THIRD AMENDMENT TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (hereinafter, the "Amendment")
is entered into as of October 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
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, (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% THROUGH AND INCLUDING
NOVEMBER 30, 1998 AND 3.50% AT ALL TIMES AFTER NOVEMBER 30, 1998
AND (B) FOR BASE RATE LOANS, 1.00% THROUGH AND INCLUDING NOVEMBER
30, 1998 AND .75% AT ALL TIMES AFTER NOVEMBER 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 NOVEMBER 30,
1998, $4,000,000 AND (II) AFTER NOVEMBER 30, 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 FOR FISCAL YEAR 1999: (I) SHALL NOT BE DUE UNTIL DECEMBER
15, 1998 AND (II) SHALL BE PREPARED WITH THE ASSISTANCE OF PWC.
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(f) A new Section 7.1(o) is hereby added to the Credit Agreement
and shall read as follows:
(O) CASH FLOW FORECASTS. COMMENCING ON THURSDAY, NOVEMBER
12, 1998 AS OF MONDAY, NOVEMBER 9, 1998, AND CONTINUING ON A
ROLLING BASIS ON MONDAY 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 MONDAY, DECEMBER 28, 1998, SUCH
PROJECTIONS SHALL BE PREPARED BY OR WITH THE MATERIAL ASSISTANCE
OF PWC.
(g) A new Section 7.1(p) is hereby added to the Credit Agreement
and shall read as follows:
(P) CASH FLOW RECONCILIATIONS. COMMENCING ON MONDAY,
NOVEMBER 16, 1998, AND CONTINUING ON MONDAY 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(O) 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 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.
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THE BORROWER SHALL NOT TERMINATE THE BORROWER'S CONSULTANTS'
SERVICES, OR DENY ANY OF THE BORROWER'S CONSULTANTS ACCESS TO
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.
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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.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
NATIONSBANK, N.A.,
as Agent for and on behalf of
the Lenders
By:_______________________________________
Name:_____________________________________
Title:____________________________________
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