Exhibit 10.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT

             This SECOND AMENDMENT TO CREDIT AGREEMENT (“Amendment”) is dated
March 30, 2001, and is entered into by and among Cherokee International, LLC, a
California limited liability company (“Borrower”), Heller Financial, Inc., in
its capacity as Agent for the Lenders party to the Credit Agreement described
below (“Agent”), and the Lenders which are signatories hereto.

             WHEREAS, Agent, Lenders and Borrower are parties to that certain
Credit Agreement dated April 30, 1999 (as such agreement has from time to time
been amended, supplemented or otherwise modified, the “Agreement”);

             WHEREAS, the Agreement has been amended by that certain Consent,
Waiver and First Amendment to Credit Agreement (“First Amendment”), dated as of
June 15, 2000 made by and among Borrower, Agent and the Lenders signatories
thereto;

             WHEREAS, Borrower has pledged to Heller Financial, Inc. 65% of the
capital stock it owns of Cherokee Netherlands I B.V. pursuant to that certain
Deed of Pledge dated as of July 15, 2000; and

             WHEREAS, Cherokee Netherlands I B.V. has pledged to Heller
Financial, Inc. 65% of the  capital stock it owns of Cherokee Netherlands II
B.V. pursuant to that certain Deed of Pledge dated as of July 15, 2000; and

             WHEREAS, the parties desire to amend the Agreement as hereinafter
set forth.

             NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Agreement and this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

             1.          Definitions.  Capitalized terms used in this Amendment,
unless otherwise defined herein, shall have the meaning ascribed to such terms
in the Agreement.

             2.          Amendment.    Subject to the conditions set forth
below, the Agreement is amended as follows:

             A new subsection 8.2 (K) is hereby inserted into the Agreement to
be and to read as follows:

             “(K)     Agent as Joint Creditor for Purposes of Perfecting
Security Interest in Shares of Dutch Companies Only

             (a) The Loan Parties, Agent and Lenders hereby acknowledge and
agree that, solely for the purpose of perfecting and realizing upon the pledged
shares of Cherokee Netherlands I B.V. and Cherokee Netherlands II B.V.
(collectively the "Dutch Guarantors") and without altering or otherwise
impairing Agent’s rights and obligations under the Loan Documents, Agent shall
be deemed the joint creditor (together with the relevant Lender) with respect to
each and every Obligation, and accordingly Agent will have its own independent
right to demand performance of the Obligations by the relevant Loan Party of
those Obligations, provided that any discharge of any Obligation to one of Agent
or the relevant Lender shall, to the same extent, discharge the corresponding
Obligation owing to the other.  Nothing in this subsection 8.2(K) shall require
Agent in lieu of a Lender to disburse funds to a Loan Party.

             (b) Without limiting or affecting Agent’s rights against any Loan
Party (whether under this paragraph or under any other provision of the Loan
Documents), Agent agrees with each other Lender (on a several and divided basis)
that, subject to the following sentence, with respect to the pledged shares of
Cherokee Netherlands I B.V. and Cherokee Netherlands II B.V. it will not
exercise its right as a joint creditor with a Lender except with the consent of
the relevant Lender.  However, for the avoidance of doubt, nothing in the
previous sentence shall in any way limit Agent’s right to act in the protection
or preservation of rights under or to enforce any Security Documents as
contemplated by the Loan Documents, or to do any act reasonably incidental to
any of the foregoing.  Any amount recovered by Agent as a result of the
operation of this subsection 8.2 (K) shall be held for the benefit of each
Lender, to be applied in accordance with the provisions of this Agreement.

             (c) Without limitation to any other indemnification provided for
the benefit of Agent in this Agreement, the Loan Parties and the Lenders agree
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation, reasonable
attorneys' fees and expenses), advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of its acting as a joint creditor as set
forth in this subsection 8.2(K) shall be subject to the indemnification
provisions of subsection 8.2(E).

             3.          Conditions.  The effectiveness of this Amendment is
subject to the following conditions precedent (unless specifically waived in
writing by Agent):

                           (a)         Borrower and the Requisite Lenders shall
have executed and delivered this Amendment, and such other documents and
instruments as Agent may require shall have been executed and/or delivered to
Agent; and

                           (b)        No Default or Event of Default shall have
occurred and be continuing;

             4.          Representations and Warranties.  To induce Agent and
Lenders to enter into this Amendment, Borrower represents and warrants to Agent
and Lenders:

                           (a)         that the execution, delivery and
performance of this Amendment has been duly authorized by all requisite limited
liability action on the part of Borrower and that this Amendment has been duly
executed and delivered by Borrower; and

                           (b)        that, except as set forth on the schedules
attached hereto, each of the representations and warranties set forth in Section
5 of the Agreement (other than those which, by their terms, specifically are
made as of certain date prior to the date hereof) are true and correct in all
material respects as of the date hereof.

             5.          Severability.  Any provision of this Amendment held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.

             6.          References.  Any reference to the Agreement contained
in any document, instrument or agreement executed in connection with the
Agreement shall be deemed to be a reference to the Agreement as modified by this
Amendment.

             7.          Counterparts.  This Amendment may be executed in one or
more counterparts, each of which shall constitute an original, but all of which
taken together shall be one and the same instrument.

             8.          Ratification.  The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
of the Agreement and shall not be deemed to be a consent to the modification or
waiver of any other term or condition of the Agreement.  Except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement are ratified and confirmed and shall continue in full force and
effect.

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follow]

             IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.

CHEROKEE INTERNATIONAL, LLC     By:    /s/ Ian Schapiro  

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Name:    Ian Schapiro  

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Title:    Vice President  

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        HELLER FINANCIAL, INC., as Agent and Lender     By:    /s/ Jacquelene M.
Hermie  

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Name:    Jacquelene M. Hermie  

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Title: Vice President  

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        FLEET CAPITAL     By:    /s/ Mark D. Newlun  

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Name:    Mark D. Newlun  

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Title:    Senior Vice President  

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        U.S. BANK     By:    /s/ Gerald F. Sorensen  

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Name:    Gerald F. Sorensen  

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Title:    Senior Vice President  

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        KEY CORPORATE CAPITAL INC.     By:    /s/ Jay R. McKenney  

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Name:    Jay R. McKenney  

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Title:    Vice President  

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        FINOVA CAPITAL CORPORATION     By:    /s/ Stephen Bristow  

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Name:    Stephen Bristow  

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Title:    Account Executive  

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CONSENT AND REAFFIRMATION

             The undersigned (“Guarantor”) hereby (i) acknowledges receipt of a
copy of the foregoing Second Amendment to Credit Agreement; (ii) consents to
Borrower’s execution and delivery thereof; (iii) agrees to be bound thereby; and
(iv) affirms that nothing contained therein shall modify in any respect
whatsoever its guaranty of the obligations of Borrower to Agent and Lenders
pursuant to the terms of that certain Guaranty dated April 30, 1999 (the
“Guaranty”) and reaffirms that the Guaranty is and shall continue to remain in
full force and effect.  Although Guarantor has been informed of the matters set
forth herein and has acknowledged and agreed to same, Guarantor understands that
Agent and Lenders have no obligation to inform Guarantor of such matters in the
future or to seek Guarantor’s acknowledgment or agreement to future amendments
or waivers, and nothing herein shall create such a duty.

             IN WITNESS WHEREOF, the undersigned has executed this Consent and
Reaffirmation on and as of the date of such Amendment.

CHEROKEE INTERNATIONAL FINANCE, INC.   By:    /s/ Ian Schapiro  

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Name:    Ian Schapiro  

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Title:    Vice President  

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