SECOND AMENDMENT TO
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CREDIT AGREEMENT
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THIS SECOND AMENDMENT TO CREDIT AGREEMENT (hereinafter, the "Amendment")
is entered into as of September 30, 1998 among PLUMA, INC., a North Carolina
corporation (the "Borrower") and NATIONSBANK, N.A., as Agent for and on behalf
of the Lenders (the "Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings given to them in the Credit
Agreement.
RECITALS
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WHEREAS, the Borrower, the Agent and the Lenders are parties to that
certain Credit Agreement dated as of April 23, 1998, as amended by that certain
First Amendment to Credit Agreement and Waiver between the Borrower and the
Agent for and on behalf of the Lenders dated as of August 27, 1998 (as further
amended, modified, supplemented, extended or restated from time to time, the
"Credit Agreement");
WHEREAS, the parties desire to amend certain terms of the Credit Agreement
as set forth herein.
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:
1. Amended Definitions. The Credit Agreement is hereby amended in the
following respects:
(a) The definition of "Applicable Percentage" set forth in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
"APPLICABLE PERCENTAGE" MEANS, FOR PURPOSES OF CALCULATING (I)
THE APPLICABLE INTEREST RATE FOR ANY REVOLVING LOAN OR ANY TERM
LOAN, (A) FOR EURODOLLAR LOANS, 3.75% THROUGH AND INCLUDING OCTOBER
30, 1998 AND 3.50% AT ALL TIMES AFTER OCTOBER 30, 1998 AND (B) FOR
BASE RATE LOANS, 1.00% THROUGH AND INCLUDING OCTOBER 30, 1998 AND
.75% AT ALL TIMES AFTER OCTOBER 30, 1998, (II) THE APPLICABLE RATE
OF THE UNUSED FEE FOR ANY DAY FOR PURPOSES OF SECTION 3.5(B), .375%
AND (C) THE APPLICABLE RATE FOR THE LETTER OF CREDIT FEE FOR ANY
DAY, 3.50%.
(b) The definition of "Borrowing Base" set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
"BORROWING BASE" MEANS, AS OF ANY DAY, THE SUM OF (A) 85% OF
ELIGIBLE RECEIVABLES, (B) 60% OF ELIGIBLE INVENTORY, IN EACH CASE AS
SET FORTH IN THE MOST RECENT BORROWING BASE CERTIFICATE DELIVERED TO
THE AGENT AND THE LENDERS IN
ACCORDANCE WITH THE TERMS OF SECTION 7.1(C) AND (C) DURING THE
PERIOD (I) FROM AND INCLUDING AUGUST 27, 1998 THROUGH AND INCLUDING
OCTOBER 30, 1998, $4,000,000 AND (II) AFTER OCTOBER 30, 1998, $0.
2. Deposit Account. A new Section 7.20 is hereby added to the Credit
Agreement and shall read as follows:
7.20 DEPOSIT ACCOUNT
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THE CREDIT PARTIES SHALL ESTABLISH WITH THE AGENT AND PLEDGE TO THE
AGENT FOR THE BENEFIT OF THE LENDERS A DEPOSIT ACCOUNT (THE "DEPOSIT
ACCOUNT") AS COLLATERAL SECURITY FOR THE CREDIT PARTY OBLIGATIONS PURSUANT
TO A CASH COLLATERAL SECURITY AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY
TO THE AGENT. EACH OF THE CREDIT PARTIES HEREBY AGREES THAT IT WILL CAUSE
EACH ACCOUNT DEBTOR OBLIGATED TO PAY A RECEIVABLE TO DIRECT PAYMENT OF
SUCH RECEIVABLE TO THE DEPOSIT ACCOUNT. THE CREDIT PARTIES FURTHER AGREE
THAT THE AGENT SHALL APPLY THE FUNDS IN THE DEPOSIT ACCOUNT TO PAYMENT OF
THE LOANS.
3. Conditions Precedent. The effectiveness of this Amendment is subject to
the satisfaction of each of the following conditions:
(a) The Agent shall have received original duly executed
counterparts of this Amendment duly executed by the Credit Parties and the
Agent.
(b) Payment by the Borrower of all other costs and expenses
heretofore incurred by the Agent, including without limitation legal fees
and expenses, in connection with the negotiation, administration,
amendment and enforcement of any of the Credit Documents.
(c) The Agent shall have received such other documents and
information as it deems reasonably necessary.
4. Miscellaneous.
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(a) The term "Credit Agreement" as used in each of the Credit
Documents shall hereafter mean the Credit Agreement as amended by this
Amendment. Except as herein specifically agreed, the Credit Agreement, and
the obligations of the Credit Parties thereunder and under the other
Credit Documents, are hereby ratified and confirmed and shall remain in
full force and effect according to their terms.
(b) The Borrower hereby represents and warrants as follows:
(i) It has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
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(ii) This Amendment has been duly executed and delivered by
the Borrower and constitutes the Borrower's legal, valid and binding
obligations, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or third party is required in connection with the execution,
delivery or performance by the Borrower of this Amendment.
(c) The Borrower represents and warrants to the Lenders that (i)
except for the representation contained in Section 6.2(a) with respect to
matters previously disclosed to the Lenders, the representations and
warranties of the Credit Parties set forth in Section 6 of the Credit
Agreement are true and correct as of the date hereof and (ii) no unwaived
event has occurred and is continuing which constitutes a Default or an
Event of Default.
(d) This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all
of which shall constitute one and the same instrument. Delivery of an
executed counterpart of this Amendment by telecopy shall be effective as
an original and shall constitute a representation that an executed
original shall be delivered.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
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Each of the parties hereto has caused a counterpart of this Amendment to
be duly executed and delivered as of the date first above written.
PLUMA, INC.
By: ___________________________________________
Name: __________________________________________
Title:__________________________________________
NATIONSBANK, N.A.,
as Agent for and on behalf of
the Lenders
By: ____________________________________________
Name: __________________________________________
Title: _________________________________________
