Exhibit 10.1
NINTH AMENDMENT TO FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
This ninth amendment to first amended and restated credit agreement
("Amendment") is made and entered into as of September 17, 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 eight previous amendments to
the Credit Agreement.
B. The purpose of this Amendment is to set forth the terms and conditions
upon which the Term Loan (as defined in the Credit Agreement) is bifurcated into
two term loans.
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 Modification and Addition of 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. Section 1.1 of the Credit Agreement is hereby amended to
modify or add (as the case may be) the following definitions:
"Loans" means the Revolving Loan, Term Loan I, Term Loan II, and the
Equipment Loans, as well as all renewals and amendments thereof.
"Notes" means the Revolving Note, Renewal Term Note I, Renewal Term Note
II, and the Equipment Notes, as well as all renewals, replacements, and
amendments thereof.
"Renewal Term Note I" has the meaning set forth in Section 2.2 of this
Amendment and includes all renewals, replacements and amendments of the Renewal
Term Note I.
"Renewal Term Note II" has the meaning set forth in Section 2.2 of this
Amendment and includes all renewals, replacements and amendments of the Renewal
Term Note II.
"Term Loan I" has the meaning set forth in Section 2.1(b) of this Amendment
and includes all renewals of and amendments to Term Loan I.
"Term Loan II" has the meaning set forth in Section 2.1(b) of this
Amendment and includes all renewals of and amendments to Term Loan II.
ARTICLE II. MODIFICATION OF TERM LOAN
2.1 Bifurcation
(a) U. S. Bank and Borrower hereby acknowledge that the outstanding
principal balance of the Term Loan as of the date of this Amendment is
$16,470,000.
(b) Effective as of the date of this Amendment, the Term Loan shall be
bifurcated into the following two loans:
(i) a term loan with an initial principal balance of $13,000,000
("Term Loan I"); and
(ii) a term loan with an initial principal balance of $3,470,000
("Term Loan II").
2.2 Renewal Term Notes
Concurrently with the execution of this Amendment, Borrower shall execute
and deliver to U. S. Bank renewal promissory notes in the forms attached hereto
as Exhibits A ("Renewal Term Note I") and B ("Renewal Term Note II") in order to
evidence Term Loan I and Term Loan II, respectively, which shall be in
substitution for, but not in payment of the Term Note and any previous renewals
thereof. The Term Note and any previous renewals thereof shall be marked
"renewed" and retained by U. S. Bank until Term Loan I and Term Loan II have
been repaid in full.
2.3 Interest
Section 3.4 of the Credit Agreement is hereby amended to reflect that
commencing as of the date of this Amendment, Term Loan I and Term Loan II shall
bear interest at the Reference Borrowing Rate.
2.4 Repayment of Term Loan I and Term Loan II
Section 3.5 of the Credit Agreement is deleted in its entirety and replaced
with the following:
(a) On the first day of each month until Term Loan I and Term Loan II
are repaid in full, Borrower shall pay U. S. Bank an amount equal to all
accrued interest on Term Loan I and Term Loan II.
(b) On January 4, 1999, Borrower shall make a principal reduction
payment to be applied against the outstanding principal balance of Term
Loan I in the amount of $4,780,000.
(c) On January 4, 1999, Borrower shall pay U. S. Bank all outstanding
principal, accrued interest, and other charges with respect to Term Loan
II.
(d) On April 30, 1999, Borrower shall pay U. S. Bank all outstanding
principal, accrued interest, and other charges with respect to Term Loan I.
ARTICLE III. 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, Renewal Term Note I, and
Renewal Term Note II, each duly executed and delivered by Borrower.
(b) U. S. Bank shall have received a certified resolution of the board of
directors of Borrower and each of the Subsidiaries in a form acceptable to U. S.
Bank.
ARTICLE IV. GENERAL PROVISIONS
4.1 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 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.
4.2 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.
4.3 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.
4.4 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.
4.5 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.
4.6 Release of Claims
IN CONSIDERATION FOR U. S. BANK'S AGREEMENT TO RESTRUCTURE THE CREDIT
FACILITIES AS PROVIDED FOR IN 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.
4.7 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.
4.8 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 4.6 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
