SEVENTH AMENDMENT TO
CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (hereinafter, this
"Amendment") is entered as of March 1, 1999 among PLUMA, INC., a North Carolina
corporation (the "Borrower"), NATIONSBANK, N.A., as Agent for and on behalf of
the Lenders (the "Agent") and the Lenders. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings given to them in the
Credit Agreement.
RECITALS
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, by that
certain Second Amendment to Credit Agreement between the Borrower and the Agent
for and on behalf of the Lenders dated as of September 30, 1998, by that Third
Amendment to Credit Agreement between the Borrower and the Agent for and on
behalf of the Lenders dated as of November 16, 1998, by that certain Fourth
Amendment to Credit Agreement between the Borrower and the Agent for and on
behalf of the Lenders dated as of December 11, 1998, by that certain Fifth
Amendment to Credit Agreement dated as of December 31, 1998 and by that certain
Sixth Amendment to Credit Agreement dated as of January 29, 1999 (as further
amended, modified, supplemented, extended or restated from time to time, the
"Credit Agreement").
WHEREAS, the Borrower and the Agent on behalf of the Lenders are parties
to that certain Forbearance Agreement dated as of November 16, 1998, as amended
by an Amendment to Forbearance Agreement dated as of December 31, 1998, by a
Second Amendment to Forbearance Agreement dated as of January 29, 1999 and by a
Third Amendment to Forbearance Agreement dated as of the date hereof (as further
amended, modified, supplemented, extended or restated from time to time, the
"Forbearance Agreement");
WHEREAS, the Borrower has advised the Lenders that it has written down
the cost value of certain Inventory by $17,253,000 for Borrowing Base purposes
in accordance with a "Summary of Inventory Adjustments," prepared by the
Borrower with the material assistance of PwC, a copy of which was provided by
the Borrower to the Agent on February 25, 1999;
WHEREAS, the aforementioned Inventory cost value write down has caused a
corresponding $10,351,000 reduction to the Eligible Inventory component of the
Borrowing Base; and
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. Reaffirmation of Existing Debt. The Credit Parties acknowledge and
confirm: (a) that the Agent, on behalf of the Lenders, has a valid and
enforceable first priority perfected security interest in the Collateral subject
only to certain Permitted Liens, (b) that the Borrower's obligation to repay the
outstanding principal amount of the Loans and reimburse the Issuing Lender for
any drawing on a Letter of Credit is unconditional and not subject to any
offsets, defenses or counterclaims, (c) that the Agent and the Lenders have
performed fully all of their respective obligations under the Credit Agreement,
the Forbearance Agreement and the other Credit Documents, and (d) by entering
into this Amendment, the Lenders do not waive or release any term or condition
of the Credit Agreement, the Forbearance Agreement or any of the other Credit
Documents or any of their rights or remedies under such Credit Documents or
applicable law or any of the obligations of any Credit Party thereunder.
2. Amendments. The Credit Agreement is hereby amended in the following
respects:
(a) 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(E) AND (C) DURING THE PERIOD (I) FROM AND
INCLUDING MARCH 2, 1999 THROUGH AND INCLUDING MARCH 15, 1999,
$14,400,000 AND (II) AFTER MARCH 15, 1999, $0.
(b) The definition of "Revolving Committed Amount" set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"REVOLVING COMMITTED AMOUNT" MEANS SIXTY THREE MILLION
DOLLARS ($63,000,000) OR SUCH LESSER AMOUNT AS THE REVOLVING
COMMITTED AMOUNT MAY BE REDUCED PURSUANT TO SECTION 3.4.
(c) Section 8.14 is hereby amended in its entirety, so that
such section now reads as follows:
8.14 MANAGEMENT.
THE BORROWER WILL NOT MAKE OR PERMIT TO OCCUR ANY
CHANGE IN THE INDIVIDUALS CONSTITUTING THE MANAGEMENT GROUP AS OF
FEBRUARY 24, 1999; PROVIDED, HOWEVER, THAT IN THE EVENT OF THE
DEATH OR VOLUNTARY RESIGNATION OF A MEMBER OF THE MANAGEMENT
GROUP, THE BORROWER SHALL HAVE A PERIOD OF 30 DAYS TO REPLACE
SUCH DECEASED OR RESIGNED MEMBER OF THE MANAGEMENT GROUP WITH AN
INDIVIDUAL WHO HAS EXTENSIVE EXPERIENCE AND A GOOD REPUTATION IN
THE UNITED STATES TEXTILE INDUSTRY AS
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AN EXECUTIVE IN THE AREA OF THE VACANCY CREATED BY SUCH DEATH OR
VOLUNTARY RESIGNATION BEFORE THE BORROWER SHALL BE DEEMED TO HAVE
VIOLATED THIS SECTION 8.14; AND PROVIDED FURTHER, THAT BORROWER
MAY WITHOUT VIOLATING THIS SECTION 8.14 REPLACE ITS INTERIM CHIEF
EXECUTIVE OFFICER WITH AN INDIVIDUAL WHO HAS EXTENSIVE EXPERIENCE
AND A GOOD REPUTATION IN THE UNITED STATES TEXTILE INDUSTRY AS A
SENIOR EXECUTIVE AND WHO IS RETAINED BY THE BORROWER ON A
FULL-TIME BASIS.
3. Miscellaneous.
(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.
(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 (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting creditors' rights generally and (b) 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) other than
the Acknowledged Events of Default (as defined in the Forbearance
Agreement) 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.
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(e) The Borrower hereby releases the Agent, the Lenders, and the
Agent's and the Lenders' respective officers, employees,
representatives, agents, counsel and directors from any and all actions,
causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any
action or failure to act on or prior to the date hereof.
(f) 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.
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., a North Carolina corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
NATIONSBANK, N.A., as Agent for and on
behalf of the Lenders
By:______________________________________
Name:____________________________________
Title:___________________________________
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