Document:

Exhibit 10.2

 

	

    	
 
    	
Worldwide Headquarters

243 Daniel Webster Highway

Merrimack, NH 03054
    

 

Phone:   +1 603.883.5200

Fax:   +1 603.595.6993

www.gtat.com

 

January 13, 2014

 

Mr. K. Raja Bal

22H

Hathaway Road

Lexington, MA 02420

 

Dear Raja:

 

Effective as of the date set forth above, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you are eligible to receive the following benefits from GTAT Corporation (the “Company”) pursuant to the terms and provisions set forth herein.

 

·                  Severance Related Payments - If your employment is terminated by the Company without Cause (as defined below), or as a result of your resignation with Good Reason (as defined below), you shall be entitled to:

 

(i)                                     continue to receive your Base Salary (as defined below), subject to applicable withholding, (paid in accordance with the Company’s general payroll practices in effect on the termination date) as special severance payments from the date of termination for a period of six (6) months thereafter (the “Severance Period”);

 

(ii)                                  to the extent permitted by the applicable benefit plans, continued participation during the Severance Period in medical and dental insurance plans sponsored by the Company on terms and conditions in effect at the time of such termination (including cost sharing, if applicable) substantially similar to those applicable to employees of the Company generally;

 

provided, however, you shall be entitled to the payments and benefits described in clauses (i) and (ii) of this paragraph if and only if you have executed and delivered to the Company a general release having customary terms and provisions that is reasonably agreeable to you and the Company (the “General Release”) within twenty-two (22) days following the date of termination and the General Release has become effective, and only so long as you have not revoked or breached the provisions of the General Release.  You understand and agree that you shall not be entitled to any other salary, compensation or benefits after termination of your employment with the Company or any subsidiary, except as specifically provided for in the Company’s employee benefit plans or as otherwise expressly required by applicable law.

 

 

You understand and agree that if your employment is (i) terminated by the Company or any subsidiary for Cause or (ii) terminated by you without Good Reason, you shall only be entitled to receive your Base Salary through the date of termination and shall not be entitled to any other salary, compensation or benefits from the Company or any of its subsidiaries thereafter, except as otherwise specifically provided for under the Company’s employee benefit plans or as otherwise expressly required by applicable law.  The termination of your employment for Cause shall preclude your resignation with Good Reason.  If your employment is terminated due to your death or Disability (as defined below), you shall only be entitled to receive (A) your Base Salary through the date of termination, and (B) any benefits you or your eligible family members are eligible for under COBRA.

 

Except as otherwise expressly provided herein, all of your rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination of your employment shall cease upon such termination, other than those expressly required under applicable law (such as COBRA).

 

For the purposes of this Agreement, “Base Salary” shall mean your annual base salary as determined by management and as in effect at the applicable time of termination of your employment.

 

For purposes of this Agreement, “Cause” shall mean with respect to you, one or more of the following:  (i) the commission of a felony or other crime involving moral turpitude or the commission of any other act or omission involving dishonesty, disloyalty or fraud with respect to the Company or any of its subsidiaries or any of their customers or suppliers, (ii) repeatedly reporting to work under the influence of alcohol or illegal drugs, the use of illegal drugs in the workplace or other repeated conduct causing the Company or any of its subsidiaries substantial public disgrace or disrepute or substantial economic harm, (iii) substantial and repeated failure to perform duties as reasonably directed by the Board, the Company’s President and Chief Executive Officer or the Company’s Chief Financial Officer, (iv) any act or omission aiding or abetting a supplier or customer of the Company or any of its subsidiaries to the material disadvantage or detriment of the Company and its subsidiaries, (v) breach of fiduciary duty, gross negligence or willful misconduct with respect to the Company or any of its subsidiaries or (vi) any other material breach of this Agreement which is not cured to the Company’s reasonable satisfaction within fifteen (15) days after written notice to you.

 

For purposes of this Agreement, “Disability” shall mean your inability to perform the essential duties, responsibilities and functions of your position with the Company and its subsidiaries for a period of 90 consecutive days or for a total of 180 days during any 12-month period as a result of any mental or physical illness, disability or incapacity even with reasonable accommodations for such illness, disability or incapacity provided by the Company and its subsidiaries or if providing such accommodations would be unreasonable, all as determined by the Compensation Committee in its reasonable good faith judgment.  You hereby agree to cooperate in all reasonable respects with the Company if a question arises as to whether you have become disabled (including, without

 

 

limitation, submitting to reasonable examinations by one or more medical doctors and other health care specialists selected by the Company and authorizing such medical doctors and other health care specialists to discuss your condition with the Company).

 

For purposes of this Agreement, “Good Reason” shall mean if you resign from employment with the Company and its subsidiaries as a result of the occurrence of one or more of the following events:  (i) the Company  reduces the amount of the Base Salary (other than as a result of a general across-the-board salary reduction applicable to all senior employees of the Company), (ii) elects to eliminate the MIP without permitting you to participate in an annual incentive bonus plan in place of the MIP which offers a potential bonus payment comparable to that earnable at 100% of plan target by you under the MIP, or (iii) the Company changes your title and reduces his responsibilities or authority in a manner materially inconsistent with that of the position of Vice President and Corporate Controller; provided that in order for your resignation for Good Reason to be effective hereunder, you must provide written notice to the Company stating your intent to resign for Good Reason and the grounds therefor within thirty (30) days after such grounds exist and grant the Company thirty (30) days from receipt of such notice to remedy or otherwise remove the grounds supporting your resignation for Good Reason.

 

The payments and benefits under this Agreement are intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code, as amended (including the regulations thereunder, “Section 409A”).  In no event shall the Company have any liability relating to the failure or alleged failure of any payment or benefit under this Agreement to comply with, or be exempt from, the requirements of Section 409A.  Notwithstanding anything to the contrary in this Agreement, if at the time of your termination of employment, you are a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon your death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (B) benefits that qualify as excepted welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the requirements of Section 409A.  For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treasury regulation Section 1.409A-1(i).  For purposes of Section 409A, your right to receive any installment payment pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

 

 

This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

This Agreement may be executed in more than one counterpart, each of which shall be deemed an original, and all of which shall be deemed a single agreement.

 

This Agreement has been executed by authorized representatives of the parties hereto.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

 

	
 
    	
GTAT CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/Hoil Kim
    
	
 
    	
Hoil Kim
    
	
 
    	
Vice   President, Chief Administrative Officer, General Counsel and Secretary
    

 

 

	
ACKNOWLEDGED   AND AGREED
    
	
 
    
	
/s/K.   Raja S. Bal
    	
 
    
	
K.   Raja S. BalExhibit 10.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of January 10, 2014, is by and between Cherokee Inc., a Delaware corporation (the “Borrower”), and JPMorgan Chase Bank, N.A. (the “Lender”).

 

In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Borrower and the Lender are parties to that certain Credit Agreement dated as of September 4, 2012, as amended on January 31, 2013 (as the same may be further amended, modified or restated from time to time, the “Credit Agreement”), which provides for a line of credit in the form of “Facility A” and a term loan in the form of “Facility B”;

 

WHEREAS, the Borrower has heretofore issued in favor of Lender that certain Line of Credit Note dated as of September 4, 2012 in connection with Facility A under the Credit Agreement (the “Line of Credit Note”);

 

WHEREAS, the Borrower has heretofore issued in favor of Lender that certain Term Note dated as of September 4, 2012, as amended on January 31, 2013, in connection with Facility B under the Credit Agreement (the “Term Note B” and together with the Line of Credit Note, the “Existing Notes”);

 

WHEREAS, the Borrower has requested, and the Lender has agreed to provide a new term loan in the amount of $19,000,000 in the form of “Facility B-1” in connection with a proposed acquisition of additional assets by the Borrower; and

 

WHEREAS, the parties hereto desire to amend the Credit Agreement to provide the new term loan through Facility B-1 and cause other amendments as set forth herein, and to concurrently herewith amend the Existing Notes and enter into a new Term Note in connection with Facility B-1 (the “Term Note B-1”).

 

NOW, THEREFORE, in consideration of the agreements contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1  Defined Terms.  Capitalized terms used, but not defined herein shall have the meanings assigned to them in the Credit Agreement, as amended by this Amendment.

 

 

ARTICLE II

 

AMENDMENTS AND CONDITIONS

 

SECTION 2.1  Amendments.

 

(a)           Section 1.1 of the Credit Agreement is hereby amended by replacing the phrase “Facility A and Facility B” in the first sentence therein with the phrase “Facility A, Facility B and Facility B-1”.

 

(b)           Section 1 of the Credit Agreement is hereby amended by inserting a new Section 1.4 as follows:

 

“1.4        Facility B-1 (Term Loan). The Bank agrees to extend credit to the Borrower in the form of a term loan in the principal sum of $19,000,000 (“Facility B-1”), bearing interest and payable as set forth in the promissory note executed on or about January 10, 2014, and with any and all renewals, modifications, extensions, rearrangements, restatements thereof and replacements or substitutions therefor.”

 

(c)           Section 2.1 of the Credit is hereby amended by inserting new definitions in the appropriate alphabetical order as follows:

 

““Hawk Acquisition Agreement” means the Asset Purchase Agreement dated on or about January 10, 2014 by and among the Borrower (and/or Hawk 900 Brands LLC), Hawk Designs, Inc. and Quiksilver, Inc. relating to the purchase of the ‘Hawk’ and ‘Tony Hawk’ brands and the related assets described therein.”

 

““Kohl’s Contract” means the Retail License Agreement, dated as of April 28, 2005, as amended on January 9, 2014 between Hawk Designs, Inc. and Kohl’s Departments Stores, Inc.”

 

(d)           Section 2.1 of the Credit Agreement is hereby amended by replacing the definition of “Distributions” in its entirety as follows:

 

““Distributions” means all dividends and other distributions made to any Equity Owners (including, without limitation, by way of stock repurchases), other than salary, bonuses, and other compensation for services expended in the current accounting period.”

 

(e)           Section 2.1 of the Credit Agreement is hereby amended by replacing the definition of “Material Contract” in its entirety as follows:

 

““Material Contract” means each of (i) the Restated License Agreement dated as of February 1, 2008 between the Borrower and Target General Merchandise, Inc., as amended December 1, 2011 and January 29, 2013 and (ii) the Kohl’s Contract.”

 

(f)            Section 2.1 of the Credit Agreement is hereby amended by replacing clause (ii) of the definition of “Permitted Acquisitions” in its entirety as follows:

 

2

 

“(ii) the aggregate amount of the consideration (or, in the case of consideration consisting of assets, the fair market value of the assets) paid by the Borrower and its Subsidiaries shall not exceed (a) $5,000,000 plus (b) the amount paid by the Borrower in connection with the transactions contemplated by Hawk Acquisition Agreement, such limit to apply on a cumulative basis for all such acquisitions or purchases subsequent to the date hereof,”

 

(g)           Paragraph (A) of Section 3.2 of the Credit Agreement is hereby amended by inserting the phrase “and the Hawk Acquisition Agreement” immediately after the phrase “Acquisition Agreement” therein.

 

(h)           Paragraph (B) of Section 3.2 of the Credit Agreement is hereby amended by inserting the phrase “and the Hawk Acquisition Agreement” immediately after the phrase “Acquisition Agreement” therein.

 

(i)            Paragraph (E) of Section 3.2 of the Credit Agreement is hereby amended in its entirety as follows:

 

“E.          Acquisition.  In the case of Facility B, the transactions contemplated by each of (1) the Acquisition Agreement and (2) the Asset Purchase Agreement entered into in January, 2013 between the Borrower and Strategic Partners, Inc., a California corporation, shall have been consummated without any amendment, modification or waiver of any of the provisions of the same (other than those necessary and made to ensure compliance with the Related Documents).  In the case of Facility B-1, the transactions contemplated by the Hawk Acquisition Agreement shall have been consummated without any amendment, modification or waiver of any of the provisions of the same (other than those necessary and made to ensure compliance with the Related Documents).”

 

(j)            Paragraphs (O)(i) and (ii) of Section 5.2 of the Credit Agreement are hereby amended in their entirety as follows:

 

“(i)          Fixed Charge Coverage Ratio.  Permit the Borrower’s Fixed Charge Coverage Ratio for any Test Period to be less than 1.20 to 1.00.  “Fixed Charge Coverage Ratio” means, for any Test Period, with respect to the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) (i) EBITDA for such period plus (ii) GAAP rental expense for such period minus (iii) capital expenditures for such period (exclusive of up to $900,000 of earn-out payments in connection with the Liz Lange acquisition that may be made in the eighteen month period following the closing of such acquisition) minus (iv) tax  expenses paid in cash for such period minus (v) Distributions paid in cash during such period plus (vi) non-cash stock compensation (without duplication), to (b) the sum of (i) cash rentals payable under leases of real and personal property for such period (without duplication of items included in consolidated interest expense), plus (ii) scheduled current maturities of long term debt, plus (iii) consolidated interest expense during such period.

 

3

 

(ii)           Senior Funded Debt Ratio.  Permit the Borrower’s Senior Funded Debt Ratio to be greater than (i) 2.50 to 1.00 from the date hereof until the fiscal quarter ending October 31, 2014, (ii) 2.25 to 1.00 from the fiscal quarter ending January 31, 2015 until the fiscal quarter ending January 31, 2016, and (iii) 2.00 to 1.00 thereafter.  “Senior Funded Debt Ratio” means, at any date of determination, with respect to the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) indebtedness for (i) borrowed money plus (ii) the deferred purchase price of property not purchased on ordinary trade terms plus (iii) capitalized leases and for other liabilities evidenced by promissory notes or other instruments, but not including any indebtedness that has been subordinated to the indebtedness evidenced by Notes pursuant to a writing that has been accepted by the Bank to (b) the sum on such date of (i) EBITDA for the most recently completed Test Period prior to such date plus (ii) non-cash stock compensation (without duplication) plus (iii) deemed EBITDA of Hawk Designs, Inc. in an amount of:

 

(I)            $2,942,000, for the Test Period ending on January 31, 2014,

 

(II)          $2,139,000, for the Test Period ending on March 30, 2014,

 

(III)                         $1,337,000, for the Test Period ending on July 31, 2014, or

 

(IV)         $535,000, for the Test Period ending on October 31, 2014.”

 

(k)           Section 6.1 of the Credit Agreement is hereby amended by inserting the phrase “and the Hawk Acquisition Agreement” immediately after the phrase “Acquisition Agreement” in clause (m) therein.

 

SECTION 2.2  Upfront Fee.  The Borrower agrees to pay to the Lender an upfront fee equal to 0.50% of the total amount advanced under Facility B-1, which shall be payable upon execution and delivery of this Amendment.

 

SECTION 2.3  Conditions.   This Amendment shall become effective upon the first date on which each of the following conditions has been satisfied:

 

(a)           The Lender shall have received this Amendment, the amendments to the Existing Notes and the new Term Note B-1, each executed and delivered by the authorized officers of the Borrower.

 

(b)           The Lender shall have received a certificate dated as of the date of this Amendment from an authorized officer of the Borrower in form and substance satisfactory to the Lender certifying as to the matters set forth in paragraphs (A) and (B) of Section 3.2 of the Credit Agreement.

 

(c)           The Lender shall have received evidence satisfactory to the Lender that the Kohl’s Contract has been executed and delivered by the parties thereto in the form heretofore provided to Lender.

 

4

 

ARTICLE III

 

MISCELLANEOUS PROVISIONS

 

SECTION 3.1  Amended Credit Agreement.  This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, shall continue in full force and effect.  All references to the Credit Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Credit Agreement as amended hereby.  This Amendment shall constitute a “Related Document” for all purposes under the Credit Agreement.

 

SECTION 3.2  Severability.  Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 3.3  Headings.  The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

 

SECTION 3.4  Execution in Counterparts.  This Amendment may be executed by the parties hereto in several counterparts, each of which shall be an original and all of which shall constitute together but one and the same agreement.

 

SECTION 3.5  Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

 

SECTION 3.6  Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns.

 

SECTION 3.7  Each guarantor acknowledging this Amendment below hereby consents to the modifications to the Credit Agreement contemplated by this Amendment and agrees that its continuing guaranty in favor of the Lender provided in connection with the Credit Agreement is, and shall remain, in full force and effect after giving effect to this Amendment.

 

[Signature page follows]

 

5

 

IN WITNESS WHEREOF, the Borrower and the Lender have executed this Amendment on the date first above written.

 

	
 
    	
BORROWER
    
	
 
    	
 
    
	
 
    	
Cherokee   Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Howard Siegel
    
	
 
    	
 
    	
Name:   
    	
Howard   Siegel
    
	
 
    	
 
    	
Title:
    	
COO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jason Boling
    
	
 
    	
 
    	
Name:   
    	
Jason   Boling
    
	
 
    	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LENDER
    
	
 
    	
 
    
	
 
    	
JPMorgan   Chase Bank, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Manju Manwani
    
	
 
    	
 
    	
Name:
    	
Manju   Manwani
    
	
 
    	
 
    	
Title:
    	
Underwriter   I-CB
    

 

S-1

 

ACKNOWLEDGED BY THE GUARANTORS

 

	
SPELL   C. LLC
    	
 
    	
CHEROKEE   BRANDS LLC
    
	
 
    	
 
    	
 
    
	
By:   Cherokee Inc., its sole member
    	
 
    	
By:   Cherokee Inc., its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Howard Siegel
    	
 
    	
By:
    	
/s/   Howard Siegel
    
	
 
    	
Name:   
    	
Howard   Siegel
    	
 
    	
 
    	
Name:   
    	
Howard   Siegel
    
	
 
    	
Title:
    	
COO
    	
 
    	
 
    	
Title:
    	
COO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Jason Boling
    	
 
    	
By:
    	
/s/   Jason Boling
    
	
 
    	
Name:   
    	
Jason   Boling
    	
 
    	
 
    	
Name:   
    	
Jason   Boling
    
	
 
    	
Title:
    	
CFO
    	
 
    	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
HAWK 900 BRANDS LLC
    	
 
    	
THREE-SIXTY   VISION LLC
    
	
 
    	
 
    	
 
    
	
By: Cherokee Inc., its sole member
    	
 
    	
By:   Cherokee Inc., its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Howard Siegel
    	
 
    	
By:
    	
/s/   Howard Siegel
    
	
 
    	
Name:
    	
Howard Siegel
    	
 
    	
 
    	
Name:
    	
Howard   Siegel
    
	
 
    	
Title:
    	
COO
    	
 
    	
 
    	
Title:
    	
COO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Jason Boling
    	
 
    	
By:
    	
/s/   Jason Boling
    
	
 
    	
Name:
    	
Jason Boling
    	
 
    	
 
    	
Name:
    	
Jason   Boling
    
	
 
    	
Title:
    	
CFO
    	
 
    	
 
    	
Title:
    	
CFO
    
								

 

S-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]