OAKLEY, INC.
FOURTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
This FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "AMENDMENT") is dated as of January 29, 1997 and entered into by and
among OAKLEY, INC., a Washington corporation ("COMPANY"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred
to herein as a "LENDER" and collectively as "LENDERS") and ▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION ("▇▇▇▇▇ FARGO"), as agent for Lenders (in such capacity,
"AGENT") and, for purposes of Section 5, the Consenting Parties (as defined
therein), and is made with reference to that certain Amended and Restated
Credit Agreement dated as of August 15, 1995, as amended by the First
Amendment to Amended and Restated Credit Agreement, dated as of November 22,
1995, by and among Company, Lenders and Agent, the Second Amendment to
Amended and Restated Credit Agreement, dated as of October 10, 1996, by and
among Company, Lenders and Agent, and the Third Amendment to Amended and
Restated Credit Agreement, dated as of November 25, 1996 (as amended, the
"CREDIT AGREEMENT"), by and among Company, Lenders and Agent. Capitalized
terms used herein without definition shall have the same meanings herein as
set forth in the Credit Agreement.
RECITALS
A. Company and Lenders desire to amend the Credit Agreement to
increase the Revolving Loan Commitment to $30,000,000.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
agree as follows:
SECTION 1. MODIFICATIONS TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 2.1A: COMMITMENTS.
Subsection 2.1A of the Credit Agreement is hereby amended by
deleting the reference to "$18,000,000" contained therein and substituting
"$30,000,000" therefor.
1.2 AMENDMENT TO SUBSECTION 7.6: FINANCIAL COVENANTS
Subsections 7.6A, 7.6B and 7.6C of the Credit Agreement are hereby
amended and restated as follows:
"A. MINIMUM CASH FLOW COVERAGE RATIO.
Company shall not permit the ratio of (i) an amount equal to EBITDA
minus the sum of (a) taxes paid or to be paid in cash, (b) Capital
Expenditures paid in cash or other consideration and Stock
Payments (determined as of the last day of any fiscal
quarter of Company for the four consecutive fiscal quarters
then ended in each case with respect to the Company and its
Subsidiaries on a consolidated basis in conformity with
GAAP) to (ii) the sum of Interest Expense (determined as of
the last day of such fiscal quarter for such four fiscal
quarter period then ended) plus the current portion of
Funded Debt (determined as of the last day of such fiscal
quarter) to be less than 2.0 to 1.00. For purposes hereof,
"Stock Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares
of any class of stock of Company now or hereafter
outstanding, except a dividend or distribution payable
solely in shares of capital stock that is not subject to
mandatory redemption or payment or (ii) any redemption,
retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any
shares of any class of stock of Company, or of any warrants,
options or other rights to acquire any such shares of stock,
now or hereafter outstanding.
B. MINIMUM LIQUIDITY. Company shall not permit the
sum of its Cash and Cash Equivalents plus the amount (if
any) by which the Commitments exceed the Total Utilization
of Revolving Loan Commitments as of the last day of any
fiscal quarter of Company on and after June 30, 1997 to be
less than $4,000,000.
C. MAXIMUM LEVERAGE. Company shall not permit the
ratio of (i) an amount equal to total Indebtedness and other
liabilities that would be reflected on the Company's balance
sheet in accordance with GAAP minus Subordinated Debt
(determined as of the last day of any fiscal quarter of
Company with respect to Company and its Subsidiaries on a
consolidated basis in conformity with GAAP) to (ii) an
amount equal to Tangible Net Worth plus Subordinated Debt
(determined as of the last day of any fiscal quarter of
Company with respect to Company and its Subsidiaries on a
consolidated basis in conformity with GAAP) to be more than
.75 to 1.00."
1.3 WAIVER OF SECTION 2.5A.
Section 2.5A of the Credit Agreement is hereby waived to the extent
necessary to permit Company during the 1996 and 1997 Fiscal Years to
repurchase Company Common Stock from shareholders of Company using proceeds
of Revolving Loans.
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1.4 MODIFICATION OF SCHEDULE
SCHEDULE 2.1: LENDERS' COMMITMENTS AND PRO RATA SHARES. SCHEDULE
2.1 to the Credit Agreement is hereby amended by deleting said SCHEDULE 2.1
in its entirety and substituting in its place thereof a new SCHEDULE 2.1 in
the form of ANNEX A to this Amendment.
SECTION 2. REPLACEMENT REVOLVING NOTES
Company agrees to execute and deliver to each Lender a new
Revolving Note (collectively, the "REPLACEMENT REVOLVING NOTES") in the
amount of such Lender's Revolving Loan Commitment in the form of EXHIBIT A
attached hereto. Each Lender hereby agrees that as promptly as practicable
after the Fourth Amendment Effective Date (as defined hereinafter) such
Lender shall return to Company for cancellation any Notes in such Lender's
possession evidencing Revolving Loans outstanding prior to the effectiveness
of this Amendment.
SECTION 3. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "FOURTH
AMENDMENT EFFECTIVE DATE"):
A. Company shall deliver to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Fourth
Amendment Effective Date:
1. Copies of this Amendment executed by Company and each Consenting
Party;
2. Signature and incumbency certificates of Company's and each
Guarantor's officers executing this Amendment and, in the case of Company,
the Replacement Revolving Notes;
3. Resolutions of Company's and each Guarantor's Board of Directors
approving and authorizing the execution, delivery and performance of this
Amendment and, in the case of Company, approving and authorizing the
execution, delivery and payment of the Replacement Revolving Notes; and
4. Replacement Revolving Notes executed by the Company,
substantially in the form of EXHIBIT A to this Amendment, with appropriate
insertions for each Lender as provided for in this Amendment.
B. On or before the Fourth Amendment Effective Date, Agent, on
behalf of Lenders, shall have received a counterpart of this Amendment
executed by a duly authorized
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officer of each Lender.
C. Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for Company and the
Guarantors, and Preston, Gates, & ▇▇▇▇▇, special Washington counsel for
Company and Guarantors incorporated in Washington, in each case in form and
substance reasonably satisfactory to Agent and its counsel, dated as of the
date hereof.
SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Company represents
and warrants to each Lender, as of the date hereof and as of the Fourth
Amendment Effective Date, that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite
corporate power and authority to enter into this Amendment and the
Replacement Revolving Notes, and to carry out the transactions contemplated
by, and perform its obligations under, the Credit Agreement as amended by
this Amendment (the "AMENDED AGREEMENT") and the Replacement Revolving Notes.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of Company and each
Consenting Party. The issuance, delivery and payment of the Replacement
Revolving Notes have been duly authorized by all necessary corporate action
on the part of the Company.
C. NO CONFLICT. The execution and delivery by Company and each
Consenting Party of this Amendment and, in the case of Company, the
Replacement Revolving Notes, and the performance by Company and each
Consenting Party of the Loan Documents and, in the case of Company, the
Replacement Revolving Notes do not and will not (i) violate the Certificate
or Articles of Incorporation or Bylaws of Company or any of its Subsidiaries,
(ii) violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries or any order, judgment or
decree of any court or other agency of government binding on Company or any
of its Subsidiaries, which violation could reasonably be expected to have a
Material Adverse Effect, (iii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries in a manner that
could reasonably be expected to have a Material Adverse Effect, (iv) result
in or require the creation or imposition of any Lien upon any of the
properties or assets of Company or any of its Subsidiaries (other than any
Liens created under any of the Loan Documents in favor of Agent on behalf of
Lenders), or (v) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries.
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D. GOVERNMENTAL CONSENTS. The execution and delivery by Company
and each Consenting Party of this Amendment and, in the case of Company, the
Replacement Revolving Notes, and the performance by Company and each
Consenting Party of the Loan Documents and, in the case of Company, the
Replacement Revolving Notes, do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by,
any federal, state or other governmental authority or regulatory body.
E. BINDING OBLIGATION. Each Loan Document and, in the case of
Company, the Replacement Revolving Notes have been duly executed and
delivered by Company and each Consenting Party, as applicable, and are the
legally valid and binding obligations of Company and each Consenting Party
thereto, enforceable against each such Person in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. All Subsidiaries of Company required to guaranty the
Obligations have guarantied the Obligations. All Persons required to enter
into the Subordination Agreement have entered into the Subordination
Agreement.
G. ABSENCE OF DEFAULT. Upon giving effect to this Amendment, no
event has occurred and is continuing or will result from the consummation of
the transactions contemplated by this Amendment that would constitute an
Event of Default or a Potential Event of Default.
SECTION 5. ACKNOWLEDGEMENT AND CONSENT
Repeat Incorporated, an Arizona corporation ("REPEAT"), and Barter
Optical, Inc., a Washington corporation ("BARTER"), are parties to the
Guaranty, pursuant to which Repeat and Barter have guarantied the Obligations
of Company under the Credit Agreement. Repeat, Barter, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("JANNARD") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and together with Repeat, Barter
and Jannard, the "CONSENTING PARTIES") are parties to the Subordination
Agreement pursuant to which the Consenting Parties have subordinated the
Subordinated Debt (as defined in the Subordination Agreement) to all Senior
Debt (as defined in the Subordination Agreement), including the Obligations.
Each Consenting Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents
to the amendment of the Credit Agreement effected pursuant to this Amendment,
including the increase in the Commitments pursuant hereto. Repeat and Barter
hereby confirm that the Guaranty will continue to guaranty to the fullest
extent possible the payment and performance of all "Guarantied Obligations"
(as such term is defined in the Guaranty), including without limitation the
payment and performance of all such Guarantied Obligations, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and all Notes. Each Consenting Party hereby confirms that
the Subordination Agreement will continue to subordinate to the fullest
extent possible all Subordinated Debt to all Senior Debt, including all
Obligations now or hereafter existing under or in respect of the
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Amended Agreement and all Notes and other Loan Documents.
Each Consenting Party acknowledges and agrees that the Guaranty and
the Subordination Agreement to which such Person is a party shall continue in
full force and effect and that all of its obligations thereunder shall be
valid and enforceable and shall not be impaired or limited by the execution
or effectiveness of this Amendment. Each Consenting Party represents and
warrants that all representations and warranties contained in the Guaranty
and the Subordination Agreement to which it is a party or otherwise bound are
true, correct and complete in all material respects on and as of the Fourth
Amendment Effective Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete
in all material respects on and as of such earlier date.
Each Consenting Party acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Consenting Party is not required by the terms of the Credit Agreement or
any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the
consent of such Consenting Party to any future amendments to the Credit
Agreement.
SECTION 6. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Fourth Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended or waived by this Amendment,
the Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees
and expenses as described in subsection 10.2 of the Credit Agreement incurred
by Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
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C. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This 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; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective upon the execution of a counterpart hereof by Requisite Lenders and
each of the other parties hereto and receipt by Company and Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
OAKLEY, INC., as the Borrower
By:
--------------------------------
Title:
-----------------------------
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, Individually and as Agent
By:
--------------------------------
Title:
-----------------------------
UNION BANK OF CALIFORNIA, N.A.,
(formerly named Union Bank) as a Lender
By:
--------------------------------
Title:
-----------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By:
--------------------------------
Title:
-----------------------------
ACKNOWLEDGMENT AND CONSENT
--------------------------
BARTER OPTICAL, INC., as a Consenting Party
By:
----------------------------
Title:
-------------------------
S-1
REPEAT INCORPORATED, as a Consenting Party
By:
----------------------------
Title:
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as a Consenting Party
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as a Consenting Party
-----------------------------------
S-2
ANNEX A
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
Revolving Loan Pro Rata
Lender Commitment Share
------ ---------------- ---------
▇▇▇▇▇ Fargo Bank, N.A. $10,500,000 35.00%
Union Bank of $ 9,750,000 32.50%
California, N.A.
Bank of America $ 9,750,000 32.50%
N.T. & S.A.
------------- ------
TOTAL $30,000,000 100%
A-1
EXHIBIT A
[FORM OF REPLACEMENT REVOLVING NOTE]
OAKLEY, INC.
PROMISSORY NOTE
$[1] Los Angeles, California
January __, 1997
FOR VALUE RECEIVED, Oakley, Inc., a Washington corporation
("COMPANY"), promises to pay to the order of [2] ("PAYEE") on or before the
Revolving Loan Commitment Termination Date, as defined in the Credit
Agreement referred to below, the lesser of (x) [3] ($[1]) and (y) the unpaid
principal amount of all advances made by Payee to Company as Revolving Loans
under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, until paid in full, at the rates, from the dates and at the
times which shall be determined in accordance with the provisions of that
certain Amended and Restated Credit Agreement dated as of August 15, 1995 by
and among Company, the financial institutions listed therein as Lenders, and
▇▇▇▇▇ Fargo Bank, National Association, as Agent (said Amended and Restated
Credit Agreement, as it may be amended, supplemented or otherwise modified
from time to time, being the "CREDIT AGREEMENT", the terms defined therein
and not otherwise defined herein being used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the aggregate
principal amount of $30,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a
more complete statement of the terms and conditions under which the Revolving
Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day
funds at the Funding and Payment Office or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Unless and until an Assignment Agreement effecting the
assignment or transfer of this Note shall have been accepted by Agent and
recorded in the Register as provided in subsection 10.1B(ii) of the Credit
Agreement, Company and Agent
--------------------
[1] Insert amount of Lender's Revolving Loan Commitment in numbers.
[2] Insert Lender's name in capital letters.
[3] Insert amount of Lender's Revolving Loan Commitment in words.
Exh. A-1
shall be entitled to deem and treat Payee as the owner and holder of this
Note and the Loans evidenced hereby. Payee hereby agrees, by its acceptance
hereof, that before disposing of this Note or any part hereof it will make a
notation hereon of all principal payments previously made hereunder and of
the date to which interest hereon has been paid; PROVIDED, HOWEVER, that the
failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4A(iii) of the Credit Agreement and to prepayment at the option
of Company as provided in subsection 2.4A(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
Exh. A-2
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the
date and at the place first written above.
OAKLEY, INC.
By:
--------------------------
Title:
-----------------------
Exh. A-3
TRANSACTIONS
ON
REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- --------- --------- --------------- ------------ ---------
▇▇▇. ▇-▇
