EXHIBIT 10.13
[Heller Financial letterhead]
HAND DELIVERED
October 11, 1996
Mr. Robert Greenberg Skechers U.S.A., Inc. 228 Manhattan Beach Boulevard, Suite 200 Manhattan Beach, California 90266
Re: Proposed Credit Facility for Kani, Inc.
Dear Robert:
The Western Division of the Current Asset Management Group of Heller Financial, Inc. ("Heller") is pleased to advise you that the Executive Portfolio Committee of Heller has approved a credit facility (the "Credit Facility") in an aggregate principal amount not to exceed $12,000,000. The Credit Facility will be provided to a corporation to be formed which is to be named Kani, Inc. ("Borrower") to which Skechers U.S.A., Inc. ("Skechers") will contribute the master licensing agreement covering all products marketed and sold under the Kani brand name and all of the operating assets of the Kani operating division of Skechers in exchange for shares representing 100% of the common stock of Borrower. The Credit Facility will be used to provide working capital financing for Borrower and to provide funds for other general corporate purposes of Borrower.
I. TERMS OF THE CREDIT FACILITY
A. The Revolving Loan.
Heller will make available to Borrower a revolving loan (the "Revolver") in an aggregate principal amount not to exceed $12,000,000 (the "Maximum Revolver Amount").
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Availability under the Revolver will be determined by reference to a borrowing base which will consist of up to eighty percent (80%) of the gross amount of "Eligible Accounts" and up to fifty percent (50%) of the value of "Eligible Inventory", as such terms will be defined in the documentation evidencing the Credit Facility (the "Credit Agreement"). The Revolver will have a term of three (3) years commencing on the closing date of the Credit Facility (the "Closing Date"). The facility will include a sublimit for inventory advances in the amount of $5,000,000.
B. Letter of Credit Guaranties
Heller will issue guarantees, in an aggregate amount not to exceed $5,000,000 (the "Maximum L/C Guaranty Amount"), of Borrower's obligations to certain banks acceptable to Heller that issue Letters of Credit for the benefit of Borrower's suppliers, provided that such Letters of Credit, including the amount and terms, are acceptable to Heller; and further provided, that the aggregate amount of such guaranties outstanding at any time which have been issued by Heller with respect to any usance Letters of Credit (any Letter of Credit that provides for payment on a maturity date that is at least thirty (30) days after the date such Letter of Credit is presented for acceptance) shall not exceed $3,500,000.
C. Interest.
Borrower will be required to pay Heller interest monthly on the outstanding daily principal balance of the Revolver at a floating rate of interest per annum equal to the Base Rate (hereafter defined) plus three-quarters of one percent (.75%).
As used herein, "Base Rate" means a fluctuating rate of interest per annum equal to, on any day, the rate of interest from time to time announced by Bank of America National Trust and Savings Association as its prime rate reference rate or base rate.
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Interest will be billed and paid monthly in arrears, commencing the first day of the month following the initial funding under the Credit Facility, and will be calculated daily on the basis of a 360-day year for the actual number of days elapsed.
D. Collection Clearance Charge.
Borrower will be required to pay to Heller each month, in addition to interest, a collection clearance charge computed as follows: (a) total collections on accounts for the month, multiplied by (b) three days, multiplied by (c) the interest rate, divided by (d) 360 days.
E. Security.
Borrower's obligations to Heller under the Credit Facility will be secured by a first priority, senior, valid and perfected security interest in and lien upon all of Borrower's personal property of every type and description, whether now owned or hereafter acquired and wherever located (collectively, the "Collateral"). Liens in favor of persons other than Heller will be prohibited, except as otherwise permitted in accordance wit
