EXHIBIT 10.7
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TWELFTH AMENDMENT TO FORBEARANCE AGREEMENT
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This Twelfth Amendment to Forbearance Agreement (this "Twelfth
Amendment") is entered into as of November 5, 2002, by and among Signature
Eyewear, Inc. ("SEI"), and City National Bank ("CNB").
RECITALS:
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WHEREAS, SEI and CNB are parties to a certain Forbearance Agreement
dated as of December 18, 2000 (the "Forbearance Agreement"); and
WHEREAS, SEI and CNB are parties to a certain Amendment to
Forbearance Agreement dated as of February 28, 2001 (the "Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Second Amendment to
Forbearance Agreement dated as of May 1, 2001 (the "Second Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Third Amendment to
Forbearance Agreement dated as of June 8, 2001 (the "Third Amendment'); and
WHEREAS, SEI and CNB are parties to a certain Fourth Amendment to
Forbearance Agreement dated as of August 22, 2001 (the "Fourth Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Fifth Amendment to
Forbearance Agreement dated as of October 22, 2001 (the "Fifth Amendment"); and
WHEREAS, SEI and CNB entered into a certain Sixth Amendment to
Forbearance Agreement dated as of December 14, 2001 (the "Sixth Amendment"),
which amendment is
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without force or effect by reason of the failure of one or more express
conditions precedent to its effectiveness; and
WHEREAS, SEI and CNB are parties to a certain Superseding Sixth
Amendment to Forbearance Agreement dated as of January 28, 2002 (the
"Superseding Sixth Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Seventh Amendment to
Forbearance Agreement dated as of March 15, 2002 (the "Seventh Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Eighth Amendment to
Forbearance Agreement dated as of March 26, 2002 (the "Eighth Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Ninth Amendment to
Forbearance Agreement dated as of April 12, 2002 (the "Ninth Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Tenth Amendment to
Forbearance Agreement dated as of May 31, 2002 (the "Tenth Amendment"); and
WHEREAS, SEI and CNB are parties to a certain Eleventh Amendment to
Forbearance Agreement dated as of July 8, 2002 (the "Eleventh Amendment"); and
WHEREAS, SEI has requested that CNB amend certain provisions
contained in the Forbearance Agreement as amended by the Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Superseding Sixth Amendment,
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the Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth
Amendment, and the Eleventh Amendment; and
WHEREAS, CNB is willing to so amend the Forbearance Agreement in
accordance with the terms and conditions hereof; and
WHEREAS, all initially capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Forbearance Agreement, as
amended;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Twelfth Amendment to the Forbearance Agreement.
a. The Definition of "Forbearance Termination Date" contained in
Section 1.2 of the Forbearance Agreement, as amended by Section 1(a) of the
Amendment, Section 1(a) of the Second Amendment, Section 1(a) of the Third
Amendment, Section 1(a) of the Fourth Amendment, Section 1(a) of the Fifth
Amendment, Section 1(a) of the Superseding Sixth Amendment, Section 1(a) of the
Seventh Amendment, Section 1(a) of the Eighth Amendment, Section 1(a) of the
Ninth Amendment, Section 1(a) of the Tenth Amendment and Section 1(a) of the
Eleventh Amendment is hereby further amended and restated in its entirety to
read as follows:
"Forbearance Termination Date" means the earlier to occur of (i) the
closing of a Transaction; (ii) December 16, 2002, or (iii) the date upon which
the Forbearance Default occurs.
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b. Section 4.1 of the Forbearance Agreement, as amended by
Section 1(b) of the Amendment, Section 1(b) of the Second Amendment, Section
1(b) of the Third Amendment, Section 1(b) of the Fourth Amendment, Section 1(b)
of the Fifth Amendment, Section 1(d) of the Superseding Sixth Amendment, Section
1(b) of the Seventh Amendment, Section 1(b) of the Eighth Amendment, Section
1(b) of the Ninth Amendment, Section 1(b) of the Tenth Amendment and Section
1(b) of the Eleventh Amendment is hereby amended and restated in its entirety to
read as follows:
4.1. SEI shall continuously exert its best efforts to accomplish the
following:
4.1.1 Close a License Sale with respect to one or more licenses
and all or substantially all inventory related thereto at a net purchase price
of not less than $750,000 as promptly as possible, but in no event later than
December 5, 2002. Without limiting the generality of the foregoing, SEI shall
(i) circulate, no later than November 15, 2002, draft documentation concerning
such License Sale, which documentation shall (a) provide for a net purchase
price of at least $750,000, (b) not contain any financing contingency, and (c)
evidence, satisfactory to CNB, of the Purchaser's ability to close such License
Sale by December 5, 2002; and (ii) have entered into definitive documentation
evidencing such License Sale on or before November 27, 2002.
4.1.2 Close a Transaction with respect to additional licenses and
all or substantially all inventory related thereto, at a net purchase price
sufficient to pay the Obligations in full at closing as promptly as possible,
but in no event later than December 16, 2002. Without limiting the generality of
the foregoing, SEI shall (i) circulate, no later than November 21, 2002,
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draft documentation concerning such Transaction, which documentation shall (a)
specify the use of the net proceeds of such Transaction to pay the Obligations,
and (b) evidence, satisfactory to CNB, the ability of the purchaser to close the
Transaction by December 16, 2002; and (ii) have entered into definitive
documentation evidencing such Transaction on or before December 5, 2002.
4.1.3 Whenever and so often as reasonably requested by CNB, SEI
shall promptly, and in any event no later than CNB shall specify, execute and
deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be requested by CNB in order for SEI to
close a Transaction, the proceeds from which will be used to pay the
Obligations.
4.1.4 SEI shall promptly provide to CNB copies of all offers,
correspondence or other information received by SEI or its advisors in
connection with any discussions respecting a Transaction, License Sale or any
other sale of assets outside the ordinary course of SEI's business. SEI shall
promptly identify each and every party expressing interest in a Transaction,
License Sale or any other purchase of assets of SEI outside the ordinary course
of SEI's business and disclose to CNB the terms of any proposal, formal or
informal, written or unwritten, respecting a possible Transaction, License Sale
or any other sale of assets outside the ordinary course of SEI's business. All
information, documentation and other materials provided to CNB pursuant to or in
connection with this Agreement and relating to a Transaction, License Sale or
any other sale of assets outside the ordinary course of SEI's business shall be
confidential and
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shall not be disclosed by CNB to any person or entity, other than (i) any
advisor to CNB in connection with such advisor's rendition of services to CNB in
respect of SEI's indebtedness to CNB, (ii) under compulsion of legal process, or
(iii) in response to legal proceedings initiated by SEI. Any advisor to CNB who
receives such confidential information in accordance with the foregoing shall be
bound by the obligation and undertaking of CNB to maintain the confidentiality
of such information. Any and all documentation evidencing a Transaction, License
Sale or sale of assets outside the ordinary course of SEI's business shall be in
form and substance satisfactory to CNB. The Transaction Documents and License
Sale Documents shall provide for repayment to CNB of the entirety of the
Obligations in immediately available funds upon closing of a Transaction or
License Sale, respectively, and shall be satisfactory to CNB as to the time,
place and manner of such repayment.
c. Section 4.8 of the Forbearance Agreement, as amended by
Section 1(c) of the Amendment, Section 1(c) of the Second Amendment, Section
1(c) of the Third Amendment, Section 1(c) of the Fourth Amendment, Section 1(c)
of the Fifth Amendment, Section 1(e) of the Superceding Sixth Amendment, Section
1(c) of the Eighth Amendment, Section 1 (c) of the Ninth Amendment and Section 1
(c) of the Eleventh Amendment is hereby amended and restated in its entirety to
read as follows:
4.8 From and after entry into this Twelfth Amendment until a
Forbearance Termination Date, all collections, revenues and cash inflows of
every kind to SEI shall be applied against the outstanding Revolving Line of
Credit each day. Absent a Forbearance Default, CNB will advance the amount
permitted under the daily Borrowing Base Certificate
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such that the outstanding principal amount of the Obligations shall not exceed
$4,225,000; provided however, that the dollar amount set forth above shall be
reduced by: (i) $100,000 on November 11, 2002; (ii) $150,000 on November 25,
2002; (iii) $150,000 on December 3, 2002; (iv) $750,000 on December 5, 2002; and
(v) $150,000 on December 12, 2002; and provided further, however, that the
inventory advance rate used to calculate the Borrowing Base and the amount
permitted to be advanced under the Borrowing Base Certificate shall be 32%,
rather than the inventory advance rate of 35% set forth in Section 1.6.1(b) of
the Loan Agreement.
d. Section 4.25 of the Forbearance Agreement is hereby added to
read as follows:
4.25 Promptly upon execution of this Twelfth Amendment, SEI shall
pay to CNB a restructuring fee of $29,166.65, which fee shall be fully earned
and nonrefundable upon receipt.
2. Conditions Precedent to the Effectiveness of this Twelfth
Amendment. The effectiveness of this Twelfth Amendment is subject to the
fulfillment, to the satisfaction of CNB and its counsel, of the following
conditions:
a. The representations and warranties in this Twelfth Amendment,
the Eleventh Amendment, the Tenth Amendment, the Ninth Amendment, the Eighth
Amendment, the Superseding Sixth Amendment, the Fifth Amendment, the Fourth
Amendment, the Third Amendment, the Second Amendment, the Amendment and the
Forbearance Agreement as amended by the Amendment, the Second Amendment, the
Third Amendment, the Fourth Amendment, the Fifth Amendment, the Superseding
Sixth Amendment, the Seventh
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Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth Amendment, the
Eleventh Amendment and this Twelfth Amendment shall be true and correct in all
material respects on and as of the date hereof, as though made on such date.
4. Miscellaneous.
a. Headings. Section headings in this Twelfth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Twelfth Amendment for any other purpose.
b. Governing Law. THIS TWELFTH AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
c. Counterparts. This Twelfth Amendment may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
d. Continued Effectiveness. The terms of the Loan Agreement and
of each of the other Loan Documents remain unchanged, and all such Loan
Documents shall remain in full force and effect and are hereby confirmed and
ratified.
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e. No Novation. This Twelfth Amendment shall not be deemed or
construed to be a satisfaction, reinstatement, novation or release of the
Eleventh Amendment, the Tenth Amendment, the Ninth Amendment, the Eighth
Amendment, the Seventh Amendment, the Superseding Sixth Amendment, the Fifth
Amendment, the Fourth Amendment, the Third Amendment, the Second Amendment, the
Amendment, the Forbearance Agreement, the Loan Agreement or any of the other
Loan Documents or, except as expressly provided herein, a waiver by CNB of any
of its rights and remedies under the Eleventh Amendment, the Tenth Amendment,
the Ninth Amendment, the Eighth Amendment, the Seventh Amendment, the
Superseding Sixth Amendment, the Fifth Amendment, the Fourth Amendment, the
Third Amendment, the Second Amendment, the Amendment, the Forbearance Agreement,
the Loan Agreement or any of the other Loan Documents at law or in equity.
f. Reaffirmation. SEI hereby reaffirms each and every covenant,
condition, obligation, and provision set forth in the Loan Documents.
g. Construction. SEI acknowledges that it has been represented by
its own legal counsel in connection with the Loan Documents, the Forbearance
Agreement, the Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment, the Superseding Sixth Amendment, the Seventh
Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth Amendment, the
Eleventh Amendment and this Twelfth Amendment, that it has exercised independent
judgment with respect to the Loan Documents, the Forbearance Agreement, the
Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the
Fifth Amendment, the Superseding Sixth Amendment,
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the Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth
Amendment, the Eleventh Amendment and this Twelfth Amendment, and that it has
not relied on CNB, or on its counsel for any advice with respect to the Loan
Documents, the Forbearance Agreement, the Amendment, the Second Amendment, the
Third Amendment, the Fourth Amendment, the Fifth Amendment, the Superseding
Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth
Amendment, the Tenth Amendment, the Eleventh Amendment and this Twelfth
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Twelfth
Amendment to be executed as of the date set forth above, by the respective duly
authorized officers.
SIGNATURE EYEWEAR, INC., a California
Corporation
By:
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Name
Title
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CITY NATIONAL BANK, a national banking
association
By:
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Name
Title
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