Document:

Exhibit 10.2

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement ("Agreement") is made and entered into this June 26, 2013, between General Employment Enterprises, Inc., an Illinois Corporation (the "Company") and Katy M. Gallagher ("Executive").

WITNESSETH:

WHEREAS, on August 31, 2011, Company purchased substantially all of the assets owned by Ashley Ellis LLC. (“Ashley Ellis”) used or useable in conjunction with the operation of the “Business” (hereinafter defined);

WHEREAS, Executive was an employee of Ashley Ellis, familiar with the management and operation of Ashley Ellis’ business of recruitment and placement of technical personnel (the "Business");

WHEREAS, Company employed Executive concurrent with the acquisition of the Business pursuant to the terms of an Employment Agreement dated August 31, 2011 (the “Original Agreement”).  This Agreement amends and restates the Original Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

		1.	Employment and Duties. During the "Term" (hereinafter defined), Executive shall be employed by the Company to perform the covenants, duties and obligations set forth in this Agreement, and such additional duties and responsibilities as may be agreed upon by the parties (sometimes collectively the "Employment Duties") subject to the reasonable overall direction and authority the Chief Financial Officer of the Company, or his designee.

 

		(a)	Executive shall devote all of Executive's full time, attention, energies and best efforts to fully and timely performing the Employment Duties and to further the business, operations and best interests of Company in an honest and ethical manner in compliance with this Agreement, all applicable laws,  ordinances, permits, licenses, governmental rules, regulations, authorizations and requirements, the Company’s Employee Handbook,  rules and regulations as may be promulgated by Company, from time to time.

		(b)	Executive shall be employed with the title " Vice President of Operations and Vice President of the Professional Staffing Division" of the Company located at One Tower Lane, Suite 2200, Oakbrook Terrace, IL 60181, or such other title and location as mutually agreed upon by Company and Executive, but in no event, during the Term, shall Executive be required to relocate more than fifty (50) miles outside the Chicago metropolitan area unless mutually agreed upon by Company and Executive in writing.

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		(c)	The Company’s Professional Staffing Division is defined as follows:

 

		(i)	the three Ashley Ellis branch offices that are being acquired pursuant to the certain Asset Purchase Agreement dated August 31, 2011, which subsists of the Naperville, Atlanta, and Houston branch offices of Ashley Ellis.

 

		(ii)	the Company’s branch offices which provide staffing services substantially in the IT, Accounting, Engineering and Clerical area on a contract and direct hire basis..

 

		(iii)	future branch offices that the Company opens, which provide staffing services substantially in the IT, Accounting, Engineering and Clerical area on a contract and direct hire basis.

 

		(iv)	any Company acquisition which provides staffing services substantially in the IT, Accounting, Engineering, and Clerical area on a contract and direct hire basis.

 

		(v)	the Company’s Professional Staffing Division will not include branches, affiliates or subsidiaries where a substantial portion of the business is staffing in the Light Industrial or Agricultural area.

 

		2.	Term of Employment. The period of Company's employment of Executive commenced as of September 1, 2011 and, unless earlier terminated for cause as provided for herein, will continue until July 15, 2013 (the "Term").

 

		(a)	The Term shall immediately terminate upon notice to Executive if (each shall be deemed a "breach"):

 

		(i)	Executive dies (“Death”) or becomes physically or mentally unable to perform her duties for the Company hereunder and such incapacity has continued for a total of ninety (90) consecutive days or any one hundred eighty (180) cays in a period of three hundred sixty-five(365) consecutive days (a “ Disability”).

 

		(ii)	Executive uses intoxicants, alcohol, drugs or other stimulants or depressants while performing the Employment Duties and such that the reputation of the Company is adversely affected, as reasonably determined by the Company.

		(iii)	Executive fails or refuses to satisfactorily perform the Employment Duties or any assignment reasonably given to Executive by the officers of Company or Executive's supervisor.

 

		(iv)	Executive otherwise breaches the terms or conditions of this Agreement or any other policy, rule or regulation of Company's generally in effect from time to time.

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		(v)	Executive is convicted of or pleads guilty or nolo contendere to any felony charge or commits a fraudulent, dishonest, immoral or unethical act with regard to Company, Company's customers, Company's prospective customers, suppliers, employees, agents or independent contractors.

 

		(vi)	Executive commits an act of moral turpitude.

 

		(vii)	Executive has been found by a court in a civil action or by the SEC to have violated any federal or state securities law;

 

(b) Sections 2(a) (ii) through 2(a)(vii) shall collectively be referred to as “Cause”.

(c) In the event of Death, Disability, or termination with Cause, Company shall only be obligated to pay Executive compensation and benefits, if any, up to and including the effective date of such termination or expiration.

(d)  Executive’s employment with the Company will terminate upon the expiration of the Term, without any further action on the part of the Company or the Executive, unless the Company and the Executive expressly agree in writing to an extension of the Term.

		3.	Compensation.

 

		(a)	During the Term of this Agreement, the Company shall pay the Executive as compensation for her services a base salary at the annualized rate of One Hundred Fifty Thousand Dollars ($150,000), less all customary employee withholdings and all other applicable federal, state and local deductions as required by law.

		(b)	Should this Agreement expire at the end of its Term (as opposed to being terminated prior to the end of the Term), the Company shall continue to pay the Executive’s compensation and benefits hereunder until September 15, 2013, and will make a one-time payment of Twelve Thousand Five Hundred Dollars ($12,500) to Executive on October 15, 2013, subject to Executive performing her ongoing duties under Section 3(c) below.

		(c)	Should this Agreement expire at the end of its Term (as opposed to being terminated prior to the end of the Term), the Executive agrees that she will make herself reasonably available to perform the Employment Duties and other transitional services to the Company for up to 5 hours per week until January 15, 2014.  In consideration therefore, the Company will pay the Executive $100 per hour for each hour of service so rendered.  During said period, the Executive will be an independent contractor of the Company, not an employee of the Company.

		(d)	The Company shall reimburse Executive for all normal, reasonable and necessary out-of-pocket expenses incident to the performance of her Employment Duties in accordance with policies adopted by the Company from time to time, upon submission by Executive of an itemized account of such expenses containing such detail and accompanied by such supporting documentation as may be generally required by the Company.

		4.	Benefits and Vacation. Vacation time and all other benefits entitled to the Executive will be governed by the Company’s Employee Handbook.  Notwithstanding any to the contrary in the Company’s Employee Handbook regarding the years of service required to earn vacation time, Executive shall receive 4 weeks of paid time off as vacation yearly.

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		5.	Confidential Information. Executive acknowledges and agrees that Executive will have access to and receive certain proprietary and confidential information and trade secrets of Company, including, without limitation, customer lists, the terms of any oral or written agreement or understanding between Company and any customer, sales and business records, price lists and methods, financial and cost information, marketing plans, methods of doing business, methods and processes and business strategy documentation, as well as such other information as Company may designate as confidential from time to time (collectively "Confidential Information"). Executive further acknowledges and agrees that the Confidential Information is the exclusive property of  Company, not generally known to the trade or industry and, but for Company's engagement of Executive in accordance with the terms of this Agreement, Executive would not have had any access to the Confidential Information. Therefore, Executive agrees that she shall not disclose to any unauthorized person or use for her own purposes any Confidential Information without the prior written consent of the Company.

		(a)	During the Term and for the "Restricted Period" (hereinafter defined) following the effective date of the termination or expiration of the Term, for any or no reason whatsoever, Executive will not, directly or indirectly, for her own benefit or for the benefit of any person or entity, other than Company pursuant to this Agreement, use, divulge, disseminate, disclose or communicate to any person or entity any of the Confidential Information in any manner whatsoever, unless Company otherwise consents to such use or disclosure of any item of the Confidential Information in writing prior to the use or disclosure thereof, in each instance and then only with respect to those items of Confidential Information specifically described, and only to the extent specifically authorized, in such written consent.

		(b)	With respect to each item of Confidential Information, the "Restricted Period" shall mean: (i) five (5) years, if such item of Confidential Information does not constitute or ceases to be a trade secret; or (ii) indefinitely, if such item of Confidential Information constitutes a trade secret; provided, however, if an item of Confidential Information ceases to be a trade secret, such item of Confidential Information shall remain confidential and proprietary to Company for a period of not less than five (5) years.

		(c)	Notwithstanding the foregoing, Confidential Information does not include information: (i) in the public domain; or (ii) that later becomes public, unless such information is made public by: (x) Executive as a result of the breach o this Agreement; or (y) any other person or entity, directly or indirectly, under an obligation of confidentiality to Company.

		(d)	Executive acknowledges and agrees that, under all circumstances, the restrictions upon her and her covenants, duties and obligations unto the Company set forth in this Paragraph 5 are necessary to protect the Company's legitimate business interests, are given as a material inducement to the Company's employment of Executive, are reasonable in scope and duration and will not prevent Executive from pursuing other business ventures and employment opportunities or otherwise cause Executive a financial hardship.

		(e)	In the event that Executive reasonably believes, after consultation with counsel, that she is required by law to disclose any Confidential Information, Executive will: (i) provide the Company with prompt notice before such disclosure in order that the Company may attempt to obtain a protective order or other assurance that confidential treatment will be accorded such Confidential Information, and (ii) cooperate with the Company in attempting to obtain such order or assurance.

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		(f)	All Confidential Information, files, records, documents and similar items relating to the business of the Company, and any copies, reproductions or recordings thereof in the Executive's possession or control, whether prepared by Executive or otherwise, shall be and remain the exclusive property of the Company and Executive shall deliver to the Company at the termination or expiration of the Term, or at any other time that the Company may request: (i) all Confidential Information including all copies and reproductions thereof, and all writings and recordings incorporating or referring 'to the Confidential Information (ii) all other property of Company and (iii) certify in writing to Company that Executive has satisfied all of her covenants, duties and obligations pursuant to this Paragraph 5(g).

		6.	Enforcement.  If the duration of Executive's covenants, duties and obligations set forth in Paragraph 5 is held to be excessive, unreasonable, invalid or unenforceable by a court of competent jurisdiction, such duration will be modified so as to be reasonable, valid and enforceable to the maximum extent permitted by law as determined by such court of competent jurisdiction. Because Executive's services are unique and because Executive has access to Confidential Information, the parties hereto agree that money damages would not be an adequate remedy for any breach of this Agreement.  Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof, without the requirement of posting a bond or security thereof.  Executive hereby waives any claim or defense that Company has an adequate remedy at law or is not being irreparably injured and will not raise or suggest any such claim or defense in any action or proceeding initiated by or on behalf of Company. Company's rights and remedies hereunder are cumulative in nature, and no such right or remedy shall be, or be considered to be, Company's sole and exclusive right or remedy.

		7.	Executive's Representations.  Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which she is bound, (ii) other than as contained in that certain Non-Disclosure and Non-Competition Agreement dated August 31, 2011, by and among Company, Ashley Ellis and Executive, Executive is not a party to or bound by any employment agreement, non-compete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that she has consulted with independent legal counsel regarding her rights and obligations under this Agreement and that she fully understands the terms and conditions contained herein.

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	8.	Compliance with IRC Code Section 409. This Agreement is intended to comply with IRC Code Section 409A and the interpretative guidance thereunder, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions, and shall be administered accordingly.  This Agreement shall be construed and interpreted with such intent. If a payment under this Agreement does not qualify as a short-term deferral under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee (as defined below) as of her  termination, distributions to the Executive may not be made before the date that is six months after the date of her termination or, if earlier, the date of the  Executive’s death (the "Six-Month Delay Rule").  Payments to which the Executive would otherwise be entitled during the first six months following the termination (the "Six-Month Delay") will be accumulated and paid on the first day of the seventh month following the termination.  Notwithstanding the Six-Month Delay Rule set forth in this Section:

 

To the maximum extent permitted under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(iii) (or any similar or successor provisions), during each month of the Six-Month Delay, the Company will pay the Executive an amount equal to the lesser of (i) the total monthly severance provided under this Agreement, or (ii) one-sixth (1/6) of the lesser of (1) the maximum amount that may be taken into account under a qualified plan pursuant to IRC Code Section 401(a)(17) for the year in which the  Executive termination occurs, and (2) the sum of the   Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the taxable year of the Executive’s preceding the taxable year of the  Executive in which her termination occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not had a termination); provided that amounts paid under this sentence will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Company under this Agreement; and

 

To the maximum extent permitted under IRC Code Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(v)(D) (or any similar or successor provisions), within ten (10) days of the termination, the Company will pay the Executive an amount equal to the applicable dollar amount under IRC Code Section 402(g)(1)(B) for the year of the Executive’s  termination; provided that the amount paid under this sentence will count toward, and will not be in addition to, the total payment amount required to be made to the  Executive by the Company under this Agreement.

 

For purposes of this Agreement, "Specified Employee" has the meaning given that term in IRC Code Section 409A and Treas. Reg. 1.409A-1(c)(i) (or any similar or successor provisions).  The Company's "specified employee identification date" (as described in Treas. Reg. 1.409A-1(c)(i)(3)) will be December 31 of each year, and the Company's 'specified employee effective date' (as described in Treas. Reg. 1.409A- 1(c)(i)(4) or any similar or successor provisions) will be February 1 of each succeeding year."

Each payment under this Agreement or any Company benefit plan is intended to be treated as one of a series of separate payments for purposes of IRC Code Section 409A and Treasury Regulation Section 1.409A-2(b)(2)(iii) (or any similar or successor provisions).

		9.	Survival. Paragraphs 5, 6, 7, 8, 9, 10, 11,14 and 15 shall survive and continue in full force in accordance with its terms, notwithstanding the expiration or termination of the Term for any or no 'reason whatsoever.

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		10.  	Notices. Any and all notices, demands, requests, consents, designations and other communications required or desired to be given pursuant to this Agreement will be given in writing and will be deemed duly given upon personal delivery, or on the third day after mailing if sent by certified mail, postage prepaid, return receipt requested, or on the day after deposit with a nationally recognized overnight delivery service which maintains records of the time, place and receipt of delivery, or upon receipt of a confirmed facsimile transmission, and in each case to the person and address set forth below, or to such other person or address which Company or Executive may respectively designate in like manner from time to time.

	
If to Executive, then to:

	
 

	
If to Company, then to:

	
 

	
 

	
 

	
Katy M. Gallagher

	
 

	
Andrew Norstrud

	
c/o: General Employment Enterprises, Inc.

	
 

	
Chief Financial Officer

	
One Tower Lane, Suite 2200

	
 

	
General Employment Enterprises, Inc.

	
Oakbrook Terrace, Il 60181

	
 

	
One Tower Lane, Suite 2200

	
Fax:  (630) 954-0595

	
 

	
Oakbrook Terrace, IL 60181

	
 

	
 

	
 

	
 

	
 

	
With a copy to (which copy alone shall not constitute notice under shall not constitute notice under this Agreement):

	
 

	
 

	
 

	
 

	
 

	
Clint J. Gage, Esq.

	
 

	
 

	
Roetzel & Andress

	
 

	
 

	
350 East Las Olas Boulevard, Ste. 1150

	
 

	
 

	
Fort Lauderdale, FL 33301

	
 

	
 

	
Fax:  954-462-4260

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	11.  	Severability. If any provision contained herein is held to be invalid or unenforceable by a court of competent jurisdiction, such provision will be severed herefrom and such invalidity or unenforceability will not affect any other provision of this Agreement, the balance of which will remain in and have its intended full force and effect; provided, however, if such invalid or unenforceable provision may be modified so as to be valid and enforceable as a matter of law, such provision will be deemed to have been modified so as to be valid and enforceable to the maximum extent permitted by law.

 

		12.  	Entire Agreement. This Agreement and those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

		13.  	Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.  Additionally, signatures transmitted via facsimile or electronically with electronic receipted delivery shall be deemed originals.

 

		14.  	Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns. Executive shall not assign her rights or delegate her duties or obligations hereunder.

 

		15.  	Governing Law; Jurisdiction. This Agreement will be construed and enforced in accordance with the laws of the State of Illinois without regard to its choice of law rules.  Any action, suit, or other legal proceeding that is commenced to resolve any matter arising under or related to any provision of this agreement shall be submitted to the exclusive jurisdiction of any state or federal court in DuPage County Illinois.

 

		16.  	Exhibits. The Exhibits referred to in this Agreement are attached to, made a part of and incorporated in this Agreement by this reference.

 

		17.  	Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by the written agreement of the party entitled to the benefits of such terms or provisions intended to be waived. Each such waiver or consent will be effective only in the specific instance and for the specific purpose for which it was given, and will not constitute a continuing waiver or consent.

 

		18.  	Assignment. Executive acknowledges that the services to be rendered by her pursuant to this Agreement are unique and personal and that she may not assign any of her rights or benefits or delegate any of her covenants, duties, agreements or obligations under this Agreement (including the right to payment hereunder). Any attempted assignment, transfer, pledge or hypothecation or other disposition of this Agreement, or of such rights, covenants, or obligations by Executive, will be null and void and of no force or effect whatsoever. The Company may assign this Agreement and any or all of its rights, covenants, duties and obligations under this Agreement upon written notice to Executive.

 

		19.  	Amendments. No modifications or amendments of this Agreement will be effective unless made in writing and signed by Company and Executive.

 

		20.  	Recitals. The recitals set forth at the beginning of this Agreement are hereby incorporated into and made a part of this Agreement as if fully set forth herein.

 

		21.  	Headings. The headings and captions of the various Paragraphs and Subparagraphs of this Agreement are for convenience of reference only and will in no way modify or affect the meaning or construction of any of the terms or provisions hereof.

 

		22.  	Knowledge and Understanding. Executive acknowledges that she has been given the time and opportunity to consult with counsel of Executive's choice prior to executing and delivering this Agreement and that Executive has freely and voluntarily executed and delivered this Agreement with full knowledge and understanding of its content, meaning and intent.

		23.  	Change in Control.  The parties hereto expressly acknowledge and agree that the Change of Control Agreement entered into by said parties hereof concurrently with the Original Agreement is hereby null and void and of no further effect.

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IN WITNESS WHEREOF, the Company and Executive have each duly executed this Agreement as of the date first written above.

	
GENERAL EMPLOYMENT ENTERPRISES, INC.

	
 

	
EXECUTIVE

	
 

	
 

	
 

	
By:

	
/s/ Andrew Norstrud

	
 

	
By:

	
/s/ Katy Imhoff (Gallagher)

	
 

	
Andrew Norstrud

	
 

	
 

	
Katy M. Gallagher

	
 

	
Chief Financial Officer

	
 

	
 

	
Executive

 

 

9INVESTOR RIGHTS AGREEMENT

 

This INVESTOR RIGHTS
AGREEMENT (the “Agreement”) is made and entered into as of June 28, 2013 by and between Lakeland Industries,
Inc., a Delaware corporation (the “Company”), and the Investor party hereto.

 

WHEREAS, on
the date hereof, the Company, Lakeland Protective Wear Inc. and the Investor party thereto entered into that certain Loan and Security
Agreement (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Financing Agreement”),
pursuant to which the Company, among other things, borrowed money and issued Warrants (as defined below) to such Investor; and

 

WHEREAS, in
connection with entering into the Financing Agreement and issuing the Warrants, the Company has agreed to provide the investor
rights set forth in this Agreement.

 

NOW, THEREFORE,
in consideration of the foregoing and of the mutual agreements contained herein, the parties hereby agree as follows:

 

1.          Board
of Directors. The Company represents, warrants and covenants that: (a) on the date hereof, the Board of Directors of
the Company (the “Board”) consists of seven (7) persons, who are divided into three classes, designated Class
1, Class 2 and Class 3; (b) each class of the Board shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board; (c) on the date hereof, there are no vacancies on the Board; (d) the
Company shall promptly notify the Investor in writing of any vacancy that occurs on the Board; and (e) until an Investor
Director (as defined below) has been duly elected to the Board, the Company shall not fill any vacancy on the Board except as
provided herein.

 

2.            Investor
Director.

 

(a)          For
so long as the Investor and/or any of its Affiliates own (beneficially or of record) (i)(A) Stockholder Securities that represent
(for these purposes, all Stockholder Securities convertible into, or exchangeable or exercisable for, other securities of the Company
shall be deemed to have been so converted, exchanged or exercised in full) in the aggregate at least six percent (6%) of the outstanding
Common Stock and (B) any loans, notes or other indebtedness under the Financing Agreement or other Transaction Documents in
an aggregate principal amount of at least $2,000,000 or (ii) shares of Common Stock (for these purposes, excluding securities
of the Company that are convertible, exchangeable or exercisable for shares of Common Stock) that represent in the aggregate at
least five percent (5%) of the outstanding Common Stock (the “Investor Conditions”), the Investor shall
have the right to designate one individual to be nominated for election to the Board (the “Investor Director”).

 

For the avoidance of
doubt, references to “outstanding Common Stock” shall not include shares issuable or reserved for issuance pursuant
to options, warrants, convertible or exchangeable securities or other similar rights. For purposes hereof, any determination required
to be made hereunder as to ownership of the Stockholder Securities shall be made at the end of each of the Company’s fiscal
quarters. The Company shall promptly notify the Investor in writing upon the Company’s determination that the Investor is
no longer entitled to designate an Investor Director hereunder.

 

    	 

    	 

    

  

(b)          If
at any time the Investor and its Affiliates no longer meet the Investor Conditions, any Investor Director previously nominated
by the Investor and currently serving as a director may serve until the next annual meeting of stockholders.

 

(c)          If
a vacancy on the Board occurs because of the death, disability, disqualification, resignation or removal of an Investor Director,
the Investor shall be entitled to designate such Investor Director’s successor in accordance with this Agreement, and the
Board shall promptly, subject to Section 4(b), fill such vacancy with such successor.

 

3.             Board
Observer Rights. For so long as (a) the Investor and/or any of its Affiliates own (beneficially or of record) (i) Stockholder
Securities that represent (for these purposes, all Stockholder Securities convertible into, or exchangeable or exercisable for,
other securities of the Company shall be deemed to have been so converted, exchanged or exercised in full) in the aggregate at
least six percent (6%) of the outstanding Common Stock and/or (ii) any loans, notes or other indebtedness under the Financing
Agreement or other Transaction Documents in an aggregate principal amount of at least $2,000,000 and (b) no Investor Director
is serving as a director on the Board, the Investor shall have the right to appoint one board observer (an “Observer”)
to attend meetings of the Board and any committee thereof. Any Observer so appointed shall have the right to attend any meeting
of the Board and any committee thereof and the Company shall, concurrently with delivery to the members of the Board or such committee,
deliver to the Observer all notices, minutes, consents and other materials provided by or on behalf of the Company to the members
of the Board or such committee; provided, however, that the Observer may be excluded from access to any material
or meeting or portion thereof if the Board or such committee reasonably determines in good faith that such exclusion is reasonably
necessary to avoid a direct conflict of interest, to preserve the attorney-client privilege, to protect highly confidential proprietary
information, or for other similar or justifiable reasons.

 

4.             Company
Obligations regarding Investor Director.

 

(a)          The
Company shall take or cause to be taken any and all such actions so that (i) the Investor Director is included in the Board’s
slate of nominees to the stockholders for the next election of directors (other than the annual meeting of stockholders of the
Company to be held on July 12, 2013 (the “2013 Stockholders’ Meeting”)) and each election of directors
thereafter at which the class of directors to which the Investor Director has been previously elected as a director is standing
for election (it being understood that if the Investor Director is not elected to the Board at such next election of directors,
the Investor Director shall be included in the Board’s slate of nominees at each following election of directors until the
Investor Director has been elected to be a member of a class of directors) and (ii) the Investor Director is included in the
proxy statement prepared by the Company in connection with soliciting proxies for every meeting of the stockholders of the Company
called with respect to the election of members of the Board (other than the 2013 Stockholders’ Meeting), and at every adjournment
or postponement thereof, and on every action or approval by written consent of the stockholders of the Company or the Board (to
the extent permitted) with respect to the election of members of the Board, and recommended for election to the Board in the same
manner and to the same extent that such action is taken in respect of the other Board nominees. Without in any way limiting the
foregoing, if at any time following the date hereof (x) a vacancy on the Board occurs and (y) an Investor Director has
not yet been duly elected to the Board, then the Company shall take or cause to be taken any and all such actions so that the Investor
Director is promptly duly elected to the Board.

 

    	-2-

    	 

    

  

(b)          At
any time a vacancy on the Board occurs because of the death, disability, disqualification, resignation or removal of an Investor
Director, then the Board, or any committee thereof, shall not fill such vacancy until the earliest to occur of: (i) the designation
by the Investor of a successor Investor Director; (ii) the failure by the Investor to designate a successor Investor Director
within thirty (30) days after receipt by the Investor of written notification of the vacancy from the Company; or (iii) the
delivery to the Company of a specific waiver in writing by the Investor of their right under this Section 4(b).

 

(c)          Notwithstanding
the foregoing, the Company shall not be obligated to cause to be nominated for election to the Board or recommend to the stockholders
the election of any Investor Director (i) who fails to submit to the Company on a timely basis such questionnaires as the
Company may reasonably require of its directors generally and such other information as the Company may reasonably request in connection
with the preparation of its filings under the Securities Laws or (ii) if the Board or any committee thereof determines in
good faith, after receipt of advice of outside legal counsel, that such action would constitute a breach of its fiduciary duties
or applicable law or violate the Certificate of Incorporation or by-laws of the Company; provided, however, that
upon the occurrence of any event under either clause (i) or (ii) above, the Company shall promptly notify the
Investor in writing of the occurrence of such event and, to the extent possible, permit the Investor to provide an alternate Investor
Director or such information sufficiently in advance of any Board action or meeting of stockholders called with respect to such
election of nominees or consent in lieu of a meeting. The Company shall use best efforts to perform its obligations under Section 4(a)
with respect to any such alternate Investor Director.

 

(d)          In
the event that the Investor designates an Investor Director pursuant to this Agreement, the Company agrees to promptly, and in
any event no later than the date of the commencement of the term of such Investor Director, enter into an indemnification agreement
with such Investor Director on terms and conditions comparable to those indemnification agreements entered into with other directors
of the Board and otherwise reasonably acceptable to the Investor.

 

5.             Certain
Other Company Obligations.

 

(a)          The
Company shall pay the reasonable out-of-pocket expenses incurred by the Investor Director and any Observer in connection with performing
such person’s duties as a director or Observer, as the case may be, including without limitation the reasonable out-of-pocket
expenses incurred by such persons for attending meetings of the Board or committee thereof, consistent with Company policies and
procedures in effect from time to time for all directors.

 

    	-3-

    	 

    

 

(b)          The
Company shall use commercially reasonable efforts to maintain, from financially sound and reputable insurers, Directors and Officers
liability insurance providing coverage to the directors (including any Investor Director), in an amount and on terms and conditions
satisfactory to the Board.

 

6.             Definitions.
As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled
by or under common Control with such Person. For purposes hereof, “Control” (including, with correlative meanings,
the terms “Controlling,” “Controlled by” and “under common Control with”),
as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

 

“Certificate
of Incorporation” means the Company’s Restated Certificate of Incorporation, as the same may be amended from time
to time.

 

“Common Stock”
means (i) the Company’s shares of Common Stock, par value $0.01 per share and (ii) any share capital into which
such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

“Investor”
means each Person identified as an Investor on the signature pages hereto and any Affiliate or transferee of any such Person who
is a subsequent holder of any Warrants or other Stockholder Securities transferred by such Person.

 

“Person”
means any individual, corporation, partnership, limited partnership, limited liability company, association, joint stock company,
trust, unincorporated organization, joint venture, union or other organization or entity, including a governmental authority.

 

“Registration
Rights Agreement” means the Registration Rights Agreement dated as of the date hereof between the Company and the investor(s)
party thereto, as it may be amended, restated, supplemented or otherwise modified from time to time.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Securities
Laws” means the Securities Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

 

“Stockholder
Securities” means (i) the Warrant Shares, (ii) any shares of Common Stock
and any shares of Common Stock issued or issuable (directly
or indirectly) upon conversion, exchange
and/or exercise of any other
securities of the Company
owned by any Investor (including, without limitation, any shares of Common Stock issued as payment of interest or other amounts
in connection with the debt incurred under the Financing Agreement or other Transaction Documents) and (iii) any other securities
issued or issuable with respect to, or in exchange for or in replacement of, Stockholder Securities, whether issued as a dividend
or other distribution, or by merger, charter amendment or otherwise.

 

    	-4-

    	 

    

  

“Transaction
Documents” means the Financing Agreement, any notes issued thereunder, any guarantees and security documents entered
into in connection therewith, the Warrants, the Registration Rights Agreement, this Agreement, and any other agreement, instrument
or other document executed and/or delivered from time to time in connection therewith, and including all amendments, restatements,
supplements or other modifications thereof.

 

“Warrants”
means the Warrants to Purchase Common Stock issued pursuant to the Financing Agreement, and any warrants delivered with respect
thereto, or in exchange therefor or in replacement thereof.

 

“Warrant Shares”
means the shares of Common Stock issued or issuable upon the exercise of the Warrants.

 

7.            Miscellaneous.

 

(a)          No
modification, amendment or waiver of any provision of this Agreement shall be effective against any of the parties hereto unless
such modification, amendment or waiver is approved in writing by the parties hereto. The failure of any party hereto to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right
of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

 

(b)          All
notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given
upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by
facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s
next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage
prepaid; or (iv) one (1) business day
after the business day of deposit with
a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt.
All such notices and communications shall be sent to the respective parties at their addresses set forth under their names on the
signature pages hereto, or to such
other facsimile number or address as subsequently modified by written notice given in accordance with this Section 7(b).

 

(c)          This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted
assigns. No rights or obligations of the Company under this Agreement may be assigned without the express written consent of the
Investor, or its successors or permitted assigns, as applicable. No rights or obligations of any Investor under this Agreement
may be assigned without the express written consent of the Company, or its successors or permitted assigns, as applicable; provided,
however, that such consent shall not be unreasonably withheld, conditioned or delayed (it being acknowledged that it shall
not be deemed unreasonable to withhold consent in connection with any proposed transfer to a competitor of the Company). Nothing
herein contained shall confer or is intended to confer on any Person that is not a party to this Agreement any rights under this
Agreement.

 

    	-5-

    	 

    

  

(d)          This
Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same agreement.
Delivery of an executed counterpart of this Agreement by facsimile, email or other electronic imaging means (including PDF) shall
be as effective as delivery of a manually executed counterpart of this Agreement.

 

(e)          The
titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting
this Agreement.

 

(f)          Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable
in any respect.

 

(g)          The
parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably
be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(h)          This
Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement
of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such subject matter.

 

(i)          This
Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and
the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court
in any such suit, action or proceeding and to the laying of venue in such court. Each of the parties hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL
HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

    	-6-

    	 

    

 

(j)          The
parties hereto shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for
any such breach and that, in addition to other rights and remedies hereunder, the parties hereto shall be entitled to specific
performance and/or injunctive or other equitable relief (without posting a bond or other security) from any court of law or equity
of competent jurisdiction in order to enforce or prevent any violation of the provisions of this Agreement.

 

[Signature pages follow]

  

    	-7-

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed, or caused their duly authorized officers to execute, this Investor Rights Agreement as of the date first
above written.

 

	COMPANY:	LAKELAND INDUSTRIES, INC.
	 	 	 
	 	By: 	/s/ Christopher J. Ryan
	 	Name: Christopher J. Ryan
	 	Title: President and Chief Executive Officer

  

	 	Address:	701-7 Koehler Avenue
	 	 	Ronkonkoma, NY 11779
	 	Attention:	Gary Pokrossa
	 	Facsimile:	(631) 981-9751

 

    	-8-

    	 

    

 

	INVESTOR:	LKL INVESTMENTS, LLC
	 	 	 
	 	By:	/s/  Steven Graham
	 	Name: Steven Graham
	 	Title: Treasurer

 

	 	Address:	P.O. Box 692
	 	 	Flagtown, NJ 08821
	 	Attention:	Steven Graham
	 	Facsimile:	(917) 591-8130

 

    	-9-

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