DEBT SUBORDINATION AGREEMENT
Exhibit 10.21
DEBT
SUBORDINATION AGREEMENT
This Debt
Subordination Agreement is entered into as of May 13, 2008 (“Agreement”),
by Wachovia Bank, National
Association, a national banking association, whose address is 00 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10017 ("Bank"), Lakeland Do Brasil Empreendimentos E
Participacoes Ltda., with an address of Xxxxxxx Xxxxxxxxxx xx
Xxxxxx, xx 00, sala 09, 14º andar, CEP 04004-040, São Paulo, São Paulo, Brazil
("Creditor"), and Lakeland
Industries, Inc., whose address is 000-00 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxx 00000 ("Borrower").
Bank has
agreed to extend or renew credit to the Borrower on the condition that Creditor
enter into this Agreement and to induce the Bank to extend such credit to the
Borrower, the Creditor has agreed to enter into this Agreement and to
subordinate indebtedness owed it by the Borrower as provided
herein.
In
consideration of Bank's extension or renewal of credit to Borrower, Bank,
Creditor and Borrower agree as follows:
Subordinated Debt: All
indebtedness of any kind now existing or hereafter contracted and all renewals,
extensions and modifications thereof owing by Borrower to Creditor are
hereinafter referred to as “Subordinated Debt”.
Bank Debt: All indebtedness of any
kind now existing or hereafter contracted and all renewals, extensions and
modifications thereof owing by Borrower to Bank are herein after referred to as
"Bank Debt".
Agreement to
Subordinate: Creditor and Borrower agree that Bank Debt shall
be superior to and, except as otherwise provided herein, shall be paid before
any part of the Subordinated Debt is paid.
Payment of Subordinated Debt
Prohibited: Borrower shall not, directly or indirectly, make
or permit any payment or transfer of property or release any collateral for
credit in reduction of Subordinated Debt; Creditor shall not demand, accept or
receive any payment in reduction of Subordinated Debt or additional collateral
for Subordinated Debt nor act to collect (including but not limited to, making
demand or commencing litigation, bankruptcy, reorganization or liquidation
proceedings against the Borrower), cancel, set-off, forgive, release, or
otherwise discharge any Subordinated Debt. In the event of Borrower’s
bankruptcy, Bank shall be paid all principal, pre- and post- petition interest
and pre- and post- petition costs and expenses to which Bank is entitled under
the Bank Debt without regard to the application bankruptcy law or other
insolvency law prior to any payment of Subordinated Debt or from any payment or
distribution on account of subordinated debt made to
Creditor. Creditor agrees that any sums or property received in
reduction of the Subordinated Debt shall be received in trust for Bank and
delivered immediately to Bank.
Assignment of Subordinated Debt and
Collateral: To secure payment and performance of Bank Debt by
Borrower, Creditor hereby grants Bank a security interest in and assigns to Bank
all Subordinated Debt and all collateral of any kind and guarantees therefor
including all instruments evidencing Subordinated Debt. Bank may file
financing statements concerning the security interest hereby
created.
Bank appointed
attorney-in-fact: Bank is hereby irrevocably appointed
attorney-in-fact for Creditor with full power to act in stead of Creditor to
sign financing statements reflecting the assignment of Subordinated Debt and
collateral and guarantees therefor and to act in all matters concerning the
Subordinated Debt including the right to make, present, file and vote proofs of
claim against Borrower on account of all or part of the Subordinated Debt and
receive and collect any dividends thereon, foreclose under any mortgage or
security agreements or otherwise take possession of and sell collateral and
collect against any guarantees and apply proceeds of such dividends, sale or
collection to reduction of Subordinated Debt and to compromise or settle any
claim related thereto.
Subordinated Legend: The parties hereto will
cause any note and any other instrument which may evidence Subordinated Debt
from time to time to be endorsed with the following legend:
"The
indebtedness evidenced by this instrument is subordinated to the prior payment
of the Bank Debt (as defined in the Debt Subordination Agreement hereinafter
referred to) pursuant to, and to the extent provided in, the Debt Subordination
Agreement dated as of May 13, 2008, in favor of Wachovia Bank,
National Association."
The
parties hereto each will further xxxx the appropriate books of account to
reflect the effect of this Agreement. Creditor agrees to deliver to
Bank, upon written request, all instruments evidencing Subordinated Debt or
collateral or guarantees therefor endorsed in blank.
Limitation on Modification of
Subordinated Debt: Borrower and Creditor shall not, without
the prior written consent of Bank, modify, extend, supplement or increase
Subordinated Debt.
No Limitation on Modification of Bank
Debt: Bank may, without notice to Creditor, extend, renew,
modify or increase Bank Debt and may substitute, exchange or release collateral
or letters of credit securing payment of Bank Debt and may add or release any
guarantor or surety on Bank Debt.
Further
Assurance: Creditor and Borrower shall execute and deliver to
Bank such further instruments and shall take such further action as Bank may
from time to time reasonably request in order to carry out the provisions and
intent of this Agreement and to confirm that Bank Debt is entitled to the
benefits of this Agreement and shall not act or permit any action prejudicial to
or inconsistent with the priority position of Bank Debt over Subordinated Debt
created by this Agreement.
Rights of
Subrogation: Creditor agrees that no payment or distribution
to Bank pursuant to the provisions of this Agreement shall entitle the Creditor
to exercise any rights of subrogation in respect thereof until Bank Debt is
finally and unavoidably paid in full.
Representations, Warranties and
Covenants: Creditor represents, warrants and covenants that
now and until all Bank Debt is fully paid, the Subordinated Debt is owned solely
by Creditor and shall not be subject to any set off, security interests, liens,
charges, subordinations other than this Agreement, assignments or encumbrances;
is payable solely to Creditor; is not and shall not be subject to any guaranty
or surety; and is not in default. Creditor covenants that Creditor
shall not sell, assign or otherwise transfer Subordinated
Debt. Borrower represents and warrants that the Subordinated Debt is
due and payable according to its terms.
Termination of
Subordination: This Agreement and the subordination granted
herein shall terminate when Bank Debt is finally and unavoidably
paid. Bank Debt shall be deemed not to be paid in full, for purposes
of this Agreement, so long as the Bank has any obligation with respect to the
Bank Debt, to make further advances to Borrower. However, this
Agreement and the subordination granted herein shall continue to be effective or
be reinstated if any payment of Bank Debt is rescinded, avoided, or for any
reason returned by Bank because of any adverse claim or threatened action as
though such payment had not been made.
Remedies: Upon
violation of this Agreement by Creditor or Borrower, Bank may accelerate the
maturity of Bank Debt and Subordinated Debt so that all Bank Debt and
Subordinated Debt is immediately due and payable. Creditor shall pay
to Bank all sums received by Creditor paid in violation of this Agreement and
Bank shall have all remedies of Creditor against collateral for Subordinated
Debt. Bank is entitled to specific performance of this Agreement and
Borrower and Creditor waive any defense based upon adequacy of remedy at law
which may be asserted as a bar to the remedy of specific
performance. No failure on the part of Bank to exercise or delay in
exercising any right or remedy hereunder shall operate as a waiver thereof nor
shall any partial exercise of any rights or remedies hereunder preclude any
other or further exercise of such or additional rights or
remedies. The remedies provided herein are cumulative of any other
remedies provided by law or otherwise held against Borrower.
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Miscellaneous: Waiver of
Notice: Creditor waives notice of the acceptance of this
Agreement by Bank. Severability: If
any provision of this Agreement is found to be invalid or unenforceable, the
remainder of such provision and all other provisions of this Agreement shall be
valid and enforceable as if such unenforceable provision were not
written. Notices: Any
notices, demands or requests shall be sufficiently given Creditor whose address
is listed on the first page hereof or Bank if in writing and mailed or delivered
to Wachovia Bank, National Association, Mail Code VA7628, P. O. Xxx
00000, Xxxxxxx, XX 00000 or Wachovia Bank, National Association, Mail Code VA7628, 00 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 or to another address as provided
herein and in the event either party hereto changes its address at prior to the
date Bank Debt paid in full, that party shall promptly give written notice to
the other party of such change of address by registered or certified mail,
return receipt requested, all charges prepaid. Notices to Bank must
include the mail code. Continuing
Agreement: This Agreement shall be binding upon the parties
and their respective successors and assigns. Assignment: Bank
may assign or transfer its rights with respect to any Bank Debt to any person or
entity, and such transferee shall thereupon become vested with all the rights in
respect thereof granted to Bank herein. Modification: This
Agreement is irrevocable and no waiver or modification of any provision of this
Agreement shall be valid unless in writing and signed by all parties
hereto. LIMITATION
ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO,
INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR
ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT
MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE
OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE
A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY
DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT
OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER
THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR
OTHERWISE. FINAL
AGREEMENT. This Agreement and the
other Loan Documents represent the final agreement between the parties and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements
between the parties.
WAIVER OF JURY
TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF CREDITOR AND
BORROWER BY
EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS AGREEMENT. EACH OF THE PARTIES AGREES
THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO
ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR
ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED
TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS
AGREEMENT.
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IN
WITNESS WHEREOF, Bank, Creditor and Borrower have signed and sealed this
Agreement as of the day and year first above written.
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Lakeland
Do Brasil Empreendimentos E Participacoes Ltda.
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By:
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/s/ Xxxx Xxxxxxx
Xxxxxx
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Xxxx
Xxxxxxx Xxxxxx, Administrator
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Lakeland
Industries, Inc.
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By:
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/s/ Xxxx X.
Xxxxxxxx
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Xxxx
X. Xxxxxxxx, Chief Financial Officer
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Wachovia
Bank, National Association
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By:
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/s/ Xxxxx
Xxxxxxxx
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Xxxxx
Xxxxxxxx, Vice President
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State of
New York
County
of
Corporate
Acknowledgment
On the
____ day of April, in the year 2008, before me, the undersigned, a Notary Public
in and for said State, personally appeared Xxxx X. Xxxxxxxx, Chief Financial
Officer of Lakeland Do Brasil Empreendimentos E Participacoes Ltda., a Brazilian
corporation, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by
his signature on the instrument, the individual, or the person upon behalf of
which the individual acted, executed the instrument.
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,Notary
Public
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Notary
Seal
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(Printed
Name of Notary)
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My
Commission Expires:
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4
State of
New York
County
of
Corporate
Acknowledgment
On the
____ day of April, in the year 2008, before me, the undersigned, a Notary Public
in and for said State, personally appeared Xxxx X. Xxxxxxxx, Chief Financial
Officer of Lakeland Industries, Inc., a Delaware corporation, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
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,Notary
Public
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Notary
Seal
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(Printed
Name of Notary)
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My
Commission Expires:
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State of
New York
County
of
Corporate
Acknowledgment
On the
____ day of April, in the year 2008, before me, the undersigned, a Notary Public
in and for said State, personally appeared ____________________________, Vice
President of Wachovia Bank, National Association, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
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,Notary
Public
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Notary
Seal
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(Printed
Name of Notary)
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My
Commission Expires:
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