CASH COLLATERAL SECURITY AGREEMENT
THIS CASH COLLATERAL ACCOUNT SECURITY AGREEMENT (this Agreement) is
made as of the ___ day of November, 1998, by PLUMA, INC., a North Carolina
corporation (the "Borrower"), and the Borrower's Subsidiaries (collectively with
the Borrower, the "Pledgors") to NATIONSBANK, N.A., as agent (together with its
successors and assigns, in such capacity, the "Agent") for the Lenders under the
Credit Agreement referenced below.
RECITALS
1. A $115 million credit facility has been extended to the Borrower
pursuant to that certain Credit Agreement dated as of April 23, 1998 (as amended
and modified, the "Credit Agreement") among the Borrower, the Borrower's
Subsidiaries identified therein, the Lenders identified therein and NationsBank,
N.A., as Agent. Terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.
2. The Lenders have required and the Pledgors have agreed to execute
this Agreement with the Agent pursuant to Section 7.20 of the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Creation of Security Interest
Section 1.1 To secure the prompt payment and performance in full when
and as due, whether by lapse of time or otherwise, of the Credit Party
Obligations, the Pledgors hereby assign, mortgage, convey, pledge, hypothecate
and deliver to the Agent, for the benefit of the Lenders, and hereby grant to
the Agent, for the benefit of the Lenders, a security interest in all right,
title and interest of the Pledgors in and to:
(a) that certain deposit account no. 004112747930 maintained
in the name of the Agent, and any and all certificates or instruments
purchased with funds deposited in such account, and all renewals of
such instruments and certificates and replacements therefor, whether in
the form of certificates of deposit or other instruments, notes,
securities or accounts (including without limitation money market
instruments and accounts) and any other cash and non-cash proceeds of
the principal amount of the foregoing, including interest and dividends
thereon (all of the foregoing is collectively referred to as the
"Account"); and
(b) all proceeds of the Account, including without limitation
interest or
dividends on the Account or said certificates, instruments, notes,
securities or accounts (the Account and the proceeds thereof being
hereinafter referred to as the "Collateral").
Section 1.2 The Pledgors shall execute and deliver to the Agent
concurrently with the execution of this Assignment, and at any time or times
hereafter at the request of the Agent, all assignments, conveyances, assignment
statements, financing statements, renewal financing statements, security
agreements, affidavits, notices and all other agreements, instruments and
documents that Agent may reasonably request, and will execute all necessary
endorsements in order to perfect and maintain the security interests and liens
granted herein by the Pledgors to the Agent and in order to fully consummate all
of the transactions contemplated herein and under the Credit Documents. In
furtherance of the foregoing, the Pledgors hereby appoint the Agent as its
attorney-in-fact for the purpose of making any of the foregoing endorsements and
executing any such financing statements, documents and agreements. The foregoing
power of attorney shall be a power coupled with an interest and shall be
irrevocable until payment in full of the Credit Party Obligations.
ARTICLE II
Priority of Security Interests
Section 2.1 The Pledgors warrant and represent that the pledge and
security interest created in Section 1.1 hereof is a first priority security
interest in favor of the Agent, for the benefit of the Lenders, and shall
constitute at all times a valid and perfected security interest in and upon all
of the Collateral and that said security interest in said Collateral shall not
become subordinate or junior to the security interests, liens or claims of any
other person, firm or corporation, including the United States or any
department, agency or instrumentality thereof, or any state, county or local
governmental agency. The Pledgors shall not grant (without the prior written
approval of the Agent) a security interest in or permit a lien or encumbrance
upon the Collateral to anyone except the Agent as long as all or any portion of
the Credit Party Obligations remain unsatisfied. The Pledgors further covenant
and agree that they shall cause all account debtors to direct payment on all
Receivables to the Account.
ARTICLE III
Default
Section 3.1 An Event of Default shall exist under the terms of this
Assignment upon the existence of an Event of Default under the terms of the
Credit Agreement. In addition, an Event of Default shall exist under this
Assignment upon (i) the failure of the Pledgors to comply with the terms and
conditions of this Assignment; or (ii) the existence or incurrence of any lien
or encumbrance on the Collateral or any part thereof.
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Section 3.2 Upon the occurrence of an Event of Default and during the
continuation thereof, the Agent, for and on behalf of the Lenders, shall have,
in respect of the Collateral, (i) all the rights and remedies contained in this
Assignment, the Credit Documents or permitted by law and (ii) all the rights and
remedies of a secured party under the Uniform Commercial Code, all of which
shall be cumulative to the extent permitted by law.
Section 3.3 If at any time or times hereafter the Agent employs counsel
to prepare or consider waivers or consents or to intervene, file a petition,
answer, motion or other pleading in any suit or proceeding related to this
Assignment or the Credit Documents, or relating to any Collateral, or to
protect, take possession of, or liquidate any Collateral, or to attempt to
enforce any security interest or lien in any collateral, or to enforce any
rights of the Agent, then in any of such events, all of the reasonable
attorneys' fees arising from such services, and any expenses, costs and charges
relating thereto, shall become a part of the Credit Party Obligations secured by
the Collateral and payable on demand.
Section 3.4 The Agent's failure at any time or times hereafter to
require strict performance by the Pledgors of any of the provisions, warranties,
terms and conditions contained in this Assignment shall not waive, affect or
diminish any right of the Agent at any time or times hereafter to demand strict
performance therewith and with respect to any other provisions, warranties,
terms and conditions contained in this Assignment.
ARTICLE IV
Access/Release of Collateral
Section 4.1 Access to Cash Collateral Account. For so long as there are
Credit Party Obligations outstanding, the Account will be maintained in the name
of the Agent, and therefore the Pledgors shall not have access to the funds or
other Collateral therein. The Agent shall have the right, at any time, to set
off against the Credit Party Obligations all amounts in the Account.
Section 4.2 Disbursement of Funds. The Agent, on behalf of the Lenders,
and the Pledgors hereby agree that all amounts in the Account shall be applied
by the Agent to payment of the Loans and other Credit Party Obligations.
ARTICLE V
Miscellaneous
Section 5.1 The internal laws and decisions of the State of North
Carolina shall govern and control the construction, enforceability, validity and
interpretation of this Assignment.
Section 5.2 This Assignment shall be binding upon and inure to the
benefit of the Pledgors, the Agent and their respective successors and assigns.
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Section 5.3 This Assignment may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Assignment to produce or account
for more than one such counterpart.
Section 5.4 If any provision of any of the Assignment is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions
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Each of the Pledgors has caused a counterpart of this Assignment to be
duly executed and delivered as of the date first above written.
PLEDGORS PLUMA, INC.,
a North Carolina corporation
By:____________________________
Name:__________________________
Title:___________________________
Accepted and agreed as of the date first above written.
NATIONSBANK, N.A., as Agent for and on
behalf of the Lenders
By:___________________________
Name:_________________________
Title:________________________
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