Document:

mm06-2515_8ke101.htm

 

 

Exhibit 10.1

 

COMVERSE, INC.

 

AMENDED AND RESTATED 2012 STOCK INCENTIVE COMPENSATION PLAN

 

 

Article 1.                      Establishment & Purpose

 

1.1           Establishment. Comverse, Inc. previously established the Comverse, Inc. 2012 Stock Incentive Compensation Plan (the “Prior Plan”), and hereby amends and restates the plan in the form of this Comverse, Inc. Amended and Restated 2012 Stock Incentive Compensation Plan, as may be amended from time to time (hereinafter referred to as the “Plan”) as set forth in this document, effective as of June 24, 2015, the date of its approval by the stockholders of the Company (the “Effective Date”).  If the Plan is not approved by the stockholders of the Company, the Prior Plan will continue to operate according to its terms.

 

1.2           Purpose of the Plan. The purposes of the Plan are to assist the Company, its Subsidiaries and Affiliates in attracting and retaining valued Directors, Employees and Consultants, to align their respective interests with shareholders’ interests through equity-based compensation and to permit the granting of Awards that are intended to constitute performance-based compensation for certain executive officers under Section 162(m) of the Code.

 

 

Article 2.                      Definitions

 

Whenever capitalized in the Plan, the following terms shall have the meanings set forth below.

 

2.1           “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company or any successor to the Company.  For this purpose, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”) shall mean ownership, directly or indirectly, of 50% or more of the total combined voting power of all classes of voting securities issued by such entity, or the possession, directly or indirectly, of the power to direct the management and policies of such entity, by contract or otherwise.

 

2.2           “Award” means any Option, Stock Appreciation Right, Restricted Stock, Other Stock-Based Award, or Performance Award that is granted under the Plan.

 

2.3           “Award Agreement” means either (a) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (b) a written or electronic statement issued by the Company or a Subsidiary to a Participant describing the terms and provisions of the actual grant of such Award.

 

2.4           “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

2.5           “Board” means the Board of Directors of the Company.

 

 

  

  

  

 

 

2.6           “Board Approval” means approval by the affirmative vote of a majority of the members of the Board present at any meeting of the Board at which a quorum is present, provided that such vote includes the affirmative vote of a majority of the Outside Directors present and not less than two Outside Directors are present.

 

2.7           “Cause”, unless otherwise provided in an Award Agreement or with respect to a Participant who has entered into a written employment, consulting or similar agreement with the Company or any Subsidiary or Affiliate that has the meaning ascribed to “Cause” (or an equivalent term) in such agreement, means: (i) the Participant’s refusal or failure to perform any of his duties and responsibilities as determined from time to time by the Board, including, without limitation: (a) the Participant’s persistent neglect of duty or chronic unapproved absenteeism (other than for a temporary or permanent disability) which remains uncured to the reasonable satisfaction of the Board following thirty (30) days’ written notice from the Company of such alleged fault; and (b) the Participant’s refusal to comply with any lawful directive or policy of the Board which refusal is not cured by the Participant within thirty (30) days of such written notice from the Company; provided, however, that the Company shall not be required to give the Participant a cure period with respect to this clause (i) on more than one occasion; (ii) the Participant acts (including a failure to act) in a manner which constitutes willful misconduct, gross negligence, or insubordination; (iii) the Company’s determination that, in the reasonable judgment of the Board, the Participant has: (x) committed an act of fraud, personal dishonesty or misappropriation relating to the Company; (y) violated any material provision of any written policy of the Company; or (z) committed any other act causing material harm to the Company’s standing or reputation, or any act of dishonesty, embezzlement, unauthorized use or disclosure of confidential information or other intellectual property or trade secrets, common law fraud or other fraud with respect thereto; (iv) a material breach by the Participant of the terms of the Plan or any Award Agreement, any other written agreement with the Company or any fiduciary duty to the Company; (v) the Participant’s arrest, indictment for or conviction (or the entry of a plea of a nolo contendere or equivalent plea) in a court of competent jurisdiction of a felony or any misdemeanor involving material dishonesty or moral turpitude; or (vi) the Participant’s habitual or repeated misuse of, or habitual or repeated performance of the Participant’s duties under the influence of, alcohol or controlled substances. As used in this definition of “Cause”, the “Company” shall mean the Company and each of the Company’s Affiliates and Subsidiaries.

 

2.8           “Change of Control” unless otherwise specified in the Award Agreement, means the occurrence of any of the following events:

 

	
  

	
(a)

	
any Person, entity or affiliated group becoming the Beneficial Owner or Owners of more than fifty percent (50%) of the outstanding equity securities of the Company, or otherwise becoming entitled to vote shares representing more than fifty percent (50%) of the total voting power of the Company’s then-outstanding securities eligible to vote to elect members of the Board (the “Voting Securities”);

 

	
  

	
(b)

	
consummation of a consolidation or merger of the Company pursuant to which the holders of the Company’s equity securities immediately prior to such transaction would not be the holders immediately after such transaction of more than fifty percent (50%) of the Voting Securities of the entity surviving such 

 

 

  

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transaction in substantially similar proportions that they held equity securities of the Company prior to such transaction;

 

	
  

	
(c)

	
shareholder approval and consummation of (or if shareholder approval is not required, the consummation of) a plan for the sale of all or substantially all of the assets of the Company to any other Person (it being understood that a spin-off of shares of capital stock of any subsidiary of the Company or a distribution of other assets of the Company as a dividend to its shareholders does not constitute a sale thereof);

 

	
  

	
(d)

	
the date, during any period of twenty-four (24) consecutive months, that individuals who as of the beginning of such period constituted the entire Board (together with any new directors other than those new directors elected in connection with an actual or threatened proxy contest or any other actual or threatened solicitation of proxies) whose election by such Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors of the Company, then still in office, who were directors at the beginning of the period (or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or

 

	
  

	
(e)

	
the approval of the shareholders of the Company of the liquidation or dissolution of the Company;

 

provided, that to the extent necessary to comply with Section 409A with respect to the payment of deferred compensation, “Change of Control” shall be limited to a “change in control event” as defined under Section 409A; provided, further, that a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially similar proportions by the Persons who hold the Company’s securities immediately before such transaction.

 

2.9           “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

 

2.10         “Committee” means the Board, or any committee or subcommittee designated by the Board to administer this Plan. The Committee shall have at least two members, each of whom shall be (i) a member of the Board, (ii) a Non-Employee Director, (iii) an Outside Director, and (iv) an “independent director” within the meaning of the listing requirements of any exchange on which the Company is listed.  If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.

 

2.11         “Company” means Comverse, Inc., a Delaware corporation, and any successor thereto.

 

2.12         “Consultant” means any person (other than an Employee or a Director) who is engaged by the Company, a Subsidiary or an Affiliate to render consulting or advisory services to the Company or such Subsidiary or Affiliate.

 

 

  

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2.13         “Continuous Service” means that the provision of services to the Company or a Subsidiary or Affiliate in any capacity of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Subsidiary or Affiliate which, to the extent applicable, shall not be deemed to occur until the expiration of any required notice or garden leave period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under applicable labor laws. Continuous Service shall not be considered interrupted in the case of (i) any sick leave, military leave or other approved “bona fide leave of absence” (within the meaning of Treasury Regulation Section 1.409A-1(h)(1)), (ii) transfers among the Company, any Subsidiary or Affiliate, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Subsidiary or Affiliate in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). Notwithstanding the foregoing, for purposes of each Incentive Stock Option granted under the Plan, if any sick leave, military leave or other approved “bona fide leave of absence” exceeds ninety (90) days, and reemployment upon expiration of such leave is not guaranteed by statue or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Option on the day three (3) months and one (1) day following the expiration of such ninety (90) day period.

 

2.14         “Director” means each member of the Board who is not an Employee, who does not receive compensation from the Company or any Subsidiary in any capacity other than as a Director and whose membership on the Board is not attributable to any contract between the Company and such Director or any other entity with which such Director is affiliated.

 

2.15         “Disability” unless otherwise specified in an Award Agreement, means “Disability” within the meaning of Treasury Regulation Section 1.409A-3(i)(4).

 

2.16         “Employee” means an officer or other employee of the Company, a Subsidiary or Affiliate, including a member of the Board who is an employee of the Company, a Subsidiary or Affiliate.

 

2.17         “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

2.18         “Fair Market Value” means, as of any date, the per Share value determined as follows, in accordance with applicable provisions of Section 409A:

 

	
  

	
(a)

	
If the Shares are listed on any established stock exchange or a national market system, the per Share Fair Market Value shall be the closing sales price for each share of such stock (or the closing bid, if no sales were reported) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

 

  

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(b)

	
If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board and the “Pink Sheets” published by the National Quotation Bureau, Inc.) or by a recognized securities dealer, the closing sales price for each share of such stock or, if closing sales prices are not reported, the per Share Fair Market Value shall be the mean between the high bid and low asked prices for a Share on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

	
  

	
(c)

	
In the absence of an established market for the Shares of the type described in (a) and (b), above, the per Share Fair Market Value thereof shall be determined by the Committee in good faith and in accordance with the applicable provision of Section 409A.

 

2.19         “Full Value Award” means any Award settled in Shares, other than (i) an Option, (ii) a Stock Appreciation Right, or (iii) a Restricted Stock purchase right or an Other Stock-Based Award under which the Company will receive monetary consideration equal to the Fair Market Value (determined on the effective date of grant) of the Shares subject to such Award.

 

2.20         “Incentive Stock Option” means an Option intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock Option.

 

2.21         “Non-Employee Director” means a person defined in Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.

 

2.22         “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

 

2.23         “Other Stock-Based Award” means any right granted under Article 9 of the Plan.

 

2.24         “Option” means any stock option granted under Article 6 of the Plan.

 

2.25         “Option Price” means the purchase price per Share subject to an Option, as determined pursuant to Section 6.2 of the Plan.

 

2.26         “Outside Director” means a member of the Board who is an “outside director” within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

 

2.27         “Participant” means any eligible person as set forth in Section 4.1 to whom an Award is granted.

 

2.28         “Participant Award Limit(s)” shall have the meaning set forth in Section 5.1.

 

2.29         “Performance Award” means an award under the Plan, including a cash bonus award, the grant, vesting, lapse of restrictions, payment or settlement of which is conditioned upon the achievement of performance objectives over a specified Performance Period, and may include awards intending to provide Performance-Based Compensation.

 

 

  

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2.30         “Performance-Based Compensation” means compensation under an Award that is intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and all regulations promulgated thereunder.

 

2.31         “Performance Measures” means measures as described in Section 10.2 on which the performance goals are based in order to qualify Awards as Performance-Based Compensation.

 

2.32         “Performance Period” means the period of time, which shall in no event be less than twelve (12) months, during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

 

2.33         “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.34         “Plan” shall have the meaning set forth in Section 1.1.

 

2.35         “Restricted Stock” means any Award granted under Article 8 of the Plan.

 

2.36         “Restriction Period” means the period during which Restricted Stock awarded under Article 8 of the Plan is subject to forfeiture.

 

2.37         “Section 409A” means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.

 

2.38         “Share” means a share of common stock of the Company, par value $0.01 per share, or such other class or kind of shares or other securities resulting from the application of Section 12.1 of the Plan.

 

2.39         “Stock Appreciation Right” means any right granted under Article 7 of the Plan.

 

2.40         “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company (or any parent of the Company) if each of the corporations, other than the last corporation in each unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

2.41         “Ten Percent Shareholder” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary or Affiliate.

 

 

Article 3                        Administration

 

3.1           Authority of the Committee. The Plan shall be administered by the Committee, which shall have full power to interpret and administer the Plan and Award Agreements and full authority to select the Directors, Employees and Consultants to whom Awards will be granted 

 

 

  

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and determine the type and amount of Awards to be granted to each such Director, Employee or Consultant, and the terms and conditions of Awards and Award Agreements. Without limiting the generality of the foregoing, the Committee may, in its sole discretion but subject to the limitations in Article 14, clarify, construe or resolve any ambiguity in any provision of the Plan or any Award Agreement and accelerate or waive vesting of Awards, lapsing of restrictions or deferral limitations imposed on Awards, and exercisability of Awards, extend the term or period of exercisability of any Awards (subject to Sections 6.3 and 7.2), modify the purchase price under any Award (subject to Section 14.2), or modify or waive any terms or conditions applicable to any Award. Awards may, in the discretion of the Committee be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or any of its Subsidiaries or Affiliates or a company acquired by the Company or with which the Company combines. The Committee shall have full and exclusive discretionary power to adopt rules, forms, instruments, and guidelines for administering the Plan as the Committee deems necessary or proper. The Committee may establish procedures pursuant to which the payment or settlement of any Award may be deferred subject to Section 409A.  Notwithstanding anything in this Section 3.1 to the contrary, the Board, or any other committee or sub-committee established by the Board, is hereby authorized (in addition to any necessary action by the Committee) to grant or approve Awards as necessary to satisfy the requirements of Section 16 of the Exchange Act and the rules and regulations thereunder and to act in lieu of the Committee with respect to Awards made to Non-Employee Directors under the Plan. All actions taken and all interpretations and determinations made by the Committee or by the Board (or any other committee or sub-committee thereof), as applicable, shall be final and binding upon the Participants, the Company, and all other interested individuals.  Committee action shall be subject to Board Approval to the extent required by applicable law and as otherwise determined by the Board.

 

3.2           Delegation. The Committee may delegate to one or more of its members or members of the Board, one or more officers of the Company or any of its Subsidiaries or Affiliates, and one or more agents or advisors such administrative duties or powers as it may deem advisable; provided that the Committee shall not delegate to officers of the Company or any of its Subsidiaries or Affiliates the power to make grants of Awards to officers or Directors of the Company or any of its Subsidiaries or Affiliates; provided, further, that no delegation shall be permitted under the Plan that is prohibited by applicable law or inconsistent with Section 162(m) of the Code, with respect to Awards intended to comply with the performance-based compensation exception under Section 162(m) of the Code.  Any resolution of the Committee authorizing such officer(s) must specify the total number of Shares subject to Awards that such officer(s) may so award, and the Committee may not authorize any officer to designate himself or herself as the recipient of an Award.

 

 

Article 4.                       Eligibility and Participation

 

4.1           Eligibility. Participants will consist of such Directors, Employees and Consultants as the Committee in its sole discretion determines and whom the Committee may designate from time to time to receive Awards. Designation of a Participant in any year shall not require the Committee to designate or Board to approve such person to receive an Award in any other year 

 

 

  

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or, once designated or approved, to receive the same type or amount of Award as granted to the Participant in any other year.

 

4.2           Type of Awards. Awards under the Plan may be granted in any one or a combination of: (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock, (d) Other Stock-Based Awards, and (e) Performance Awards. The Plan sets forth the types of performance goals and sets forth procedural requirements to permit the Company to design Awards that qualify as Performance-Based Compensation, as described in Article 10 hereof. Awards granted under the Plan shall be evidenced by Award Agreements (which need not be identical) that provide additional terms and conditions associated with such Awards, as determined by the Committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the Plan and any such Award Agreement, the provisions of the Plan shall prevail.

 

 

Article 5.                                Shares Subject to the Plan and Maximum Awards

 

5.1           Number of Shares Available for Awards, Maximum Awards and Award Limitations.

 

	
  

	
 (a)

	
General. As of the Effective Date, and subject to adjustment as provided in Article 12 hereof, the maximum number of Shares available for issuance to Participants pursuant to Awards under the Plan shall be 5,000,000 Shares, less one (1) Share for every one (1) Share that was subject to an Option or Stock Appreciation Right granted after April 15, 2015 and prior to the Effective Date under the Prior Plan and 2.15 Shares for every one Share that was subject to an Award other than an Option or Stock Appreciation Right granted after April 15, 2015 and prior to the Effective Date under the Prior Plan.  The Shares available for issuance under the Plan may consist, in whole or in part, of authorized and unissued Shares or treasury Shares.

 

	
  

	
(b)

	
Share Counting.  (i) Each Share subject to an Award other than a Full Value Award shall be counted against the limit set forth in Section 5.1(a) as one (1) Share, and (ii) each Share subject to a Full Value Award granted pursuant to the Plan shall be counted for purposes of the limit set forth in Section 5.1(a) as 2.15 Shares.  If an outstanding Award (or after April 15, 2015, an Award under the Prior Plan) for any reason expires or is terminated or canceled without having been exercised or settled in full, or if Shares acquired pursuant to an Award (or after April 15, 2015, an Award under the Prior Plan) subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the Participant’s purchase price, the Shares allocable to the terminated portion of such Award or such forfeited or repurchased Shares (or Shares subject to any such Prior Plan Award) shall again be available for issuance under the Plan.  Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award (or Award under the Prior Plan) that is settled in cash.  With respect to both Awards granted under the Plan and, after April 15, 2015, Awards granted under the Prior Plan: (1) upon payment in Shares pursuant to the exercise of a Stock Appreciation Right, the number of Shares available for

 

 

 

  

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issuance under the Plan shall be reduced by the gross number of Shares for which the Stock Appreciation Right is exercised; (2) if the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, or by means of a net exercise, the number of Shares available for issuance under the Plan shall be reduced by the gross number of Shares for which the Option is exercised; (3) Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the exercise or settlement of Options or Stock Appreciation Rights shall not again be available for issuance under the Plan; (4) Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the vesting or settlement of Full Value Awards shall again become available for issuance under the Plan; and (5) Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options shall not be added to the Shares authorized for grant under the Plan.

 

Any Shares that again become available for Awards under the Plan pursuant to this Section shall be added as (i) one (1) Share for every one (1) Share subject to Options or Stock Appreciation Rights granted under the Plan or Options or Stock Appreciation Rights granted under the Prior Plan, and (ii) as 2.15 Shares for every one (1) Share subject to Full Value Awards granted under the Plan or Awards other than Options or Stock Appreciation Rights granted under the Prior Plan.

 

	
  

	
(c)

	
ISO Limit.  Subject to adjustment as provided in Article 12 hereof, the maximum aggregate number of Shares that may be issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed 3,000,000 Shares.

 

	
  

	
(d)

	
Participant Award Limits. Subject to adjustment as provided in Article 12 hereof, (i) the maximum number of Shares with respect to which any Options may be granted to any Participant pursuant to an Award in any fiscal year shall be 300,000 Shares; (ii) the maximum number of Shares with respect to which any Stock Appreciation Rights may be granted to any Participant pursuant to an Award in any fiscal year shall be 300,000 Shares; and (iii) the maximum amount of Performance-Based Compensation Awards (other than Options and Stock Appreciation Rights) granted to any Participant pursuant to an Award that is denominated in Shares in any fiscal year shall be 150,000 Shares.  The maximum amount of Performance-Based Compensation Awards granted to any Participant pursuant to an Award in any fiscal year shall be $10,000,000 if such Performance-Based Compensation Awards are denominated in cash rather than shares.  Each of the foregoing limits are referred to herein as a “Participant Award Limit” and collectively “Participant Award Limits.”  Each of the Participant Award Limits shall be multiplied by two with respect to Awards granted to a Participant during the first fiscal year in which the Participant commences employment with the Company and its Subsidiaries.

 

	
  

	
(e)

	
 
Director Award Limits. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in 

 

 

  

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accordance with applicable financial accounting rules) of all Awards granted to any Director during any single calendar year shall not exceed $300,000.

 

	
  

	
(f)

	
Minimum Vesting.  No Option or Stock Appreciation Right granted on or after the Effective Date may vest in less than one year from its date of grant.  Notwithstanding the foregoing, up to 5% of the available Shares authorized for issuance under the Plan as of the Effective Date may vest (in full or in part) in less than one year from their date of grant (the “5% Basket”).  Any Option or Stock Appreciation Right granted under the Plan may vest in full or in part upon death or disability of the Participant, or upon a Change of Control of the Company (whether on an automatic or discretionary basis), and such vesting shall not count against the 5% Basket. 

 

	
  

	
(g)

	
Assumed Plans. If the Committee authorizes the assumption under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, of awards granted under another plan, such assumption shall not (i) reduce the maximum number of Shares available for issuance pursuant to an Award under this Plan, or (ii) be subject to or counted against a Participant’s Participant Award Limit. Any shares available for issuance pursuant to a stockholder-approved equity incentive plan sponsored by a company acquired by the Company may (following appropriate adjustments to reflect the acquisition, as determined by the Committee) be used for Awards under the Plan, subject to applicable law and stock exchange requirements.

 

 

Article 6.                       Stock Options

 

6.1           Grant of Options. The Committee is hereby authorized to grant Options to Participants. Each Option shall permit a Participant to purchase from the Company a stated number of Shares at an Option Price established by the Committee, subject to the terms and conditions described in this Article 6 and to such additional terms and conditions, as established by the Committee, in its sole discretion, that are consistent with the provisions of the Plan. Options shall be designated as either Incentive Stock Options or Nonqualified Stock Options, provided, that Options granted to Directors and Consultants shall be Nonqualified Stock Options. An Option granted as an Incentive Stock Option shall, to the extent it fails to qualify as an Incentive Stock Option, be treated as a Nonqualified Stock Option. Neither the Committee, the Board nor the Company or any of its Affiliates shall be liable to any Participant or to any other person if it is determined that an Option intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option. Options shall be evidenced by Award Agreements which shall state the number of Shares covered by such Option. Such agreements shall conform to the requirements of the Plan, and may contain such other provisions, as the Committee shall deem advisable.  No dividends or dividend equivalents will be paid with respect to Options.

 

6.2           Terms of Option Grant. The Option Price of an Award shall be determined by the Committee at the time of grant, but shall not be less than one-hundred percent (100%) of the Fair Market Value of a Share on the date of grant. In the case of any Incentive Stock Option granted 

 

  

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to a Ten Percent Shareholder pursuant to an Award, the Option Price shall not be less than one-hundred-ten percent (110%) of the Fair Market Value of a Share on the date of grant.

 

6.3           Option Term. The term of each Option shall be determined by the Committee at the time of grant and shall be stated in the Award Agreement, but in no event shall such term be greater than ten (10) years (or, in the case on an Incentive Stock Option granted to a Ten Percent Shareholder, five (5) years).

 

6.4           Time of Exercise. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.  Subject to applicable law, the Committee may provide in the Award Agreement that (i) the time to exercise may be extended, but not beyond the original term, if the exercise would be prohibited by applicable law or the Company’s insider trading policy, and/or (ii) the Option may be automatically exercised immediately prior to expiration of the term if the Option is in-the-money at that time and the Participant has not exercised it.

 

6.5           Method of Exercise. Except as otherwise provided in the Plan or in an Award Agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable. For purposes of this Article 6, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company pursuant to clauses (i), (ii), (iii) or (iv) of the following sentence (including the applicable tax withholding pursuant to Section 15.3 of the Plan). The aggregate Option Price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant (i) in cash or its equivalent (e.g., by check, draft, money order, cashier’s check, or wire transfer made payable to the Company), (ii) to the extent permitted by the Committee, in Shares (whether or not previously owned by the Participant) having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee, (iii) partly in cash and, to the extent permitted by the Committee, partly in such Shares (as described in (ii) above) or (iv) if there is a public market for the Shares at such time, subject to such requirements as may be imposed by the Committee, through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The Committee may prescribe any other method of payment that it determines to be consistent with applicable law and the purpose of the Plan.

 

6.6           Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to employees of the Company or of a “parent corporation” or “subsidiary corporation” (as such terms are defined in Section 424 of the Code) at the date of grant. The aggregate Fair Market Value (generally determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under all plans of the Company and of any “parent corporation” or “subsidiary corporation” shall not exceed one hundred thousand dollars ($100,000), or the Option shall be treated as a Nonqualified Stock Option. For purposes of the preceding sentence, Incentive Stock 

 

 

  

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Options will be taken into account generally in the order in which they are granted. No Incentive Stock Option may be exercised later than ten (10) years after the date it is granted. Each provision of the Plan and each Award Agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an incentive stock option as defined in Section 422 of the Code, and any provisions of the Award Agreement thereof that cannot be so construed shall be disregarded. To the extent that an Option does not qualify as an Incentive Stock Option, it will be treated as a Nonqualified Stock Option.

 

6.7           Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date the Participant makes a disqualifying disposition of any Shares acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Shares before the later of (A) two years after the date of grant of the Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession of any Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence.

 

 

Article 7.                       Stock Appreciation Rights

 

7.1           Grant of Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants, including a grant of Stock Appreciation Rights in tandem with any Option at the same time such Option is granted (a “Tandem SAR”). Stock Appreciation Rights shall be evidenced by Award Agreements that shall conform to the requirements of the Plan and may contain such other provisions, as the Committee shall deem advisable. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (a) the Fair Market Value of a specified number of Shares on the date of exercise over (b) the grant price of the right as specified by the Committee on the date of the grant. Such payment may be in the form of cash, Shares, other property or any combination thereof, as the Committee shall determine in its sole discretion.  No dividends or dividend equivalents will be paid with respect to Stock Appreciation Rights.

 

7.2           Terms of Stock Appreciation Right. Subject to the terms of the Plan and any applicable Award Agreement, the grant price of any Award (which shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant), term, methods of exercise, methods of settlement, and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee. The Committee may impose such other conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. No Stock Appreciation Right shall have a term of more than ten (10) years from the date of grant. Subject to applicable law, the Committee may provide in the Award Agreement that (i) the time to exercise may be extended, but not beyond the original term, if the exercise would be prohibited by applicable law or the Company’s insider trading policy, and/or (ii) the Stock Appreciation Right may be automatically exercised immediately prior to expiration of the term if it is in-the-money at that time and the Participant has not exercised it.

 

 

  

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7.3           Tandem Stock Appreciation Rights and Options. A Tandem SAR shall be exercisable only to the extent that the related Option is exercisable and shall expire no later than the expiration of the related Option. Upon the exercise of all or a portion of a Tandem SAR, a Participant shall be required to forfeit the right to purchase an equivalent portion of the related Option (and, when a Share is purchased under the related Option, the Participant shall be required to forfeit an equivalent portion of the Stock Appreciation Right).

 

 

Article 8.                       Restricted Stock

 

8.1           Grant of Restricted Stock. An Award of Restricted Stock is a grant by the Committee of a specified number of Shares to the Participant, which Shares are subject to forfeiture upon the occurrence of specified events. Participants shall be awarded Restricted Stock in exchange for consideration not less than the minimum consideration required by applicable law. Restricted Stock shall be evidenced by an Award Agreement, which shall conform to the requirements of the Plan and may contain such other provisions, as the Committee shall deem advisable.

 

8.2           Terms of Restricted Stock Awards. Each Award Agreement evidencing a Restricted Stock grant shall specify the period(s) of restriction, the number of Shares of Restricted Stock subject to the Award, the purchase price, if any, of the Shares of Restricted Stock, the performance, employment or other conditions (including the termination of a Participant’s Continuous Service whether due to death, disability or other reason) under which the Restricted Stock may be forfeited to the Company and such other provisions as the Committee shall determine. Any Restricted Stock granted under the Plan shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates (in which case, the certificate(s) representing such shares shall be legended as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period and deposited by the Participant, together with a stock power endorsed in blank, with the Company, to be held in escrow during the Restriction Period). At the end of the Restriction Period, the restrictions imposed hereunder and under the Award Agreement shall lapse with respect to the number of Shares of Restricted Stock as determined by the Committee, and the legend shall be removed and such number of Shares delivered to the Participant (or, where appropriate, the Participant’s legal representative).

 

8.3           Voting and Dividend Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, Participant’s holding Restricted Stock granted hereunder shall have the right to exercise voting rights with respect to the Restricted Stock and have the right to receive dividends on such Restricted Stock. In no event may dividends or dividend equivalents be paid to a Participant with respect to Restricted Stock which vests based on the achievement of performance goals until the Restricted Stock which relates to such dividends vests.

 

8.4           Performance Goals. The Committee may condition the grant of Restricted Stock or the expiration of the Restriction Period upon the Participant’s achievement of one or more performance goal(s) specified in the Award Agreement. If the Participant fails to achieve the specified performance goal(s), the Committee shall not grant the Restricted Stock to such 

 

 

  

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Participant or the Participant shall forfeit the Award of Restricted Stock to the Company, as applicable.

 

8.5           Section 83(b) Election. If a Participant makes an election pursuant to Section 83(b) of the Code concerning Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company and timely remit required withholding taxes via personal check or in accordance with Section 15.3.

 

 

Article 9.                       Other Stock-Based Awards

 

9.1           Grant of Other Stock-Based Awards. The Committee, in its sole discretion, may grant Awards of Shares and Awards that are valued, in whole or in part, by reference to, or are otherwise based on the Fair Market Value of, Shares (the “Other Stock-Based Awards”), including without limitation, restricted stock units and other phantom awards. Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of Continuous Service, the occurrence of an event and/or the attainment of performance objectives or goals. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards, whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares, and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).

 

9.2           Dividend Rights. In an Award Agreement, the Committee may provide for the payment of dividends or dividend equivalents on Other Stock-Based Awards.  In no event may dividends or dividend equivalents be paid to a Participant with respect to an Award which vests based on the achievement of performance goals until the Award which relates to such dividends vests.

 

 

Article 10.                     Performance Awards

 

10.1         Grant of Performance Awards.  The Committee may grant Performance Awards including Awards intending to provide Performance-Based Compensation.  The Committee is authorized to design any Award so that the amounts of cash or Shares payable or distributed pursuant to such Award are treated as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and related regulations.

 

10.2         Performance Measures. Performance Measures shall be calculated in accordance with the Company’s financial statements, or, if such measures are not reported in the Company’s financial statements, they shall be calculated in accordance with generally accepted accounting principles (“GAAP”), a method used generally in the Company’s industry, or in accordance with a methodology established by the Committee prior to the grant of the Performance Award, or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP.  The vesting, crediting and/or payment of Performance-Based 

 

  

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Compensation shall be based on the achievement of objective performance goals based on one or more of the following Performance Measures: (a) sales or revenue; (b) earnings per share; (c) measurable achievement in quality, operation and compliance initiatives; (d) objectively determinable measure of non-financial operating and management performance objectives; (e) net earnings (either before or after interest, taxes, depreciation and amortization); (f) economic value-added; (g) net income (either before or after taxes); (h) operating income and segment performance; (i) cash flow (including, but not limited to, operating cash flow and free cash flow); (j) cash flow return on capital; (k) return on net assets; (l) return on stockholders’ equity; (m) return on assets; (n) return on capital; (o) stockholder returns, dividends and/or other distributions; (p) return on sales; (q) gross or net profit margin; (r) productivity; (s) expenses; (t) margins; (u) operating efficiency; (v) customer satisfaction; (w) measurable achievement in quality and compliance initiatives; (x) working capital; (y) debt; (z) debt reduction; (aa) price per share of stock; (bb) market share; (cc) completion of acquisitions; (dd) business expansion; (ee) product diversification; and (ff) new or expanded market penetration.  The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may exclude the impact of an event or occurrence that the Committee determines should appropriately be excluded, including: (pp) extraordinary, unusual, infrequently occurring, or non-recurring items; (qq) effects of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (rr) effects of currency fluctuations; (ss) effects of financing activities (e.g., effect on earnings per share of issuing convertible debt securities); (tt) expenses for restructuring, productivity initiatives or new business initiatives; (uu) impairment of tangible or intangible assets; (vv) litigation or claim judgments or settlements; (ww) non-operating items; (xx) acquisition expenses; (yy) discontinued operations; and (zz) effects of assets sales, divestitures, spin-offs, mergers, acquisitions, and financing transactions, including selling accounts receivable.

 

Any Performance Measure may be (i) used to measure the performance of the Company and/or any of its Subsidiaries or Affiliates as a whole, any business unit or divisional level thereof or any combination thereof against any goal including past performance or (ii) compared to the performance of a group of comparable companies, or a published or special index, in each case that the Committee, in its sole discretion, deems appropriate.  The vesting, crediting and/or payment of Performance Awards that are not intended to constitute Performance-Based Compensation may be based on the achievement of the Performance Measures listed above, or any other performance goals as determined by the Committee.

 

10.3         Establishment of Performance Goals. With respect to Awards that are intended to constitute Performance-Based Compensation, no later than ninety (90) days after the commencement of a Performance Period (but in no event after twenty-five percent (25%) of such Performance Period has elapsed), the Committee shall establish in writing: (i) the performance goals (and any exclusions) applicable to the Performance Period; (ii) the Performance Measures to be used to measure the performance goals in terms of an objective formula or standard; (iii) the formula for computing the amount of compensation payable to the Participant if such performance goals are obtained; and (iv) the Participants or class of Participants to which such performance goals apply. The outcome of such performance goals must be substantially uncertain when the Committee establishes the goals.

 

 

  

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10.4         Adjustment of Performance-Based Compensation. Awards that are designed to qualify as Performance-Based Compensation may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

 

10.5         Certification of Performance. Except for Awards that pay compensation attributable solely to an increase in the value of Shares, no Award designed to qualify as Performance-Based Compensation shall be vested, credited or paid, as applicable, with respect to any Participant until the Committee certifies in writing that the performance goals and any other material terms applicable to such Performance Period have been satisfied.

 

10.6         Performance Goals. The Committee may condition the grant, vesting, payment, settlement, or delivery of any Award upon the achievement of one or more performance goal(s) specified in the Award Agreement.

 

10.7         Interpretation. Each provision of the Plan and each Award Agreement relating to Performance-Based Compensation shall be construed so that each such Award shall be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and related regulations, and any provisions of the Award Agreement thereof that cannot be so construed shall be disregarded, except as otherwise determined by the Committee.

 

 

Article 11.                     Compliance with Section 409A of the Code and Section 457A of the Code

 

11.1         General. The Company intends that any Awards be structured in compliance with, or to satisfy an exemption from, Section 409A, such that there are no adverse tax consequences, interest, or penalties as a result of the Awards. Notwithstanding the Company’s intention, in the event any Award is subject to Section 409A, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any Award from the application of Section 409A, (ii) preserve the intended tax treatment of any such Award, or (iii) comply with the requirements of Section 409A, including without limitation any such regulations guidance, compliance programs and other interpretative authority that may be issued after the date of grant of an Award.

 

This Plan, Awards and Award Agreements granted hereunder shall be interpreted at all times in such a manner that the terms and provisions of the Plan, Awards and Award Agreements are exempt from or comply with Section 409A.

 

11.2         Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan or any Award Agreement to a “specified employee” (as defined under Section 409A) as a result of his or her “separation from service” (as defined below) (other than a payment that is not subject to Section 409A) shall be delayed for the first six (6) months following such “separation from service” and shall instead be paid (in a manner set forth in the Award Agreement) on the first of 

 

  

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the month that immediately follows the end of such six-month period (or, if earlier, within 10 business days following the date of death of the specified employee).

 

11.3         Separation from Service. A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment,” “termination of Continuous Service” or like terms shall mean “separation from service.”

 

11.4         Section 457A. The Company intends that any Awards be structured in compliance with, or to satisfy an exemption from, Section 457A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder (“Section 457A”), such that there are no adverse tax consequences, interest, or penalties as a result of the Awards. Notwithstanding the Company’s intention, in the event any Award is subject to Section 457A, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any Award from the application of Section 457A, (ii) preserve the intended tax treatment of any such Award, or (iii) comply with the requirements of Section 457A, including without limitation any such regulations, guidance, compliance programs and other interpretative authority that may be issued after the date of the grant.

 

 

Article 12.                     Adjustments

 

12.1         Adjustments in Authorized Shares. In the event of any corporate event or transaction involving the Company, a Subsidiary and/or an Affiliate (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, extraordinary cash dividend, amalgamation, or other like change in capital structure (other than regular cash dividends to shareholders of the Company), or any similar corporate event or transaction, the Committee, to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, in its sole discretion, the number and kind of Shares or other property that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares or other property subject to outstanding Awards, the Option Price, grant price or purchase price applicable to outstanding Awards, the Participant Award Limits, and/or other value determinations applicable to the Plan or outstanding Awards.

 

12.2         Change of Control.  Unless the Committee shall provide otherwise at the time of grant of an Award, upon the occurrence of a Change of Control any outstanding Awards under the Plan which are assumed or substituted by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent shall immediately vest in 

 

 

  

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full, become exercisable and all restrictions lapse, as may be applicable if within twenty four (24) months following the Change of Control (i) the Participant’s service is terminated by the Company without Cause; (ii) if the Participant has entered into a written employment, consulting or similar agreement with the Company or any Subsidiary or Affiliate containing a definition of “good reason” (or an equivalent term), the Participant’s service is terminated for “good reason;” or (iii) the Participant’s service is terminated due to death or Disability.

 

Notwithstanding the foregoing, the Committee is authorized (but not obligated) to make adjustments in the terms and conditions of outstanding Awards, including without limitation the following (or any combination thereof): (i) continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent; (ii) substitution by the surviving company or corporation or its parent of awards with substantially the same terms for such outstanding Awards; (iii) accelerated exercisability, vesting and/or lapse of restrictions under outstanding Awards immediately prior to the occurrence of such event; (iv) upon written notice, provide that any outstanding Awards must be exercised, to the extent then exercisable, during a reasonable period of time immediately prior to the scheduled consummation of the event, or such other period as determined by the Committee (in either case, contingent upon the consummation of the event), and at the end of such period, such Awards shall terminate to the extent not so exercised within the relevant period; and (v) cancellation of all or any portion of outstanding Awards for fair value (as determined in the sole discretion of the Committee and which may be zero) which, in the case of Options and Stock Appreciation Rights or similar Awards, if the Committee so determines, may equal the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of Shares subject to such Awards (or, if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding Awards or portion thereof being canceled) over the aggregate Option Price or grant price, as applicable, with respect to such Awards or portion thereof being canceled (which may be zero).

 

Unless the Committee shall provide otherwise at the time of grant of an Award, upon the occurrence of a Change of Control any outstanding Awards under the Plan which are not assumed or substituted for by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent shall immediately prior to the occurrence of the Change of Control vest in full, become exercisable and all restrictions lapse, as may be applicable.

 

 

Article 13.                     Termination of Service

 

13.1         Termination of Service For Cause. Unless the Award Agreement provides otherwise, all of a Participant’s Awards (including any exercised Awards for which Shares have not been delivered to the Participant) shall be cancelled and forfeited immediately on the date Participant’s service terminates if such termination is for Cause or Cause exists on such date (and the Company shall return to the Participant the price if any paid for such undelivered Shares).

 

13.2         Termination of Service For Reason Other Than Cause. If a Participant’s service is terminated other than a termination for Cause, then unless the Award Agreement provides 

 

 

  

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otherwise, all unvested Awards will terminate immediately as of the date the Participant’s service terminates.

 

 

Article 14.                     Duration, Amendment, Modification, Suspension and Termination

 

14.1         Duration of the Plan. Unless sooner terminated as provided in Section 14.2, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date.

 

14.2         Amendment, Modification, Suspension and Termination of Plan. The Committee may amend, alter, suspend, discontinue, or terminate (for purposes of this Section 14.2, an “Action”) the Plan or any portion thereof or any Award (or Award Agreement) thereunder at any time; provided that no such Action shall be made, other than as permitted under Article 11 or 12, (i) without shareholder approval (A) if such approval is necessary to comply with any tax or regulatory requirement applicable to the Plan, (B) if such Action increases the number of Shares available under the Plan (other than an increase permitted under Article 5 absent shareholder approval), (C) if such Action results in a material increase in benefits permitted under the Plan (but excluding increases that are immaterial or that are minor and to benefit the administration of the Plan, to take account of any changes in applicable law, or to obtain or maintain favorable tax, exchange, or regulatory treatment for the Company, a Subsidiary, and/or an Affiliate) or a change in eligibility requirements under the Plan, or (D) for any Action that results in a reduction of the Option Price or grant price per Share, as applicable, of any outstanding Options or Stock Appreciation Rights or cancellation of any outstanding Options or Stock Appreciation Rights in exchange for cash, or for other Awards (other than in connection with a Change of Control) such as other Options or Stock Appreciation Rights, with an Option Price or grant price per Share, as applicable, that is less than such price of the original Options or Stock Appreciation Rights; or take any other action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed, and (ii) without the written consent of the affected Participant, if such Action would materially diminish the rights of any Participant under any Award theretofore granted to such Participant under the Plan; provided, however, that the Committee may amend the Plan, any Award or any Award Agreement without such consent of the Participant in such manner as it deems necessary to comply with applicable laws.

 

 

Article 15.                     General Provisions

 

 

15.1         No Right to Service. The granting of an Award under the Plan shall impose no obligation on the Company, any Subsidiary or any Affiliate to continue the Continuous Service of a Participant and shall not lessen or affect any right that the Company, any Subsidiary or any Affiliate may have to terminate the Continuous Service of such Participant. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

 

 

  

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15.2         Settlement of Awards; Fractional Shares. Each Award Agreement shall establish the form in which the Award shall be settled. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Awards, other securities or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be rounded, forfeited or otherwise eliminated.

 

 

15.3         Tax Withholding. The Company shall have the power and the right to deduct or withhold automatically from any amount deliverable under the Award or otherwise, or require a Participant to remit to the Company, the amount necessary to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan. With respect to required withholding, Participants may elect (subject to the Company’s automatic withholding right set out above), subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction (or such other rate that will not cause an adverse accounting consequence or cost).

 

15.4         No Guarantees Regarding Tax Treatment. Participants (or their beneficiaries) shall be responsible for all taxes with respect to any Awards under the Plan. The Committee, the Board and the Company make no guarantees to any person regarding the tax treatment of Awards or payments made under the Plan. Neither the Committee, the Board nor the Company has any obligation to take any action to prevent the assessment of any tax on any person with respect to any Award under Section 409A or Section 457A or otherwise and none of the Company, any of its Subsidiaries or Affiliates, or any of their employees or representatives shall have any liability to a Participant with respect thereto.

 

 

15.5         Section 16 Participants. With respect to Participants subject to Section 16 of the Exchange Act, transactions under the Plan, including Tax Withholding, are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee or the Board fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee or the Board, as applicable.

 

 

15.6         Non-Transferability of Awards. Except as provided below, no Award and no Shares that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative.  To the extent and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award without consideration (each transferee thereof, a “Permitted Assignee”) (i) to the Participant’s spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders or (iv) for charitable donations; provided that such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred 

 

 

  

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Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan.  The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section.

 

 

15.7         Conditions and Restrictions on Shares. The Committee may impose such other conditions or restrictions on any Shares received in connection with an Award as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received for a specified period of time or a requirement that a Participant represent and warrant in writing that the Participant is acquiring the Shares for investment and without any present intention to sell or distribute such Shares. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any conditions and restrictions applicable to such Shares.

 

 

15.8         Compliance with Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies, or any stock exchanges on which the Shares are admitted to trading or listed, as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

 

	
  

	
(a)

	
Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

	
  

	
(b)

	
Completion of any registration or other qualification of the Shares under any applicable national, state or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

The restrictions contained in this Section 15.8 shall be in addition to any conditions or restrictions that the Committee may impose pursuant to Section 15.7. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

 

15.9         Awards to Non-U.S. Directors, Employees or Consultants. To comply with the laws in countries other than the United States in which the Company or any of its Subsidiaries or Affiliates operates or has Directors, Employees or Consultants, the Committee, in its sole discretion, shall have the power and authority to:

 

	
  

	
(a)

	
Determine which Subsidiaries or Affiliates shall be covered by the Plan;

 

	
  

	
(b)

	
Determine which Directors, Employees or Consultants outside the United States are eligible to participate in the Plan;

 

	
  

	
(c)

	
Modify the terms and conditions of any Award granted to Directors, Employees or Consultants outside the United States to comply with applicable foreign laws;

 

 

  

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(d)

	
Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals; and

 

	
  

	
(e)

	
Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 15.9 by the Committee shall be attached to this Plan document as appendices.

 

15.10       Rights as a Shareholder. Except as otherwise provided herein or in the applicable Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

15.11       Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

 

15.12       Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Subsidiaries or Affiliates may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts. The Plan is not subject to the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time.

 

15.13       No Constraint on Corporate Action. Nothing in the Plan shall be construed to (i) limit, impair, or otherwise affect the Company’s or its Subsidiary’s or Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (ii) limit the right or power of the Company, its Subsidiaries or Affiliates to take any action which such entity deems to be necessary or appropriate.

 

15.14       Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

 

 

  

22

  

 

 

15.15       Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.

 

15.16       Waiver of Certain Claims. By participating in the Plan, the Participant waives all and any rights to compensation or damages in consequence of the termination of his or her office or Continuous Service for any reason whatsoever, whether lawfully or otherwise, insofar as those rights arise or may arise from his or her ceasing to have rights under the Plan as a result of such termination, or from the loss or diminution in value of such rights or entitlements, including by reason of the operation of the terms of the Plan, any determination by the Board or Committee pursuant to a discretion contained in the Plan or any Award Agreement or the provisions of any statute or law relating to taxation.

 

15.17       Data Protection. By participating in the Plan, the Participant consents to the collection, processing, transmission and storage by the Company in any form whatsoever, of any data of a professional or personal nature which is necessary for the purposes of introducing and administering the Plan. The Company may share such information with any Subsidiary or Affiliate, the trustee of any employee benefit trust, its registrars, trustees, brokers, other third party administrator or any Person who obtains control of the Company or acquires the Company, undertaking or part-undertaking which employs the Participant, wherever situated.

 

15.19       Erroneously Awarded Compensation. All Awards, if and to the extent subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act, may be subject to a claw back policy or other incentive compensation policy established from time to time by the Company to comply with such Act.

 

*        *        *

 

 

This Plan was duly adopted and approved by the Board by resolution at a meeting held on the 14th day of May, 2015.

 

/s/  Roy S. Luria                                  

Roy S. Luria, Secretary

 

 

 

 

23Exhibit 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;

 

    	 	Page 1 of 32

    	 

    

 

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.

 

    	 	Page 2 of 32

    	 

    

 

“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.

 

    	 	Page 3 of 32

    	 

    

 

“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.

 

    	 	Page 4 of 32

    	 

    

 

“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.

 

    	 	Page 5 of 32

    	 

    

 

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.

 

    	 	Page 6 of 32

    	 

    

 

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;

 

    	 	Page 7 of 32

    	 

    

 

(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.

 

    	 	Page 8 of 32

    	 

    

 

(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).

 

    	 	Page 9 of 32

    	 

    

 

(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:

 

    	 	Page 10 of 32

    	 

    

 

(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.

 

    	 	Page 11 of 32

    	 

    

 

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.

 

    	 	Page 15 of 32

    	 

    

 

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.

 

5.7Exclusivity

 

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.

 

    	 	Page 22 of 32

    	 

    

 

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.

 

    	 	Page 25 of 32

    	 

    

 

(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.

 

    	 	Page 26 of 32

    	 

    

 

(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.

 

    	 	Page 27 of 32

    	 

    

 

	(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.

 

    	 	Page 28 of 32

    	 

    

 

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.

 

    	 	Page 29 of 32

    	 

    

 

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

 

    	 	Page 30 of 32

    	 

    

 

(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.

 

    	 	Page 31 of 32

    	 

    

 

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

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