SIXTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
("Amendment") is entered into effective as of November 30,
1995, by and between L. A. Gear California, Inc., a
California corporation ("Borrower"), and BankAmerica
Business Credit, Inc., a Delaware corporation ("Lender").
WHEREAS, Lender and Borrower entered into a certain
Loan and Security Agreement, dated as of November 22, 1993,
as amended by: a First Amendment to Loan and Security
Agreement, dated as of May 31, 1994; a Second Amendment to
Loan and Security Agreement dated as of August 31, 1994; a
Third Amendment to Loan and Security Agreement dated as of
January 25, 1995; a Fourth Amendment to Loan and Security
Agreement dated as of February 28, 1995; and a Fifth
Amendment to Loan and Security Agreement, dated as of May
31, 1995 (the Loan and Security Agreement, as amended and
supplemented, the "Agreement"). (Unless specifically
defined herein, all capitalized terms shall be defined in
accordance with the Agreement.), and
WHEREAS, Borrower desires to amend the Agreement and
Lender is willing to amend the Agreement, subject to the
terms and conditions stated herein,
NOW, THEREFORE, in consideration of the mutual
covenants contained herein and intending to be legally
bound, the parties agree as follows.
SECTION ONE - AMENDMENT
1.1 AMENDMENT OF "AVAILABILITY". The definition of
"Availability" in Article 1 of the Agreement is hereby
amended in its entirety to read as follows:
"'AVAILABILITY' means (a) the lesser at any
point in time of (i) $75,000,000, or (ii) the sum
of (A) eighty percent (80%) of the Net Amount of
Eligible Accounts, and (B) the lesser of (1)
$20,000,000, or (2) fifty percent (50%) of the
value of Eligible Inventory, valued at the lower
of market value or cost (established on a "first-
in, first-out" basis); LESS (b) the sum of (i) the
unpaid balance of Loans at that time; (ii) the
aggregate undrawn face amount of all outstanding
Letters of Credit which Lender has, or has caused
to be, issued or obtained for Borrower's account
OTHER than Cash Secured Letters of Credit; (iii)
reserves for accrued interest on the Loans; (iv)
the amount by which outstanding Guaranties of Debt
of Foreign Affiliates exceed $25,000,000, (v) the
amount by which outstanding Intercompany Accounts
exceed $55,158,000, in the aggregate, (vi) the
Foreign Exchange Reserve, (vii) the Direct Deposit
and Overdraft Reserve, (viii) the Minimum Excess
Availability Reserve, and (ix) all other reserves
which Lender in its Discretion deems necessary and
desirable to maintain with respect to Borrower's
account, including, without limitation, any
amounts
5
which Lender may reasonably be expected to be
obligated to pay in the future for the account of
Borrower."
1.2 AMENDMENT OF "FOREIGN EXCHANGE RESERVE. The
definition of "Foreign Exchange Reserve" in Section 1.1 of
the Agreement is hereby amended and restated to read in its
entirety as follows:
"FOREIGN EXCHANGE RESERVE' means, at any date
during which a foreign exchange contract is
outstanding between Borrower and Bank of America,
the sum of $1,500,000, plus such amount as Lender,
in its Discretion, calculates to be its current
exposure with respect to foreign exchange
contracts then outstanding."
1.3 AMENDMENT OF ARTICLE 1. Article 1 of the
Agreement is hereby amended by the addition of a new
definition, entitled "Minimum Excess Availability Reserve,"
which shall read in its entirety as follows:
"'MINIMUM EXCESS AVAILABILITY RESERVE' means:
(a) $15,000,000 when the aggregate outstanding
balance of the Loans is greater than zero; and (b)
$10,000,000 at all other times."
1.4 AMENDMENT OF SECTION 9.11. The phrase "Sections
9.20 and 9.21" wherever appearing in Section 9.11 is hereby
amended to read "Section 9.25."
1.5 AMENDMENT OF SECTION 9.16. The phrase "Section
9.20" wherever appearing in Section 9.16 is hereby amended
to read "Section 9.25".
1.6 AMENDMENT OF SECTION 9.18. Section 9.18 of the
Agreement is hereby amended to read in its entirety as
follows:
"9.18 ADJUSTED TANGIBLE NET WORTH. Borrower
shall not permit Adjusted Tangible Net Worth,
calculated as of the last day of any Fiscal
Quarter, to be less than $97,000,000."
1.7 DELETION OF SECTIONS 9.20, 9.21, AND 9.24.
Sections 9.20, 9.21, and 9.24 of the Agreement are hereby
deleted from the Agreement in their entirety and shall be of
no further force or effect.
1.8 AMENDMENT OF ARTICLE 9. Article 9 of the
Agreement is hereby amended by the addition of a new
section, numbered 9.25, which shall read in its entirety as
follows:
"9.25 INTERCOMPANY TRANSACTIONS. Borrower will
not permit the aggregate amount of outstanding
Intercompany Advances made by the Borrower PLUS the
aggregate amount of outstanding Intercompany
Receivables to exceed at any time the sum of
$55,158,000."
6
SECTION TWO - REPRESENTATIONS AND WARRANTIES
2.1 ACKNOWLEDGMENT OF BORROWER. Borrower hereby
represents and warrants that the execution and delivery of
this Amendment and compliance by Borrower with all of the
provisions of this Amendment (i) are within the powers and
purposes of Borrower; (ii) have been duly authorized or
approved by Borrower; and (iii) constitute the valid and
binding obligation of Borrower, enforceable in accordance
with its terms. Borrower reaffirms its obligation to pay
all amounts due Lender under the Agreement in accordance
with and subject to the terms thereof as modified hereby.
2.2 RATIFICATIONS. The terms and provisions set forth
in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Agreement
and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement,
including, without limitation, all financial covenants
contained therein, are ratified and confirmed and shall
continue in full force and effect. Lender and Borrower
agree that the Agreement as amended hereby shall continue to
be legal, valid, binding and enforceable in accordance with
its terms.
SECTION THREE - MISCELLANEOUS
3.1 AGREEMENT UNMODIFIED. Except as otherwise
specifically modified by this Amendment, all terms and
provisions of the Agreement remain unmodified and in full
force and effect.
3.2 TOTAL AGREEMENT. This Amendment, and all other
agreements referred to herein or delivered in connection
herewith, shall constitute the entire agreement between the
parties relating to the subject matter hereof, shall rescind
all prior agreements and understandings between the parties
hereto relating to the subject matter hereof, and shall not
be changed or terminated orally.
7
3.3 SEVERABILITY. To the extent any provision of this
Amendment is not enforceable under applicable law, such
provision shall be deemed null and void and shall have no
effect on the remaining portions of the Amendment.
IN WITNESS WHEREOF, the parties have executed this
Amendment as of the day and year first above written.
L.A. Gear California, Inc.
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Title: Vice President - Treasurer
BankAmerica Business Credit, Inc.
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
Title: Senior Accountant Executive
8
RATIFICATION OF GUARANTY
Raegal Finance Inc. hereby consents to the foregoing
and confirms that its Guaranty dated as of November 22,
1993, in favor of BankAmerica Business Credit, Inc. relating
to the obligations of L.A. Gear California, Inc. remains
unmodified and in full force and effect.
Raegal Finance, Inc.,
a Texas corporation
By: /s/ Xxxxxxx Xxxxxx
Title: Chief Financial Officer
L.A. Gear, Inc. hereby consents to the foregoing and
confirms that its Guaranty dated as of November 22, 1993, in
favor of BankAmerica Business Credit, Inc. relating to the
obligations of L.A. Gear California, Inc. remains unmodified
and in full force and effect.
L.A. Gear, Inc.
By: /s/ Xxxxxx Xxxxxxxxx
Title: Vice President - Treasurer
9
