Exhibit 10.1

 

AMENDMENT NUMBER TWO

TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND

AMENDMENT NUMBER ONE TO LIBOR/PRIME RATE ADDENDUM

 

This AMENDMENT NUMBER TWO TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND
AMENDMENT NUMBER ONE TO LIBOR/PRIME RATE ADDENDUM (this “Amendment”), dated as
of August 10, 2011, is entered into by and among DECKERS OUTDOOR CORPORATION, a
Delaware corporation (“Deckers”), TSUBO, LLC, a Delaware limited liability
company (“Tsubo” and collectively with Deckers, “Borrower”), and COMERICA BANK
(“Bank”), with reference to the following facts:

 

A.            Borrower and Bank previously entered into (i) that certain Second
Amended and Restated Credit Agreement, dated as of May 27, 2010, as amended from
time to time (as so amended, the “Agreement”), and (ii) that certain LIBOR/Prime
Rate Addendum to Loan and Security Agreement, as of May 27, 2010, as amended
from time to time (as so amended, the “Interest Rate Addendum”, and together
with the Agreement, the “Documents”); and

 

B.            Borrower and Bank desire to amend certain provisions of the
Documents in accordance with the terms of this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby
agree as follows:

 

1.             Defined Terms.  All initially capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Agreement.

 

2.             Amendment to Section 1.1 (Definitions) of the Agreement.

 

(a)           The following defined terms set forth in Section 1.1 of the
Agreement are hereby amended to read as follows:

 

“LC Fee Percentage”  means 0.75%; provided, however, that solely during the
Increased Commitment Period, the LC Percentage Fee shall be 1.25%.

 

“Revolving Credit Commitment” means Twenty Million Dollars ($20,000,000);
provided, however, that solely during the Increased Commitment Period, the
Revolving Credit Commitment shall be Sixty Million Dollars ($60,000,000).

 

(b)           The following defined terms are hereby added to Section 1.1 of the
Agreement in alphabetical order to read as follows:

 

“Compliance Certificate” means a certificate of compliance to be delivered
quarterly in accordance with Section 6.3(b), substantially in the form of
Exhibit 6.3(b).

 

“Consolidated EBITDAR” means, with respect to any period, the result of (a) the
sum of (i) Borrowers’ and the Subsidiaries’ consolidated net income, plus
(ii) to the extent deducted in calculating such consolidated net income, the sum
of Borrowers’ and the Subsidiaries’ (1) consolidated interest charges,
(2) federal, state and local income taxes payable during such period,
(3) depreciation and amortization expense, (4) rental expense, (5) non-cash
stock option expense, and (6) other non-recurring expenses

 

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reducing such consolidated net income which do not represent a cash item in such
period or any future period, minus (b) to the extent included in calculating
such consolidated net income, the sum of Borrowers’ and the Subsidiaries’
(i) federal, state and local income taxes credits given during such period, and
(ii) all non-cash items increasing such consolidated net income, in each case
calculated in accordance with GAAP.

 

“Increased Commitment Period” means the  period commencing on the effective date
of that certain Amendment Number Two to Second Amended and Restated Credit
Agreement and Amendment Number One to Libor/Prime Rate Addendum by and among
Borrowers and Bank, and ending on November 30, 2011.

 

3.             Amendment to Section 1 (Definitions) of the Interest Rate
Addendum. The definition of “Applicable Margin” set forth in Section 1.c of the
Agreement is hereby amended to read as follows:

 

“Applicable Margin” means: (1) in respect of the LIBOR—based Rate, 1.0% per
annum; provided, however, that solely during the Increased Commitment Period,
such margin shall be 1.25%; and (2) in respect of the Prime Referenced Rate 0.0%
per annum; provided, however, that solely during the Increased Commitment
Period, such margin shall be 0.25%.

 

4.             Amendment to Clause (b) of Section 6.3 (Collateral Reporting and
Financial Statements) of the Agreement.  Clause (b) of Section 6.3 of the
Agreement is hereby amended to read as follows:

 

(b)           as soon as available but not later than forty five (45) days after
the end of each quarterly accounting period, (i) a consolidated internally
prepared Financial Statement for Borrowers and the Subsidiaries which shall
include Borrowers’ and the Subsidiaries’ consolidated balance sheet as of the
close of such period, and Borrowers’ and the Subsidiaries’ consolidated
statement of income and retained earnings and consolidated statement of cash
flow for such period and year to date, certified by the Chief Financial Officer
of Borrowers, to the best of his or her knowledge after due and diligent
inquiry, as being complete and correct and fairly presenting in all material
respects Borrowers’ and its Subsidiaries’ financial condition and results of
operations for such period, and (b) solely during the Increased Commitment
Period, a Compliance Certificate from the Chief Financial Officer or the Chief
Operating Officer of Borrowers, stating, among other things, that he or she has
reviewed the provisions of this Agreement and the Loan Documents and that, to
the best of his or her knowledge after due and diligent inquiry there exists no
Event of Default or Unmatured Event of Default, and containing the calculations
and other details necessary to demonstrate compliance with Section 7.15(c) and
(d);

 

5.             Amendment to Clause (d) of Section 7.8 (Investments) of the
Agreement.  Clause (d) of Section 7.8 of the Agreement is hereby amended to read
as follows:

 

(d)           Notwithstanding the terms of Section 7.8(a), Borrowers shall be
permitted to make loans and advances (i) to their employees, provided that such
loans and advances do not exceed Two Hundred Thousand Dollars ($200,000) in the
aggregate outstanding at any time, (ii) to any Subsidiary and (iii) to any
Excluded Subsidiary, provided that such net loans and advances to Subsidiaries
(who are not Loan Parties) and Excluded Subsidiaries (who are not Loan Parties)
do not exceed Seventy-Five Million Dollars ($75,000,000) in the aggregate per
calendar year.

 

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6.             Amendment to Section 7.15 (Financial Condition) of the
Agreement.  Section 7.15 of the Agreement is hereby amended to read as follows:

 

7.15         Financial Condition.  Permit or suffer:

 

(a)           Except during the Increased Commitment Period, at any time
outstanding Obligations exceed Two Million Dollars ($2,000,000), Consolidated
Effective Tangible Net Worth, measured as of the end of each fiscal quarter of
Parent, commencing with the fiscal quarter ended December 31, 2009, to be less
than the sum of (i) $294,891,000 plus (ii) on a cumulative basis, 75% of the
Consolidated Net Profit (but in no event less than zero) for each fiscal year,
commencing with the fiscal year ended December 31, 2010.

 

(b)           Except during the Increased Commitment Period, at any time
outstanding Obligations exceed Two Million Dollars ($2,000,000), any
Consolidated Net Loss for two or more consecutive fiscal quarters.

 

(c)           Solely during the Increased Commitment Period, the ratio of
(i) the sum of (x) 80% of Borrowers’ and the Subsidiaries’ consolidated net
accounts receivable, plus (y) 50% of Borrowers’ and the Subsidiaries’
consolidated Inventory, to (ii) Borrowers’ and the Subsidiaries’ consolidated
total secured funded indebtedness, measured as of the end of each fiscal quarter
of Parent, commencing with the fiscal quarter ended September 30, 2011, to be
less than 1.10:1.00.

 

(d)           Solely during the Increased Commitment Period, the ratio of
(i) Consolidated EBITDAR for the trailing four fiscal quarter period, to
(ii) the sum of Borrowers’ and the Subsidiaries’ (x) consolidated interest
expense and (y) consolidated rental expense during such period, measured as of
the end of each fiscal quarter of Parent, commencing with the fiscal quarter
ended September 30, 2011, to be less than 2.25:1.00.

 

7.             Amendment to add Exhibit 6.3(b) (Compliance Certificate) to the
Agreement.  Exhibit 6.3(b) attached to this Amendment is hereby added as
Exhibit 6.3(b) to the Agreement.

 

8.             Representations and Warranties.  In order to induce Bank to enter
into this Amendment, Borrower hereby represents and warrants to Bank that:

 

(a)           No Event of Default or Unmatured Event of Default is continuing;

 

(b)           All of the representations and warranties set forth in the
Agreement and the Loan Documents are true, complete and accurate in all respects
(except for representations and warranties which are expressly stated to be true
and correct as of the Closing Date); and

 

(c)           This Amendment has been duly executed and delivered by Borrower,
and after giving effect to this Amendment, the Agreement, the Interest Rate
Addendum and the Loan Documents continue to constitute the legal, valid and
binding agreements and obligations of Borrower, enforceable in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
and similar laws and equitable principles affecting the enforcement of
creditors’ rights generally.

 

9.             Conditions Precedent to Effectiveness of Amendment.  The
effectiveness of this Amendment is subject to and contingent upon the
fulfillment of each and every one of the following conditions:

 

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(a)           Bank shall have received this Amendment, duly executed by Borrower
and Bank;

 

(b)           Bank shall have received the Reaffirmation of Guarantors attached
hereto, duly executed by each Guarantor party thereto;

 

(c)           No Event of Default, Unmatured Event of Default or Material
Adverse Effect shall have occurred and be continuing; and

 

(d)           All of the representations and warranties set forth herein, in the
Loan Documents and in the Agreement shall be true, complete and accurate in all
respects as of the date hereof (except for representations and warranties which
are expressly stated to be true and correct as of the Closing Date).

 

10.           Counterparts; Telefacsimile Execution.  This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Amendment.  Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment.  Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

 

11.           Integration.  The Agreement and Interest Rate Addendum as amended
by this Amendment constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and thereof, and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof and thereof.

 

12.           Reaffirmation of the Agreement.  The Agreement and Interest Rate
Addendum as amended hereby and the other Loan Documents remain in full force and
effect.

 

[signatures follow]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment as of the date first hereinabove written.

 

 

 

DECKERS OUTDOOR CORPORATION,

 

a Delaware corporation

 

 

 

 

 

 

By

/s/ Thomas A. George

 

Name:

Thomas A. George

 

Title:

Chief Financial Officer

 

 

 

 

 

TSUBO, LLC,

 

a Delaware limited liability company

 

 

 

By its Managing Member:

 

 

 

DECKERS OUTDOOR CORPORATION,

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Thomas A. George

 

Name:

Thomas A. George

 

Title:

Chief Financial Officer

 

 

 

 

 

COMERICA BANK

 

 

 

 

 

 

By:

/s/ Isabel Barreiro

 

Name:

Isabel Barreiro

 

Title:

Assistant Vice President

 

Amendment Number Two to Second Amended and Restated Credit Agreement and

Amendment Number One to LIBOR/Prime Rate Addendum

 

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Exhibit 6.3(b)
To
Second Amended and Restated Credit Agreement

 

Form of Compliance Certificate

 

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COMPLIANCE CERTIFICATE

 

To:                              COMERICA BANK

15303 Ventura Boulevard

Sherman Oaks, California 91403

Attn: Isabel Barreiro

 

This Compliance Certificate is given pursuant to Section 6.3(b) of that certain
Second Amended and Restated Credit Agreement, dated as of May 27, 2010 (the
“Agreement”), by and among DECKERS OUTDOOR CORPORATION, a Delaware corporation
(“Deckers”), TSUBO, LLC, a Delaware limited liability company (“Tsubo” and
collectively with Deckers, “Borrower”), and COMERICA BANK (“Bank”).  All
initially capitalized terms used but not defined in this Compliance Certificate
shall have the meanings assigned to such terms in the Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

(1)                                  He/She is the duly elected Chief Financial
Officer of Borrower;

 

(2)                                  He/She reviewed the terms of the Agreement
and the Loan Documents and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and condition of Borrower
during the accounting period covered by the attached financial statements;

 

(3)                                  The examinations described in Paragraph
(2) above did not disclose, and he/she has no knowledge of, the existence of any
condition or event which constitutes an Unmatured Event of Default or Event of
Default during, or at the end of, the accounting period covered by the attached
financial statements or as of the date of this Compliance Certificate, except as
set forth below; and

 

(4)                                  Exhibit A attached hereto and incorporated
herein by this reference sets forth the financial data and computations
evidencing Borrower’s compliance with the covenants set forth in
Section 7.15(c) and (d) of the Agreement, all of which data and computations are
true, complete and correct.

 

Described below are the exceptions, if any, to Paragraph (3) above which list,
in detail, the nature of the condition or event, the period during which it has
existed and the action which Borrower has taken, is taking, or proposes to take
with respect to each such condition or event:

 

 

 

 

This Compliance Certificate, together with the computations set forth in
Exhibit A hereto and the financial statements delivered concurrently herewith in
support hereof, are made and delivered this            day of 
                                  , 20    .

 

 

 

 

 

Name:

 

 

Title: Chief Financial Officer

 

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EXHIBIT “A”

 

[To be Attached]

 

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REAFFIRMATION OF GUARANTORS

 

Each of the undersigned, as a “Guarantor” under a Continuing Guaranty
(“Guaranty”), executed in favor of Comerica Bank (“Bank”) with respect to the
obligations of Deckers Outdoor Corporation, a Delaware corporation (“Deckers”),
Tsubo, LLC, a Delaware limited liability company (“Tsubo” and collectively with
Deckers, “Borrower”), owing to Bank, hereby acknowledges receipt of a copy of
the foregoing Amendment Number Two to Second Amended and Restated Credit
Agreement and Amendment Number One to Libor/Prime Rate Addendum, consents to the
terms contained therein and agrees that its Guaranty shall remain in full force
and effect.

 

Although Bank has informed us of the matters set forth above and we have
acknowledged same, we understand and agree that Bank has no duty under the Loan
Agreement, the Guaranties, or any other agreement between us to so notify us or
to seek an acknowledgment, and nothing herein is intended to or shall create
such a duty hereafter.

 

Dated: August 10, 2011

DECKERS RETAIL, LLC,

 

a California limited liability company

 

 

 

 

 

By: Deckers Outdoor Corporation, its sole member

 

 

 

By

/s/ Thomas A. George

 

Name:

Thomas A. George

 

Its:

Chief Financial Officer

 

 

 

 

 

DECKERS CONSUMER DIRECT CORPORATION,

 

an Arizona corporation

 

 

 

 

 

By

/s/ Zohar Ziv

 

Name:

Zohar Ziv

 

Its:

Director

 

Reaffirmation of Guarantors to

Amendment Number Two to Second Amended and Restated Credit Agreement and

Amendment Number One to LIBOR/Prime Rate Addendum

 

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