THIRD AMENDMENT TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (hereinafter, the "Amendment")
is entered into as of November 16, 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
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 and 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 (as further
amended, modified, supplemented, extended or restated from time to time, the
"Credit Agreement");
WHEREAS, the Borrower and the Agent are parties to that certain
Forbearance Agreement dated as of the date hereof (the "Forbearance Agreement");
WHEREAS, in accordance with and as a condition precedent to the
Forbearance Agreement, 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
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 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 "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% FROM
OCTOBER 31, 1998 AND THEREAFTER AND (B) FOR BASE RATE LOANS,
1.00% FROM OCTOBER 31, 1998 AND THEREAFTER, (II) THE
APPLICABLE RATE OF THE UNUSED FEE FOR ANY DAY FOR PURPOSES OF
SECTION 3.5(B), .375% AND (III) 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 NOVEMBER 16, 1998 THROUGH AND
INCLUDING DECEMBER 31, 1998, $1,000,000 AND (II) AFTER
DECEMBER 31, 1998, $0.
(c) The definition of "New Consultant" contained in Section
1.1 of the Credit Agreement is deleted in its entirety.
(d) The following definitions are hereby added to Section 1.1
of the Credit Agreement:
"BORROWER'S CONSULTANTS" MEANS N&C, PWC AND TSG.
"N&C" SHALL HAVE THE MEANING PROVIDED SUCH TERM IN SECTION
7.19 HEREOF.
"PWC" SHALL HAVE THE MEANING PROVIDED SUCH TERM IN SECTION
7.19 HEREOF.
"TSG" SHALL HAVE THE MEANING PROVIDED SUCH TERM IN SECTION
7.19 HEREOF.
(e) Section 7.1(f) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
(F) ANNUAL BUSINESS PLAN AND BUDGETS. AT LEAST 30
DAYS PRIOR TO THE END OF EACH FISCAL YEAR OF THE BORROWER, AN
ANNUAL BUSINESS PLAN AND BUDGET OF THE CONSOLIDATED PARTIES
CONTAINING, AMONG OTHER THINGS, PRO FORMA FINANCIAL STATEMENTS
FOR THE NEXT FISCAL YEAR; PROVIDED, HOWEVER, THAT THE ANNUAL
BUSINESS PLAN AND BUDGET OF THE CONSOLIDATED PARTIES FOR
FISCAL YEAR 1999: (I) SHALL NOT BE DUE UNTIL DECEMBER 21, 1998
AND (II) SHALL BE PREPARED WITH THE MATERIAL ASSISTANCE OF
PWC.
2
(f) Section 7.1(p) of the Credit Agreement is hereby amended
and restated in its entirety and shall read as follows:
(P) CASH FLOW FORECASTS. COMMENCING ON MONDAY,
NOVEMBER 16, 1998, AND CONTINUING ON A ROLLING BASIS ON
THURSDAY OF EACH WEEK THEREAFTER, DETAILED CASH FLOW
PROJECTIONS FOR THE THEN UPCOMING THIRTEEN WEEKS, EACH IN FORM
ACCEPTABLE TO THE AGENT. THROUGH AT LEAST THE THIRTEEN WEEK
CASH FLOW PROJECTION DUE THURSDAY, DECEMBER 31, 1998, SUCH
PROJECTIONS SHALL BE PREPARED BY OR WITH THE MATERIAL
ASSISTANCE OF PWC.
(g) A new Section 7.1(q) is hereby added to the Credit
Agreement and shall read as follows:
(Q) CASH FLOW RECONCILIATIONS. COMMENCING ON
THURSDAY, NOVEMBER 19, 1998, AND CONTINUING ON THURSDAY OF
EACH WEEK THEREAFTER, A TRUE AND ACCURATE RECONCILIATION
REPORT, REFLECTING A DETAILED COMPARISON BETWEEN THE
CONSOLIDATED PARTIES' ACTUAL CASH FLOW COMPUTATIONS THROUGH
THE END OF THE PREVIOUS WEEK AND THAT PROJECTED FOR SUCH WEEK
IN THE MOST RECENT CASH FLOW PROJECTION INCLUDING SUCH PERIOD
PROVIDED TO THE AGENT IN ACCORDANCE WITH SECTION 7.1(P)
HEREOF. THROUGH AT LEAST THE RECONCILIATION REPORT DUE
THURSDAY, DECEMBER 31, 1998, SUCH RECONCILIATION REPORTS SHALL
BE PREPARED BY OR WITH THE MATERIAL ASSISTANCE OF PWC.
(h) Section 7.19 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
7.19 CONSULTANTS. THE BORROWER PREVIOUSLY HAS
RETAINED XXXXXXX AND COMPANY ("N&C") AND PRICEWATERHOUSE
COOPERS, L.L.P.("PWC") AS BUSINESS AND FINANCIAL CONSULTANTS
FOR THE BORROWER, AND BORROWER PREVIOUSLY HAS RETAINED THE
XXXXXXXX GROUP ("TSG") AS A MANAGEMENT INFORMATION CONSULTANT.
THE BORROWER SHALL MAKE AVAILABLE TO THE LENDERS FROM TIME TO
TIME APPROPRIATE REPRESENTATIVES OF THE BORROWER'S CONSULTANTS
TO REVIEW AND DISCUSS WITH THE LENDERS THE RECOMMENDATIONS
AND/OR REPORTS THAT HAVE BEEN MADE BY ANY OF THE BORROWER'S
CONSULTANTS TO AND/OR ON BEHALF OF THE BORROWER (INCLUDING
MAKING AVAILABLE TO THE LENDERS COPIES OF ALL WRITTEN
MATERIALS PROVIDED BY ANY OF THE BORROWER'S CONSULTANTS TO THE
BORROWER). THE LENDERS MAY ELECT TO ENGAGE, AT THE EXPENSE OF
THE BORROWER, A THIRD PARTY EXPERT TO REVIEW ON BEHALF OF THE
LENDERS THE INFORMATION PREPARED BY ANY OF THE BORROWER'S
CONSULTANTS. THE BORROWER SHALL CAUSE THE BORROWER'S
CONSULTANTS, AS THE AGENT MAY REQUEST, (I) TO MEET
PERIODICALLY WITH THE AGENT TO REPORT UPON THE BORROWER'S
CONSULTANTS' FINDINGS, REPORTS AND RECOMMENDATIONS AND (II) TO
MEET WITH THE LENDERS TO REPORT ON THE BORROWER'S CONSULTANTS'
FINDINGS, REPORTS AND RECOMMENDATIONS. THE BORROWER SHALL PAY
ALL COSTS ASSOCIATED WITH ITS RETENTION OF THE BORROWER'S
CONSULTANTS. THE BORROWER SHALL NOT TERMINATE ANY OF THE
BORROWER'S CONSULTANTS' SERVICES, OR DENY ANY OF THE
BORROWER'S CONSULTANTS ACCESS TO
3
INFORMATION NECESSARY TO PERFORM ITS SERVICES WITHIN THE SCOPE
OF ITS ENGAGEMENT, PRIOR TO THE EXPIRATION OF SUCH ENGAGEMENT.
ALL REPORTS AND INFORMATION PROVIDED BY THE BORROWERS'
CONSULTANTS TO THE AGENT OR THE LENDERS SHALL BE SUBJECT TO
THE CONFIDENTIALITY PROVISIONS OF SECTION 11.15 HEREOF.
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 (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) 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.
4
(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: __________
5
