STOCK REDEMPTION AGREEMENT
This Stock Redemption Agreement is entered into this 16th day of
September, 1993 between PLUMA, INC. ("Pluma") and XXXXXXX X. XXXXXX ("Xxxxxx").
Contemporaneously herewith Pluma and Xxxxxx have entered into an
Agreement and Release, and this Stock Redemption Agreement is being executed
pursuant thereto.
For and in consideration of the agreements hereinafter set forth,
Xxxxxx agrees to sell to Pluma and Pluma agrees to purchase from Xxxxxx 270,077
shares of the common stock of Pluma (the "Shares") which constitute all of the
Pluma common stock owned by Xxxxxx. Pluma agrees to redeem the Shares from
Xxxxxx upon the following terms and conditions:
1. PURCHASE PRICE. The purchase price to be paid for the Shares shall
be that price determined by Xxxxxxxx Ball & Company in November, 1993 for Pluma
and its shareholders (the "Appraised Value") for Pluma's next annual Stock
Exchange Program which will be conducted at the end of 1993 and the early part
of 1994, provided the Appraised Value must be determined pursuant to the same
methodology utilized by Xxxxxxxx Ball & Company for Pluma's last two annual
Stock Exchange Programs.
2. PAYMENT OF PURCHASE PRICE. Pluma shall pay the purchase price as
follows:
(a) Twenty percent (20%) of the purchase price shall be paid
in cash at the Closing on January 31, 1994.
(b) The balance of the purchase price shall be paid by Pluma
executing a promissory note to Xxxxxx in an amount equal to 80% of the purchase
price (the "Note"). The principal balance of the Note shall be repaid in four
(4) consecutive equal annual installments beginning on January 31, 1995. The
unpaid principal balance of the Note shall bear interest at the annual rate of
five percent (5%). Interest shall be paid in arrears quarterly beginning on May
1, 1994.
The Note may be prepaid at any time without penalty.
The Note shall indicate on its face and shall be
subordinate to all of Pluma's indebtedness to First Union National Bank of North
Carolina, whether said indebtedness is currently in existence or hereinafter
incurred, and the Note shall also be subordinate to any loans made by other
lenders which may refinance any portion of the First Union National Bank of
North Carolina indebtedness referenced above.
Pluma's obligations of payment under the note shall
be secured by Pluma pledging the Shares pursuant to a Security Agreement
attached hereto as Exhibit "A".
Upon Pluma's payment of the cash portion of the
Purchase Price as set forth above, Xxxxxx shall deliver to Pluma a stock power
duly endorsed in blank in form necessary to enable the transfer of the title to
the Shares to Pluma.
3. CONDITION PRECEDENT. Notwithstanding Pluma's obligation to purchase
the Shares and Xxxxxx'x obligation to sell the Shares at the price set forth
above, Pluma and Xxxxxx agree (i) that if the Appraised Value is less than
$15.00 per share, Xxxxxx shall have no obligation to, but may, sell any portion
of his Shares to Pluma, and Pluma will be obligated to purchase those Shares so
tendered for sale by Xxxxxx at the Appraised Value even though less than $15.00
per share, and (ii) if the Appraised Value is more than $20.02 per share, Pluma
shall have no obligation to, but may, purchase any portion of Xxxxxx'x Shares
and Xxxxxx will be obligated to sell those Shares so requested by Pluma to be
purchased at the Appraised Value even though greater than $20.02 per share, and
in either event the Purchase Price shall be as set forth in Section 2 above.
4. DEPOSIT OF SHARE CERTIFICATES. Within five (5) days of the execution
hereof, Xxxxxx agrees to deposit with Xxxxxx Xxxx Xxxxxxxxx Xxxxxxx & Xxxxxxxxx,
P.A. (the "Escrow Agent") the stock certificates representing the Shares. The
Escrow Agent shall hold the Shares in escrow from the date of the deposit of
said Shares until the purchase price for the Shares is paid or Pluma or Xxxxxx
elect not to exercise their right to sell or purchase, as the case may be, as
set forth in Section 3 above. The Shares shall be released to Pluma upon the
payment by Pluma of the cash portion of the purchase price and the execution of
the Note as set forth in Section 2 above, but, shall continue to be held by the
Escrow Agent (as Collateral Agent) pursuant to the terms of the Security
Agreement. The Escrow Agent shall release the Shares to Xxxxxx in the event
Xxxxxx elects not to sell his Shares to Pluma, or Pluma elects not to purchase
the Shares from Xxxxxx pursuant to the terms of Section 3 above.
The following are other terms and conditions related to the
Shares while they are held by the Escrow Agent:
(a) Notwithstanding that the Shares are held in escrow, the
Shares may be transferred by will, or pursuant to the laws of descent and
distribution, or through appropriate legal proceedings, but in all cases the
Shares shall remain in escrow and subject to the terms of this Agreement until
released pursuant to the terms hereof. The Shares in escrow may be transferred
by gift to "immediate" family members as that term is defined in Plum's Stock
Transfer and Redemption Agreement to which Pluma is a party, provided that the
Shares shall remain subject to the terms of this Agreement. The Shares may not
be pledged to secure a debt.
(b) Xxxxxx shall have all voting rights with respect to the
escrowed shares until the shares are delivered by the Escrow Agent to Pluma at
closing.
(c) Any dividends paid on the Shares shall be paid to Xxxxxx
until the Shares are delivered to Pluma according to the terms hereof.
(d) The Escrow Agent may conclusively rely on, and shall be
protected, when it acts in good faith upon, any statement, certificate, notice,
request, consent, order or other document which it believes to be genuine and
signed by the proper party. The Escrow Agent shall have no duty or liability to
verify any such statement, certificate, notice, request, consent, order or other
document
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and its sole responsibility shall be to act only as expressly set forth in this
Agreement. The Escrow Agent shall be under no obligation to institute or defend
any action, suit or proceeding in connection with this Agreement unless it is
indemnified to its satisfaction. The Escrow Agent may consult counsel with
respect to any questions arising under this Agreement and the Escrow Agent shall
not be liable for any action taken, or omitted, in good faith upon advise of
counsel. In performing any of its duties hereunder, the Escrow Agent shall not
incur any liability to anyone for any damages, losses or expenses except for
willful default or negligence, and it shall accordingly not incur any such
liability with respect to: (i) any action taken or omitted in good faith upon
advise of its counsel or counsel for the Issuer given with respect to any
questions relating to the duties and responsibility of the Escrow Agent under
this Agreement, or (ii) any action taken or omitted in reliance upon any
instrument, including written advise provided for herein, not only as to its due
execution and the validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein, which the Escrow
Agent shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
the Agreement.
(e) Pluma and Xxxxxx agree to hold the Escrow Agent harmless
from, and indemnify the Escrow Agent for, any and all costs of investigation or
claims, costs, expenses, attorney fees or other liabilities or disbursements
arising out of any administrative investigation or proceeding or any litigation,
commenced or threatened, relating to this Agreement, including without
limitation, the implementation of this Agreement, the distribution of stock or
funds, the investment of funds, the interpretation of this Agreement or similar
matters, provided that the Escrow Agent shall not be indemnified for any claims,
costs, expenses or other liability arising from its bad faith or negligence or
that of its employees, officers, directors or agents.
5. REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx represents and
warrants to Pluma that:
(a) Xxxxxx has clear and unencumbered title to the Shares to
be sold by him hereunder; and on January 1, 1994, there will be no lien or other
encumbrance on the Shares.
(b) Xxxxxx has the full right, power and authority and legal
capacity and authority to enter into this Agreement and to sell and transfer to
Pluma the Shares to be sold and transferred by Xxxxxx hereunder.
6. MISCELLANEOUS. This Agreement shall be governed by the laws of the
State of North Carolina, may not be assigned and shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
representatives, heirs, legatees and devisees. This Agreement supersedes all
prior understandings between the parties with respect to the subject matter
hereof and may be signed in any number of counterparts which together shall
constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first set forth above.
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PLUMA, INC.
By: /s/ R. Xxxx Xxxxxxx, Xx.
ATTEST: President
/s/ Xxxxxx X. Xxxx
[CORPORATE SEAL]
/s/ G. B. Xxxxxx (SEAL)
XXXXXXX X. XXXXXX
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