Exhibit 10.26
THIRD AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AGREEMENT
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THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment") is made and entered into this 11th day of September, 1996, by and
among XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking
association formerly known as First Interstate Bank of Texas, N.A. (the "Bank"),
Fossil Partners, L.P. (the "Borrower"), Fossil, Inc. (the "Company"), Fossil
Intermediate, Inc. ("Fossil Intermediate"), Fossil Trust ("Fossil Trust"),
Fossil New York, Inc. ("Fossil New York"), Fossil Stores I, Inc. ("Fossil I")
and Fossil Stores II, Inc. ("Fossil II").
RECITALS
A. The Bank, the Borrower, the Company, Fossil Intermediate, Fossil
Trust, Fossil New York and Fossil I are parties to that certain Second Amended
and Restated Loan Agreement, dated effective April 30, 1995, as amended by (i)
that certain First Amendment to Second Amended and Restated Loan Agreement,
dated effective March 27, 1996, by and among the Bank, the Borrower, the
Company, Fossil Intermediate, Fossil Trust, Fossil New York and Fossil I, and
(ii) that certain Second Amendment to Second Amended and Restated Loan
Agreement, dated effective May 3, 1996, by and among the Bank, the Borrower, the
Company, Fossil Intermediate, Fossil Trust, Fossil New York, Fossil I and Fossil
II (as amended, the "Loan Agreement");
B. The Bank and the Borrower desire to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
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1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
Amendments
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2.01 Amendment to Section 1. Effective as of the date hereof, Section 1
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"1. The Line of Credit. Subject to, and upon the terms,
conditions, covenants and agreements contained herein, the Bank agrees
to loan the Borrower, at any time, and from time to time prior to the
maturity of the Borrower's promissory note executed in conjunction with
this Agreement such amounts as the Borrower may request up to, but not
exceeding, an aggregate principal sum at any time outstanding equal to
$30,000,000.00 (provided, however, that, notwithstanding the foregoing,
during the period from September 1, 1996 through October 31, 1996, the
Borrower may request an amount up to, but not exceeding,
$37,000,000.00)(the 'Line of Credit'); within such limits and during
such period, the Borrower may borrow, repay, and re-borrow hereunder.
All loans under the Line of Credit shall be evidenced by the Borrower's
Sixth Amended and Restated Master Revolving Credit Note (the 'Revolving
Note'), substantially in form and substance satisfactory to the Bank,
payable to the order of the Bank, and bearing interest upon the terms
provided therein (but in no event to exceed the maximum non-usurious
interest rate permitted by law). The principal of and interest on the
Revolving Note shall be due and payable as set forth on the face of the
Revolving Note. Notation by the Bank on its records shall constitute
prima facie evidence of the amount and date of any payment or borrowing
thereunder.
(a) Renewals and Extensions. All renewals,
extensions, modifications and rearrangements of the Revolving
Note, if any, shall be deemed to be made pursuant to this
Agreement, and accordingly, shall be subject to the terms and
provisions hereof, and the Borrower shall be deemed to have
ratified, as of such renewal, extension, modification or
rearrangement date, all of the representations, covenants and
agreements herein set forth.
(b) Letters of Credit. Advances under the Line of
Credit may also be made to fund Documentary or Stand-by
Letters of Credit (as hereinafter defined) that are issued
under the Revolving Note and are drawn upon, provided, the
Bank may, in its own discretion, advance funds under the Line
of Credit to fund such Documentary or Stand-by Letters of
Credit (as hereinafter defined) when the Borrower does not
reimburse the Bank for such funding. All such advances shall
be added to the principal amount of the Revolving Note."
2.02 Amendment to Section 2. Effective as of the date hereof, Section 2
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"2. Documentary and Stand-by Letters of Credit. Subject to the
conditions herein, the Bank shall (a) from time to time, at the request
of the Borrower, issue documentary or stand-by letters of credit to
Borrower's vendors for the acquisition of inventory for the Borrower
(the 'Inventory Acquisition Letters of Credit') and (b) at the request
of the Borrower, issue a stand-by letter of credit in an aggregate
amount up to (Y)600,000,000.00 in favor of any Japanese domestic bank
for the account of the Borrower (the 'JDB Letter of Credit')(the
Inventory Acquisition Letters of Credit and the JDB Letter of Credit
are hereinafter collectively referred to as the 'Documentary or
Stand-by Letters of Credit'). The fees for such issuance shall be in
accordance with the Bank's schedule of fees for issuance of letters of
credit existing as of the time of issuance. Immediately upon issuance,
such Documentary and Stand-by Letters of Credit shall be considered in
computing the amount of funds available to the Borrower, as provided in
Section 6 herein. The Bank shall not be obligated: (x)(i) during the
period from September 1, 1996 through October 31, 1996, to issue
Documentary or Stand-by Letters of Credit if the issuance of same would
cause the Outstanding Revolving Credit (as hereinafter defined) to
exceed the sum of (A) the Borrowing Base (as hereinafter defined) and
(B) $7,000,000.00, and (ii) at any time after October 31, 1996, to
issue Documentary or Stand-by Letters of Credit if the issuance of same
would cause the Outstanding Revolving Credit to exceed the Borrowing
Base; (y) to issue such Letters of Credit with an expiration date more
than one hundred eighty (180) days after the maturity date of the
Revolving Note; and (z) to extend the expiration date of such Letters
of Credit to a date more than one hundred eighty (180) days after the
maturity date of the Revolving Note."
2.03 Amendment to Section 6(a). Effective as of the date hereof,
Section 6(a) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(a) Revolving Note. The aggregate principal amount at any
time outstanding under the Revolving Note for loans made in a currency
other than in lawful money of Japan ('Yen'), plus one hundred twenty
percent (120%) of the aggregate principal amount at any time
outstanding under the Revolving Note for loans made in Yen (calculated
by reference to the amount of United States of America dollars into
which Bank determines it could, in accordance with its practice from
time to time in the interbank foreign exchange market, convert such
amount of Yen at its spot rate of exchange in effect at approximately
8:00 a.m. (Dallas, Texas time) on the day on which such loan is made),
plus, one hundred twenty percent (120%) of the face amount of the JDB
Letter of Credit (calculated by reference to the amount of United
States of America dollars into which Bank determines it could, in
accordance with its practice from time to time in the interbank foreign
exchange market, convert such amount of Yen at its spot rate of
exchange in effect at approximately 8:00 a.m. (Dallas, Texas time) on
the date of determination), plus the face amount of all outstanding
Documentary and Stand-by Letters of Credit (other than the JDB Letter
of Credit) issued for the account of the Borrower, plus twenty percent
(20%) of the aggregate amount of all foreign currency future contracts
issued by the Bank for the account of the Borrower (said sum being
herein referred to as the 'Outstanding Revolving Credit') shall not at
any time exceed the lesser of (a) $30,000,000.00, or (b) the Borrowing
Base (as hereinafter defined); provided, however, that, notwithstanding
the foregoing, during the period from September 1, 1996 through October
31, 1996, the Outstanding Revolving Credit shall not at any time exceed
the lesser of (a) $37,000,000.00, or (b) the sum of (i) the Borrowing
Base and (ii) $7,000,000.00."
2.04 Amendment to Section 6(c). Effective as of the date hereof,
Section 6(c) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(c) Borrowing Base Compliance. In the event the Outstanding
Revolving Credit at any time exceeds the Borrowing Base then, upon
notice from the Bank, the Borrower shall immediately make such payments
to the Bank necessary to reduce the Outstanding Revolving Credit to an
amount such that the Outstanding Revolving Credit is less than or equal
to the amount of the Borrowing Base; provided, however, that,
notwithstanding the foregoing, during the period from September 1, 1996
through October 31, 1996, the term 'Borrowing Base' as used in this
Section 6(c) shall be replaced by the phrase 'sum of (i) the Borrowing
Base and (ii) $7,000,000.00.'"
2.05 Amendment to Section 16(a). Effective as of the date hereof,
Section 16(a) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(a) Debt. Create, incur, assume or suffer to exist any debt
for borrowed money, whether by way of loan, or the issuance or sale of
bonds, debentures, notes or securities, including deferred debt for the
purchase price of assets, except (i) the loans described herein, (ii)
revolving credit loans in an aggregate principal amount of up to
(Y)600,000,000.00 from any Japanese domestic bank; provided, that the
only security for such revolving credit loans shall be the JDB Letter
of Credit, (iii) loans from one or more Guarantors to the Borrower or
another Guarantor, so long as the indebtedness in respect of such loans
is unsecured and fully subordinated to the indebtedness owing to the
Bank pursuant to a written subordination agreement in form and
substance satisfactory to the Bank, and (iv) current accounts payable
and other current obligations (other than for borrowed money) arising
out of transactions in the ordinary course of business."
2.06 Amendment to Section 19. Effective as of the date hereof, Section
19 of the Loan Agreement is hereby amended by deleting the reference therein to
"First Interstate Bank of Texas, N.A." and substituting in lieu thereof "Xxxxx
Fargo Bank (Texas), National Association".
ARTICLE III
Conditions Precedent
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3.01 Conditions to Effectiveness. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by the Bank:
(a) The Bank shall have received the following documents, each in form
and substance satisfactory to the Bank and its counsel:
(i) This Amendment, duly executed by the Borrower, the
Company, Fossil Intermediate, Fossil Trust, Fossil New York, Fossil I
and Fossil II;
(ii) A Revolving Note in the form of Exhibit A to this
Amendment, duly executed by Borrower; and
(iii) A company general certificate (hereinafter referred
to as the "Company General Certificate")for the Company, certified by
its Secretary or Assistant Secretary, acknowledging (A) that its
Board of Directors has met and has adopted, approved, consented to
and ratified resolutions which authorize the execution, delivery and
performance of this Amendment, the Revolving Note and all other Loan
Documents to which it is or is to be a party, and (B) the names of
the officers authorized to sign this Amendment, the Revolving Note
and each of the other Loan Documents to which it is or is to be a
party (including the certificates contemplated herein) together with
specimen signatures of such officers. The Company General Certificate
shall conform to the Company General Certificate which is attached
hereto as Exhibit B and incorporated herein for all purposes;
(b) There shall have been no material adverse change in the
financial condition of the Borrower or any Guarantor;
(c) There shall be no material adverse litigation, either pending or
threatened, against the Borrower or any Guarantor that could reasonably be
expected to have a material adverse effect on the Borrower or such Guarantor;
(d) The representations and warranties contained herein and in the Loan
Agreement and the other Loan Documents, as each is amended hereby, shall be true
and correct as of the date hereof, as if made on the date hereof;
(e) No default or Event of Default shall have occurred and be
continuing, unless such default or Event of Default has been specifically waived
in writing by the Bank;
(f) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to the Bank and its legal
counsel; and
(g) The Bank shall have received from the Borrower a closing fee in
the amount of Five Thousand and No/100 Dollars ($5,000.00)(the "Closing Fee"),
payable on the date hereof. The Closing Fee shall reimburse the Bank for its
costs and expenses incurred in connection with the negotiation, execution and
delivery of this Amendment, including the Bank's attorney's fees.
ARTICLE IV
Limited Waiver and Consent
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4.01 By execution of this Agreement and upon satisfaction of the
conditions precedent set forth in Article III of this Amendment, the Bank hereby
(a) consents to the Borrower guaranteeing certain loans made by one or more
financial institutions to the Borrower's officers and employees (provided, that
the aggregate principal amount of such loans shall not exceed $50,000.00)(the
"Officer Guarantees"), and (b) waives any default or Event of Default arising
under the Loan Agreement solely by reason of the Borrower's violation of Section
16(b) of the Loan Agreement resulting from the Borrower entering into the
Officer Guarantees. Except as specifically provided in this Article IV, nothing
contained herein shall be construed as a waiver by the Bank of any covenant or
provision of the Loan Agreement, the other Loan Documents, this Amendment, or of
any other contract or instrument between the Borrower or the Guarantors and the
Bank, and the failure of the Bank at any time or times hereafter to require
strict performance by the Borrower or any Guarantor of any provision thereof
shall not waive, affect or diminish any right of the Bank to thereafter demand
strict compliance therewith. The Bank hereby reserves all rights granted under
the Loan Agreement, the other Loan Documents, this Amendment and any other
contract or instrument between the Borrower, the Guarantors and the Bank.
ARTICLE V
Ratifications, Representations and Warranties
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5.01 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The parties hereto agree that the Loan
Agreement and the other Loan Documents, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
5.02 Representations and Warranties. The Borrower, the Company, Fossil
Intermediate, Fossil Trust, Fossil New York, Fossil I and Fossil II hereby
represent and warrant to the Bank that (a) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been duly authorized by all
requisite corporate, partnership or trust proceedings, as appropriate, and will
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the Agreement of Limited Partnership, Articles of
Incorporation, By-Laws or Trust Agreement, as applicable, of the Borrower or any
Guarantor, or of any mortgage, indenture, contract, agreement or other
instrument, or any judgment, order or decree, binding upon the Borrower or any
Guarantor; (b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and the other Loan Documents are true and correct
on and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (c) no default or Event of Default
under the Loan Agreement, as amended hereby, has occurred and is continuing,
unless such default or Event of Default has been specifically waived in writing
by the Bank; and (d) the Borrower and the Guarantors are in full compliance with
all covenants and agreements contained in the Loan Agreement and the other Loan
Documents, as amended hereby.
ARTICLE VI
Miscellaneous Provisions
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6.01 Survival of Representations and Warranties. All representations
and warranties made in the Loan Agreement or any other Loan Documents,
including, without limitation, any document furnished in connection with this
Amendment, shall survive the execution and delivery of this Amendment and the
other Loan Documents, and no investigation by the Bank or any closing shall
affect the representations and warranties or the right of the Bank to rely upon
them.
6.02 Reference to Loan Agreement. Each of the Loan Agreement and the
other Loan Documents, and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof or pursuant
to the terms of the Loan Agreement, as amended hereby, are hereby amended so
that any reference in the Loan Agreement and such other Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement, as amended hereby.
6.03 Expenses of the Bank. As provided in the Loan Agreement, the
Borrower agrees to pay on demand all reasonable costs and expenses incurred by
the Bank in connection with the preparation, negotiation, and execution of this
Amendment and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of the Bank's legal counsel, and all costs and
expenses incurred by the Bank in connection with the enforcement or preservation
of any rights under the Loan Agreement, as amended hereby, or any other Loan
Documents, including, without, limitation, the costs and fees of the Bank's
legal counsel.
6.04 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of the Borrower, the Guarantors and the Bank and their
respective successors and assigns.
6.06 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
6.07 Effect of Waiver. No consent or waiver, express or implied, by the
Bank to or for any breach of or deviation from any covenant or condition by the
Borrower or any Guarantor shall be deemed a consent to or waiver of any other
breach of the same or any other covenant, condition or duty.
6.08 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE lAWS OF THE STATE OF
TEXAS.
6.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS,
EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY THE BORROWER,
THE GUARANTORS AND THE BANK.
6.11 Release. THE BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "INDEBTEDNESS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM THE BANK. THE BORROWER AND THE GUARANTORS HEREBY
VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE THE BANK, ITS
PREDECESSORS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE BORROWER OR THE GUARANTORS MAY NOW OR HEREAFTER
HAVE AGAINST THE BANK, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY LOANS OR EXTENSIONS OF CREDIT FROM THE BANK TO THE BORROWER
UNDER THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE
OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND
NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
6.12 Agreement for Binding Arbitration. Each party to this Amendment
hereby acknowledges that it has agreed to be bound by the terms and provisions
of the Bank's current Arbitration Program, which is incorporated by reference
herein and is acknowledged as received by the parties pursuant to which any and
all disputes shall be resolved by mandatory binding arbitration upon the request
of any party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BANK"
XXXXX FARGO BANK (TEXAS), NATIONAL
ASSOCIATION,
By:___________________________________________
Xxxxxxx X.X. Xxxx
Vice President
"BORROWER"
FOSSIL PARTNERS, L.P.
By: Fossil, Inc., its general partner
By:__________________________________________
Xxxxx X. Xxxxxx, Executive Vice President
and Chief Financial Officer
"GUARANTORS"
FOSSIL, INC.
By:___________________________________________
Xxxxx X. Xxxxxx, Executive Vice President
and Chief Financial Officer
FOSSIL INTERMEDIATE, INC.
By:___________________________________________
Xxxxx X. Xxxxxxxxx, President
FOSSIL TRUST
By:___________________________________________
Xxxxx X. Xxxxxx, Trustee
FOSSIL NEW YORK, INC.
By:___________________________________________
Xxxxx X. Xxxxxxxxx, Chief Executive Officer
FOSSIL STORES I, INC.
By:___________________________________________
Xxxxx X. Xxxxxx, Treasurer
FOSSIL STORES II, INC.
By:___________________________________________
Xxxxx X. Xxxxxx, Treasurer
Exhibits:
A - Form of Revolving Note
B - Form of Company General Certificate
EXHIBIT A
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FORM OF REVOLVING NOTE
(See Attached)
EXHIBIT B
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FORM OF COMPANY GENERAL CERTIFICATE
(See Attached)
