Prepared by MerrillDirect





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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of page intentionally left blank; signature pages 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
	 	


	Name:	   Ian
  Schapiro
	 	


	Title:	   Vice
  President
	 	


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


	Name:	   Jacquelene
  M. Hermie
	 	


	Title:	Vice President
	 	


	 	 
	 	 
	FLEET
  CAPITAL
	 	 
	By:	   /s/
  Mark D. Newlun
	 	


	Name:	   Mark
  D. Newlun
	 	


	Title:	   Senior
  Vice President
	 	


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


	Name:	   Gerald
  F. Sorensen
	 	


	Title:	   Senior
  Vice President
	 	


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


	Name:	   Jay
  R. McKenney
	 	


	Title:	   Vice
  President
	 	


	 	 
	 	 
	FINOVA
  CAPITAL CORPORATION
	 	 
	By:	   /s/
  Stephen Bristow
	 	


	Name:	   Stephen
  Bristow
	 	


	Title:	   Account
  Executive
	 	


			











 


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
	 	


	Name:	   Ian
  Schapiro
	 	


	Title:	   Vice
  President