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:
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                  (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.
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<PAGE>


                  (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 NORELLI 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
                  STEPHENS 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

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<PAGE>

                  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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<PAGE>


                  (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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