NORTH CAROLINA
SECURITY AGREEMENT
GUILFORD COUNTY
THIS AGREEMENT, made this the ______ day of _______________, 1994, by
and between PLUMA, INC., a North Carolina corporation (hereinafter referred to
as the "Company"), and XXXXXXX X. XXXXXX (hereinafter referred to as "SECURED
PARTY"). XXXXXX XXXX XXXXXXXXX XXXXXXX & XXXXXXXXX, P.A. has agreed to act as
the agent of Secured Party for the purposes set forth in this Agreement and
shall be hereinafter referred to as "Collateral Agent."
WITNESSETH, that:
WHEREAS, pursuant to the Stock Redemption Agreement entered into by and
among the Company and Secured Party as of September 16, 1993, (the "Stock
Redemption Agreement"), a copy of which is attached hereto as Exhibit 1 and
incorporated herein by reference, the Company and Secured Party have agreed to
the terms and conditions upon which a certain number of shares of Pluma, Inc.
stock currently owned by Secured Party (the "Stock") may be redeemed by the
Company; and
WHEREAS, the Company has agreed to secure the performance of all of the
obligations owing by the Company to Secured Party arising under the Stock
Redemption Agreement, the note to be delivered to Secured Party at the Closing
contemplated in the Stock Redemption Agreement (the "Note") or any other
agreement or document executed in connection therewith by Secured Party and the
Company (hereinafter referred to collectively as the "Obligations") by granting
the Secured Party a security interest in the Stock.
NOW, THEREFORE, IT IS AGREED:
1. Pledge of Stock. As security for the satisfaction of the Obligations
including, but not limited to, the repayment of the Note according to its terms,
and the full, complete and absolute performance by Company of each of the terms
and conditions of the Stock Redemption Agreement, Company hereby grants a
security interest in and pledges the Stock (such stock together with any
additional stock or other properties that may hereafter be brought within the
operation of this Agreement shall be hereinafter referred to collectively as the
"Stock") to the Secured Party by depositing said Stock with the Collateral
Agent. Secured Party hereby appoints Collateral Agent as the agent of Secured
Party for purposes of taking possession of the Stock. The Collateral Agent shall
hold the Stock as security for the satisfaction of the Obligations including,
but not limited to, the repayment of the Note according to its terms, and the
full, complete and absolute performance by Company of each of the terms and
conditions of the Stock Redemption Agreement. Collateral Agent shall not
encumber or dispose of such shares except in accordance with the provisions of
this Agreement.
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2. Voting Rights, Etc.
(a) As long as the Stock is held as Collateral for the
Obligations pursuant to paragraph 1 above, and so long as Company is not in
default in the performance of any of the terms of the Note, the Stock Redemption
Agreement or this Agreement, the Company shall have the right to vote the Stock
on all corporate matters.
(b) In the event, any dividend, reclassification, adjustment
or other change is declared or made in the capital structure of the Company
while the Stock is held by the Collateral Agent, all new, substituted and
additional shares, or other securities or other property issued by the Company
in respect of the Stock shall be held by the Collateral Agent under the terms of
this Agreement and in the same manner as the shares originally pledged
hereunder.
(c ) From and after the occurrence of a default by Company in
the performance of any of the terms of the Note, the Stock Redemption Agreement
or this Agreement, the Secured Party shall have the right to vote the Stock and
to receive all cash dividends and other cash distributions or payments on the
stock held by Collateral Agent or thereafter paid by the Company.
3. Representations. Secured Party represents and warrants that there
are no restrictions upon or agreements relating to the transfer or pledge of, or
grant of security interest in the Stock other than the Stock Transfer And
Redemption Agreement between Company and its shareholders. Company represents
and warrants that upon the redemption of the Stock at Closing, except as set
forth above, there shall be no restrictions upon or agreements relating to the
transfer or pledge of, or grant of a security interest in, the Stock and that
the Company has the right to pledge, assign and transfer the Stock as provided
herein.
4. Terms. Upon satisfaction of the Obligations including, but not
limited to, the repayment of the Note according to its terms, and the full,
complete and absolute performance by Company of each of the terms and conditions
of the Stock Redemption Agreement, Secured Party shall provide immediate written
notice of such satisfaction to Collateral Agent. Upon receiving such notice from
Secured Party, Collateral Agent shall deliver the Stock to the Company and this
Agreement shall terminate.
5. Default. The occurrence of any default under the Stock Redemption
Agreement or the Note shall constitute a default under this Agreement. In the
event Company is in default hereunder, all unpaid installments under the Note
and Stock Redemption Agreement shall, at Secured Party's option, become
immediately due and payable. Waiver of any default by Secured Party shall not be
deemed a waiver of any other default and all Secured Party's rights are
cumulative and not alternative. Upon the occurrence of a default by Company
which is not waived by Secured Party, the Secured Party shall deliver written
notice of such default to Collateral Agent and to Company. Collateral Agent
shall, at Secured Party's request and at Secured Party's option, either (a)
deliver to the Secured Party the Stock, in satisfaction of the Note, or (b)
offer the Stock for sale at public or private sale. In the event Security Party
elects to have the Stock offered for sale, the
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Secured Party may be a purchaser. The Collateral Agent shall give Company and
the Secured Party notice of the time and place of any public or private sale of
the stock not less than forty-five (45) nor more than sixty (60) days prior
thereto, which Company and Secured Party acknowledge to be reasonable notice. In
the case of a private sale, such notice shall specify the price per share at
which the proposed sale is to be made and such price shall be deemed to be fair
and adequate price for such shares unless either the Company or the Secured
Party, not less than fifteen (15) days prior to such sale, shall notify the
Collateral Agent in writing of such party's objection to the proposed sale, in
which case the Collateral Agent shall proceed thereafter to sell the Stock by
means of a public sale. All of the Stock shall be sold by the Collateral Agent
regardless of whether such sale is private or a public sale and regardless of
whether the amount owed by the Company. The proceeds of the sale of any or all
of the Stock shall be applied first to pay the expenses of conducting the sale,
including the Collateral Agent's reasonable attorney's fees incurred in
connection therewith; and then the balance of the proceeds shall be applied to
the principal, interest and actual attorney's fees due and payable under the
Stock Redemption Agreement and under the provisions of the Note relating to the
acceleration of the Note. After the foregoing obligations have been satisfied in
full, any excess proceeds from the sale of the Stock shall be delivered to the
Company and Collateral Agent's obligations and duties hereunder shall terminate;
however, if the proceeds of the sale of the stock are insufficient to satisfy
the liability of the Company hereunder, the Company shall remain liable for any
such deficiency. In addition to the rights specifically granted Secured Party
hereunder with respect to a default by the Company, Secured Party shall, after
default, have all rights and remedies granted by the Uniform Commercial Code in
force in the State of North Carolina as of the date of this Agreement.
6. Delivery of Stock Certificates. Collateral Agent hereby acknowledges
its prior receipt of the Stock.
7. Limitation of Liability. In determining the liability of the
Collateral Agent, the parties agree as follows:
(a) In performing any of his duties under this Security
Agreement, or upon the claimed failure to perform its duties hereunder,
Collateral Agent shall not be liable to anyone for damages, losses or expenses
which such person may incur as a result of the Collateral Agent's so acting, or
failing to act; provided, however, Collateral Agent shall be liable for damages
arising out of its willful default or gross negligence under this Agreement.
Without limiting the foregoing, the parties hereto agree that Collateral Agent
shall not incur any liability for taking any action provided for herein upon the
instructions of Secured Party including but not limited to, the delivery of the
Stock to Secured Party or the offering of the Stock for sale as provided in
Paragraph 6 hereof upon receiving notice from Secured Party that Company is in
default hereunder and the Collateral Agent shall be entitled, without further
inquiry or investigation, to rely upon any notice given to him by the Secured
Party.
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(b) The Collateral Agent shall not be responsible for the validity of
this Agreement or the execution hereof or for the truth of any of the recitals
or statements of fact herein contained.
(c) The Collateral Agent shall not be under any obligation to take any
legal action in connection with this pledge, or to appear in, prosecute or
defend any action or legal proceeding or to file any income or other tax return.
(d) N amendment or modification of this Agreement or waiver of its
terms shall affect the rights and duties of the Collateral Agent unless its
written consent thereto shall have been obtained.
8. Successor Collateral Agent. Should the Collateral Agent acting
hereunder die or resign at any time during the continuance of this Agreement, a
successor Collateral Agent shall be appointed by Secured Party, his personal
representative or assigns. Any such successor Collateral Agent shall deliver to
the parties hereto and to the resigning Collateral Agent a written instrument
accepting such appointment hereunder and thereupon shall succeed to all the
rights and duties of the Collateral Agent hereunder, and shall be entitled to
receive the Stock and any other property then held by the resigning Collateral
Agent hereunder.
9. Effect. This Agreement shall inure to the benefit of and be binding
upon Company, Secured Party and Collateral Agent, and their respective heirs,
executors, administrators, successors and assigns. In the event of the death of
Secured Party, the holder of the Note shall be treated as, and inure to all of
the rights and benefits of, the Secured Party.
10. Counterparts. This Agreement may be executed in three or more
identical counterparts, each of which when executed and delivered shall be an
original, but all such counterparts constitute one and the same instrument.
11. Further Assurances and Power of Attorney. Company agrees to execute
such other and further documents, including, without limitation, security
agreements, pledge agreements, agreements, financing statements, continuation
statements, and the like as may from time to time be reasonably necessary, to
perfect, confirm, establish, reestablish, continue, or complete the security
interests and liens in the Stock and the purposes and intentions of this
Agreement, it being the intention of the Company to provide hereby a full and
absolute warranty of further assurance to Secured Party. If Company fails to
execute any such documents within ten (10) days of being requested to do so by
the Secured Party, the Company hereby appoints the Secured Party as the
Company's attorney-in-fact for purposes of executing such documents in the
Company's name, place and stead, which power of attorney shall be considered as
coupled with an interest and irrevocable.
12. Situs. This Agreement shall be construed and governed in accordance
with the laws of the State of North Carolina.
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13. Waiver, Modification or Cancellation. Any waiver, alteration or
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the parties.
14. Notices. Notices under this Agreement shall be in writing and shall
be delivered personally or mailed, postage prepaid, certified mail, return
receipt requested, to the party to whom such notice is being given at the
address of such party as set forth below or to such other address as may be
furnished by a notice given in compliance with this Section:
Secured Party: G. B. Xxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Company: PLUMA, Inc.
000 Xxxx Xxxxxxxxxx Xxxx
Xxxx, XX 00000
Collateral Agent: Xxxxxx Xxxx Xxxxxxxxx Xxxxxxx &
Xxxxxxxxx, P.A.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written and the Collateral Agent has executed this
Agreement indicating his consent to be bound under the terms of this Agreement.
COMPANY:
PLUMA, INC.
By: /s/ R. Xxxx Xxxxxxx
Name:
Title: President
SECURED PARTY:
/s/ G. B. Xxxxxx (SEAL)
G. B. XXXXXX
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I, ____________________________, accept and agree to serve as the Collateral
Agent, subject to the terms of this Security Agreement.
COLLATERAL AGENT:
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