SECOND AMENDMENT TO
CREDIT AGREEMENT
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
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
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.
(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.
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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