office of the city of Salvador,
State of Bahia, Brazil, under the numbers 780, 781, 75667 and 76982.

 

“Tax” or “Taxes” means all taxes of any kind, and all charges, fees, customs,
levies, duties, imposts, required deposits or other assessments, including all
net income, capital gains, gross income, gross receipts, property, franchise,
sales, use, excise, withholding, payroll, employment, social security, workers’
compensation, unemployment, mortgage, occupation, capital stock, ad valorem,
value added, transfer, documentary stamp, gains, profits, net worth, asset,
transaction, and other taxes, and any interest, penalties or additions to tax
with respect thereto, whether disputed or not, imposed upon any Person by any
federal, state, local or foreign taxing authority or other Governmental Body
under applicable Law.

 

“Third Party” means any Person not an Affiliate of the other referenced Person
or Persons.

 

1.2          Additional Defined Terms

 

For purposes of this Agreement, the following terms shall have the meanings
specified in the Sections indicated below:

 

Term Section “Acquisition Proposal” Section 0 “Agreement” Introductory Paragraph
“Brazilian Business Liabilities” Section 2.3 “Indemnified Party” Section 8.2(a)
“Indemnifying Party” Section 8.3(a) “Labor Liabilities” Section 2.3 “Losses”
Section 8.2(a) “Survival Period” Section 8.1 “Third Party Claim” Section 8.3(a)
“Valuation Report” Fourth Whereas Clause

 

1.3          Other Definitional and Interpretive Matters

 

Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

 

Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

 

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Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

 

Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

 

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

 

Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

 

Payments and Computations. Except for the payment of the cash payment to be made
pursuant to Section 2.2 (which shall be paid at the Closing), each party shall
make each payment due to another party to this Agreement not later than 1:00
p.m. New York - USA time on the day when due. All payments shall be measured and
paid in U.S. dollars by wire transfer in to the account or accounts designated
by the party receiving such payment. All computations of interest shall be made
on the basis of a year of 365 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Whenever any payment under this Agreement shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included in
the computation of payment of interest.

 

Article II
TRANSFER OF THE SHARES

 

2.1          Transfer of Shares

 

Upon the terms and conditions set forth in this Agreement, Transferor shall
transfer, assign and convey to Transferee and Transferee agrees to receive and
accept from Transferor all right, title and interest of Transferor in and to the
LB Shares on the Closing Date.

 

The parties agree that the completion of the transfer of the LB Shares is
subject to (i) the execution and delivery on the Closing Date of the
corresponding amendment to Lakeland Brazil’s articles of association, setting
forth the transfer of the LB Shares to the Transferee and (ii) registry of such
amendment before the relevant Commercial Registry. The parties agree to comply
with any additional requirement eventually made by the Commercial Registry
officers in order to facilitate the transfer of the LB Shares to the Transferee.

 

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2.2          Consideration for Transfer

 

In consideration of the transfer, assignment, conveyance and delivery by
Transferor of the LB Shares to Transferee, Transferee shall pay, at the Closing
Date, an aggregate amount equal to one Brazilian Real (R$1.00) to Transferor.

 

2.3          Brazilian Business Liabilities

 

Lakeland Brazil and Transferee agree to pay, perform or otherwise discharge, in
accordance with the terms and subject to the conditions thereof, any liabilities
and obligations of Lakeland Brazil, (“Brazilian Business Liabilities”),
including labor claims made against Lakeland Brazil deriving from events that
occurred during the time the Transferor was a shareholder of that entity (“Labor
Liabilities”), and both Transferee and Lakeland Brazil agree to hold Transferor
and any of its Affiliates harmless if and to the extent Transferor or any of its
Affiliates incur any liabilities, obligations or expenses with respect to the
Brazilian Business Liabilities. For purposes of this Agreement, the term
“Brazilian Business Liabilities” means all those liabilities and obligations of
Lakeland Brazil, including but not limited to those described in paragraphs (a)
through (h) below, whether or not any such obligation is reflected on Lakeland
Brazil’s or financial statements, and whether they arose prior to, on, or
subsequent to the Closing Date and whether they derive from events that occurred
prior to or after the transfer of the LB Shares pursuant to this Agreement:

 

(a)          liabilities and obligations with respect to the employees and
former employees, including without limitation severance obligations, in the
Brazilian Business;

 

(b)          liabilities arising from any labor claim already existing and/or to
be filed against Lakeland Brazil, its affiliates, officers and shareholders
(present, past and future);

 

(c)          any and all Labor Liabilities of the Brazilian Business not
described in clauses (a) or (b) above;

 

(d)          all liabilities and obligations with respect to any and all
applicable taxes arising out of or imposed in connection with the Brazilian
Business, including, for the avoidance of doubt, the ongoing VAT tax liability
with the State of Bahia;

 

(e)          any liabilities and obligations arising under leases, Contracts,
Licenses and Governmental Permits to which Lakeland Brazil is a party or in the
name or held by Lakeland Brazil;

 

(f)           product warranty liabilities, product return obligations pursuant
to any stock balancing program and rebates pursuant to any marketing program to
the extent such liabilities and obligations arise from sales of products in the
course of the Brazilian Business, whether before or after the Closing Date;

 

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(g)          accounts payable of the Brazilian Business (including, for the
avoidance of doubt, (i) invoiced accounts payable and (ii) accrued but not yet
invoiced accounts payable), except as provided for herein; and

 

(h)          all other obligations and liabilities with respect to the Brazilian
Business ,whether known or unknown, absolute or contingent, except as provided
for herein.

 

2.4          Distributorship and Supply Agreement

 

(a)          On the Closing Date, Transferor and, to the extent appropriate, its
Affiliates, shall enter into a Distributorship and Supply Agreement with
Lakeland Brazil, which will be in form annexed hereto as Exhibit B.

 

(b)          For the period commencing on the Closing Date and ending three
hundred and sixty five (365) days thereafter, Transferor shall also grant to
Lakeland Brazil a written guarantee with respect to the payment for all
purchases made by Lakeland Brazil from Transferor’s Affiliate in China, in the
total amount of Sixty Four Thousand United States Dollars ($64,000.00).

 

(c)          All terms and conditions established in subsections (a) and (b)
hereinabove, including the exclusivity in Brazil, shall remain valid and
enforceable provided that Lakeland Brazil performs all payments to Transferor
and/or any of its Affiliates for disposables purchased after the Closing Date
within no more than sixty (60) days from the respective due date.

 

2.5          Continuing Business Incentives

 

(a)          Transferor and Transferee acknowledge that Lakeland Brazil needs
additional funds to assure its regular operation during the first two (2) years
after the Closing Date as shown in the Valuation Report and the parties own
studies. Hence Transferor or has already provided funds in anticipation of this
Agreement, and undertakes to provide additional funds to Lakeland Brazil in the
total amount of Seven Hundred Seventeen Thousand United States Dollars
($717,000.00) plus One Million, Five Hundred Seventy-Four Thousand, Eight
Hundred Brazilian Reals (R$1,574,800.00), exclusive of any funds required to be
provided under Sections 2.5(b) and 2.5(e), according to the rules and provisions
of this Section 2.5. Lakeland Brazil, Transferee and JNemer agree that all funds
provided by Transferor pursuant to this Section 2.5(a) shall be utilized for the
purposes set forth in Section 2.3 and consistent with the Multiplica Agreement.

 

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(i)            The funds mentioned Section 2.5(a), in the total amount of Seven
Hundred Seventeen Thousand United States Dollars ($717,000.00) plus One Million,
Five Hundred Seventy-Four Thousand, Eight Hundred Brazilian Reals
(R$1,574,800.00), to the extent not already expended, shall be deposited by
Transferor into the Joint Bank Account (except for the $350,000 payment on the
execution of this Agreement, which shall go into the Lakeland Brazil Operating
Account), disbursements of which are governed by the Multiplica Agreement, in
installments, according to the following dates and amounts:

 

-Three Hundred Sixty Seven Thousand United States Dollars ($367,000.00)
($200,000.00 in cash plus $167,000.00 paid to Stedfast ($85,000.00) in April
2015 and Xinxiang Protective Textiles Limited ($82,000.00) in February and April
2015, both of whom are suppliers to Lakeland Brazil), previously paid;

 

-Three Hundred Fifty Thousand United States Dollars ($350,000.00) on the
execution of this Agreement;

 

-Nine Hundred Ninety-Two Thousand Brazilian Reals (R$992,000.00) on July 1st,
2015;

 

-Two Hundred Eighty-Eight Thousand, Three Hundred Brazilian Reals (R$288,300.00)
on August 1st, 2015; and

 

-Two Hundred Ninety-Four Thousand, Five Hundred Brazilian Reals (R$294,500.00)
on September 1st, 2015.

 

(ii)          All funds previously provided and to be provided by Transferor
pursuant to Section 2.5(a)(i) are the object of a raise of Lakeland Brazil
capital stock, and have been or shall be paid by Transferor, at its discretion,
partially or entirely in cash and partially or entirely by the issuance on the
Closing Date of a promissory note payable to Lakeland Brazil (comprising up to
the final two payments in the aggregate amount of R$582,800.00 due after the
Closing Date).

 

(iii)         The parties hereto acknowledge that Transferor need not pay the
amounts set forth in Section 2.5(a)(i) in the event that Lakeland Brazil and/or
any of its Affiliates files for bankruptcy, file for court Protected
Restructuring or abandons the Brazilian Business, or in the event that the
Multiplica Agreement is no longer in force and operational.

 

(iv)         Transferee and JNemer hereby acknowledge and accept that Transferor
has prior to the Closing Date made payment to certain global suppliers on behalf
of Lakeland Brazil (see Section 2.5(a)(i)) and may, at its own discretion, pay
directly to Lakeland Brazil’s global suppliers, any amount due to them by
Lakeland Brazil up to the Closing Date and deduct such amounts from the amounts
otherwise due to be paid in accordance with Section 2.5(a)(i).

 

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(b)          In addition to funds required to be provided under Sections 2.5(a)
and 2.5(e), Transferor also undertakes to provide funds to Lakeland Brazil in
order for it to satisfy present and future labor claims against Lakeland Brazil
deriving from events that occur prior to Closing Date. Such fund shall be
provided by Transferor strictly according to the following rules and provisions:

 

(i)            Transferor shall fund Lakeland Brazil for one hundred percent
(100%) of the total amount to be paid by Lakeland Brazil in connection with the
labor claim issued by Lana dos Santos (the “Lana dos Santos Claim”).

 

(ii)          Transferor shall fund Lakeland Brazil for 100% of all other labor
claims deriving from events occurred prior to Closing Date, up to a cap of Three
Hundred and Seventy Thousand United States Dollars ($370,000.00) (the “Cap”)
(exclusive of the Lana dos Santos Claim), such funding to be provided by
Transferor as claims are adjudicated. This cap do not apply to the labor claim
already issued by Lana dos Santos, according to the provisions of item (i)
above.

 

(iii)         Should the liabilities deriving from labor claims issued against
Lakeland Brazil with respect to events that occurred prior to the Closing Date,
exclusive of the Lana dos Santos Claim, exceed the Cap in item (ii) above,
Transferor agrees to contribute funds to Lakeland Brazil for sixty percent (60%)
of the amount in excess of the Cap.

 

(iv)         All funds to be provided by Transferor according to the provisions
of this Subsection (b) shall be deposited by Transferor into the Joint Bank
Account on an “as needed” base, within thirty (30) days from the date Lakeland
Brazil requests the correspondent payment. Any request must be accompanied by
proof of the correspondent charging and/or disbursement, which shall be subject
to analysis and validation by Transferor. The Transferor may, at its own
discretion, refute any request for reimbursement from Lakeland Brazil if it
determines, in its sole but reasonable discretion, that the claim is based on
false or unrealistic assumptions or facts.

 

(v)          Transferee, JNemer and Lakeland Brazil agree to use commercially
reasonable efforts and operate in good faith to contest and resolve the labor
claims described in Section 2.5(b) above and shall not settle the Lana dos
Santos Claim without the permission of Multiplica.

 

(c)          Transferors obligations to fund the amounts set forth in Subsection
(b) will be automatically terminated upon the earlier of:

 

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(i)            All labor claims against Lakeland Brazil deriving from events
which occurred prior to Closing Date being duly settled;

 

(ii)          By mutual agreement of Transferor and Lakeland Brazil; or

 

(iii)         At the end of two (2) years from the Closing Date.

 

(d)          If upon termination according to the provisions of subsection (c)
above, the claims paid (exclusive of the Lana dos Santos Claim) are less than
the Cap, Transferor shall deposit, within 30 days after such termination, an
amount equal to the difference between the Cap and such amounts so paid into the
Joint Bank Account.

 

(e)          As an incentive to Lakeland Brazil and Transferee to continue
developing Lakeland Brazil’s operation in a healthy and profitable manner,
Transferor shall make available the following amounts to Lakeland Brazil, in
addition to funds required to be provided under Sections 2.5(a) and 2.5(b):

 

(i)            One Hundred and Fifty Thousand United States Dollars
($150,000.00) provided (A) none of Lakeland Brazil and/or any of its Affiliates
file for bankruptcy, file for a Court Protected Restructuring or abandon the
Brazilian Business within the first twelve (12) months immediately following the
Closing Date and (B) the Multiplica Agreement is in effect and operational
through and on the date twelve (12) months from the Closing Date.. This amount
shall be deposited by Transferor into the Joint Bank Account not later than
sixteen (16) months after the Closing Date; and

 

(ii)          An additional one Hundred Thousand United States Dollars
($100,000.00) provided (A) none of Lakeland Brazil and/or any of its Affiliates
file for bankruptcy file a Court Protected Restructuring or abandon the
Brazilian Business within the twenty four (24) months immediately following the
Closing Date and (B) the Multiplica Agreement is in effect and operational
through and on the date twenty-four (24) months from the Closing Date. This
amount shall be deposited by Transferor into the Joint Bank Account not later
than twenty-eight (28) months after the Closing Date.

 

(f)           If Transferee, Lakeland Brazil or any of its Affiliates intend to
file for a Court Protected Restructuring or to declare Bankruptcy during the
first five (5) years following the Closing Date, Lakeland Brazil and/or
Transferee shall notify Transferor of such intent at least thirty (30) days
prior to the earlier of the date of the correspondent announcement to the public
is intended to be made and the intended date of the filing.

 

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2.6          Further Assurances; Further Conveyances and Assumptions; Consent of
Third Parties

 

(a)          Transferee and Lakeland Brazil acknowledge that, due to the
obligations assumed by Transferor under the terms of this Agreement, Transferor
needs to have access to Lakeland Brazil’s accounting books, records and such
other business records, as may be reasonably requested, for a determined period.
In view of that, Transferee and Lakeland Brazil shall provide Transferor with
(i) monthly financial statements prepared internally no later than the 30th day
of the following month. In addition, Transferee and Lakeland Brazil shall grant
Transferor and/or any person formally appointed by it full access to Lakeland
Brazil’s books and records, for the period of five (5) years after the Closing
Date.

 

(b)          As a condition to all obligations assumed by Transferor under this
Agreement being effective, Transferee shall retain Multiplica as a financial
advisor for Lakeland Brazil for a period of at least two (2) years from the
Closing Date. All fees for services to be rendered by Multiplica shall be paid
by Lakeland Brazil and/or by Transferee. Failure to comply with the provisions
of this section 2.6 shall constitute a material breach of this Agreement by the
Transferee and Lakeland Brazil and shall, in addition to all rights and remedies
that Transferor shall have as a matter of law, excuse Transferor from all of its
obligations under this Agreement and entitle Transferor to reimbursement from
Transferee, Lakeland Brazil and its Affiliates of all payments theretofore made
by Transferor under the provisions of Section 2.5, plus a ten percent (10%)
penalty, together with interest at the rate of twelve percent (12%) per annum on
the indemnified amount calculated from the date of payment or deposit in the
Joint Account until the date repaid.

 

(c)          From time to time following the Closing, Transferor, Transferee,
Lakeland Brazil and JNemer shall, and shall cause their respective Affiliates
to, execute, acknowledge and deliver all such further conveyances, notices,
assumptions, releases and acquaintances and such other instruments, and shall
take such further actions, as may be necessary or appropriate to assure fully to
Transferor, Transferee, Lakeland Brazil and their respective Affiliates and
their respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Transferee and Lakeland Brazil and created in favor of Transferor under this
Agreement, and to otherwise effectuate the transactions contemplated hereby and
thereby.

 

2.7          Taxes

 

Transferee and Transferor shall each (a) reasonably cooperate with each other to
minimize Brazilian and USA Tax costs arising out the transactions contemplated
by this Agreement and (b) pay the all-applicable Taxes according to the
respective law that they are subject to and perform all recording and filing
fees that may be imposed, assessed or payable arising out of the transactions
contemplated by this Agreement, including, transfers and assignments
contemplated hereby; provided, however, that the real estate transfer tax
applicable to the transfer of the Real Estate shall be paid by Transferor.

 

 Page 12 of 32

 

 

Article III
REPRESENTATIONS AND WARRANTIES OF TRANSFEROR

 

Transferor represents and warrants to Transferee that:

 

3.1          Organization and Qualification

 

Transferor is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has all requisite corporate
or similar power and authority to own, transfer and assign the LB Shares in
accordance with this Agreement and to carry out all of the provisions of this
Agreement in accordance with its terms.

 

3.2          Authorization; Binding Effect

 

(a)          Transferor has all requisite corporate power and authority (i) to
execute and deliver this Agreement and all other agreements referred to herein
to which it will be a party and (ii) to effect the transactions contemplated
hereby and thereby, and the execution, delivery and performance of this
Agreement and all other agreements referred to herein to which it will be a
party have been duly authorized by all requisite corporate action and do not
require the approval of Transferor’s stockholders.

 

(b)          This Agreement, when duly executed and delivered by Transferor,
will be valid and will create legally binding obligations of Transferor,
enforceable against Transferor, as applicable, in accordance with its terms.

 

3.3          Non-Contravention; Consents

 

(a)          Assuming that the required consent of Transferor’s senior lender
has been obtained, the execution, delivery and performance of this Agreement by
Transferor and the consummation of the transactions contemplated hereby, do not
and will not: (i) result in a breach or violation of any provision of
Transferor’s charter, by-laws or similar organizational documents, (ii) violate
or result in a breach of or constitute an occurrence of default under any
provision of, result in the acceleration or cancellation of any obligation
under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, conveyance to secure debt, note,
loan, indenture, lien, lease, agreement, instrument, order, judgment, decree or
other arrangement or commitment to which Transferor is a party or by which it is
bound, excluding the agreement executed by and among Transferor, Lakeland
Brazil, Elder Marcos Vieira da Conceição and Márcia Cristina Vieira da Conceição
Antunes on September 11, 2012, which shall be amended before the Closing Date,
or (iii) violate any order, judgment, decree, rule or regulation of any
Governmental Body having jurisdiction over Transferor or any Affiliate of
Transferor.

 

 Page 13 of 32

 

 

(b)          No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person is required to be obtained by Transferor
in connection with the execution and delivery of this Agreement or for the
consummation of the transactions contemplated hereby by Transferor, except for
the consent of Transferor’s senior lender.

 

3.4          Brokers

 

No broker, investment banker, financial advisor or other Person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Transferor or any of its Affiliates.

 

No Other Representations or Warranties

 

Except for the representations and warranties contained in this Article III,
none of Transferor, or any Affiliate of Transferor, makes any representations or
warranties, express or implied, and Transferor hereby disclaims any other
representations or warranties, whether made by Transferor or any Affiliate of
Transferor, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement,
the transactions contemplated hereby or the Brazilian Business.

 

Article IV
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE AND JNEMER

 

Transferee and JNemer represent and warrant, jointly and severally, to
Transferor as of the date hereof that:

 

4.1          Organization and Qualification

 

Transferee is a limited liability company duly organized, validly existing in
good standing under the Laws of Brazil and has all requisite corporate or
similar power and authority to enter into and to carry out all of the provisions
of this Agreement in accordance with its terms. Transferee is duly qualified to
do business in Brazil.

 

JNemer is a natural Person legally resident in Brazil and has all power and
authority to enter into and to carry out all of the provisions of this Agreement
in accordance with its terms.

 

 Page 14 of 32

 

 

4.2          Authorization; Binding Effect

 

(a)          Transferee has all requisite corporate power and authority (i) to
execute and deliver this Agreement and all other agreements referred to herein
to which it will be a party and (ii) to effect the transactions contemplated
hereby and thereby, and the execution, delivery and performance of this
Agreement and all other agreements referred to herein to which it will be a
party have been dully authorized by all requisite corporate action and do not
require the approval of Transferee’s stockholders.

 

(b)          This Agreement, when duly executed and delivered by Transferee,
will be valid and legally binding upon Transferee and will be enforceable
against Transferee in accordance with its terms.

 

(c)          JNemer has all requisite power and authority (i) to execute and
deliver this Agreement and all other agreements referred to herein to which he
will be a party and (ii) to effect the transactions contemplated hereby and
thereby.

 

(d)          This Agreement, when duly executed and delivered by JNemer will be
valid and legally binding upon JNemer, and will be enforceable against JNemer in
accordance with its terms.

 

4.3          No Violations

 

(a)          The execution, delivery and performance of this Agreement by
Transferee and JNemer and the consummation of the transactions contemplated
hereby do not and will not violate any order, judgment, decree, rule or
regulation of any Governmental Body having jurisdiction over Transferee or
JNemer or any of its or his properties.

 

(b)          No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person is required to be obtained by Transferee
or JNemer in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby by Transferee or JNemer.

 

(c)          The execution, delivery and performance of this Agreement by
Transferor and JNemer and the consummation of the transactions contemplated
hereby, do not and will not: (i) result in a breach or violation of any
provision of Transferor’s charter, by-laws or similar organizational documents,
(ii) violate or result in a breach of or constitute an occurrence of default
under any provision of, result in the acceleration or cancellation of any
obligation under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, conveyance to secure debt, note,
loan, indenture, lien, lease, agreement, instrument, order, judgment, decree or
other arrangement or commitment to which Transferor or JNemer is a party to or
by which it or he is bound.

 

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4.4          Brokers

 

No broker, investment banker, financial advisor or other Person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with the transactions contemplated by this Agreement based on
arrangements made by or on behalf of Transferee, JNemer or any of their
Affiliates.

 

4.5          No Inducement or Reliance; Independent Assessment

 

(a)          With respect to the LB Shares, the Brazilian Business and any other
rights or obligations to be transferred hereunder or pursuant hereto or thereto,
Transferee and JNemer have not been induced by and has not relied upon any
representations, warranties or statements, whether express or implied, made by
Transferor, any Affiliate of Transferor, or any agent, employee, attorney or
other representative of Transferor or by any other Person representing or
purporting to represent Transferor, that are not expressly set forth in this
Agreement, whether or not any such representations, warranties or statements
were made in writing or orally, and none of Transferor, any Affiliate of
Transferor, or any agent, employee, attorney, other representative of Transferor
or other Person shall have or be subject to any liability to Transferee or
JNemer or any other Person resulting from the distribution to Transferee or
JNemer, or Transferee’s or JNemer’s use of, any such information.

 

(b)          Transferee and JNemer (who is a senior manager of Lakeland Brazil),
acknowledge that, based on the available information, it or he has made its or
his own assessment of the present condition and the future prospects of the
Brazilian Business and is sufficiently experienced to make an informed judgment
with respect thereto. Transferee and JNemer further acknowledge that neither
Transferor, nor any Affiliate of Transferor, has made any warranty, express or
implied, as to the future prospects of the Brazilian Business or its
profitability for Transferee or JNemer, or with respect to any forecasts,
projections or business plans prepared by or on behalf of Transferor or and
delivered to Transferee or JNemer in connection with the Brazilian Business and
the negotiation and the execution of this Agreement.

 

(c)          Finally, Transferee and JNemer acknowledge and are fully aware of
all informed tax and labor liabilities of Lakeland Brazil (including existing
VAT litigations and tax notice infraction already issued against Lakeland
Brazil).

 

 Page 16 of 32

 

 

Article V
CERTAIN COVENANTS

 

5.1          Access and Information

 

(a)          Transferor shall, and shall cause its Affiliates and Lakeland
Brazil to, give to Transferee and to its officers, employees, accountants,
counsel and other representatives reasonable access during Transferor’s or the
applicable Affiliate’s and Lakeland Brazil’s normal business hours throughout
the period prior to the Closing to the Brazilian Business Records, including but
not limited to, all properties, books, lease files, contracts, commitments,
reports of examination and records (excluding confidential portions of personnel
and medical records) directly relating to the Brazilian Business. Transferor
shall, and shall cause its Affiliates and Lakeland Brazil to, assist Transferee
in making such investigation and shall cause its counsel, accountants,
engineers, consultants and other non-employee representatives to be reasonably
available to Transferee for such purposes.

 

(b)          After the Closing Date, Transferor on the one hand and Transferee,
Lakeland Brazil and JNemer on the other hand shall provide to each other and to
their respective officers, employees, counsel and other representatives, upon
request (subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or Third Party confidentiality obligation),
reasonable access for inspection and copying of all Brazilian Business Records,
including but not limited to Governmental Permits, Licenses, Contracts and any
other information existing as of the Closing Date and relating to the Brazilian
Business, and shall make their respective personnel reasonably available for
interviews, depositions and testimony in any legal matter concerning
transactions contemplated by this Agreement, the operations or activities
relating to the Brazilian Business and as otherwise may be necessary or
desirable to enable the party requesting such assistance to: (i) comply with any
reporting, filing or other requirements imposed by any Governmental Body; (ii)
assert or defend any Action or allegation in any litigation or arbitration or in
any administrative or legal proceeding; or (iii) perform its obligations under
this Agreement. The party requesting such information or assistance shall
reimburse the other party for all reasonable and necessary out-of-pocket costs
and expenses incurred by such other party in providing such information and in
rendering such assistance. The access to files, books and records contemplated
by this Section 5.1(b) shall be during normal business hours and upon reasonable
prior notice and shall be subject to such reasonable limitations as the party
having custody or control thereof may impose to preserve the confidentiality of
information contained therein.

 

(c)          Transferee shall preserve, and shall cause Lakeland Brazil and its
Affiliates to preserve, all Brazilian Business Records for at least ten (10)
years after the Closing Date. After this ten-year period and at least ninety
(90) days prior to the planned destruction of any Brazilian Business Records,
Transferee shall notify Transferor in writing of such planned destruction and
shall make available to Transferor, upon its request, such Brazilian Business
Records. Transferee further agrees that to the extent Brazilian Business Records
are placed in storage, they will be indexed in such a manner as to make
individual document retrieval possible in an expeditious manner.

 

 Page 17 of 32

 

 

5.2          Conduct of Brazilian Business

 

From and after the date of this Agreement and until the Closing Date, except as
otherwise contemplated by this Agreement or as Transferee shall otherwise
consent to in writing, Transferor, Lakeland Brazil and each of their Affiliates,
with respect to the Brazilian Business:

 

(a)          shall carry on the Brazilian Business in the ordinary course and,
to the extent consistent therewith, use reasonable best efforts to preserve the
relationships of the Brazilian Business with customers, suppliers, licensors,
licensees, distributors, landlords and others with whom the Brazilian Business
deals;

 

(b)          shall not permit, or other than in the ordinary course of the
Brazilian Business or as may be required by Law or a Governmental Body, all or
any of the Lakeland Brazil’s assets (real or personal, tangible or intangible)
presently and actively used or held for use primarily in the operation or
conduct of the Brazilian Business, to be sold, leased, licensed, transferred or
disposed of;

 

(c)          shall not acquire any asset except in the ordinary course of the
Brazilian Business;

 

(d)          shall not permit Lakeland Brazil to terminate or materially extend
or materially modify any Contract except in the ordinary course of the Brazilian
Business;

 

(e)          shall not permit Lakeland Brazil to incur or assume, any
liabilities, obligations or indebtedness for borrowed money, other than in the
ordinary course of the Brazilian Business;

 

(f)           shall not cause or permit Lakeland Brazil to do any act, that
would cause any representation or warranty of Transferor in this Agreement to be
or become untrue in any material respect or intentionally omit to take any
action necessary to prevent any such representation or warranty from being
untrue in any material respect;

 

(g)          shall not increase the compensation or benefits provided to any
employee of Lakeland Brazil, except for increases in the ordinary course of the
Brazilian Business;

 

(h)          shall not change any accounting practice or principle used by the
Brazilian Business, except for any change required by reason of a concurrent
change in GAAP; and

 

 Page 18 of 32

 

 

(i)            shall not cause or permit Lakeland Brazil to enter into such
agreement or commitment with respect to the foregoing.

 

5.3          Administration and Control of Lakeland Brazil

 

(a)          As condition for the completion of all obligations assumed by
Transferor under the provision of this Agreement, Transferee, Lakeland Brazil
and JNemer acknowledge, undertake, consent and agree as follows:

 

(i)            JNemer will be appointed as legal representative (the “signing
officer”) of Lakeland Brazil on the Closing Date and shall maintain this
position for at least the first two (2) years immediately after the Closing
Date.

 

(ii)          Transferee shall maintain the ownership of at least fifty one
percent (51%) of Lakeland Brazil’s shares at least during the first two (2)
years immediately after the Closing Date.

 

(iii)         JNemer shall maintain the ownership of at least fifty one percent
(51%) of Transferee’s shares at least during the first two (2) years immediately
after the Closing Date.

 

(b)          Unless waived in writing by Transferor, failure to comply with the
provisions of Section 5.3(a) shall constitute a material breach of this
Agreement by Transferee and JNemer and shall, in addition to all rights and
remedies that Transferor shall have as a matter of law or equity, excuse
Transferor from all of its obligations under this Agreement (including making
the payments required by Section 2.5) and entitle Transferor to reimbursement
from Transferee and Lakeland Brazil of all payments theretofore made by
Transferor under the provisions of Section 2.5.

 

5.4          Reasonable Best Efforts

 

Upon the terms and subject to the conditions set forth in this Agreement, each
of the parties agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including using reasonable best
efforts to accomplish the following: (i) the taking of all acts necessary to
cause the conditions to Closing to be satisfied as promptly as practicable, (ii)
the obtaining of all necessary actions,, waivers, consents and approvals from
Governmental Bodies and the making of all necessary registrations and filings
(including filings with Governmental Bodies, if any) and the taking of all steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by any Governmental Body, (iii) the obtaining of all necessary
consents, approvals, releases or waivers from Third Parties, (iv) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any Governmental Body vacated or reversed, and (v) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by and to fully carry out the purposes of, this Agreement.

 

 Page 19 of 32

 

 

5.5          Contacts with Suppliers, Employees and Customers

 

Without the prior written consent of Transferor, which may be withheld for any
reason or no reason, Transferee shall not, until the Closing Date, contact any
suppliers to, or customers of, the Brazilian Business or any Brazilian Business
employees in connection with or pertaining to any subject matter of this
Agreement.

 

5.6          Non-Solicitation of Employees

 

None of Transferor, any of its representatives or any of its Affiliates will at
any time prior to two (2) years from the date hereof, directly or indirectly,
solicit the employment of any of the Brazilian Business employees without
Transferee’s prior written consent, except ETavares, who may be retained by
Transferor or any of its Affiliates at any time. The term “solicit the
employment” shall not be deemed to include generalized searches for employees
through media advertisements, employment firms or otherwise that are not focused
on Persons employed by Transferee or any successor. This restriction shall not
apply to any employee whose employment with Lakeland Brazil or its successor is
involuntarily terminated by Transferee, Lakeland Brazil or any of its
Affiliates, or its or their successors, after the Closing. Solicitation of
employment shall only be deemed to occur if the Person who performs such
solicitation has knowledge of this Agreement or if such Person has no knowledge
of this Agreement but Transferor’s employees with knowledge of this Agreement
have advance knowledge of any such solicitation.

 

5.7 Exclusivity

 

Unless and until this Agreement is terminated pursuant to Section 10.1, neither
Transferor nor its directors or officers shall, directly or indirectly, through
any employee, representative, agent, Affiliate or otherwise, (i) solicit,
initiate or encourage any inquiry or proposal, except from Transferee, that
constitutes, or may be reasonably expected to lead to, a proposal or offer for a
merger, consolidation, business combination, sale of substantial assets (other
than the sale of inventory or obsolete equipment in the ordinary course of
business) or sale of a substantial percentage of shares of stock pursuant to a
stock acquisition (including, without limitation, through a tender offer)
involving or relating to the Brazilian Business (“Acquisition Proposal”); (ii)
engage in negotiations or discussions, except with Transferee and JNemer,
concerning, or provide any non-public information or access to any person or
entity, other than Transferee, relating to an Acquisition Proposal; or (iii)
agree to, approve or recommend any Acquisition Proposal. This Section shall not
apply to any transaction (or proposed transaction) involving a change of control
of the equity ownership of Transferor.

 

 Page 20 of 32

 

 

Article VI
CONFIDENTIAL NATURE OF INFORMATION

 

6.1          Confidentiality Agreement

 

Transferee and JNemer agree that the confidentiality provisions of this Article
VI shall apply to (a) all documents, materials and other information, including
but not limited to Proprietary Subject Matter, that it shall have obtained
regarding Transferor or its Affiliates during the course of the negotiations
leading to the consummation of the transactions contemplated hereby (whether
obtained before or after the date of this Agreement), any investigations made in
connection therewith and the preparation of this Agreement and related documents
and (b) all analyses, reports, compilations, evaluations and other materials
prepared by Transferee or its accountants or financial advisors that contain or
otherwise reflect or are based upon, in whole or in part, any of the provided
information.. Any information pertaining to the Transferor should remain
confidential as long as the law will allow.

 

6.2          Transferor’s and Transferee’s Proprietary Subject Matter

 

(a)          Except as provided in Section 6.2(b), after the Closing and for a
period of five years following the Closing Date, each of Transferor, Lakeland
Brazil, Transferee and JNemer agree that it or he will keep confidential all
Proprietary Subject Matter of the other party or its Affiliates that is received
from, or made available by, in the course of the transactions contemplated
hereby, including, for purposes of this Section 6.2, information about the
Brazilian Business’s business plans and strategies, marketing ideas and
concepts, especially with respect to unannounced products and services, present
and future product plans, pricing, volume estimates, financial data, product
enhancement information, business plans, marketing plans, sales strategies,
customer information (including customers’ applications and environments),
market testing information, development plans, specifications, customer
requirements, configurations, designs, plans, drawings, apparatus, sketches,
software, hardware, data, prototypes, connecting requirements or other technical
and business information, except, in the case of Transferee’s obligation, for
such Proprietary Subject Matter as is conveyed to Transferee as part of the LB
Shares.

 

 Page 21 of 32

 

 

(b)          Notwithstanding the foregoing, such Proprietary Subject Matter
shall not be deemed confidential and neither Transferor nor Transferee shall
have any obligation with respect to any such Proprietary Subject Matter that:

 

(i)            at the time of disclosure was already known to Transferor,
Lakeland Brazil, Transferee or JNemer, as the case may be, other than as a
result of this transaction, free of restriction as evidenced by documentation in
Transferor’s or Transferee’s possession, as the case may be;

 

(ii)          is or becomes publicly known through publication, inspection of a
product or otherwise, and through no negligence or other wrongful act of
Transferor, Lakeland Brazil, Transferee or JNemer, as the case may be;

 

(iii)         is received by Transferor, Lakeland Brazil, Transferee or JNemer,
as the case may be, from a Third Party without similar restriction and without
breach of any agreement;

 

(iv)         to the extent it is independently developed by Transferor, Lakeland
Brazil, Transferee or JNemer, as the case may be; or

 

(v)          is required to be disclosed under applicable Law or judicial
process, including, without limitation, according to the rules of the United
States of America Securities and Exchange Commission.

 

(c)          If Transferor (or any of its Affiliates), Lakeland Brazil,
Transferee or JNemer, as the case may be, is requested or required (by oral
question, interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Proprietary Subject
Matter, such party will promptly notify the other party of such request or
requirement and will cooperate with such other party such that such other party
may seek an appropriate protective order or other appropriate remedy. If, in the
absence of a protective order or the receipt of a waiver hereunder, a party (or
any of its Affiliates) is in the opinion of its or his counsel compelled to
disclose the Proprietary Subject Matter or else stand liable for contempt or
suffer other censure or significant penalty, such party (or its or his
Affiliate) may disclose only so much of the Proprietary Subject Matter to the
Person compelling disclosure as is required by Law. Transferor, Lakeland Brazil,
Transferee and JNemer as the case may be, will exercise its (and will cause its
or his Affiliates to exercise their) reasonable best efforts to obtain a
protective order or other reliable assurance that confidential treatment will be
accorded to such Proprietary Subject Matter.

 

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Article VII
CLOSING

 

7.1          Conditions Precedent to Closing

 

(a)          The Closing is conditioned upon the complete and full
accomplishment of all following conditions:

 

(i)            as a condition for Transferor to close, each of the
representations and warranties of Transferee and JNemer in Article IV hereof
that are subject to materiality or similar qualifications shall be true in all
respects at and as of the Closing Date and each of the representations and
warranties contained in Article IV that are not subject to materiality or
similar qualifications shall be true and correct in all material respects at and
as of the Closing Date, in each case as though then made and as though the
Closing Date was substituted for the date of this Agreement throughout such
representations and warranties;

 

(ii)          as a condition for Transferee and JNemer to close, each of the
representations and warranties of Transferor in Article III hereof that are
subject to materiality or similar qualifications shall be true in all respects
at and as of the Closing Date and each of the representations and warranties
contained in Article III that are not subject to materiality or similar
qualifications shall be true and correct in all material respects at and as of
the Closing Date, in each case as though then made and as though the Closing
Date was substituted for the date of this Agreement throughout such
representations and warranties;

 

(iii)         obtainment of the consent of Transferor’s senior lender to the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein;

 

(iv)         settlement and full payment by Transferor of the agreement executed
by and between Transferor, Lakeland Brazil, Elder Marcos Vieira da Conceição and
Márcia Cristina Vieira da Conceição Antunes on September 11, 2012;

 

(v)          the execution, and closing upon, of an Agreement between Transferor
(and/or an Affiliate of Transferor) and Lakeland Brazil with respect to the sale
with accord and satisfaction of the Real Estate to Transferor or an Affiliate of
the Transferor;

 

(vi)         execution and registry before the Commercial Registry of the change
in Lakeland Brazil’s Articles of Association stating the rise of its capital
stock according to the provisions of Section 2.5(a)(ii).

 

 Page 23 of 32

 

 

(vii)        JNemer must have the ownership of at least fifty one percent (51%)
of all shares representing the capital stock of Transferee and also be appointed
as its legal representative in the company`s bylaws.

 

(viii)      Execution of a Free Rental Lease Agreement for the real estate where
Lakeland Brazil`s head office is located, with a maximum free lease period of 2
years, provided that Transferor has the right to sell the respective real estate
at any time and, in this case, Lakeland Brazil must have a maximum 6 month
period to leave the real estate.

 

7.2          Transactions on the Closing

 

At the Closing, the following transactions shall take place:

 

(a)          Parties shall sign and deliver all documents required for the
transfer of the LB Shares to Transferee and the payment by Transferee pursuant
to Section 2.1;

 

(b)          Transferor shall deliver to Transferee all Brazilian Business
Records, to the extent in Transferor’s or an Affiliate’s possession and not
previously provided to Transferee.

 

(c)          The Distributorship and Supply Agreement referred to in Section 2.4
shall be entered into.

 

(d)          A written guarantee by Transferor in respect of the guarantee
described in Section 2.4(b) shall be delivered.

 

(e)          Transferor shall issue and deliver to Lakeland Brazil the
promissory notes mentioned in Section 2.5(a)(ii).

 

(f)           Each party shall deliver to another party such other documents as
may be reasonably requested by that party.

 

7.3          Closing Date

 

The Closing shall take place on July 31, 2015, at the offices of Lakeland Brazil
located at Rua Apucarana, 428, 1st floor, São Paulo, SP, 03311-001, at 2 PM
local time (such date and time being referred to herein as the “Closing Date”)
or at such time as the closing conditions have been met.

 

7.4          Contemporaneous Effectiveness

 

All acts and deliveries prescribed by this Article VII, regardless of
chronological sequence, will be deemed to occur contemporaneously and
simultaneously on the occurrence of the last act or delivery, and none of such
acts or deliveries will be effective until the last of the same has occurred.

 

 Page 24 of 32

 

 

Article VIII
STATUS OF AGREEMENTS

 

The rights and obligations of Transferee and Transferor under this Agreement
shall be subject to the following terms and conditions:

 

8.1          Survival

 

The representations and warranties of Transferee, JNemer and Transferor
contained in this Agreement shall survive the Closing Date until the date which
is thirty six (36) months after the Closing Date (the “Survival Period”), and
claims based upon or arising out of such representations and warranties may be
asserted at any time during the Survival Period, after which time such
representations and warranties shall expire and terminate. The termination of
the representations and warranties provided herein shall not affect the rights
of a party in respect of any claim made by such party in a writing received by
the other party during the Survival Period. The agreements and covenants
contained in this Agreement shall survive the Closing Date indefinitely or in
accordance with their terms, if any.

 

8.2          General Agreement to Indemnify

 

(a)          Transferor and Transferee shall indemnify, defend and hold harmless
the other party hereto, any Affiliate thereof, and any director, officer or
employee of such other party or Affiliate thereof (each an “Indemnified Party”)
from and against any and all claims, actions, suits, proceedings, liabilities,
obligations, losses, and damages, amounts paid in settlement, interest, costs
and expenses (including reasonable attorneys’ fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (collectively, “Losses”) incurred or suffered by any Indemnified
Party to the extent that the Losses arise by reason of, or result from (i)
subject to Section 8.1, any breach of any representation or warranty of such
party contained in this Agreement (it being agreed that solely for the purposes
of establishing whether any matter is indemnifiable pursuant to this
sub-paragraph (a)(i), the accuracy of the representations and warranties made by
each of Transferor and Transferee shall be determined without giving effect to
the qualifications to such representations and warranties concerning
materiality, or (ii) the breach by such party of any covenant or agreement of
such party contained in this Agreement to the extent not waived by the other
party.

 

(b)          Transferee and/or Lakeland Brazil further agree to indemnify and
hold harmless Transferor from and against any Losses incurred by Transferor
arising out of, resulting from, or relating to Brazilian Business Liabilities.

 

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(c)          Transferee and Lakeland Brazil further agree to indemnify and hold
harmless Transferor with respect to any Losses arising from the operation and
conduct of the Brazilian Business from and after the Closing.

 

(d)          Transferee and Lakeland Brazil also agree to indemnify and hold
harmless Transferor with respect to any future abandonment of Brazilian
Business, Bankruptcy or filing of a Court Protected Restructuring by Lakeland
Brazil and/or any of its Affiliates and/or successors and assigns.

 

(e)          The amount of the Indemnifying Party’s liability under this
Agreement shall be net of any applicable insurance proceeds actually received
by, and other savings, including Tax savings, that may actually reduce the
overall impact of the Losses upon, the Indemnified Party. The indemnification
obligations of each party hereto under this Article VIII shall inure to the
benefit of the directors, officers and Affiliates of the other party hereto on
the same terms as are applicable to such other party.

 

(f)           Notwithstanding anything contained in this Agreement to the
contrary, no party shall be liable to the other party for any indirect, special,
punitive, exemplary or consequential loss or damage (including any loss of
revenue or profit) arising out of this Agreement; provided, however, that the
foregoing shall not be construed to preclude recovery by the Indemnified Party
in respect of Losses directly incurred from Third Party Claims. Both parties
shall mitigate their damages.

 

8.3          General Procedures for Indemnification

 

(a)          The Indemnified Party seeking indemnification under this Agreement
shall promptly notify the party against whom indemnification is sought (the
“Indemnifying Party”) of the assertion of any claim, or the commencement of any
action, suit or proceeding by any Third Party, in respect of which indemnity may
be sought hereunder and shall give the Indemnifying Party such information with
respect thereto as the Indemnifying Party may reasonably request, but failure to
give such notice shall not relieve the Indemnifying Party of any liability
hereunder (unless the Indemnifying Party has suffered material prejudice by such
failure). The Indemnifying Party shall have the right, but not the obligation,
exercisable by written notice to the Indemnified Party within thirty (30) days
of receipt of notice from the Indemnified Party of the commencement of or
assertion of any Action by a Third Party in respect of which indemnity may be
sought hereunder (a “Third Party Claim”), to assume the defense and control the
settlement of such Third Party Claim that (i) involves (and continues to
involve) solely money damages or (ii) involves (and continues to involve) claims
for both money damages and equitable relief against the Indemnified Party that
cannot be severed, where the claims for money damages are the primary claims
asserted by the Third Party and the claims for equitable relief are incidental
to the claims for money damages.

 

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(b)          The Indemnifying Party or the Indemnified Party, as the case may
be, shall have the right to participate in (but not control), at its own
expense, the defense of any Third Party Claim that the other is defending, as
provided in this Agreement.

 

(c)          The Indemnifying Party, if it has assumed the defense of any Third
Party Claim as provided in this Agreement, shall not consent to a settlement of,
or the entry of any judgment arising from, any such Third Party Claim without
the Indemnified Party’s prior written consent (which consent shall not be
unreasonably withheld) unless such settlement or judgment relates solely to
monetary damages. The Indemnifying Party shall not, without the Indemnified
Party’s prior written consent, enter into any compromise or settlement that (i)
commits the Indemnified Party to take, or to forbear to take, any action or (ii)
does not provide for a complete release by such Third Party of the Indemnified
Party. The Indemnified Party shall have the sole and exclusive right to settle
any Third Party Claim, on such terms and conditions as it deems reasonably
appropriate, to the extent such Third Party Claim involves equitable or other
non-monetary relief against the Indemnified Party, and shall have the right to
settle any Third Party Claim involving money damages for which the Indemnifying
Party has not assumed the defense pursuant to this Section 8.3 with the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.

 

(d)          In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement that does not involve a Third Party Claim, such
Indemnified Party shall send written notice of such claim to the Indemnifying
Party. Such notice shall specify the basis for such claim. As promptly as
possible after the Indemnified Party has given such notice, and subject to the
limitations set forth in Section 8.2, the Indemnified Party and the Indemnifying
Party shall establish the merits and amount of such claim by mutual agreement,
or, if necessary, by (i) arbitration according to the provisions of Section 9.6
or (ii) any other reasonable means elected by all parties.

 

Article IX
MISCELLANEOUS PROVISIONS

 

9.1          Notices

 

All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if (i) mailed by certified or
registered mail, return receipt requested, (ii) sent by Federal Express or other
express carrier, fee prepaid, (iii) sent via facsimile with receipt confirmed,
or (iv) delivered personally, addressed as follows or to such other address or
addresses of which the respective party shall have notified the other.

 

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(a) If to Transferor, to:  LAKELAND INDUSTRIES, INC.     Attn: Charles Roberson
    202 Pride Lane     Decatur, Alabama 35603     United States of America      
(b) If to Transferee, to: INDÚSTRIA E COMÉRCIO DE ROUPAS E     EQUIPAMENTOS DE
PROTEÇÃO INDIVIDUAL LTDA.     Attn: Jack Antunes Nemer     Rua Luxemburgo, 260,
Lotes 82/83 – Bloco O     Loteamento Granjas Rurais, Salvador – BA, 41230-130,
Brasil       (c) If to: JACK ANTUNES NEMER     Rua Luxemburgo, 260, Lotes 82/83
– Bloco O     Loteamento Granjas Rurais, Salvador – BA, 41230-130, Brasil

 

9.2          Expenses

 

Except as otherwise provided in this Agreement, each party to this Agreement
will bear all the fees, costs and expenses that are incurred by it or him in
connection with the transactions contemplated hereby, whether or not such
transactions are consummated.

 

9.3          Entire Agreement; Modification

 

The agreement of the parties, which consists of this Agreement and the documents
referred to herein, sets forth the entire agreement and understanding between
the parties and supersedes any prior agreement or understanding, written or
oral, relating to the subject matter of this Agreement. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby, and in accordance with
Section 10.4.

 

9.4          Assignment; Binding Effect; Severability

 

This Agreement may not be assigned by any party hereto without the other party’s
written consent. This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the successors, legal representatives and permitted
assigns of each party hereto. The provisions of this Agreement are severable,
and in the event that any one or more provisions are deemed illegal or
unenforceable the remaining provisions shall remain in full force and effect
unless the deletion of such provision shall cause this Agreement to become
materially adverse to either party, in which event the parties shall use
reasonable best efforts to arrive at an accommodation that best preserves for
the parties the benefits and obligations of the offending provision.

 

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9.5          Governing Law

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK IN THE UNITED STATES OF AMERICA, AS TO
ALL MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT,
ENFORCEABILITY, PERFORMANCE AND REMEDIES.

 

9.6          Consent to Jurisdiction

 

(a)          Any dispute, claim or controversy arising out of or relating to
this Agreement or the breach, termination, enforcement, interpretation or
validity thereof, including the determination of the scope or applicability of
this Agreement, shall be determined by arbitration administered by the
Arbitration Place located in Toronto, Ontario, Canada, in accordance with the
Rules of Arbitration of the International Chamber of Commerce rules and to the
following rules:

 

(i)            Either Party may initiate arbitration by filing a written demand
for arbitration at any time and submit it to the Arbitration Place and to the
other Party.

 

(ii)          The Tribunal will consist of three arbitrators. Within 15 days
after the commencement of arbitration, each Party shall select one person to act
as arbitrator, and the two so selected shall select a third arbitrator within 30
days of the commencement of the arbitration. If the arbitrators selected by the
Parties are unable or fail to agree upon the third arbitrator within the
allotted time, the third arbitrator shall be appointed by Arbitration Place in
accordance with its rules. All arbitrators shall serve as neutral, independent
and impartial arbitrators

 

(iii)         The place of arbitration will be Toronto, Ontario, Canada. The
language to be used in the arbitral proceedings will be English.

 

(iv)         Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.

 

(b)          Nothing contained herein will be construed to exclude Transferor,
prior to the appointment of the Tribunal, from seeking provisional or emergency
remedies from any court of competent jurisdiction and such application shall not
be deemed inconsistent with, or a waiver of, this Agreement to arbitrate any
dispute, claim or controversy arising out of or relating to this Agreement or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this Agreement.

 

9.7          Execution in Counterparts

 

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

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9.8          No Third Party Beneficiaries

 

Nothing in this Agreement, express or implied, is intended to or shall (a)
confer on any Person other than the parties hereto and their respective
successors or assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement or (b) constitute the parties hereto as partners or
as participants in a joint venture. This Agreement shall not provide third
parties with any remedy, claim, liability, reimbursement, cause of action or
other right in excess of those existing without reference to the terms of this
Agreement. No Third Party shall have any right, independent of any right that
exist irrespective of this Agreement, under or granted by this Agreement, to
bring any suit at law or equity for any matter governed by or subject to the
provisions of this Agreement.

 

9.9          Specific Performance

 

The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court in New York State, United States, this being in
addition to any other remedy to which they are entitled at law or in equity.

 

9.10       Jurisdiction

 

All parties hereto consent to the jurisdiction in which actions may be brought
pursuant to the Agreement.

 

Article X
TERMINATION AND WAIVER

 

10.1       Termination

 

(a)                 This Agreement may be terminated at any time prior to the
Closing Date by:

 

(i)  Mutual Consent. The mutual written consent of Transferee and Transferor;

 

(ii) Breach of Contract. Breach, by any Party, in any material respect, of any
of its representations, warranties, covenants or agreements contained in this
Agreement shall give the right to the non-breaching Party to terminate this
Agreement;

 

(iii)   Court or Administrative Order. The Agreement shall terminate if there
shall be in effect a final, non-appealable order of a Governmental Body of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereby; or

 

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(b)          This Agreement may be terminated at the election of Transferor if
any one or more of the conditions to close, other than the condition set forth
in Section 7.1(a)(ii), have not been fulfilled by August 31, 2015.

 

(c)          This Agreement may be terminated at the election of Transferee or
JNemer if any one or more of the conditions to close, other than the condition
set forth in Section 7.1(a)(i), have not been fulfilled by August 31, 2015.

 

10.2       Effect of Termination

 

In the event of the termination of this Agreement in accordance with Section
10.1, this Agreement shall become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders, except for
the obligations of the parties hereto as provided in Article VI relating to the
obligations of Transferee and Transferor to keep confidential certain
information, Section 9.2 relating to certain expenses and this Section 10.2.
Nothing in this Section 10.2 shall be deemed to release either party from any
liability for any breach of any obligation hereunder.

 

10.3       Material To Be Returned

 

(a)          In the event of the termination of this Agreement in accordance
with Section 10.1, the transactions contemplated by this Agreement shall be
terminated, without further action by any party hereto.

 

(b)          Furthermore, in the event that this Agreement is terminated as
provided herein, Transferee and JNemer shall return all documents and other
material received from Transferor, any Affiliate of Transferor or Lakeland
Brazil or any representative of Transferor or Lakeland Brazil relating to the
Brazilian Business or the transactions contemplated by this Agreement, whether
obtained before or after the execution of this Agreement.

 

10.4       Amendment of Agreement

 

This Agreement may be amended with respect to any provision contained herein at
any time prior to the Closing Date by mutual agreement by the parties hereto;
provided, however, that such amendment shall be evidenced by a written
instrument duly executed on behalf of each party by itself or by its duly
authorized officer or employee.

 

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IN WITNESS WHEREOF, each party has caused this Agreement to be duly executed on
its behalf by its duly authorized officer as of the date first written above.

 

 

/s/ Gary Pokrassa

LAKELAND INDUSTRIES, INC.

by Gary Pokrassa

Chief Financial Officer

 

/s/ Jack Antunes Nemer

ZAP COMÉRCIO DE BRINDES CORPORATIVOS LTDA.

by Jack Antunes Nemer

Attorney

 

/s/ Eduardo Fernandes Tavares

LAKE BRASIL INDUSTRIA E COMERCIO DE ROUPAS E

EQUIPAMENTOS DE PROTECAO INDIVIDUAL LTDA.

by Eduardo Fernandes Tavares

CEO

 

/s/ Jack Antunes Nemer

JACK ANTUNES NEMER

 

LAWYERS:

 

The lawyers undersigned estate that they assisted the Parties on the negotiation
and executions of this Agreement exclusively concerning Brazilian Law:

 

/s/ Daniel Cione Florez Da Silveira   /s/ Igor Ghirardello Tambucci

DANIEL CIONE FLOREZ DA SILVEIRA

 OAB/SP 155.101

(lawyer of Transferor)

 

IGOR GHIRARDELLO TAMBUCCI

OAB/SP 243.715

(lawyer of Transferee and JNemer)

 

WITNESSES:

 

1.  /s/ Edilson G. Teixeira   2.  /s/ Luiz Alfredo Mader

Name: Edilson G. Teixeira

I.D.:

C.P.F.:

 

Name: Luiz Alfredo Mader

I.D.:

C.P.F.:

 

 Page 32 of 32