FOURTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10
This Fourth Amendment to Credit Agreement (this "Amendment") is entered
into as of September 9,1998, between Bank of America National Trust and Savings
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Association ("Bank") and K-Swiss, Inc. ("Borrower"), with reference to the
following:
Recitals
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A. Bank and Borrower are parties to that certain Credit Agreement dated as
of March 25, 1994, as modified by amendments dated as of June 29, 1995, August
12, 1996, and July 29, 1997 (as amended, the "Credit Agreement").
B. Bank and Borrower now desire to further amend the Credit Agreement on
the terms and conditions set forth below.
Agreement
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NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Amendment
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shall have the meanings ascribed to them in the Credit Agreement.
2. Amendments. The Credit Agreement shall be amended as follows:
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(a) In the definition of "Availability Period" in Paragraph 1.1, the
date "July 1, 1999" is amended to read "July 1, 2001."
(b) Paragraph 2.2(d) is amended in full to read as follows:
"(d) Except as provided in Paragraph 2.2 (e), advances under the
Revolving Facility shall bear interest at a rate per annum equal to the
Reference Rate minus three-quarters percent (0.75%). Borrower shall pay
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interest monthly on the first day of each month until the last day of the
Availability Period, on which date all accrued and unpaid interest shall be
due and payable."
(c) Subparagraph 2.4(c)(1) is amended in full to read as follows:
"(1) expire on or before two hundred twenty-five (225) days
after the date such letter of credit is issued, but not to extend more than
one hundred eighty (180) days beyond the last day of the Availability
Period;"
(d) Paragraph 2.4(d) is amended in full to read as follows:
"(d) Borrower shall pay Bank negotiation fees of the greater of
two-tenths percent (0.20%) of the amount of each drawing or Seventy Five
Dollars ($75), and other fees at the times and in the amounts Bank advises
Borrower from time to time as being generally applicable to commercial
letters of credit issued by Bank, including without limitation, amendment,
discrepancy, and cancellation fees."
(e) In Paragraph 2.5(d) the percentage of "one and one half percent
(1.5%)" is amended to read "one percent (1.0%)".
(f) Paragraph 3.2 of the Agreement is amended in full to read as
follows:
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"3.2 Unused commitment fee. Borrower shall pay Bank a fee on
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any difference between the Credit Limit and the sum of advances actually
outstanding plus the face amount of letters of credit and acceptances
actually outstanding under this Agreement, determined by the weighted
average of the unused portion of credit provided under the Revolving
Facility that is available for advances, acceptances, and letters of credit
under Paragraphs 2.2, 2.3, 2.4, and 2.5 of this Agreement, respectively
during the specified period. The fee will be calculated at the rate of one
eighth percent (0.125%) per annum. This fee is due on July 31, 1998, and
quarterly in arrears thereafter until the expiration of the Availability
Period."
(g) The following is added as a new Paragraph 7.17:
"7.17 Year 2000 Compliance. Borrower has conducted a
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comprehensive review and assessment of Borrower's systems and equipment
applications and made inquiry of Borrower's key suppliers, vendors and
customers with respect to the "year 2000 problem" (that is, the inability
of computers, as well as embedded microchips in non-computing devices, to
properly perform date-sensitive functions with respect to certain dates
prior to and after December 31, 1999). Based on that review and inquiry,
Borrower does not believe the year 2000 problem, including costs of
remediation, will result in a material adverse change in Borrower's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit. Borrower has developed adequate
contingency plans to ensure uninterrupted and unimpaired business operation
in the event of a failure of its own or a third party's systems or
equipment due to the year 2000 problem, including those of vendors,
customers, and suppliers, as well as a general failure of or interruption
in its communications and delivery infrastructure."
(h) Paragraph 8.3 is amended in full to read as follows:
"8.3 Audits. Maintain adequate books, accounts and records and
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prepare all financial statements required hereunder in accordance with
generally accepted accounting principles consistently applied, and in
compliance with the regulations of any governmental regulatory body having
jurisdiction over Borrower or Borrower's business and to allow Bank and its
agents to inspect Borrower's properties (including taking and removing
samples for environmental testing) and examine, audit, and make copies of
books and records at any reasonable time. If any of Borrower's properties,
books or records are in the possession of a third party, Borrower
authorizes that third party to permit Bank or its agents to have access to
perform inspections or audits and to respond to Bank's requests for
information concerning such properties, books and records.
Bank has no duty to inspect Borrower's properties or to examine, audit, or
copy books and records and Bank shall not incur any obligation or liability
by reason of not making any such inspection or inquiry. In the event that
Bank inspects Borrower's properties or examines, audits, or copies books
and records, Bank will be acting solely for the purposes of protecting
Bank's security and preserving Bank's rights under this Agreement. Neither
Borrower nor any other party is entitled to rely on any inspection or other
inquiry by Bank. Bank owes no duty of care to protect Borrower or any other
party against, or to inform Borrower or any other party of, any adverse
condition that may be observed as affecting Borrower's properties or
premises, or Borrower's business. Bank may in its discretion disclose to
Borrower or any other party any findings made as a result of, or in
connection with, any inspection of Borrower's properties."
(i) Paragraph 8.6 is amended in full to read as follows:
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"8.6 Effective Tangible Net Worth. Maintain at all times on a
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consolidated basis effective Tangible Net Worth plus Subordinated Debt of
at least Sixty Six Million Dollars ($66,000,000) plus the sum of seventy
five percent (75%) of net income after income taxes (without subtracting
losses) earned in each fiscal year commencing after December 31, 1997, less
the sum of purchases of treasury stock up to and including Ten Million
Dollars ($10,000,000) in each fiscal year commencing after December 31,
1997, but not to exceed an aggregate amount of Twenty Million Dollars
($20,000,000)."
(j) The following sentence is added at the end of Paragraph 10.4:
"In the event that any case is
commenced by or against Borrower under the Bankruptcy Code (Title 11,
United States Code) or any similar or successor statute, Bank is entitled
to recover costs and reasonable attorneys' fees incurred by Bank related to
the preservation, protection, or enforcement of any rights of Bank in such
a case."
(k) Except as hereby amended, all of the terms and conditions of the
Credit Agreement shall remain in full force and effect.
3. Representations and Warranties. Borrower represents and warrants to
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Bank that: (a) no Event of Default has occurred and is continuing under the
Credit Agreement, (b) the representations and warranties in the Credit Agreement
are true as of the date of this Amendment, (c) this Amendment is within
Borrower's powers, has been duly authorized, and does not conflict with
Borrower's organizational papers, and (d) this Amendment does not conflict with
any law, agreement, or obligation by which Borrower is bound.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
BANK OF AMERICA NATIONAL TRUST K-SWISS, INC.
AND SAVINGS ASSOCIATION
By: /s/Xxxxxxx X. Xxxxxx By: /s/Xxxxxx Xxxxxxx
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Xxxxxxx X. Xxxxxx Xxxxxx Xxxxxxx
Vice President Vice President -Finance
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