Exhibit
10.3
 
 
 ESCROW
AGREEMENT
 
 
 BETWEEN
 
 
 “MARCIA
CRISTINA VIEIRA DA CONCEIÇÃO ANTUNES”
 AS HOLDER OF THE ESCROW
ACCOUNT
 
 
 AND
 
 
 LAKELAND
DO BRASIL EMPREENDIMENTOS E PARTICIPAÇÕES LTDA.
 AS
THE ESCROW ACCOUNT
BENEFICIARY
 
 
 and
 
 
 BANCO
UBS PACTUAL S.A.
 AS
ESCROW
AGENT
 
 
 ________________________________
 
 DATED MAY
9th, 2008
 ________________________________
  
  
  ESCROW
AGREEMENT
 
 THIS
ESCROW AGREEMENT (“Escrow Agreement”),
dated May 9th, 2008
is executed by and between:
 
 a. as
Escrow Account
Holder: “MARCIA CRISTINA VIEIRA DA CONCEIÇÃO ANTUNES”, Brazilian Citizen,
married, businesswoman, bearer of the identification Card RG N. 02504273.46
SSP/BA, enrolled with the Brazilian Taxpayers’ Registry (CPF/MF) under N.
507.932.685-91, resident and domiciled in the City of Salvador, State of Bahia,
at Alameda Cabo Frio, Quadra 34, Lote 10, Bairro Praias do Flamengo, CEP
41603-115 (“Escrow
Account Holder”);
 
 b.  as
Escrow Account
Beneficiary: LAKELAND DO
BRASIL EMPREENDIMENTOS E PARTICIPAÇÕES LTDA., a limited liability
company, headquartered in the City of São Paulo, State of São Paulo, at Avenida
Bernardino de Campos, n.o 98, Sala 9, 14th Floor,
04004-040, corporate taxpayer register under CNPJ/MF No. 09.484.003/0001-12
(“Escrow Account
Beneficiary”);
 
 Escrow
Account Holder and the Escrow Account Beneficiary are referred to herein,
collectively, as “Parties”;
and
 
 c.  as
Escrow Agent:
BANCO UBS PACTUAL S.A., a financial institution headquartered in the City and
State of Rio de Janeiro, at Praia de Botafogo 501, 5th and
6th
floors, corporate taxpayer register under CNPJ/MF No. 30.306.294/0001-45 (“Escrow
Agent”);
 
 NOW
WHEREAS
  
  (a) Escrow
Account Holder, Escrow Account Beneficiary together with Lakeland Industries,
Inc., Nordeste Empreendedor Fundo Mútuo de Investimento em Empresas Emergentes
and Qualytextil S.A. entered into a Share Purchase Agreement on May 2nd, 2008
(the “SPA”) for
the acquisition, by the Escrow Account Beneficiary of all of the outstanding
capital stock of Qualytextil S.A.;
 
 (b)  terms
with initial letter in capitals and not defined herein will have the meaning
attributed thereto in Clause 7 or,
subsidiarily, in the SPA, as the case may be;
  (c)  according
to Sections 2.02 and 2.04 of the SPA, it has been agreed by
the  Escrow Account Holder and the Escrow Account Beneficiary that
this Escrow Agreement would be entered into and that a escrow account would be
opened in the name of  the Escrow Account Holder;
 
 (d)  the
Parties hereto agree, under the terms of the SPA, that the sum of R$
2.346.292,80, must be deposited by the Escrow Account Beneficiary
in immediately available funds into the Escrow Account (as defined in Clause
1.2);
 
 (e)  the
funds maintained in the Escrow Account, as defined in Clause 1.2, below,
under the terms stipulated herein shall only be used according to the terms and
conditions of this Escrow Agreement;
 
 (f)  each
of Parties has requested the Escrow Agent to act as escrow agent in relation to
the funds maintained according to the terms established herein;
 
 (g)  the
Escrow Agent agrees to act as escrow agent in relation to any funds maintained
in the Escrow Account, according to the terms stipulated herein, and to take any
steps set forth herein; and
  
  (h)  Escrow
Account Holder and Escrow Account Beneficiary agree on releasing the Escrow
Agent from any damages resulting from any transactions performed according to
the terms of this Escrow Agreement, except if otherwise expressly stipulated
herein.
 
 
 THEREFORE,
THE Parties hereto agree to enter into this Escrow Agreement in accordance with
the terms and conditions set forth below.
 
 Clause
1
 Appointment
of the Escrow Agent;
 Escrow
Account; Purpose
 
 1.1. Appointment of Escrow
Agent. The Escrow Account Beneficiary and the  Escrow Account
Holder hereby appoint the Escrow Agent to act as their escrow agent in
connection with the Escrow Agreement and any funds maintained deposited under
the terms of this Escrow Agreement, and the Escrow Agent hereby accepts such
appointment and undertakes to (i) comply with the terms and conditions
established in this Escrow Agreement; and (ii) maintain the Account Funds (as
defined in Clause
1.2) in escrow, within the limits established herein.
 
 1.2. Escrow Account. The
Escrow Agent hereby confirms receipt of funds in the total amount of $
2.346.292,80, for credit into account No.7420, held by the Escrow Account
Holder, at the branch no. 002 of Banco UBS Pactual S.A., opened with the Escrow
Agent specifically for the purpose established in this agreement (“Escrow Account”). The
Parties agree that the sums kept in the Escrow Account, including all and any
earnings resulting from the investment of such funds according to this Escrow
Agreement (“Account
Funds”) shall only be released by the Escrow Agent to the Parties under
the terms of this instrument. The Parties agree that the Escrow Account will be
a non-remunerated account not operated by checks, and that it shall be operated
exclusively by
  
  available
electronic transfers – known as TEDs.
 
 1.3. Purpose. The Parties
acknowledge and agree that all and any Account Funds belonging originally to the
MARCIA CRISTINA VIEIRA DA CONCEIÇÃO ANTUNES shall be used to guarantee the
indemnity obligations of  the Escrow Account Holder  under
the terms of the SPA, subject to the terms and conditions established herein and
in the SPA.
 
 Clause
2
 Instructions
to the Escrow Agent;
 Release
of Funds from the Escrow Account
 
 2.1. Instruction to Escrow
Agent. Escrow Account Holder hereby, irrevocably and irreversibly
authorizes and instructs the Escrow Agent (i) to operate the Escrow Account
exclusively under the terms of this Escrow Agreement, and (ii) not to make,
accept or otherwise authorize any transfer of Account Funds from the Escrow
Account, except if in strict compliance with the terms and conditions of this
Escrow Agreement and/or as provided in Clause 6.2.2,
below.  Escrow Account Holder hereby, irrevocably grants to the Escrow
Agent all powers and authority to act according to this Escrow Agreement,
waiving any rights, which  the Escrow Account Holder may have in
respect to the Escrow Account or the Account Funds in addition to those
specifically established herein.
 
 2.2. Releases from Escrow
Account. Without prejudice to the provisions in Clause 6.2.2, below,
never during the effectiveness of this Escrow Agreement may the Escrow Agent
transfer, release or be authorized to transfer or release any Account Funds,
except the releases in favor of Escrow Account Beneficiary or to the Escrow
Account Holder according to the terms of this Escrow Agreement.
 
 2.3. No Measure for
Release. Except if
  
  otherwise
provided in this Escrow Agreement, it is hereby agreed that none of Parties
shall be bound to take or exhaust any judicial or extrajudicial measures against
the other Party and/or the Escrow Agent to ensure compliance with any other
right or guarantee as a condition for the release of the Account Funds as
provided herein.
 
 Clause
3
 Releases
of Account Resources
 
 3.1.  Releases of Funds from the
Escrow Account. The Parties are authorized to jointly demand the release
of Funds from the Escrow Account to Escrow Account Beneficiary and/or
to  the Escrow Account Holder, according to the provisions of the SPA,
with due compliance to this Escrow Agreement..
 
 3.2.  Request for Release.
No release of the Account Funds shall be made by the Escrow Agent until the
Escrow Agent receives written notice duly signed by both Parties, specifying (i)
the exact amount to be released to Escrow Account Beneficiary; and/or (ii) the
exact amount to be released to  the Escrow Account Holder; and (iii)
the bank account (s) to which the Escrow Agent shall transfer the amount of the
Account Funds in question (“Request for
Release”).
 
 3.3.  Account Funds
Release. Within 5 (five) Business Days after the receipt of the Request
for Release, the Escrow Agent shall release to the Escrow Account Beneficiary
and/or to the Escrow Account Holder the amount of Account Funds requested to the
Escrow Agent according to the Request for Release, by transfer of the respective
amount of Account Funds in immediately available funds to the bank account (s)
specified in such Request for Release.
  
  3.3.1 –
The sums in connection with the payment of taxes accruing on the Escrow Account,
the Account Funds, the transfer of resources related to the purpose of this
Escrow Agreement will be debited directly from the Escrow Account, and so will
(according to Clause
6.5 below) the remuneration due to the Escrow Agent as a result of
performance of its duties under this Escrow Agreement.
 
 Clause
4
 Permitted
Investments
 
 
 4.1 Permitted
Investments. The Account Funds shall be invested by the Escrow Agent as
soon as they are available in the Escrow Account and net of any costs or any
other taxes and their respective deductions or payments accruing on the Account
Funds and on their investment in the alternative investments described in Annex 4.1 (“Permitted
Investments”), according to the written instructions of the Escrow
Account Holder, directed to the Escrow Agent, with copy to the Escrow Account
Beneficiary. Any investment other than the Permitted Investments shall be
preceded by written approval by the Escrow Account Beneficiary.
 
 4.2. Yield of Permitted
Investments. All and any earnings obtained with the Permitted Investments
will be added to the Account Funds, for all purposes of this Escrow Agreement,
and the Escrow Agent shall release them to the Escrow Account Holder, if and
when  the Escrow Account Holder thus requests it through a notice in
writing to the Escrow Agent to this effect.
 
 Clause
5
 Statements
of Escrow Account; Reports
 
 
 5.1 Statements. The
Escrow Agent shall supply monthly, by the tenth day of each month, with respect
to the preceding month, to each of the Parties, a statement
  
  of the
Escrow Account, which shall outline and specify in detail the history and
activities of the Escrow Account. This report shall contain the minimum
information provided in Annex
5.1.
 
 Clause
6
 Escrow
Agent
 
 6.1 Commitments of the Escrow
Agent. The Escrow Agent undertakes to act strictly pursuant to the terms
established herein.
 
 
 6.2. Liability of the Escrow
Agent. The obligations and liabilities of the Escrow Agent are restricted
to those expressly provided in this Escrow Agreement. No obligation of the
Escrow Agent shall be presupposed or implied from this Escrow Agreement and the
Escrow Agent shall not be requested to recognize any other contracts among the
parties, including the SPA.
 
 6.2.1.
The Parties agree that the Escrow Agent has not supplied any type of financial,
tax or business consulting in connection with this Escrow Agreement, is not
aware and shall not be requested to interpret the content of the obligations and
rights resulting from the relationship among the Parties and resulting from the
SPA and, consequently, shall not be liable, in any way, for the provisions of
the SPA, nor for any information supplied in such respect.
 
 6.2.2  In
case all or part of the Account Funds, or the Escrow Account, is pledged, seized
or, in any other way, committed according to any order from a Government
Authority, or if the release/escrow of the Account Funds is suspended or
restricted by any order from a Governmental Authority, or if any other order
issued by a  Governmental Authority affects the Account Funds or the
Escrow Account or any act of the Escrow Agent pursuant to the terms of this
Escrow Agreement, the Escrow Agent is expressly authorized to
  
  comply
strictly with the provisions of such order, without any obligation to challenge
said order or obtain any consent from the Parties before complying therewith,
and such compliance shall not imply any liability of the Escrow Agent to the
Parties or any other person.
 
 6.2.3.  The
Escrow Agent does not make any representations with respect to the validity,
value, authenticity or enforceability of any document, notice or instrument
maintained by or delivered to the Escrow Agent pursuant to the terms of this
Escrow Agreement, nor in connection with the identity, authority or rights of
any person who has signed, deposited or delivered or intended to sign, deposit
or deliver such document, notice or instrument, and the Escrow Agent may not be
held liable, in any way, for such requirements.
 
 6.2.4  The
Escrow Agent will not be requested to issue any opinion or make any judgment,
diligence or research in connection with amounts, the reasonableness or merit
(including with respect to the occurrence of the events described in Clause 1.3) of any or
all notices or documents attached hereto, or provided to the Escrow Agent
according to the provisions of this Escrow Agreement.
 
 6.2.5  The
Escrow Agent will not be required to advise any Party in connection with
criteria to withdraw, remit or take or abstain from taking any step in
connection with the Account Funds. Thus, the Escrow Agent will not be required
to give any advice, nor shall guarantee any earnings resulting or which may
result from any Permitted Investments.
 
 6.2.6  The
Parties acknowledge and agree that the Escrow Agent is not responsible or liable
for transferring any of its own resources, providing or completing the funds
deposited in the Escrow Account
  
  or using
its own funds to collect any taxes accruing on the Escrow Account, the Account
Funds and/or this Escrow Agreement.
 
 6.2.7  The
Escrow Agent will not be liable to any person for any damage, loss or expenses
incurred as a result of any act or omission by the Escrow Agent, and the other
contracting parties will be subsidiarily and individually liable for
indemnifying and releasing the Escrow Agent in connection with all and any loss,
liability, claim, action, damages and expenses, including justified lawyers’
fees and disbursements, directly or indirectly related to this Escrow Agreement,
except if such damages, losses or expenses are caused by willful misconduct of
the Escrow Agent in performing its activities and obligations according to this
Escrow Agreement, which willful misconduct is attributed by a final decision
transited in rem
judicatam. The Parties acknowledge and agree, and the Escrow Agent is
aware that the Escrow Agent will be liable only for such losses, damages or
expenses resulting from the final and unappealable decision of a Governmental
Authority (including legal costs and lawyers’ fees). Notwithstanding any
provision otherwise in this Escrow Agreement, the Escrow Agent will not be
liable for any loss of profits or any damages or indirect or consequential
damages, even if the Escrow Agent has been warned about the probability of such
losses and damages regardless of its conduct.
 
 6.2.8  The
Escrow Agent will not be liable for any error of judgment or any step taken,
sustained or omitted by it in good faith. The Escrow Agent may exercise any of
its powers and perform any of its duties exposed directly or through
representatives or attorneys-in-fact and may consult lawyers, accountants and
other qualified persons selected and contracted by it. The Escrow Agent will not
be liable for any action, act or omission performed, in good faith, according to
the advice or opinion of any of these lawyers, accountants and other qualified
persons. In the case the Escrow Agent is not sure about its
duties
  
  or
obligations, as stipulated herein, or if it receives instructions or claims from
a Party of this instrument, which, in the Escrow Agent’s opinion conflict with
any provisions of this Escrow Agreement, or in the event of conflict between the
Parties and/or any natural person or legal entity, with respect to the sums and
documents held pursuant to the terms hereof, the Escrow Agent will be entitled
to, at its sole discretion, abstain from taking any steps and its only
obligations will be to safely keep all the Account Funds while such controversy
or conflict lasts, until it receives (a) precise and joint written instructions
from the Escrow Account Holder and the Escrow Account Beneficiary (in the case
of Clause 4.2 ̧
only from  the Escrow Account Holder) or (b) a judicial or
Governmental Authority’s order also with precise instructions, but in this case,
the Escrow Agent shall promptly inform the Parties in writing about its not
accepting an instruction from such Parties. In the case of (b), the Escrow Agent
may choose, at its sole discretion, to deposit the asset held in a judicial
deposit account. The costs and expenses (including lawyers’ fees and legal
costs) incurred in connection with such proceedings shall be paid by the other
Parties of this Escrow Agreement, other than the Escrow Agent, and will be
considered as obligations of the same.
 
 6.2.9  The
Escrow Agent will be entitled to trust any order, sentence, certificate, claim,
notification, term or other type of written instrument delivered thereto as
contemplated herein, without being obliged to check the authenticity or
precision of the facts declared therein or their adequacy or any other
instrument or validity of the respective services. The Escrow Agentmay act based on any
instrument or upon a signature deemed as authentic thereby, based on the
signature card of the representatives of  the Escrow Account Holder
and of the Escrow Account Beneficiary deposited with the Escrow
Agent.
  
  6.2.10  The
Escrow Agentshall
not have any liability in the case of the other Parties requesting judicial
recovery, decreeing bankruptcy, or finding themselves in a condition of
insolvency or liquidation, and may not guarantee that the Account Funds will be
judicially frozen.
 
 6.3  Indemnification of Escrow
Agent. The Parties hereby agree to protect, defend and keep the Escrow
Agent, its directors, advisors, agents and employees from and against all and
any costs, losses, claims, damages, disbursements, liabilities and expenses,
including reasonable investigation costs, legal costs and lawyers’ fees, which
may be imposed upon or incurred by the  Escrow Agent in connection
with its acceptance of, or appointment as, Escrow Agent, pursuant to the terms
of this instrument, or in connection with the performance of its duties and
obligations assumed herein, including any litigation resulting from this Escrow
Agreement or involving its purpose, as well as any matters in connection with
the transactions among the Parties according to the terms of the SPA, provided
that, however, such indemnity against losses does not cover damages, losses,
claims, disbursements, responsibilities and damages resulting from willful
misconduct of the Escrow Agent, according to Clause 6.2.7. These
indemnity provisions shall remain in force after the termination of this Escrow
Agreement or resignation or removal of the Escrow Agent as escrow agent,
pursuant to the terms hereof, for a period of 2 (two) years.
 
 6.4  Resignation by Escrow
Agent. The Escrow Agent may, at any time, with prior and express notice
of at least 60 (sixty) days, resign its functions upon delivery of a notice to
the Parties and the transfer of the Account Funds to any escrow agent that
succeeds it, chosen pursuant to the terms hereof. Whatever the financial
institution succeeding the Escrow Agent, it shall be jointly appointed by the
Parties (or by the competent court, or Governmental Authority, in compliance
with
  
  Clause 10), within 60
(sixty) days after the Escrow Agent communicates its resignation, in writing,
during which period the Escrow Agent will be released from all and any future
obligations resulting from this Escrow Agreement. The resignation of the Escrow
Agent will become effective upon the appointment of the successor (including by
the competent court or Governmental Authority, in compliance with Clause 10), as agreed
by the Parties. If  the Escrow Account Holder  and Escrow
Account Beneficiary, after negotiating in good faith, do not reach an agreement
on the successor of the Escrow Agent by the 50th
(fiftieth) day after receipt of said resignation notification, the new escrow
agent shall be one of the following banks: Citibank, HSBC,
Santander, ABN or Unibanco, which choice must fall on the bank that accepts to
act according to the terms hereof for the lowest fees, and the withdrawing
Escrow Agent shall immediately transfer all the Account Funds to an account of
the  Escrow Account Holder with such successor. The Escrow Agent will
not be liable for keeping and preserving the Account Funds as from the 60th
(sixtieth) day after the date of delivery of its written resignation notice to
the Parties.
 
 6.5  Remuneration of the Escrow
Agent. As a result of the performance by the Escrow Agent of the
functions contemplated in this Escrow Agreement, the Parties agree that the
Escrow Agent will be entitled to receive from the Escrow Account Holder a
monthly remuneration of R$500,00, to be debited monthly from the account
No.7421, held by the Escrow Account Holder, at the branch no. 002 of Banco UBS
Pactual S.A. (such account is not the Escrow Account), until the fifth business
day of each month, related to the escrow services rendered in the month before,
until the termination of this Escrow Agreement.
 
 6.6  Inexistence of Offsetting
Right against the Account Funds. Except as established in Clause 6.5
above, and without prejudice to the provisions in Clause
  
  3.3.1
above, the Escrow Agent, hereby, expressly waives any right that it may have to
offset any other credit, which it may have against one of the Parties, with any
portion of the Account Funds, to be released to such Party, according to the
terms hereof.
 
 6.7 Cooperation. The
Parties shall cooperate with the Escrow Agent in compliance with its duties and
responsibilities as provided in this Escrow Agreement, and shall supply all
instruments and documents within their respective attributions that are
necessary for the Escrow Agent to fulfill its respective duties and
responsibilities.
 
 Clause
7
 Definitions
 
 7.1 Definitions. Except
if otherwise established in this Escrow Agreement, the terms below will have the
following meanings:
 
 a.
              “Business Day”
      will mean any day other than a Saturday, Sunday or National Holiday or any
      other day in which the Brazilian financial institutions are authorized or
      obliged by law to remain closed in the Brazilian territory as a
      whole.
 
  b.
              “Governmental
      Authority” shall mean any authority, agency, stock exchange,
      council, commission, organ, department, court or competent autarchy of any
      state or government, whether national or international, federal, state or
      municipal, exercising its judiciary, administrative or legislative duties,
      and any arbitration court or
board.
  
  7.2  Interpretation.
Whenever the context thus requires, the singular shall include the plural and
vice-versa and the gender of any pronoun will include the other
genders.
 
 Clause
8
 Confidentiality
 
 8.1 Confidentiality.
Except if required by the applicable law (including by any summons or order
issued by a Governmental Authority), or if it otherwise agreed by the parties,
each of the parties hereto, including the Escrow Agent, shall keep confidential
all and any written or oral information and documentation, directly related to
this Escrow Agreement or to the transactions contemplated herein, including, but
not limited to, the content of this instrument (“Confidential
Information”). The obligation set forth above shall not apply to any
information which comes into the public domain by means other than resulting
from a breach by any of the parties above of its confidentiality obligations, or
which disclosure is required pursuant to the terms of the applicable law
(including by any summons or order issued by a Governmental
Authority).
 
 8.2 Continuity of the
Confidentiality Obligations., The confidentiality obligations provided in
this Clause 8shall remain in full force for up to 1 (one) year after termination of
the Escrow Agreement.
 
 Clause
9
 Term;
Termination
 
 9.1  Term. This Escrow
Agreement will remain in full force until (i) the Escrow Agent receives a
notification signed by both Parties indicating that all the Account Funds shall
be released to  the Escrow Account Holder and/or to the Escrow Account
Beneficiary; or (ii) for the period of five (5) years, counted
from this date, whichever occurs first.
  
  9.1.1  In
the event of Clause 9.1(ii) above, if at that time the Parties are in dispute or
litigation in connection with the Account Funds, this Escrow Agreement may be
renewable for an additional period of five (5) years. For this
purpose, the Escrow Account Holder and/or the Escrow Account Beneficiary shall
notify the Escrow Agent, within 60 (sixty) days before the end of the initial
term of five (5) years, to communicate that this Escrow Agreement shall be
renewed for a five (5) years additional term. Once the notification has not been
received, in such term the Escrow Agent shall transfer immediately all the
Account Funds to the account No. 7421 held by the Escrow Account Holder, at the
branch no. 002 of Banco UBS Pactual S.A.
 
 9.1.2  If
the Escrow Agent notifies the Parties, at any time and in its sole
discretion,  in order to inform that it will not renew this Escrow
Agreement, once the notification has been received, the Parties shall indicate
to the Escrow Agent who his successor will be, according to Clause 6.4, and the
Escrow Agent shall transfer immediately all the Account Funds to an account of
the EscrowAccountHolder with
such successor.
 
 
 9.2  Prior Termination.
Notwithstanding Clause
9.1 and without prejudice to the provisions in Clause 6.4, the
Parties may mutually agree to terminate this Escrow Agreement at any prior
date.
 
 Clause
10
 General
Conditions
 
 10.1 Notifications. All
notices, notifications, authorizations, waivers and other communications
pursuant to the terms of this Escrow Agreement shall be made in writing and
delivered by registered mail with confirmation of receipt, a recognized
commercial remittance, by hand, or sent by
  
  transmission
by fax (in this case, at the time of confirmation of receipt of the
transmission), in each case to the appropriate address and fax telephone numbers
established below (or to such other addresses or telephone numbers as the party
designates by notice to the other parties):
 
 a. If
to the Escrow Account Holder, to:
 
 MARCIA
CRISTINA VIEIRA DA CONCEIÇÃO ANTUNES
 
 Address:
Alameda Cabo Frio, Quadra 34, Lote 10, Bairro Praias do Flamengo, Salvador, BA,
CEP 41603-115
 Telephone/Fax: +55
71 8129-3555/ +55 71 3390-3005
 E-mail:
'marciaantunes@qualytextil.com.br'
 
 b. If to
the Escrow Account Beneficiary, to:
 
 LAKELAND DO BRASIL EMPREENDIMENTOS E
PARTICIPAÇÕES LTDA.
 
 Address:
Avenida Bernardino de Campos, n.o 98, Sala 9, 14th Floor, 04004-040, São Paulo,
SP
 Contact:
Mr. José Tavares Lucena
 Telephone
/ Fax: (55 11) 3886-8961
 E-mail:
jlucena@pryor.com.br
 With copy
to Lakeland Industries, Inc.
 701-07
Koehler Avenue, Ronkonkoma
 NY 11779,
USA
 Attention
to Mr. Gary A. Pokrassa and
Christopher J. Ryan
 E-mail:
GAPokrassa@lakelan.com,
 CJRyan@lakeland.com
 Fax:631-981-9751
 c. If
to Escrow Agent to:
 
 Banco UBS
Pactual S.A.
 
 Address:
Praia de Botafogo 501, 5o andar
 Botafogo
– Rio de Janeiro – RJ
 Brasil –
CEP: 22250-040
 CNPJ:
30.306.294/0001-45
 Contact:  [...]
  
  Telephone
/ Fax:
 E-mail:
 
 10.2 Binding Effect;
Assignment. This Escrow Agreement and the rights and obligations of the
Contracting Party, as well as any instrument or agreement signed or delivered
pursuant to the terms hereof, shall bind all the contracting parties and their
respective successors. This Escrow Agreement and any rights and obligations
contemplated or resulting from this Escrow Agreement may not be assigned by any
of the parties without prior consent in writing from the other party, except as
set forth in the Clause
6.4.
 
 10.3   Waivers and Changes.
This Escrow Agreement may be altered, substituted, canceled, renewed or
extended, and compliance with its terms may only be granted by a written
instrument signed by all the parties or, in the case of a waiver, by the party
waiving the right in question. No delay or failure of any party in exercising
any right, power or privilege, pursuant to the terms hereof, will operate as a
waiver of such right, power or privilege or novation, or will prevent any
subsequent exercise thereof.
 
 10.3.1  Absence of Alterations in
theSPA.  The Escrow Account Holder and the Escrow Account
Beneficiary agree that this Escrow Agreement is entered into according to the
terms of the SPA. No provision of this Escrow Agreement shall affect or alter
the provisions of the SPA.
 
 10.4   Independence of
Clauses. Any term of provision of this Escrow Agreement that is declared
invalid or unenforceable in any jurisdiction shall, with respect to such
jurisdiction, become ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining terms
or provisions of the Escrow Agreement.
  
  10.5  Language.
This Escrow Agreement is being executed in the English and Portuguese languages.
In the event of any discrepancy between the English and Portuguese versions of
this Escrow Agreement, the English version of the Agreement shall
prevail.
 
 10.6 GoverningLaw. This Escrow
Agreement will be written by and interpreted according to the laws of the
Federative Republic of Brazil.
 
 10.7 Jurisdiction. The
parties elect the central venue of the Circuit Court of São Paulo, State of São
Paulo, waiving any other, regardless of how privileged it may be, to file any
legal measure resulting from this Escrow Agreement.
 
 IN
WITNESS WHEREOF, the parties sign this Escrow Agreement by their respective
legal representatives in 3 (three) original counterparts of equal contents and
form, in the presence of the 2 (two) undersigned witnesses.
  
 São
      Paulo, 09 de maio de 2008.By:
              /s/ MARCIA CRISTINA
      VIEIRA DA CONCEIÇÃO ANTUNESMARCIA
      CRISTINA VIEIRA DA CONCEICAO ANTUNESBy:
              /s/ ELTON DE CARVALHO
      ANTUNESELTON
      DE CARVALHO ANTUNESBy:
              /s/JOSE
      TAVARES LUCENALAKELAND
      DO BRASIL EMPREENDIMENTOS E PARTICIPAÇÕES LTDA.BANCOUBSPACTUAL
      S.A.
  Testemunhas/
      Witness:1.
                
                
                2.Name:
                
                Nome:Id:
                
                RG:
 
  Annex
4.1
 Permitted
Investments
 
 
 The
Account Funds shall be invested by the Escrow Agent, according to the terms of
Clause 4.1 and
according to the instructions of   the Escrow Account Holder, in
the following investment alternatives (each a “Permitted
Investment”):
 
 Fundo UBS Pactual High Yield;
 
 
 Annex
5.1
 Escrow
Account Reports
 
 
 The
Escrow Agent shall send to the Parties monthly reports containing at
least:
 
 -  the
      balance of the Escrow Account.
 -  the
      Permitted Investments, and their respective
  balances.