Exhibit 10.2

Execution Version

AMENDMENT NO. 1 TO FINANCING AGREEMENT

AMENDMENT NO. 1 TO FINANCING AGREEMENT, dated as of August 11, 2017 (this
"Amendment"), to the Financing Agreement, dated as of December 7, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Financing Agreement"), by and among Cherokee Inc., a Delaware corporation
(the "Parent" and, together with each other Person that is a domestic Subsidiary
of Parent and executes a joinder agreement and becomes a "U.S. Borrower"
thereunder, each a "U.S. Borrower" and, collectively, the "U.S. Borrowers"),
Irene Acquisition Company B.V., a private company with limited liability
incorporated under the laws of the Netherlands, having its statutory seat
(statutaire zetel) in Amsterdam, the Netherlands and registered with the Dutch
trade register under number 67160921 (the "Dutch Borrower" and, together with
the U.S. Borrowers, each a "Borrower" and collectively, the "Borrowers"), each
subsidiary of the Parent listed as a "Guarantor" on the signature pages thereto
(together with each other Person that executes a joinder agreement and becomes a
"Guarantor" thereunder or otherwise guaranties all or any part of the
Obligations (as defined therein), each a "Guarantor" and, collectively, the
"Guarantors"), the lenders from time to time party thereto (each a "Lender" and,
collectively, the "Lenders"), Cerberus Business Finance, LLC, a Delaware limited
liability company ("Cerberus"), as collateral agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity,
the "Collateral Agent"), and Cerberus, as administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such capacity,
the "Administrative Agent" and together with the Collateral Agent, each an
"Agent" and collectively, the "Agents").

WHEREAS,  the Loan Parties have requested that the Required Lenders amend
certain provisions of the Financing Agreement as more fully set forth herein,
and the Required Lenders are willing to amend such provisions of the Financing
Agreement on the terms set forth herein;

NOW THEREFORE,  in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

1.     Definitions.  All terms used herein that are defined in the Financing
Agreement and not otherwise defined herein shall have the meanings assigned to
them in the Financing Agreement. 

2.     Amendments. 

(a)      Section 1.01 of the Financing Agreement is hereby amended by:

i.  adding the following defined terms in alphabetical order:

"Amendment No. 1" means that certain Amendment No. 1 to Financing Agreement,
dated as of August 11, 2017, by and among the Parent, the Dutch Borrower, the
other Loan Parties party thereto, the Agents and the Lenders party thereto.

 

 

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"Amendment No. 1 Effective Date" means the date on which all conditions
precedent set forth in Section 4 of Amendment No. 1 were satisfied in accordance
therewith.

"Equity Purchase Agreements" means one or more common stock purchase agreements,
each dated as of August 11, 2017, by and between the Parent and the investor
party thereto.

ii.  amending and restating clause (b)(ix) of the definition of "Consolidated
EBITDA" to read as follows:

"(ix) any net after-tax extraordinary, nonrecurring or unusual gains or losses
or income or expense or charges (less all fees and expenses related thereto)
related to consolidation costs, restructuring costs, severance and relocation
costs, retention, severance and systems establishment costs (and not related to
the Hi-Tec Acquisition), not to exceed $750,000 in the aggregate for any such
period, provided that with respect to each such charge, (A) such charge must
have been incurred within 12 months from the related action or event and (B) the
Parent shall have delivered to the Administrative Agent a certificate of an
Authorized Officer specifying and quantifying such charge,"

(b)      Section 2.05(c)(iii) is amended by adding at the end of the second
parenthetical therein: ", or any Equity Issuance on the Amendment No. 1
Effective Date which issuance was a condition to effectiveness thereof, or
Equity Issuances issued pursuant to Section 7.01(q) or issued pursuant to the
commitments to purchase additional shares of Common Stock of the Parent made by
one or more investors pursuant to the Equity Purchase Agreement".

(c)      Section 7.01 is amended by adding a new clause (q) thereto as follows:

(q)      If  on any date after the Amendment No. 1 Effective Date but on or
prior to February 28, 2018 the Borrowers shall either (x) have Availability plus
Qualified Cash in an amount less than $3,000,000 or (y) have failed to provide
cash balance reports of the Parent and its Subsidiaries within the time period
set forth in Section 7.01(a)(vi) evidencing (together with the amount of
Availability at such time) Availability plus Qualified Cash in an amount of at
least $3,000,000 (the occurrence of either of the foregoing clauses (x) and (y),
a "Liquidity Condition"), the Parent shall, no later than 10 Business Days after
the delivery of a written request (a "Demand") by the Collateral Agent (provided
that on the date of such delivery either Liquidity Condition has occurred and is
continuing), issue Equity Interests on terms acceptable to the Agents (which
Equity Interests, if such Demand is made on or prior to the February 28, 2018,
may be sold and purchased pursuant to the Equity Purchase Agreements) yielding
net cash proceeds to the Parent therefrom of no less than the amount requested
by the Collateral Agent pursuant to such Demand (provided that (1) such Demand
may include amounts necessary to prepay up to the amounts outstanding under the
Batra A/R Facility Loan pursuant to Section 7.02(m)(ii)(C) and (2)  the
aggregate amount that may be required by such Demands, taken collectively, shall
not exceed the amounts described in clause (1) of this proviso plus $4,000,000).
 If the Collateral Agent delivers a Demand on or prior to February 28, 2018, the
Parent agrees to promptly deliver a written notice to the investors under the
Equity Purchase

 

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Agreements to purchase additional shares of Common Stock of the Parent in
accordance with the applicable terms of the Equity Purchase Agreements.

(d)      Section 7.02(m)(ii) of the Financing Agreement is amended by amending
and restating the proviso to subclause (C) thereof to read as follows:

";  provided that the Batra A/R Facility Loan, notwithstanding that it is
Subordinated Indebtedness, may be repaid on or after February 28, 2018 in an
aggregate principal amount not to exceed $1,514,645.84 (plus accrued and unpaid
interest thereon) (1) with the cash proceeds of the Equity Issuances issued
pursuant to the commitments to purchase additional shares of Common Stock of the
Parent made by one or more investors pursuant to the Equity Purchase Agreements
or (2) otherwise with cash on hand of the Parent, in each case, so long as no
Liquidity Condition has occurred and is continuing or would occur after giving
effect to such repayment,"

(e)      Section 7.03(a) of the Financing Agreement is amended by amending and
restating such Section in its entirety as follows:

Leverage Ratio.  Permit the Leverage Ratio of the Parent and its Subsidiaries,
for any period of 4 consecutive fiscal quarters of the Parent and its
Subsidiaries for which the last quarter ends on or about a date set forth below
to be greater than the ratio set forth opposite such date:

Fiscal Quarter End

Leverage Ratio

 

 

July 31, 2017

16.00 to 1.00

 

 

October 31, 2017

10.50 to 1.00

 

 

February 3, 2018

3.50 to 1.00

 

 

April 30, 2018

2.25 to 1.00

 

 

July 31, 2018 and thereafter

2.00 to 1.00

 

(f)      Section 7.03(b) of the Financing Agreement is amended by amending and
restating such Section in its entirety as follows:

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Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio of the
Parent and its Subsidiaries, for any period of 4 consecutive fiscal quarters of
the Parent and its Subsidiaries for which the last quarter ends on or about a
date set forth below to be less than the ratio set forth opposite such date:

Fiscal Quarter End

Fixed Charge Coverage Ratio

 

 

July 31, 2017

0.25 to 1.00

 

 

October 31, 2017

0.35 to 1.00

 

 

February 3, 2018

1.10 to 1.00

 

 

April 30, 2018 and thereafter

1.75 to 1.00

 

(g)      Section 9.01(c) of the Financing Agreement is amended by adding the
phrase "Section 7.01(q)," immediately following the reference to "Section
7.01(o)".

3.     Waiver. Subject to the satisfaction of the conditions set forth in
Section 4 and pursuant to Section 12.02 of the Financing Agreement, the Agents
and the Lenders hereby waive any Default or Event of Default arising from the
Loan Parties failure to comply with the covenants set forth in Section 7.03(a)
and 7.03(b) of the Financing Agreement for the periods ending on or about April
28, 2017.

4.     Conditions to Effectiveness.  This Amendment shall become effective on
the date upon which the following conditions are satisfied (the first date upon
which each such condition is satisfied, the "Amendment Effective Date"):

(a)      receipt by the Collateral Agent of this Amendment, duly executed by the
Loan Parties, each Agent and each Required Lender;

(b)      receipt by the Collateral Agent of duly executed copies of one or more
common stock purchase agreements (collectively, the "Equity Purchase
Agreements"), each dated as of the date hereof, by and between the Parent and
the investor party thereto (such investor or investors, collectively, the
"Equity Investors") pursuant to which the Equity Investors have provided the
Company with commitments until February 28, 2018 to purchase additional shares
of Common Stock of the Parent in an aggregate amount of not less than (1) the
amount necessary to prepay up to the amounts outstanding under the Batra A/R
Facility Loan pursuant to Section 7.02(m)(ii)(C) of the Financing Agreement (as
amended by this Amendment) plus (2) $4,000,000 in the event of a Liquidity
Condition (as such term is defined in Section 2(b) of this Amendment);

(c)      the Parent shall have received net cash proceeds of no less than
$4,000,000 from the issuance of Common Stock of the Parent pursuant to the terms
of one or more Equity Purchase Agreements; and

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(d)      all fees and expenses required to be paid hereunder and under the
Financing Agreement and the other Loan Documents shall have been paid.

5.     Representations and Warranties.  Each of the Loan Parties represents and
warrants as follows:

(a)      The execution, delivery and performance by such Loan Party of this
Amendment have been duly authorized by all necessary action, and such Loan Party
has all requisite power, authority and legal right to execute, deliver and
perform this Amendment.

(b)      This Amendment is a legal, valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with the terms thereof,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity.

(c)      The following statements are true and correct after giving effect to
this Amendment:  (i) the representations and warranties contained in Article VI
of the Financing Agreement and in each other Loan Document, certificate or other
writing delivered to any Agent or any Lender pursuant hereto or thereto on or
prior to the Amendment Effective Date are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations or warranties that are already qualified or modified as to
"materiality" or "Material Adverse Effect" or words of similar import in the
text thereof, which representations and warranties shall be true and correct in
all respects subject to such qualification) on and as of the Amendment Effective
Date as though made on and as of such date, except to the extent that any such
representation or warranty expressly relates solely to an earlier date (in which
case such representation or warranty shall be true and correct in all material
respects on and as of such earlier date) and (ii) no Default or Event of Default
has occurred and is continuing or would result from this Agreement becoming
effective in accordance with its terms.

6.     Continued Effectiveness of the Financing Agreement and Other Loan
Documents.  Each Loan Party hereby (a) acknowledges and consents to this
Amendment, (b) confirms and agrees that the Financing Agreement and each other
Loan Document to which it is a party is, and shall continue to be, in full force
and effect and is hereby ratified and confirmed in all respects except that on
and after the Amendment Effective Date all references in any such Loan Document
to "the Financing Agreement," the
"Agreement," "thereto," "thereof," "thereunder" or words of like import
referring to the Financing Agreement shall mean the Financing Agreement as
amended by this Amendment, and (c) confirms and agrees that to the extent that
any such Loan Document purports to assign or pledge to the Collateral Agent for
the benefit of the Agents and Lenders, or to grant to the Collateral Agent for
the benefit of the Agents and Lenders a security interest in or Lien on, any
Collateral as security for the Obligations or Guaranteed Obligations, as the
case may be, of any Loan Party from time to time existing in respect of the
Financing Agreement (as amended hereby) and the other Loan Documents, such
pledge, assignment and/or grant of the security interest or Lien is hereby
ratified and confirmed in all respects.  This Amendment does not and shall not
affect any of the obligations of any Loan Party, other than as expressly
provided herein, including, without limitation, the Borrowers' obligation to
repay the Loans in accordance with the terms of Financing Agreement, or the
obligations of any other Loan Party under any Loan Document to

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which it is a party, all of which obligations shall remain in full force and
effect.  Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Agents or any Lender under the Financing Agreement or any
other Loan Document, nor constitute a waiver of any provision of the Financing
Agreement or any other Loan Document.

7.     Release.  Each Loan Party hereby acknowledges and agrees that:  (a)
neither it nor any of its Affiliates has any claim or cause of action against
any Agent or any Lender (or any of their respective Affiliates, officers,
directors, employees, attorneys, consultants or agents) and (b) each Agent and
each Lender has heretofore properly performed and satisfied in a timely manner
all of its obligations to the Loan Parties and their Affiliates under the
Financing Agreement and the other Loan Documents that are required to have been
performed on or prior to the date hereof.  Notwithstanding the foregoing, the
Agents and the Lenders wish (and the Loan Parties agree) to eliminate any
possibility that any past conditions, acts, omissions, events or circumstances
would impair or otherwise adversely affect any of the Agents' and the Lenders'
rights, interests, security and/or remedies under the Financing Agreement and
the other Loan Documents.  Accordingly, for and in consideration of the
agreements contained in this Amendment and other good and valuable
consideration, each Loan Party (for itself and its Affiliates and the
successors, assigns, heirs and representatives of each of the foregoing)
(collectively, the "Releasors") does hereby fully, finally, unconditionally and
irrevocably release and forever discharge each Agent, each Lender and each of
their respective Affiliates, officers, directors, employees, attorneys,
consultants and agents (collectively, the "Released Parties") from any and all
debts, claims, obligations, damages, costs, attorneys' fees, suits, demands,
liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever
nature or description, and whether in law or in equity, under contract, tort,
statute or otherwise, which any Releasor has heretofore had or now or hereafter
can, shall or may have against any Released Party by reason of any act, omission
or thing whatsoever done or omitted to be done on or prior to the
Amendment Effective Date directly arising out of, connected with or related to
this Amendment, the Financing Agreement or any other Loan Document, or any act,
event or transaction related or attendant thereto, or the agreements of any
Agent or any Lender contained therein, or the possession, use, operation or
control of any of the assets of any Loan Party, or the making of any Loans or
other advances, or the management of such Loans or advances or the Collateral.
The foregoing release does not release or discharge, or operate to waive
performance by, the Agents or the Lenders of their express agreements and
obligations stated in the Loan Documents on or after the Amendment Effective
Date.

8.     Miscellaneous.

(a)      This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement.  Delivery of an executed counterpart of this Amendment by
facsimile or electronic mail shall be equally effective as delivery of an
original executed counterpart of this Amendment. 

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(b)      Section and paragraph headings herein are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.

(c)      This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.

(d)      Sections 12.10 and 12.11 of the Financing Agreement are hereby
incorporated by reference into this Amendment, mutatis mutandis.

(e)      The terms of this Amendment may be modified, waived or amended only by
a writing by all the parties hereto or as otherwise permitted under Section
12.02 of the Financing Agreement.

(f)      The Loan Parties hereby acknowledge and agree that this Amendment
constitutes a "Loan Document" under the Financing Agreement.  Accordingly, it
shall be an Event of Default under the Financing Agreement if (i) any
representation or warranty made by the Loan Parties under or in connection with
this Amendment shall have been incorrect in any material respect when made, or
(ii) the Loan Parties shall fail to perform or observe any term, covenant or
agreement contained in this Amendment. Nothing contained in this Amendment shall
prejudice or otherwise affect the Agent's or any Lender's rights to enforce the
provisions contained herein upon the default by any Loan Party in the
performance thereof.

[Remainder of page intentionally left blank.]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date set forth on the first page hereof.

 

BORROWERS:

 

 

 

CHEROKEE INC., as U.S. Borrower

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

 

 

IRENE ACQUISITION COMPANY B.V., as Dutch Borrower

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Director A

 

 

 

 

 

By:

/s/ Edward van Wezel

 

 

Name:   Edward van Wezel

 

 

Title:     Director B

 

Amendment No. 1 to Financing Agreement

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/s/ Henry Stupp /s/ Henry Stupp

 

 

 

GUARANTORS:

 

 

 

SPELL C. LLC

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Chief Executive Officer

 

 

 

 

 

 

 

CHEROKEE BRANDS LLC:

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

 

 

THREE-SIXTY VISION LLC

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

 

 

HAWK 900 BRANDS LLC

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

Amendment No. 1 to Financing Agreement

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/s/ Henry Stupp

 

 

 

EDCA LLC

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

 

 

 

 

 

 

FFS HOLDINGS, LLC

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

 

 

FLIP FLOP SHOPS FRANCHISE COMPANY, LLC

 

 

 

By:  FFS Holdings, LLC, its sole member

 

 

 

By:  Cherokee Inc., its sole member

 

 

 

By:

/s/ Henry Stupp

 

 

Name:   Henry Stupp

 

 

Title:     Chief Executive Officer

 

Amendment No. 1 to Financing Agreement

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HI-TEC SPORTS INTERNATIONAL

 

HOLDINGS B.V.

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Managing Director

 

 

 

 

HI-TEC SPORTS PUBLIC LIMITED COMPANY

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Director

 

 

 

HI-TEC INTERNATIONAL HOLDINGS B.V.

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Managing Director

 

 

 

HI-TEC SPORTS UK LIMITED

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Director

 

 

 

HI-TEC SPORTS (CANADA) LTD.

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      President

 

 

 

HI-TEC NEDERLAND B.V.

 

 

 

By:

/s/ Henry Stupp

 

 

Name:    Henry Stupp

 

 

Title:      Managing Director

 

Amendment No. 1 to Financing Agreement

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ADMINISTRATIVE AGENT AND

 

COLLATERAL AGENT:

 

 

 

CERBERUS BUSINESS FINANCE, LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:   Daniel Wolf

 

 

Title:     Chief Executive Officer

 

Amendment No. 1 to Financing Agreement

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LENDERS:

 

 

 

 

 

CERBERUS ASRS FUNDING LLC

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

 

CERBERUS FSBA HOLDINGS LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

CERBERUS KRS LEVERED LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

CERBERUS LEVERED LOAN

 

OPPORTUNITIES FUND III, L.P.

 

By:  Cerberus Levered Opportunities III

 

GP, LLC

 

Its:   General Partner

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Senior Managing Director

 

 

 

CERBERUS LOAN FUNDING XVI LP

 

By:  Cerberus PSERS GP, LLC

 

Its:   General Partner

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Senior Managing Director

 

 

 

 

 

 

 

Amendment No. 1 to Financing Agreement

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CERBERUS LOAN FUNDING XVIII

 

L.P.

 

By:  Cerberus LFGP XVIII, LLC

 

Its:   General Partner

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Senior Managing Director

 

 

 

 

 

 

CERBERUS LOAN FUNDING XIX

 

L.P.

 

By:  Cerberus LFGP XIX, LLC

 

Its:   General Partner

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Senior Managing Director

 

 

 

 

 

 

CERBERUS N-1 FUNDING LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

CERBERUS ONSHORE LEVERED III

 

LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

CERBERUS PNC FUNDING LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

CERBERUS PSERS LEVERED LLC

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:    Daniel Wolf

 

 

Title:      Vice President

 

 

 

 

Amendment No. 1 to Financing Agreement

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CERBERUS PSERS LEVERED LOAN

 

OPPORTUNITIES FUND, L.P.

 

By:  Cerberus PSERS Levered

 

Opportunities GP, LLC

 

Its:   General Partner

 

 

 

By:

/s/ Daniel Wolf

 

 

Name:   Daniel Wolf

 

 

Title:     Senior Managing Director

 

Amendment No. 1 to Financing Agreement

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