Exhibit
10.18
 
 INVENTORY
PLEDGE AND SECURITY AGREEMENT
 
 
 This
Pledge and Security Agreement (the “Agreement”) is made as of May 13, 2008 by
and among:
 
 Wachovia Bank,National
Association, duly organized and existing in accordance with the laws of New
York, with its registered office at 12 East 49th Street, 43rd
Floor, New York, New York  10017, represented in accordance with
its corporate documents,(the “Bank”);
 
 Qualytextil S/A, duly
organized and existing in accordance with the laws of Brazil, with its
registered office in the City of Salvador, State of Bahia, at Rua Luxemburgo,
s/no, Loteamento Granjas Rurais, Presidente Vargas, Quadra O, Lotes 82 and 83,
São Caetano, Brazil, enrolled with the Brazilian Taxpayers Roll of the Ministry
of Finance (CNPJ/MF) under no. 04.011.170/0001-22, herein duly represented in
accordance with its Charter Documents, together with its successors and
permitted assigns (the “Qualytextil”);
and
 
 As
Intervening and Consenting Parties:
 
 Lakelanddo Brasil Empreendimentos
eParticipações
Ltda., a company duly organized and existing in accordance with the laws
of Brazil, with its registered office at Avenida Bernardino de Campos, no 98,
sala 09, 14o andar, São Paulo – SP, Brazil, enrolled with the Brazilian
Taxpayers Roll of the Ministry of Finance (CNPJ/MF) under no.
09.484.003/0001-12, herein duly represented in accordance with its Articles of
Association, together with its successors and permitted assigns (the “Lakeland
Brazil”); and
 
 Lakeland Industries, Inc, duly
organized and existing in accordance with the laws of Delaware, with its
registered office at 701-07 Koehler Avenue, Ronkonkoma, 11779, herein duly
represented by its Chief Financial Officer, Mr. Christopher J. Ryan and Gary
Pokrassa (the “Lakeland”).
 
 
 W I T N E S S E T H:
 
 
 WHEREAS,
pursuant to the Loan Agreement, dated July 7, 2005, as amended by the Third
Modification Agreement and Reaffirmation of Guaranty dated of even date hereof
entered into by and between Lakeland and the Bank (as amended, supplemented,
restated or otherwise modified and in effect from time to time the “Credit Agreement”),
the Bank has agreed to loan to Lakeland a $ 30,000,000 revolving line of credit
to be used for the purchase by Lakeland Brazilof the totality of
shares of Qualytextil;
  1
  WHEREAS,
after the execution of a Share Purchase Agreement by and among Lakeland,
Lakeland Brazil, Qualytextil, and its shareholders, Lakeland Brazil shall be the
legal owner of 1,507,701 shares representing, in the aggregate, 100% of the
capital stock of Qualytextil;
 
 WHEREAS,
it is a condition precedent of the Credit Agreement that Lakeland causes to be
created in favor of the Bank, a security interest over the inventory of
Qualytextil in all of its forms (as defined in Section 1.01.) to secure
Lakeland’s obligations arising from the Credit Agreement;
 
 WHEREAS
Qualytextil have agreed to pledge its inventory in all of its forms in favor of
the Bank;
 
 NOW,
THEREFORE, in consideration of the foregoing premises and mutual covenants
contained herein, the parties hereto agree as follows:
 
 
 ARTICLE
I - The Pledge
 
 1.01.     
   Pledge; Grant of Security
Interest. (a) In order to secure the full and prompt payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of all the obligations under the Credit Agreement, (and which
Lakeland hereby acknowledges and recognizes for all legal purposes), Qualytextil
hereby unconditionally and irrevocably pledges to the Bank all its inventory in
all of its forms as described in Annex II, located at the places specified
therein (each, a “Location”) including,
without limitation, (i) all raw materials, work in process, finished goods and
materials used or consumed in the manufacture, production, preparation
or shipping thereof, (ii) goods in which Qualytextil has an interest in
mass or a joint or other interest or right of any kind (including, without
limitation, goods in which Qualytextil has an interest or right
as consignee) and (iii) goods that are returned to or repossessed or
stopped in transit by Qualytextil, and all accessions thereto and products
thereof and documents therefore (any and all such property being the "Inventory");
 
 (b)           Furthermore,
Qualytextil agrees with the creation of a security in favor of the Bank,
regarding other goods owned by Qualytextil, in substitution for any good that
belongs to the Inventory that had been sold during the term of this Agreement,
in whole or in part (the “Substitute Goods”),
as security for all present and future debts of Lakeland and all payments of any
nature due to the Bank. For this purpose, every six (6) months, Qualytextil
undertakes to send to the Bank a notice, substantially in the form of Annex III
hereto (the “Notice of
Pledge”), specifying  the  products in  the
Inventory which were sold during this period and that
were  substituted.
 
 (c)           Notwithstanding
the Notice of Pledge above stated, since the moment of sale of any product in
the Inventory as described in Annex II, the Substitute Goods shall forthwith be
subject to all of the clauses, terms and conditions of this Pledge
Agreement.
 
 (d)           In
case of Substitute Goods as stated in Section 1.01.(b) above, each three (3)
Notices of Pledge delivered by Qualytextil to the Bank , the Parties shall
promptly (i) execute an amendment to this Agreement (the “Amendment”) in order
to extend the lien created hereunder
  2
  to such
Substitute Goods, and (ii) provide the required filings and register the pledge
of such Substitute Goods in accordance with the provisions of Section 1.01.
hereof or take such other actions as may otherwise be required by applicable law
to extend such lien;
 
 (e)           The
Inventory pledged hereunder, including the Substitute Goods to be pledged shall
remain in the possession of Qualytextil until the sale of any of its
products.
 
 1.02.        
Definitions:
Interpretation. Capitalized terms used herein shall have the same
meanings ascribed to them in the Credit Agreement.
 
 
 ARTICLE
II – SECURED OBLIGATIONS
 
 2.01.        
The Debt: For
the purposes of Section 1,424 of the Brazilian Civil Code, this Agreement shall
cover, fully and without restrictions, any and all debts and monetary
liabilities of Lakeland to the Bank in relation to the Credit Agreement and
irrespective of whether of such debts or liabilities: (i) are present or future;
(ii) are actual, prospective, contingent or otherwise; (iii) are owed or
incurred as principal, interest, fees, charges, taxes, duties or other imposts,
damages (whether for breach of contract or tort or incurred on any other
ground), losses, costs or expenses (including judicial costs and attorney’s
fees) or on any account; (v) are owed at stated maturity, upon prepayment,
following acceleration or otherwise; or (vi) comprise any combination of the
above (the “Secured
Obligations”). The total estimated principal amount of the Secured
Obligations, the final maturity date and the interest rates provided in the
Credit Agreement for such Secured Obligations are, on this date, those set forth
in Annex I hereof.
 
 
 ARTICLE
III - REPRESENTATIONS AND WARRANTIES
 
 3.01.        Representations and
Warranties. Qualytextil represents and warrants to the Bank as of the
date hereof, as of the date of any Amendment and as of the date of any other
date that the following representations and warranties are required to be made
or are deemed to be made pursuant to this Agreement, to the Credit Agreement or
any other financing document, that:
 
 (a)           Qualytextil
is a corporation duly organized and validly existing and in good standing under
the laws of Brazil, and they have all requisite corporate power, authority and
legal right under the laws of such jurisdiction to enter into and perform their
obligations under this Agreement;
 
 (b)           Other
than the registration provided in Section 8.01. no consent, approval,
authorization or other action by, and no notice to or of, or declaration or
filing with, any governmental or other public body, or any other person, is
required for (i) the due authorization, execution, delivery, validly
enforceability of this Agreement and the performance by
Qualytextil  of its obligations hereunder or the consummation of the
transactions contemplated hereby; (ii) the creation, perfection or maintenance
of the first priority lien created hereby; and (iii) the
  3
  exercise
by the Bank of its rights under this Agreement or the remedies with respect of
the Inventory pledged herein;
 
 (c)           Annex
II hereto completely and accurately sets forth the number of goods of the
Inventory, as well as the corresponding value in Reais;
 
 (d)           Qualytextil
is the legal and record owner of, and has title to, its Inventory in which it
has granted to the Bank a first priority security interest, free of any and all
liens except for the lien created hereunder, and be the owner of any Substitute
Goods described in any of the Notices of Pledge and that the Inventory is and
any Substitute Goods will be free and unencumbered of all and any charges both
under the law and any agreements.
 
 (e)          
There are no options or other contractual arrangements for the pledge of the
Inventory, and there are no arrangements, preemptive rights or any other rights
or claims of any character relating to the purchase, repurchase, transfer, with
respect to the Inventory that restrict the transfer of or otherwise relate to
the Inventory, in either case that would affect the pledge hereunder;
and
 
 
 ARTICLE
IV – OBLIGATIONS OF QUALYTEXTIL
 
 4.01.       
At all times during such period as this pledge over the Inventory, is and
continues to be in full force and effect, Qualytextil undertakes:
 
 (a)           to
keep the Inventory at its own expense in good conditions of repair and in
perfect operating conditions, ensuring that the value thereof is not affected,
to perform any relevant maintenance therefore and to keep it free of any liens,
encumbrances or charges, as well as to defend it against all claims and legal
procedures brought by any person other than the Bank;
 
 (b)           to
maintain enough goods at its Inventory to accomplish with the lien created
herein.
 
 (c)           to
pay out of its own funds or for its own account any taxes, charges, license
fees, duties, contributions, assessments and/or any other amounts due or to
become due with regard to the Inventory, obtaining release and/or discharge
thereof;
 
 (d)           to
assume the liabilities for any and all damages caused by the Inventory to third
parties and/or to Qualytextil assets, holding the Bank harmless of the
liabilities for any and all damages caused by the Inventory to said third
parties or assets;
 
 (e)           
to keep the Inventory  at its own expense insured, in favor of the
Bank, against total risk, including, but not limited to damages caused by fire,
flood, earthquake, robbery, theft, embezzlement, vandalism and other reasonable
causes of damages, with reputable insurance companies and/or underwriters in a
manner, to an extent and on terms satisfactory to the Bank and customary for
such kind of assets in the Federative Republic of Brazil as well as to produce
to the Bank documentary evidence of compliance by Qualytextil with the
obligations contained
  4
    (f)           
 to appoint the Bank as loss payee under the insurance policy/ies relating
to the Inventory and to order the insurance company/ies to pay to the Bank
thereinafter any insurance proceeds and any premium
reimbursement;
  5
  (g)           to
inform the Bank and the insurance company(ies) promptly of the occurrence of any
insurance event relating to the Inventory and, as the case may be, to keep the
Bank advised as to the progress of any claim invoked against Qualytextil or any
of its property. In the event of any loss, Qualytextil shall not take any step
for the purpose of entering into a compromise, settlement or arrangement with
any of its insurance companies or creditors without prior written consent of the
Bank;
 
 (h)           to
immediately inform the Bank when any of the insurance policies related to the
Inventory or provided in this Agreement is terminated, revoked or
nullified;
 
 (i)          
 not to claim, ask or request, and not to file any lawsuit or judicial
proceeding against the Bank in order to compel it to take any measure in
relation to the Inventory or asking for any indemnification due to damages
occurred in the Inventory, independently of the cause and size of the
damage;
 
 (j)        
   not to  create or permit to exist any charge,
pledge, mortgage, hypothecation, lien or other encumbrance of any nature
whatsoever having the effect of creating a security interest over the Inventory
or to allow the Inventory to be used in violation of any law, regulation or
insurance policy applicable to the Inventory. Losses or damages caused to the
Inventory shall not exempt Qualytextil of any of the obligations assumed
hereunder;
 
 (k)           to
allow the representatives of the Bank or a third person on behalf of the Bank to
inspect the Inventory and the premises where the Inventory is installed at any
reasonable time and on reasonable notice;
 
 4.02.         Negative Covenants.
During the term of this Agreement, Qualytextil undertakes not to:
 
 (a)           create
any other encumbrances to the Inventory for so long as the Inventory are subject
to lien created hereunder without the prior written consent of the
Bank.
 
 (b)           take
or participate in any action or enter into any agreement which results or may
result in the loss of ownership and/or possession of all or part
of  the Inventory, including the Substitute Goods, for so long as the
Inventory are subject to the lien created hereunder, or any other transaction
which could have the same result as a encumbrance of any of the goods which are
part of the Inventory or which would, for any reason, be inconsistent with the
security interest of the Bank hereunder or defeat, impair, amend, restrict or
circumvent any right of the Bank hereunder, except that Qualytextil is hereby
authorized to sell, use or move the Inventory, with due regard to Section
4.01(b).
 
 4.03.        
Transfer of
Inventory. (a) In the event of an act of God or force majeure,
Qualytextil may transfer the Inventory affected by such acts of God or force
majeure, even to another place with storing conditions reasonably acceptable to
the Bank, in order to preserve and maintain the Inventory (or any part thereof)
in good storage conditions. In this event, Qualytextil shall, as soon as
practicable, but no later than five (5) Business Days after any such event,
inform the Bank of the place to which the Inventory (or any part thereof) has
been transferred to (“New Location”), which
place may then be inspected by the Bank. If the Bank
  6
  has
reasonable grounds not to approve the New Location, the Bank may inform
Qualytextil of its objection and request Qualytextil to remove and/or transfer
the Inventory (or any part thereof) to another location reasonably acceptable to
the Bank, in which case Qualytextil shall remove the Inventory to another
location within the timeframes reasonably agreed upon between the parties, at
the expenses of Qualytextil.
 
 (b)           In
the event the Inventory are transferred to the New Location pursuant to his
Section 4.03 (a), Qualytextil agrees to, as soon as practicable, but no later
than ten (10) Business Days after any such transfer, execute and deliver to the
Bank an amendment to this Agreement to update the list of the Inventory
contained in Annex II with the new location for each Inventory.
 
 (c)          
Any amendments to this Agreements to be executed pursuant to this Section 4.03
shall be registered with the competent real estate registry(ies) and delivered
to the Bank as provided and within the timeframes established under Section
8.01.
 
 
 ARTICLE
V - RISK OF LOSS
 
 5.01.        Qualytextilshall bear all risk of
loss with respect to the Inventory. The injury to or loss of the Inventory,
either partial or total, shall not release Qualytextil from payment or other
performance hereof.
 
 5.02.        Qualytextil
shall bear the risk of loss to the extent of any deficiency in the effective
insurance coverage with respect to loss or damage to the Inventory. Qualytextil
hereby assigns to Bank the proceeds of all property insurance covering the
Inventory up to the amount of the Secured Obligations and directs any insurer to
make payments directly to Bank.  Qualytextil hereby appoints Bank its
attorney-in-fact, which appointment shall be irrevocable and coupled with an
interest for so long as Secured Obligations are unpaid, to file proof of loss
and/or any other forms required to collect from any insurer any amount due from
any damage or destruction of the Inventory, to agree to and bind Qualytextil as
to the amount of said recovery, to designate payee(s) of such recovery, to grant
releases to insurer, to grant subrogation rights to any insurer, and to endorse
any settlement check or draft. Qualytextil agrees not to exercise any of the
foregoing powers granted to Bank without Bank's prior written
consent.
 
 
 ARTICLE
VI - DEFAULT
 
 6.01.         Default. (a) Upon the
occurrence of an Event of Default (as defined in the Credit Agreement) which is
continuing, the Bank may, in its sole discretion, irrespective of any prior or
subsequent notice, sell, assign, transfer or in any other way dispose of all or
part of the Inventory pledged hereunder (the “Sale”), at market
price and upon market terms and conditions and subject to applicable law, in or
out of court, in a public or private transaction, and shall apply the proceeds
of such Sale thus received for the payment of the Secured Obligations then due
and unpaid, as well as for the payment or reimbursement of all other costs and
expenses incurred as a result of the Sale.
  7
  (b)          
For the purposes hereof, it is hereby agreed and understood that (i) in the
event the amount obtained from the Sale, after the reimbursement to the Bank of
all costs and expenses incurred in connection with the Sale, including Bank’s
fees, attorney’s fees and court costs and expenses, exceeds the amounts due
under the Secured Obligations, the balance shall be promptly returned to
Qualytextil by the Bank, and (ii) in the event the amounts obtained from the
Sale are lower than the amounts due under the Secured Obligations, Qualytextil
shall remain liable for the payment of the outstanding balance.
 
 6.02.         Power of Attorney.
(a) For the purposes of this Article VI, Qualytextil hereby irrevocably and
irreversibly, as a condition to the pledge created hereunder, appoints the Bank
as its attorney-in-fact, pursuant to Article 684 and the sole paragraph of
Article 686 of the Brazilian Civil Code, to act solely, with broad powers to,
upon the occurrence of an Event of Default which is continuing carry out, in the
name and on behalf of Qualytextil, any acts necessary for the Sale, including
the execution of any documents required for the definitive transfer of the
Inventory pledge hereby, the Bank being authorized, at its sole discretion and
irrespective of Qualytextil’s consent, to delegate the powers granted herein to
any third party.
 
 (b)          
For such purpose Qualytextil has executed and delivered to the Bank on the date
hereof an irrevocable power-of-attorney, substantially in the form of Annex IV
and shall maintain such irrevocable power-of-attorney in full force and effect
until the Secured Obligations have been paid in full to the Bank to its
satisfaction.
 
 (c)           Any
notice by to the Bank that at such time an Event of Default has occurred or has
ceased shall be conclusive against Qualytextil and any other third
parties.
 
 
 ARTICLE
VII -TERM
 
 7.01.  
     Term. The pledge
hereunder and the power of attorneys granted herein will endure in their
entirety and will remain in full force and effect until the Secured Obligations
have been irrevocably and indefeasibly paid in full to the Bank has no further
commitment to lend under the Credit Agreement.
 
 
 ARTICLE
VIII - MISCELLANEOUS
 
 8.01.      
  Registration. (a)
Qualytextil undertakes to, within fifteen (15) days of the date of execution of
this Agreement, register it or any amendments hereto with the competent Real
Estate Registry (Cartório
de Registro de
Imóveis) of the city(ies) where the Inventory are located, provided that
Qualytextil shall pay any and all costs, expenses, fees and other charges
payable in connection thereto, necessary for the perfection of this Agreement or
any amendments thereto. Qualytextil shall provide the Bank with one original
counterpart of this Agreement or any amendment thereto duly registered with the
competent Real Estate Registry within five (5) Business Days after its
accomplishment.
 
 (b)         
  For registration purposes only, the amount of this Agreement is
R$3,512,416.57.
  8
  8.02.       
 Deposit of the
Inventory – Qualytextil hereby irrevocably undertakes to act as
depository, in accordance with the provisions of the Brazilian Civil Code, of
the Inventory and of any Substitute Goods.
 
 8.03.       
 Cumulative
Remedies. The rights, powers and remedies of the Parties under this
Agreement are cumulative and shall be in addition to all rights, powers and
remedies available to the Parties pursuant to the Credit Agreement and at law,
in equity or by statute and may be exercised successively or concurrently
without impairing the rights of the Parties hereunder.
 
 8.04.        
Waivers and
Amendments. This Agreement and its provisions shall only be modified,
amended, supplemented or waived with the express written consent of Qualytextil
and the Bank.
 
 8.05.       
 Severability. If any
provision of this Agreement shall be held to be invalid, illegal or
unenforceable under applicable law, such provision shall be ineffective only to
the extent of such invalidity, illegality or unenforceability, and shall not
affect any other provisions hereof or the validity, legality or enforceability
of such provision in any other jurisdiction.  To the extent permitted
by applicable law, the parties shall in good faith negotiate and execute an
Amendment to this Agreement to replace any such severed provision with a new
provision that (a) reflects their original intent and (b) is valid and
binding.  The first priority security interest created thereby shall,
to the extent permitted by applicable law, constitute a continuing first
priority Lien on and perfected first priority security interest in the
Inventory, in each case enforceable against Qualytextil in accordance with its
terms.
 
 8.06.        
Complete Agreement;
Successors and Assigns. This Agreement is intended by the parties as the
final expression of their agreement regarding the subject matter hereof and as a
complete and exclusive statement of the terms and conditions of such
agreement.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns.
 
 8.07.         Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the further
exercise of such right or remedy.
  8.08.         Language.This
Agreement is being executed in English and a sworn translation of this Agreement
shall be provided by Qualytextil for purposes of registry, pursuant to Section
8.01.above.
 
 8.09.         No Novation. It is
the express intent of the parties hereto that this Agreement is in no way
intended to constitute a novation of any of the terms of the Lon
Agreement.
 
 8.10.         Intervening and Consenting
Parties. The
Intervening and Consenting Parties hereby expressly consents to and agrees with
all of the terms and conditions of this Agreement and undertakes to faithfully
observe and fulfill any and all of its obligations arising
hereunder.
 
 8.11          Notices. All notices
and other communications provided for hereunder shall be provided in accordance
with the Credit Agreement.
  9
  8.12.        Clearance
Certificates. Qualytextil hereby delivers to the Bank the following
clearance certificates which copies are attached hereto as Annex V
I:
 
 (i)
              Clearance
      Certificate (Certidão
      Positiva com Efeitos de Negativa de Débitos relativos às Contribuições
      Previdenciárias e às de Terceiros) issued by the Federal Revenue
      Service (Secretaria da
      Receita Federal); and
 
 (ii)
              Clearance
      Certificate (Certidão
      Conjunta Positiva com Efeitos de Negativa de Débitos relativos aos
      Tributos Federais e à Dívida Ativa da União), joinly issued by the
      Office of the Attorney-General of the National Treasury (Procuradoria da Fazenda
      Nacional) and the Federal Revenue Service (Secretaria da Receita
      Federal).
 
 8.13.         Governing Law;
Jurisdiction.  This Agreement shall be governed by and
construed and interpreted in accordance with the laws of Brazil.  The
parties irrevocably submit to the jurisdiction of the courts sitting in the City
of São Paulo, State of São Paulo, Brazil, any action or proceeding to resolve
any dispute or controversy related to or arising from this Agreement and the
parties irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such courts, with the express waiver
of the jurisdiction of any other court, however privileged it may
be.
 
 [SIGNATURE
PAGE TO FOLLOW]
  10


IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in
the presence of the undersigned witnesses.
 
 
 WACHOVIA
BANK
 
 
 By:
              /s/ Roger
      Grossman
              By:Name:
              Roger
      Grossman
              Name:Title:
              Vice
      President
              Title:
 
 QUALYTEXTIL
S.A.
 
 
 By:
              /s/ Miguel G.
      Bastos
              By:
              /s/ Elder Marcos
      Vieira da ConceicaoName:
              Miguel
      G. Bastos
              Name:
              Elder
      Marcos Vieira da ConceicaoTitle:
              CFO
              Title:
              CEO
 
 
 LAKELAND
INDUSTRIES, INC.
 
 
 By:
              /s/
      Gary A. PokrassaName:
              Gary
      PokrassaTitle:
              CFO
 
 LAKELAND
DO BRASIL EMPREENDIMENTOS E PARTICIPAÇÕES LTDA.
 
 
 
 By:
              /s/
      Jose Tavares Lucena
              By:Name:
              Jose
      Tavares Lucena
              Name:Title:
              Administrator
              Title:
  WITNESSES:Name:
              
              
              Name:ID:
              
              
              ID:
  11
  ANNEX
I
 
 
 CONDITIONS
AND CHARACTERISTICS OF THE SECURED OBLIGATIONS
 
 
 1)            
TOTAL PRINCIPAL AMOUNT OF THE SECURED OBLIGATIONS
 
 A sum not
to exceed US$ 30,000,000.00 (thirty million United States dollars)
 
 2)            
INTEREST RATE OVER THE AMOUNT EFFECTIVELY DISBURSED:
 
 Based on
either LIBOR or LIBOR Market Index Rate, plus the Applicable Margin (equal to
the percentage set forth in the table based on Borrower’s Funded Debt to EBITDA
Ratio), more particularly described in the Second Amended and Restated
Promissory Note attached hereto as Annex I(a)
 
 3)            
MATURITY DATE OF INTEREST:
 
 Monthly
payments of interest only commencing June 2, 2008, final payment of all accrued
interest on July 7, 2010
 
 4)            
 REPAYMENT OF THE PRINCIPAL AMOUNT:
 
 Final
payment of principal on July 7, 2010
 
 5)            
PENALTY IN AN EVENT OF DEFAULT:
 
 Interest
rate plus 3%
  12
  ANNEX
I.(a)
 
 SECOND
AMENDED AND RESTATED PROMISSORY NOTE
  13
  ANNEX
II
 
 
 DESCRIPTION
AND LOCATION OF THE INVENTORY AS OF APRIL 30, 2008
 
 Quantity
              Quality
              Description
              Location
  14
  ANNEX
III
 
 NOTICE
OF PLEDGE
 
 
 Pursuant
to the Inventory Pledge and Security Agreement, dated as of May 13, 2008 by and
among (i) WACHOVIA BANK (the “Bank”); and QUALYTEXTIL S/A (the
“Qualytextil”), and as Intervening and Consenting Parties;LAKELAND DO BRASIL
EMPREENDIMENTOS E PARTICIPAÇÕES LTDA., and LAKELAND INDUSTRIES, INC; we
hereby give in pledge and transfer to the Bank, under the terms and conditions
of the above referred Inventory Pledge and Security Agreement and for the
purposes specified therein, the following Substitute Goods:
 
 Quantity
              Quality
              Description
              Location
 
 May 13,
2008
 
 QUALYTEXTIL S/A
 
 
 By: /s/ Miguel G.
Bastos
 Name:
Miguel G. Bastos
 Title:
CFO
 
 
 Accepted
by:  /s/
Roger Grossman
 
 WACHOVIA
BANK
  15
  ANNEX
IV
 
 POWER
OF ATTORNEY
 
 QUALYTEXTIL S/A, A company
duly organized and existing in accordance with the laws of Brazil, with its
registered office in the City of Salvador, State of Bahia, at Rua Luxemburgo,
s/no, Loteamento Granjas Rurais, Presidente Vargas, Quadra O, Lotes 82 and 83,
São Caetano, Brazil, enrolled with the Brazilian Taxpayers Roll of the Ministry
of Finance (CNPJ/MF) under no. 04.011.170/0001-22, herein duly represented in
accordance with its Charter Documents, together with its successors and
permitted assigns (the “Qualytextil”) hereby irrevocably and irreversibly
appoints WACHOVIA BANK,
duly organized and existing in accordance with the laws of New York, with its
registered office at 12 East 49th Street, 20th Floor, New York, New
York  10017, represented in accordance with its corporate documents
(the “Bank”), as its attorney-in-fact to act in its name and place, with the
following powers:
 
 
 (a)
              upon
      the occurrence of an Event of Default which is continuing (as defined in
      the Credit Agreement), to sell, assign, transfer or in any other way
      dispose of all or part of the Inventory pledged to the Bank pursuant to
      the Inventory Pledge and Security Agreement entered into between the Bank
      and Qualytextil on May 13, 2008 (as from time to time amended, the “Inventory Pledge and
      Security Agreement”), at market prices and upon market terms and
      conditions and subject to applicable law irrespective of any prior or
      subsequent notice to Qualytextil with respect thereto, in accordance with
      the provisions set forth in the Inventory Pledge and Security Agreement
      and in Article 1,433, Item IV, and Article 1,435, Item V, of the Brazilian
      Civil Code, and apply the proceeds thus received for the payment of the
      Secured Obligations the due and unpaid as well for the payment or
      reimbursement of all other costs and expenses incurred as a result of such
      sale, being vested with all necessary powers incidental thereto,
      including, without limitation, the power and authority to execute transfer
      documents, including discharge documentation with respect to the
      Inventory, to purchase foreign currency and make all remittances abroad,
      to sign any necessary foreign exchange contract with financial
      institutions in Brazil that may be required to such remittances and to
      represent the Grantor before the Central Bank of Brazil, financial
      institutions, private and public law legal entities and any Brazilian
      governmental authority when necessary to accomplish the purpose of the
      Inventory Pledge and Security Agreement;
and
 
 (b)
              upon
      the occurrence of an Event of Default which is continuing, to take any
      action and to execute and deliver any instrument consistent with the terms
      of the as deemed
  16
  necessary
or advisable to accomplish the purpose of the Inventory Pledge and Security
Agreement.
 
 Any
notice by the Bank that at such time an Event of Default has occurred and is
continuing shall be conclusive against Qualytextil and all other third parties.
Capitalized terms used, but not defined herein, shall have the meaning ascribed
to them in the Credit Agreement and/or in the Inventory Pledge and Security
Agreement. The powers granted herein are in addition to the powers granted by
the Bank in the Inventory Pledge and Security Agreement and not to cancel or
revoke any of such powers. This power of attorney is irrevocable and is granted
as a condition to the Inventory Pledge and Security Agreement and as a means to
comply with the obligations set forth therein, in accordance with the Article
684 and the sole paragraph of Article 686 of the Brazilian Civil Code, and shall
be valid and effective until The Bank has receives full payment of the
obligations secured by the Inventory Pledge and Security Agreement to its
satisfaction. The Bank may delegate the power granted through this power of
attorney.
 
 Qualytextil
has caused its duly authorizes representatives to execute this power of attorney
on May 13, 2008.
 
 
 QUALYTEXTIL
S/A
 
  By: /s/ Miguel G.
Bastos
 Name:
Miguel G. Bastos
 Title:
CFO
  17
  ANNEX
V
 
 CLEARANCE
CERTIFICATES






18