EXHIBIT 10.10(h)
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Sixth Amendment to that certain Amended and Restated Loan and
Security Agreement ("Amendment") is made and entered into as of June 12, 2002,
by and between Skechers U.S.A., Inc. ("Borrower") and The CIT Group/Commercial
Services, Inc. ("CIT"), successor by purchase to the Commercial Services
Division of Heller Financial, Inc., as Agent and as Lender ("Agent"). All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Amended and Restated Loan and Security Agreement.
WHEREAS, Agent and Borrower are parties to a certain Amended and
Restated Loan and Security Agreement, dated September 4, 1998 and all amendments
thereto (the "Agreement"); and
WHEREAS, Borrower and Agent desire to amend the Agreement as
hereinafter set forth;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENT
1.1 Delete the first paragraph of subsection 2.1(B) of the Agreement in its
entirety and substitute the following:
(B) Revolving Loan: Each Lender, severally, agrees to lend to Borrower
from time to time its Pro Rata Share of each Revolving Advance. The
aggregate amount of all Revolving Loan Commitments shall not exceed
at any time $200,000,000 as reduced by subsection 2.4(B). Amounts
borrowed under this subsection 2.1(B) may be repaid and reborrowed
at any time prior to the earlier of (i) the termination of the
Revolving Loan Commitment pursuant to subsection 8.3 or (ii) the
Termination Date; provided, however that Borrower shall reduce the
Revolving Loan to an amount not greater than the Cleanup Amount for
at least one Business Day each consecutive twenty-one (21) day
period. Except as otherwise provided herein, no Lender shall have
any obligation to make a Revolving Advance to the extent such
Revolving Advance would cause the Revolving Loan (after giving
effect to any immediate application of the proceeds thereof) to
exceed the Maximum Revolving Loan Amount.
1.2 Delete subsection 2.1(B)(2) of the Agreement in its entirety and
substitute the following:
(2) "Borrowing Base" means, as of any date of determination, an
amount equal to the sum of (a) 85% of Eligible Accounts plus
(b) the lesser of (i) $100,000,000 and (ii) 60% of Eligible
Inventory (excluding Eligible Retail Inventory) plus (c) the
lesser of (i) $2,000,000 and (ii) fifty percent (50%) of the
Eligible Retail Inventory plus (d) the Overadvance Amount; and
less (e) in each case such reserves as Agent in its reasonable
discretion may elect to establish.
1.3 Add the following at the end of the definition of "Eligible Accounts"
set forth in Section 2.1(C) of the Agreement:
Borrower, Agent and the Lenders hereby agree that with respect to
determining eligibility of Accounts arising from Borrower's rights
to payment under that certain Credit Approved Receivables
Purchasing Agreement dated as of May 31, 2000 between CIT and
Borrower, as amended (the "CARPA"), the foregoing criteria shall be
applied to the underlying Account purchased by CIT from Borrower
pursuant to the CARPA arising from the sale of goods or the
rendering of services by Borrower.
1.4 Delete Section 9.5(B) of the Agreement in its entirety and substitute
the following:
(B) Each Lender may sell participations in all or any
part of any Loans made by it to another Person; provided that, any
such participation shall be in a minimum amount of $5,000,000; and
provided further, that, all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such
participation. Borrower hereby acknowledges and agrees that the
participant under each participation shall for purposes of
subsections 2.8, 2.9, 2.10, 9.6 and 10.2 be considered to be a
"Lender". No such participant shall sell, pledge, assign,
sub-participate or otherwise transfer its rights or duties under
its participation agreement, without the prior written consent of
Agent and Borrower; except to a parent, subsidiary or affiliate of
such participant upon prior written notice to Agent and no such
sale, pledge, assignment, sub-participation or other transfer shall
release such participant from its obligations and liabilities under
the Participation Agreement. Notwithstanding the foregoing, in the
event of a sale of substantially all of the loan portfolio of any
such participant to another financial institution, such participant
may with thirty (30) days notice to Agent sell or assign or
otherwise transfer its rights or duties under its participation
agreement to such financial institution.
1.5 Delete the definition of "Accounts" set forth in Section 11.1 of the
Agreement in its entirety and substitute the following:
"Accounts" means all "accounts" (as defined in the UCC),
accounts receivable, contract rights and general intangibles
relating thereto, notes, drafts and other forms of obligations owed
to or owned by Borrower arising or resulting from the sale of goods
or the rendering of services, whether or not earned by performance,
including, without limitation, any rights to payment under that
certain Credit Approved Receivables Purchasing Agreement dated as
of May 31, 2000 between CIT and Borrower, as amended.
1.6 Delete the definition of "Letter of Credit Reserve" set forth in
Section 11.1 of the Agreement in its entirety and substitute the
following:
"Letter of Credit Reserve" means, at any time, an amount equal
to (a) 50% of the aggregate amount of Letter of Credit Liability to
the extent that such amount is $1,000,000 or less, plus (b) 75% of
the aggregate amount of Letter of Credit Liability to the extent
that such amount exceeds $1,000,000, plus (c) without duplication,
the aggregate amount theretofore paid by Agent or any Lender under
Lender Letters of Credit and not debited to the Loan Account
pursuant to subsection 2.1(G)(2) or otherwise reimbursed by
Borrower.
1.7 Add the following definition of "Tangible Net Worth" to Section 11.1 of
the Agreement in proper alphabetical order:
"Tangible Net Worth" of any Person means as of any date, an
amount equal to: (a) Net Worth of such Person; less (b) Intangible
Assets of such Person; less (c) prepaid expenses of such Person in
excess of $250,000; less (d) all obligations owed to such Person by
any Affiliate of such Person or any of its Subsidiaries; and less
(e) all loans by such Person to its officers, stockholders,
Subsidiaries or employees (determined in each case in conformity
with GAAP); plus (f) the outstanding amount of Subordinated Debt.
1.8 Add the Financial Covenants Rider attached hereto as the "Financial
Covenants Rider" to the Agreement and reinsert all references in the
Agreement to the Financial Covenants Rider or the financial covenants
represented thereby previously deleted by the Fifth Amendment to Loan
and Security Agreement dated as of July 11, 2001 between CIT and
Borrower.
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SECTION 2. RATIFICATION OF AGREEMENT
2.1 To induce CIT to enter into this Amendment, Borrower represents and
warrants that after giving effect to this Amendment, no violation of
the terms of the Agreement exist and all representations and warranties
contained in the Agreement are true, correct and complete in all
material respects on and as of the date hereof.
2.2 Except as expressly set forth in this Amendment, the terms, provisions
and conditions of the Agreement are unchanged, and said Agreement, as
amended, shall remain in full force and effect and is hereby confirmed
and ratified.
SECTION 3. COUNTERPARTS
This Amendment may be executed in any number of counterparts, and all
such counterparts taken together shall be deemed to constitute one and the same
instrument. Signature pages may be detached from counterpart documents and
reassembled to form duplicate executed originals. This Amendment shall become
effective as of the date hereof upon the execution of the counterparts hereof by
Borrower, Guarantor and CIT.
SECTION 4. GOVERNING LAW
THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 5. ACKNOWLEDGMENT AND CONSENT BY GUARANTORS
Each Guarantor hereby acknowledges that it has read this Amendment and
consents to the terms thereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under its respective guaranty shall not be impaired or affected and
the guaranties are, and shall continue to be, in full force and effect and are
hereby confirmed and ratified in all respects.
Witness the execution hereof by the respective duly authorized officers
of the undersigned as of the date first above written.
THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Agent and as Lender
By: /s/ William F. Elliott
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Title: Vice President
SKECHERS U.S.A., INC.
ATTEST:
/s/ Philip Paccione By: /s/ David Weinberg
- ------------------------------- ------------------------------
Secretary Title: Chief Financial Officer
(SIGNATURES CONTINUED ON PAGE 3)
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GUARANTOR:
SKECHERS USA, INC. II,
a Delaware corporation
By: /s/ David Weinberg
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Title: Chief Financial Officer
SKECHERS BY MAIL, INC.,
a Delaware corporation
By: /s/ Philip Paccione
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Title: Corporate Secretary
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FINANCIAL COVENANTS RIDER
This Financial Covenants Rider is attached and made a part of that certain
Amended and Restated Loan and Security Agreement, dated as of September 4, 1998
and entered into among Borrower, Agent and Lenders.
Tangible Net Worth. Borrower shall maintain Tangible Net Worth of at least
$125,000,000 at all times.
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