Exhibit 10.4
TENTH AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This tenth amendment to first amended and restated credit agreement
("Amendment") is made and entered into as of November 2, 1998, by and between U.
S. BANK NATIONAL ASSOCIATION, successor by merger to U. S. Bank of Washington,
National Association ("U. S. Bank"), and GARGOYLES, INC., a Washington
corporation ("Borrower").
R E C I T A L S:
A. On or about April 7, 1997, U. S. Bank and Borrower entered into that
certain first amended and restated credit agreement (together with all
amendments, supplements, exhibits, and modifications thereto, the "Credit
Agreement") whereby U. S. Bank agreed to extend certain credit facilities to
Borrower. U. S. Bank and Borrower have entered into nine previous amendments to
the Credit Agreement.
B. The purpose of this Amendment is to set forth the terms and conditions
upon which U. S. Bank will grant Borrower's request to waive and reset certain
financial covenants under the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, the parties agree as follows:
ARTICLE I. AMENDMENT; DEFINITIONS
1.1 Amendment
The Credit Agreement and each of the other Loan Documents are hereby
amended as set forth herein. Except as specifically provided for herein, all of
the terms and conditions of the Credit Agreement and each of the other Loan
Documents shall remain in full force and effect throughout the terms of the
Loans, as well as any extensions or renewals thereof.
1.2 Definitions
As used herein, capitalized terms shall have the meanings given to them in
the Credit Agreement, except as otherwise defined herein, or as the context
otherwise requires.
ARTICLE II. FINANCIAL COVENANTS
2.1 Waiver
U. S. Bank hereby agrees to waive all violations of the following financial
covenants through the date of this Amendment:
(a) Tangible Net Worth covenant set forth in Section 8.15 of the Credit
Agreement;
(b) Working Capital covenant set forth in Section 8.16 of the Credit
Agreement;
(c) Debt Service Coverage Ratio set forth in Section 8.17 of the Credit
Agreement;
(d) Minimum monthly sales covenant set forth in Section 8.19 of the Credit
Agreement; and
(e) Minimum monthly EBITDA covenant set forth in Section 8.20 of the Credit
Agreement.
2.2 Deletion
The following sections of the Credit Agreement are hereby deleted in their
entirety:
(a) Section 8.15 - Tangible Net Worth;
(b) Section 8.16 - Working Capital covenant;
(c) Section 8.17 - Debt Service Coverage Ratio;
(d) Section 8.19 - minimum monthly sales covenant; and
(e) Section 8.20 - minimum monthly EBITDA covenant.
U. S. Bank and Borrower hereby acknowledge that Section 8.18 of the Credit
Agreement - Senior Debt Ratio was deleted in a previous amendment to the Credit
Agreement.
ARTICLE III. MODIFICATION OF BORROWING BASE
Section 2.8(a)(iii) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(iii) 65 percent of Eligible Inventory; provided that the maximum
advance based upon Eligible Inventory is limited to $8,000,000.
ARTICLE IV. REGISTRATION OF SHARES
The first sentence of Section 7.2(a) of the Third Amendment to First
Amended and Restated Credit Agreement dated January 15, 1998, is hereby deleted
in its entirety and replaced with the following:
Borrower shall take all steps to complete and file a registration
statement for the registration of the Shares on or before January 4,
1999, and shall use its best efforts to cause the registration to
become effective as soon after the filing of the registration
statement as possible.
ARTICLE V. CONDITIONS PRECEDENT
The modifications set forth in this Amendment shall not be effective unless
and until the following conditions have been fulfilled to U. S. Bank's
satisfaction:
(a) U. S. Bank shall have received this Amendment, duly executed and
delivered by Borrower, H.S.C., Inc., Sungold Eyewear, Inc. and Private Eyes
Sunglass Corporation.
(b) After having given effect to any waivers and modifications of
definitions set forth in this Amendment, there shall not exist any Default or
Event of Default.
(c) All representations and warranties of Borrower contained in the Credit
Agreement or otherwise made in writing in connection therewith or herewith shall
be true and correct and in all material respects have the same effect as though
such representations and warranties had been made on and as of the date of this
Amendment.
(d) U. S. Bank shall have received a certified resolution of the board of
directors of Borrower and each of the undersigned guarantors in a form
acceptable to U. S. Bank.
ARTICLE VI. GENERAL PROVISIONS
6.1 Representations and Warranties
Borrower hereby represents and warrants to U. S. Bank that as of the date
of this Amendment and after having given effect to any waivers and modifications
to definitions set forth in this Amendment, there exists no Default or Event of
Default. All representations and warranties of Borrower contained in the Credit
Agreement and the Loan Documents, or otherwise made in writing in connection
therewith, are true and correct as of the date of this Amendment. Borrower
acknowledges and agrees that all of Borrower's Indebtedness to U. S. Bank is
payable without offset, defense, or counterclaim.
6.2 Security
All Loan Documents evidencing U. S. Bank's security interest in the
Collateral shall remain in full force and effect, and shall continue to secure,
without change in priority, the payment and performance of the Loans, as amended
herein, and any other Indebtedness owing from Borrower to U. S. Bank.
6.3 Guaranties
The parties hereto agree that the Guaranties shall remain in full force and
effect and continue to guarantee the repayment of the Loans to U. S. Bank as set
forth in such Guaranties.
6.4 Payment of Expenses
Borrower shall pay on demand all costs and expenses of U. S. Bank incurred
in connection with the preparation, negotiation, execution, and delivery of this
Amendment and the exhibits hereto, including, without limitation, attorneys'
fees incurred by U. S. Bank.
6.5 Survival of Credit Agreement
The terms and conditions of the Credit Agreement and each of the other Loan
Documents shall survive until all of Borrower's obligations under the Credit
Agreement have been satisfied in full.
6.6 Release of Claims
IN CONSIDERATION FOR U. S. BANK'S AGREEMENT TO ENTER INTO THIS AMENDMENT,
BORROWER, H.S.C., INC., SUNGOLD EYEWEAR, INC., AND PRIVATE EYES SUNGLASS
CORPORATION EACH HEREBY RELEASES AND FOREVER DISCHARGES U. S. BANK, ITS
PREDECESSORS AND SUCCESSORS-IN-INTEREST, AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES AND AGENTS FROM ANY AND ALL CLAIMS,
DEMANDS, DAMAGES, LIABILITIES, CHARGES, ACTIONS, LOSSES, CAUSES OF ACTION,
COSTS, EXPENSES, COMPENSATION, AND SUITS OF ANY KIND, PAST, PRESENT OR FUTURE,
ARISING FROM OR ALLEGED TO ARISE FROM THEIR BUSINESS RELATIONSHIP, INCLUDING THE
RELATIONSHIP PROVIDED FOR IN THE CREDIT AGREEMENT THROUGH THE DATE OF THIS
AMENDMENT, WHETHER KNOWN OR UNKNOWN. THIS RELEASE IS INTENDED TO BE COMPLETE AND
COMPREHENSIVE WITH RESPECT TO ALL SUCH CLAIMS. THIS RELEASE OF CLAIMS HAS BEEN
COMPLETELY READ AND FULLY UNDERSTOOD AND VOLUNTARILY ACCEPTED FOR THE PURPOSE OF
MAKING A FULL AND FINAL COMPROMISE AND SETTLEMENT WITH RESPECT TO ALL CLAIMS,
DISPUTED OR OTHERWISE.
6.7 Counterparts
This Amendment may be executed in one or more counterparts, each of which
shall constitute an original agreement, but all of which together shall
constitute one and the same agreement.
6.8 Statutory Notice
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
IN WITNESS WHEREOF, U. S. Bank and Borrower have caused this Amendment to
be duly executed by their respective duly authorized signatories as of the date
first above written.
GARGOYLES, INC., a Washington corporation
By /s/ Xxx Xxxxxxxxxxx
----------------------------
Title: CEO and CFO
U. S. BANK NATIONAL ASSOCIATION
By /s/ Xxxxx Xxxxxx
----------------------------
Xxxxx X. Xxxxxx, Vice President
Each of the undersigned Guarantors hereby (i) reaffirms its Guaranty and its
Security Agreement, (ii) agrees that its Guaranty guarantees the repayment of
the Loans, as amended herein, (iii) agrees that its respective Security
Agreement and related collateral documents secures the payment and performance
of the Secured Obligations described in such Security Agreement, (iv)
acknowledges that its obligations pursuant to its Guaranty and Security
Agreement are enforceable without defense, offset, or counterclaim, and (v)
agrees to the release of claims set forth in Section 6.6 of this Amendment.
H.S.C., Inc., a Washington corporation
By /s/ Xxx Xxxxxxxxxxx
----------------------------
Title: President and CFO
SUNGOLD EYEWEAR, INC.,
a Washington corporation
By /s/ Xxx Xxxxxxxxxxx
---------------------------------
Title: CEO and CFO
PRIVATE EYES SUNGLASS
CORPORATION, a Washington corporation
By /s/ Xxx Xxxxxxxxxxx
---------------------------------
Title: President and CFO
