PLEDGE AGREEMENT
PLEDGE AGREEMENT ("Pledge Agreement") dated as of September __, 2001, is made by
Tag-It de Mexico, S.A. de C.V. ("Mexico") and Tag-It Pacific, Inc. ("Pacific")
(Mexico and Pacific are collectively referred to as "Pledgor"), in favor of
Hilos Timon, S.A. de C.V. ("Timon"), herein represented by Mr. David Williamson,
and Coats American, Inc. ("Coats"), herein represented by Ms. Donna Armstrong,
(Timon and Coats are collectively referred to as "Secured Party").
RECITALS
A. Coats and Pacific are parties to a Supply Agreement dated as of
September _____, 2001 (the "Supply Agreement"), pursuant to which
Pacific and its affiliates (including Mexico) are to purchase thread
products from Coats and its affiliates (including Timon). A copy of
the Supply Agreement is attached hereto as Annex I.
B. The Pledgor is willing to execute this Pledge Agreement, to secure its
obligations under the Supply Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Pledgor hereby represents,
warrants, covenants and agrees as follows:
SECTION 1. DEFINITIONS.
The following terms not otherwise defined in the Preamble or Recitals of this
Pledge Agreement shall have the following meanings:
"Pledged Collateral" shall have the meaning set forth in SECTION 2 ,
below.
"Secured Obligations" shall mean (i) the obligations to be performed by
the Pledgor under this Pledge Agreement, and (ii) the prompt payment to
Secured Party for amounts owed for the purchase of the Inventory, when
due in accordance with Section 7 of the Supply Agreement (including any
applicable cure periods specified in Section 16(b) of the Supply
Agreement) (and interest due thereon).
"Inventory" The term "Inventory" means all goods, merchandise or other
personal property of any description hereafter purchased or otherwise
acquired by Pledgor from Secured Party, and situated in Mexico.
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SECTION 2. PLEDGE.
As security for the full, prompt and complete performance when due of the
Secured Obligations, Pledgor hereby pledges to Secured Party, a security
interest in the Inventory (The Inventory is hereinafter referred to as the
"Pledged Collateral").
SECTION 3. DURATION.
This Pledge Agreement shall become effective as of the date hereof and shall
continue in full force and effect, as long as there is any Secured Obligation
outstanding.
SECTION 4. MISCELLANEOUS.
4.1 ENTIRE AGREEMENT. This Pledge Agreement, together with the Supply
Agreement, constitutes and contains the entire agreement of the parties and
supersedes any and all prior and contemporaneous agreements, negotiations,
correspondence, understandings and communications between the parties, whether
written or oral, respecting the subject matter hereof.
4.2 NO WAIVER; AMENDMENTS. No failure on the part of Secured Party to
exercise, no delay in exercising and no course of dealing with respect to, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. This Pledge Agreement may not be
amended or modified except by written agreement between Pledgor and Secured
Party, and no consent or waiver hereunder shall be valid unless in writing and
signed by the Parties.
4.3 NOTICES. The parties agree that any notice they must deliver
hereunder must be sent in writing, through certified mail receipt acknowledgment
requested, or by courier service or fax, but in the latter case always with
receipt acknowledgment of the party being notified. For the purposes of this
Pledge Agreement, the parties designate as their addresses the following:
Pledgor:
Tag-It de Mexico, S.A. de C.V.
c/o Tag-It Pacific, Inc.
21900 Burbank Blvd.
Woodland Hills, CA 91367
Attn: Ronda Sallmen and Colin Dyne
Fax: 818-444-4106
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Secured Party:
Hilos Timon, S.A. de C.V.
Calz. Mexico Xochimilco No. 4985
Col. Arenal Tepepan
Delegacion Tlalpan
14610-Mexico, D.F.
Attn: David Williamson
Fax: 52-5447-0748
and
Coats American, Inc.
Two LakePointe Place
4135 South Stream Blvd.
Charlotte, NC 28217
Attention: Donna Armstrong
Fax: (704) 329-5970
with a copy to:
Moore & Van Allen, PLLC
100 North Tryon Street, Suite 4700
Charlotte, NC 28202-4003
Attention: A. Mark Adcock
Fax: (704) 331-1159
4.4 GOVERNING LAW AND JURISDICTION. This Pledge Agreement and the
obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of Mexico.
4.5 JURISDICTION. With regard to this Pledge Agreement, the parties
hereby expressly submit, at the election of the plaintiff, to the jurisdiction
of the courts of (i) Mexico City, Federal District, the place where the Pledgor
has its domicile, or (ii) to the jurisdiction of the courts of North Carolina or
any other court which would otherwise have jurisdiction with respect to such
party.
4.6 RECORDATION. Both parties agree to record this agreement (such
recordation to be undertaken by Timon or its agents) in the Section of Commerce
of the Public Registry Bureau in Mexico, D.F., pursuant to article 2859 of the
Civil Code of the Federal District, authorizing Messrs. Rafael Arozarena Correa,
Carlos Serna Rodriguez, Roberto Cuetara Canale and Mariana Gomez Luna to carry
out such Registry.
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IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be duly
executed as of the date first written above
PLEDGOR: TIMON:
TAG-IT DE MEXICO, S.A. de C.V. HILOS TIMON, S.A. de C.V.
By: /S/ COLIN DYNE * By: /S/ DAVID J. WILLIAMSON *
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Printed Name: COLIN DYNE Printed Name: DAVID J. WILLIAMSON
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Title: CEO Title: FINANCE DIRECTOR
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Witness Witness
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Printed Name: Printed Name:
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TAG-IT PACIFIC, INC. COATS AMERICAN, INC.
By: /S/ COLIN DYNE * By: /S/ DONNA ARMSTRONG *
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Printed Name: COLIN DYNE Printed Name: DONNA ARMSTRONG
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Title: CEO Title: VP
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Witness Witness
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Printed Name: Printed Name:
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*Executed Spanish language version of agreement.
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ANNEX I
Copy of the Supply Agreement