THIRD AMENDMENT TO
FORBEARANCE AGREEMENT
THIS THIRD AMENDMENT TO FORBEARANCE AGREEMENT (hereinafter, this "Third
Forbearance Agreement Amendment") is entered as of March 1, 1999 between 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 or designated herein shall have the respective
meanings given to them in the Credit Agreement (defined below).
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 certain
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 between the Borrower and the Agent for and on
behalf of the Lenders dated as of December 31, 1998 and by that certain Sixth
Amendment to Credit Agreement between the Borrower and the Agent for and on
behalf of the Lenders 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 and by a
Second Amendment to Forbearance Agreement dated as of January 29, 1999 (as
further amended, modified, supplemented, extended or restated from time to time,
the "Forbearance Agreement");
WHEREAS, the Borrower has violated Section 3.3(b)(i) of the Credit
Agreement by allowing the sum of the aggregate principal amount of outstanding
Revolving Loans plus LOC obligations outstanding plus the aggregate principal
amount of outstanding Swingline Loans to exceed the Borrowing Base without
immediately making payment on the Loans and/or to a cash collateral account in
respect of the LOC Obligations in an amount sufficient to eliminate such excess
(the "Overadvance Default");
WHEREAS, the Borrower has informed the Lenders that Borrower has
violated Section 8.14 of the Credit Agreement by changing the individual who
serves as its President (the "Management Group Change Default");
WHEREAS, the Borrower has requested that the Lenders agree to (i) waive
the currently existing Management Group Change Default (ii) waive the currently
existing Overadvance Default, (iii) amend the Forbearance Agreement to extend
the Forbearance Termination Date to March 15, 1999, (iv) release the Xxxxxxxx
Indemnity Receivables (defined below) and (v) amend the Credit Agreement to
allow the Borrower the opportunity to comply fully with Sections 3(b)(i) and
8.14 of the Credit Agreement going forward. The Agent, on behalf of the Lenders,
has agreed to do so, but only upon the terms and conditions 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. Waivers of Certain Defaults. The Agent, on behalf of the Lenders,
agrees to waive the currently existing Management Group Change Default and the
currently existing Overadvance Default. These limited waivers shall in no way
modify or affect the Borrower's obligations to comply fully with each and every
term and condition (including but not limited to those contained in Sections
3.3(b)(i) and 8.14) of the Credit Agreement, as amended by the Seventh
Amendment, from and after the date hereof.
2. Forbearance Termination Date. The Forbearance Agreement is hereby
amended so that the Forbearance Termination Date is extended to March 15, 1999.
3. Xxxxxxxx Indemnity Receivables. The Agent, on behalf of the Lenders,
agrees that the Agent shall execute such documents as are necessary to release
its security interest, held on behalf of the Lenders, in the Receivables set
forth on Schedule I to this Forbearance Agreement (the "Xxxxxxxx Indemnity
Receivables") to allow for the assignment, free and clear of any interest of the
Agent or the Lenders, of the Xxxxxxxx Indemnity Receivables to Xxxxx X. Xxxxxxxx
Company, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxx X.
Xxxxxxxx (the "Xxxxxxxx Parties") in accordance with Section 5.5 of that certain
Asset Purchase Agreement among the Borrower and the Xxxxxxxx Parties dated
December 30, 1997 (the "Xxxxxxxx Asset Purchase Agreement"), provided that the
Xxxxxxxx Parties pay a minimum of $250,000 in immediately available funds in
exchange for the assignment of the Xxxxxxxx Indemnity Receivables. The Borrower
shall cause any and all amounts paid by the Xxxxxxxx Parties to the Borrower in
connection with the Xxxxxxxx Parties' obligations to the Borrower under the
Xxxxxxxx Asset Purchase Agreement to be paid directly to the Agent for
application to the outstanding principal balance of the Revolving Loans.
4. Amendment to Credit Agreement. Simultaneously with the execution of
this Third Forbearance Agreement Amendment, the Borrower shall execute and
deliver to the Agent, on behalf of the Lenders, a Seventh Amendment to Credit
Agreement (the "Seventh Amendment") in form of that attached hereto as Exhibit
A.
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5. Third Forbearance Agreement Amendment Fees. In consideration of the
willingness of the Agent, on behalf of the Lenders, to enter this Third
Forbearance Agreement Amendment, the Borrower, simultaneously with the execution
of this Agreement, shall pay to the Agent for the account of each Lender who
consents to this Third Forbearance Agreement Amendment and the Seventh Amendment
and delivers evidence of such consent to the Agent by the date hereof, a fee in
an amount equal to .05% of such Lender's Commitment immediately prior to the
execution of the Seventh Amendment (collectively, the "Third Forbearance
Agreement Amendment Fees").
6. Revised Business Plans. On or before March 5, 1999, the Borrower
shall deliver to the Agent on behalf of the Lenders revised business plans and
budgets of the Borrower for fiscal years 1999 and 2000, which revised business
plans and budgets shall be prepared with the material assistance of PwC.
7. Conditions Precedent. As conditions precedent to the effectiveness of
this Third Forbearance Agreement Amendment, on or before the date hereof:
(a) The Agent shall have received original duly executed
counterparts of this Third Forbearance Agreement Amendment duly executed
by the Credit Parties and the Agent;
(b) The Borrower shall have executed and delivered to the Agent
the Seventh Amendment;
(c) The Agent, on behalf of the Lenders, shall have received the
Third Forbearance Agreement Amendment Fees; and
(d) The Borrower shall have delivered to the Agent an opinion of
counsel to the Borrower in form and substance satisfactory to the Agent
as to the due authorization, execution, delivery and enforceability of
this Third Forbearance Agreement Amendment and the Seventh Amendment.
8. Limited Modification Only. Except as specifically modified hereby,
the terms and conditions of the Forbearance Agreement remain in full force and
effect.
9. Release. 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.
10. Expenses. Upon demand therefor, the Borrower shall pay all
out-of-pocket expenses incurred by the Agent in connection with the negotiation,
drafting and execution of this Third
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Forbearance Agreement Amendment and the exhibits hereto, including without
limitation reasonable fees and expenses of the Agent's counsel.
11. Borrower's Representations. The Borrower hereby represents and
warrants as follows:
(a) The Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Third Forbearance Agreement
Amendment;
(b) This Third Forbearance Agreement 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); and
(c) 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 Third Forbearance Agreement
Amendment.
12. Counterparts. This Third Forbearance Agreement 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 Third Forbearance
Agreement Amendment by telecopy shall be effective as an original and shall
constitute a representation that an executed original shall be delivered.
13. GOVERNING LAW. THIS THIRD FORBEARANCE AGREEMENT 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.
[SIGNATURES CONTINUE ON FOLLOWING PAGE.]
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Each of the parties hereto has caused a counterpart of this Third
Forbearance Agreement 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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