Exhibit 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (this “Amendment”), dated April 29, 2014, is entered into
by and between WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), and SKULLCANDY,
INC., a Delaware corporation (“Borrower”).
RECITALS
Borrower and Bank are parties to a Credit Agreement dated August 19, 2013 (as
amended from time to time, the “Credit Agreement”). Capitalized terms used in
these recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.
Borrower has requested that certain amendments be made to the Credit Agreement,
which Bank is willing to make pursuant to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
1.Defined Terms. Capitalized terms used in this Amendment which are defined in
the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.
2.Section 1.1 of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“1.1    LINE OF CREDIT.
(a)    Line of Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including August 19, 2018, not to exceed at any time the aggregate principal
amount of Ten Million Dollars ($10,000,000) (“Line of Credit”) (as such amount
may be reduced pursuant to Section 1.1(d) below), the proceeds of which shall be
used for general corporate purposes. Borrower’s obligation to repay advances
under the Line of Credit shall be evidenced by an amended and restated
promissory note dated as of April 29, 2014 (as amended, restated or otherwise
modified from time to time, the “Line of Credit Note”), all terms of which are
incorporated herein by this reference.
(b)    Limitation on Borrowings. Outstanding borrowings under the Line of
Credit, to a maximum of the principal amount set forth above, shall not at any
time exceed an aggregate of Ten Million Dollars ($10,000,000) (as such amount
may be reduced pursuant to Section 1.1(d) below) less the undrawn amount of all
Letters of Credit.
(c)    Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby and commercial letters of credit for the account of
Borrower (each, a “Letter of Credit” and collectively, “Letters of Credit”);
provided however, that the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed Five Million Dollars ($5,000,000). The
form and substance of each Letter of Credit shall be subject to approval by
Bank, in its sole discretion. Each Letter of Credit shall be issued for a term
not to exceed three hundred sixty-five (365) days, as designated by Borrower;
provided however, that (i) subject to the following clause (ii), any Letter of
Credit with an initial term not exceeding three hundred sixty-five (365) days
may

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provide, upon Borrower’s request and at Bank’s discretion, for its automatic
renewal for additional periods not exceeding three hundred sixty-five (365) days
and (ii) no Letter of Credit shall have an expiration date subsequent to the
maturity date of the Line of Credit. The undrawn amount of all Letters of Credit
shall be reserved under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to the additional
terms and conditions of the Letter of Credit agreements, applications and any
related documents required by Bank in connection with the issuance thereof. Each
drawing paid under a Letter of Credit shall be deemed an advance under the Line
of Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this Agreement applicable to such advances; provided however, that
if advances under the Line of Credit are not available, for any reason, at the
time any drawing is paid, then Borrower shall immediately pay to Bank the full
amount drawn, together with interest thereon from the date such drawing is paid
to the date such amount is fully repaid by Borrower, at the rate of interest
applicable to advances under the Line of Credit. In such event Borrower agrees
that Bank, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such drawing.
(d)    Borrowing, Repayment, Reduction and Termination by Borrower. Borrower may
from time to time during the term of the Line of Credit borrow, partially or
wholly repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions contained herein or in the Line of Credit
Note; provided however, that the total outstanding borrowings under the Line of
Credit shall not at any time exceed the maximum principal amount available
thereunder, as set forth above. Provided that there are no suits, actions,
proceedings or claims pending or threatened against any Indemnified Person under
this Agreement with respect to any Indemnified Liabilities, Borrower may
terminate the Line of Credit at any time prior to August 19, 2018, if it
delivers a written notice to Bank of its intention to do so at least ten (10)
days prior to the proposed termination date and Bank shall, at Borrower’s
expense, release or terminate any filings or other agreements that perfect
Bank’s security interest in or liens on the Collateral (as defined herein and in
any other Loan Documents), upon Bank’s receipt of each of the following, in form
and content satisfactory to Bank: (a) cash payment in full of all obligations of
Borrower to Bank under the Loan Documents, including without limitation, the
payment of all indebtedness, obligations and liabilities of Borrower to Bank
under the Credit Agreement and the other Loan Documents (other than Unasserted
Contingent Indemnification Claims), and completed performance by Borrower with
respect to its other obligations under the Loan Documents, (b) evidence that any
obligation of Bank to extend credit to Borrower under any Loan Document has been
terminated, (c) a general release of all claims against Bank by Borrower and
each of its Subsidiaries party to any Loan Document relating to Bank’s
performance and obligations under the Loan Documents, and (d) an agreement by
Borrower and each of its Subsidiaries party to any Loan Document to indemnify
Bank for any payments received by Bank that are applied to the obligations of
Borrower to Bank under the Loan Documents as a final payoff that may
subsequently be returned or otherwise not paid for any reason.”
3.Section 4.9 of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“4.9    FINANCIAL CONDITION. Maintain the financial condition of Borrower and
its Subsidiaries on a consolidated basis as follows using generally accepted
accounting principles consistently applied and used consistently with prior
practices (except to the extent modified by the definitions herein):

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(a)    Total Liabilities divided by Tangible Net Worth not greater than 1.1 to
1.0 as of the last day of each fiscal quarter, beginning with the fiscal quarter
ending March 31, 2014, with “Total Liabilities” defined as the aggregate of
current liabilities and long-term liabilities, measured on a consolidated basis,
and with “Tangible Net Worth” defined as the aggregate of total stockholders’
equity less any intangible assets, measured on a consolidated basis.
(b)    Current Ratio not less than 2.0 to 1.0 as of the last day of each fiscal
quarter, beginning with the fiscal quarter ending March 31, 2014, with “Current
Ratio” defined as (i) total current assets, measured on a consolidated basis,
divided by total current liabilities, measured on a consolidated basis.
(c)    EBITDA Coverage Ratio not less than 2.0 to 1.0 as of the last day of each
fiscal quarter, determined on a rolling 4-quarter basis, beginning with the
fiscal quarter ending March 31, 2014, with “EBITDA” defined as net profit before
tax plus interest expense (net of capitalized interest expense), depreciation
expense and amortization expense, all measured on a consolidated basis, and with
“EBITDA Coverage Ratio” defined as EBITDA divided by the aggregate of total
interest expense plus the prior period current maturity of long-term debt and
the prior period current maturity of subordinated debt, all measured on a
consolidated basis.”
4.Section 7.17 of the Credit Agreement is hereby amended by adding the following
definitions:
“Current Ratio” has the meaning specified therefor in Section 4.9(b).
“EBITDA” has the meaning specified therefor in Section 4.9(c).
“EBITDA Coverage Ratio” has the meaning specified therefor in Section 4.9(c).
5.Section 7.17 of the Credit Agreement is hereby further amended by deleting the
definition of “Asset Ratio” therefrom.
6.No Other Changes. Except as specifically provided herein, all terms and
conditions of the Credit Agreement shall remain in full force and effect,
without waiver or modification.
7.Conditions Precedent. This Amendment shall be effective when Bank shall have
received an executed original hereof, together with each of the following, each
in substance and form acceptable to Bank in its discretion:
(a)The Amended and Restated Revolving Line of Credit Note.
(b)The Acknowledgment and Agreement of Guarantors set forth at the end of this
Amendment, duly executed by AG Acquisition Corporation and Skullcandy North
America, LLC (each a “Guarantor”).
(c)A Certificate of the Secretary of Borrower certifying as to (i) the
resolutions of the board of representatives of Borrower approving the execution
and delivery of this Amendment, (ii) the fact that the organizational documents
of Borrower, which were certified and delivered to Bank pursuant to the
Certificate of Authority of Borrower dated as of August 19, 2013, continue in
full force and effect and have not been amended or otherwise modified except as
set forth in the Certificate to be delivered, and (iii) certifying that the
officers and agents of Borrower who have been certified to Bank, pursuant to the
Certificate of Authority of Borrower dated as of August 19, 2013, as being
authorized to sign and to act on behalf of Borrower continue to be so authorized
or setting forth the sample signatures of each of the officers and agents of
Borrower authorized to execute and deliver this Amendment and all other
documents, agreements and certificates on behalf of Borrower.
(d)Such other matters as Bank may require.

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8.Representations and Warranties. Borrower hereby represents and warrants to
Bank as follows:
(a)Borrower has all requisite power and authority to execute this Amendment and
any other agreements or instruments required hereunder and to perform all of its
obligations hereunder and thereunder, and each of this Amendment and all such
other agreements and instruments has been duly executed and delivered by
Borrower and constitutes the legal, valid and binding agreement and obligation
of Borrower, enforceable against Borrower in accordance with its respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.
(b)The execution, delivery and performance by Borrower of this Amendment and any
other agreements or instruments required hereunder have been duly authorized by
all necessary corporate action and do not (i) require any authorization, consent
or approval by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign or any of Borrower’s interest holders,
other than authorizations, consents or approvals that have been obtained and
that are still in force and effect, (ii) violate any provision of any law, rule
or regulation or of any order, writ, injunction or decree presently in effect,
having applicability to Borrower, or the certificate of incorporation or bylaws
of Borrower, (iii) contravene any provision of Borrower’s organization
documents, (iv) result in a material breach of or constitute a material default
under any contract, obligation or any other agreement, lease or instrument to
which Borrower is a party or by which it or its properties may be bound or
affected or (v) result in or require the creation or imposition of any lien or
other encumbrance of any nature whatsoever upon any assets of Borrower.
(c)Borrower hereby remakes all representations and warranties contained in the
Credit Agreement and all of the representations and warranties contained in
Article II of the Credit Agreement are correct on and as of the date hereof as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.
9.References; Affirmation. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Loan Documents to the Credit Agreement shall
be deemed to refer to the Credit Agreement as amended hereby. Borrower hereby
reaffirms all covenants set forth in the Loan Documents. The existing Loan
Documents, except as amended by this Amendment or, as applicable, as amended (or
amended and restated) by a separate agreement or instrument in connection
herewith, shall remain in full force and effect, and each of them is hereby
ratified and confirmed by Borrower and Bank. Borrower and Bank intend that this
Amendment shall not in any manner (a) constitute the refinancing, refunding,
payment or extinguishment of the Line of Credit or other obligations of Borrower
evidenced by the existing Loan Documents; (b) be deemed to evidence a novation
of the outstanding balance of the Line of Credit or other obligations of
Borrower; or (c) affect, replace, impair, or extinguish the creation,
attachment, perfection or priority of the liens or other encumbrances on any
collateral granted pursuant to the Credit Agreement or any of the other Loan
Documents evidencing, governing or creating liens or other encumbrances on any
collateral. This Amendment and the Credit Agreement shall be read together, as
one document. Borrower further certifies that as of the date of this Amendment
there exists no Event of Default, nor any condition, act or event which with the
giving of notice or the passage of time or both would constitute any such Event
of Default.
10.No Waiver. The execution of this Amendment and the acceptance of all other
agreements and instruments related hereto shall not be deemed to be a waiver of
any default or Event of Default under the Credit Agreement or a waiver of any
breach, default or event of default under any Loan Document or other document
held by Bank, whether or not known to Bank and whether or not existing on the
date of this Amendment.
11.General Release. In consideration of the benefits provided to Borrower under
the terms and provisions hereof, Borrower and each Guarantor hereby agree as
follows (“General Release”):

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(a)Borrower and each Guarantor, for itself and on behalf of its respective
successors and assigns, do hereby release, acquit and forever discharge Bank,
all of Bank’s predecessors in interest, and all of Bank’s past and present
officers, directors, attorneys, affiliates, employees, and agents, of and from
any and all claims, demands, obligations, liabilities, indebtedness, breaches of
contract, breaches of duty or of any relationship, acts, omissions, misfeasance,
malfeasance, causes of action, defenses, offsets, debts, sums of money,
accounts, compensation, contracts, controversies, promises, damages, costs,
losses and expenses, of every type, kind, nature, description or character,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length (each, a “Released Claim” and
collectively, the “Released Claims”), that Borrower or any Guarantor now has or
may acquire as of the later of: (i) the date this Amendment becomes effective
through the satisfaction (or waiver by Bank) of all conditions hereto; or (ii)
the date that Borrower and each Guarantor have executed and delivered this
Amendment to Bank (hereafter, the “Release Date”), including without limitation,
those Released Claims in any way arising out of, connected with or related to
any and all prior credit accommodations, if any, provided by Bank, or any of
Bank’s predecessors in interest, to Borrower or any Guarantor, and any
agreements, notes or documents of any kind related thereto or the transactions
contemplated thereby or hereby, or any other agreement or document referred to
herein or therein.
(b)Borrower and each Guarantor hereby acknowledge, represent and warrant to Bank
that they agree to assume the risk of any and all unknown, unanticipated or
misunderstood defenses and Released Claims which are released by the provisions
of this General Release in favor of Bank, and Borrower and each Guarantor hereby
waive and release all rights and benefits which they might otherwise have under
any state or local laws or statutes with regard to the release of such unknown,
unanticipated or misunderstood defenses and Released Claims.
(c)Borrower and each Guarantor hereby acknowledge that each of them has had an
opportunity to obtain a lawyer’s advice concerning the legal consequences of
each of the provisions of this General Release.
(d)Borrower and each Guarantor hereby specifically acknowledge and agree that:
(i) none of the provisions of this General Release shall be construed as or
constitute an admission of any liability on the part of Bank; (ii) the
provisions of this General Release shall constitute an absolute bar to any
Released Claim of any kind, whether any such Released Claim is based on
contract, tort, warranty, mistake or any other theory, whether legal, statutory
or equitable; and (iii) any attempt to assert a Released Claim barred by the
provisions of this General Release shall subject Borrower and each Guarantor to
the provisions of applicable law setting forth the remedies for the bringing of
groundless, frivolous or baseless claims or causes of action.
12.Costs and Expenses. Borrower hereby reaffirms its agreement under the Credit
Agreement to pay or reimburse Bank on demand for all costs and expenses incurred
by Bank in connection with the Loan Documents, including without limitation all
reasonable fees and disbursements of legal counsel. Without limiting the
generality of the foregoing, Borrower specifically agrees to pay all fees and
distributions of counsel to Bank for the services performed by such counsel in
connection with the preparation of this Amendment and the documents and
instruments incidental hereto.
13.Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
14.Miscellaneous. This Amendment and the Acknowledgment and Agreement of
Guarantors may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same agreement. Delivery of an executed counterpart
of this Amendment by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart of
this Amendment. Any party delivering an executed counterpart of this Amendment
by telefacsimile or other electronic method of transmission also shall

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deliver an original executed counterpart of this Amendment but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.
[The remainder of this page intentionally left blank.]Signature Page to First
Amendment
{Z0025654/6 }
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.
WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Richard J. Lambert
Name: Richard J. Lambert
Title: Senior Vice President
SKULLCANDY, INC.

By: /s/ Jason Hodell
Name: Jason Hodell
Title: Chief Financial Officer

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Acknowledgment and Agreement of Guarantor to First Amendment

ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
Each of the undersigned, each a guarantor of the indebtedness of Skullcandy,
Inc. (“Borrower”) to Wells Fargo Bank, National Association (“Bank”), pursuant
to a Continuing Guaranty dated August 19, 2013 (each, a “Guaranty”), hereby (i)
acknowledges receipt of the foregoing Amendment; (ii) consents to the terms
(including without limitation the release set forth in Paragraph 11 of the
Amendment) and execution thereof; (iii) reaffirms (A) all obligations to Bank
pursuant to the terms of its Guaranty and the terms of the Third Party Security
Agreement dated as of August 19, 2013 (each, a “Security Agreement”) between it
and Bank, (B) its waivers of each and every one of the defenses to such
obligations as set forth in its Guaranty and/or its Security Agreement, and (C)
that its obligations under its Guaranty and its Security Agreement are separate
and distinct from the obligations of any other party under the foregoing
Amendment and the other Loan Documents; (iv) acknowledges that the
“Indebtedness” (as defined in its Security Agreement) and obligations secured by
its Security Agreement include all obligations of the undersigned under its
Guaranty, and that the term “Guaranty” as referenced in its Security Agreement
includes its Guaranty; and (v) acknowledges that (A) the term “Loan Documents”
as used in its Guaranty means such documents as they may be amended or otherwise
modified and (B) Bank may amend, restate, extend, renew or otherwise modify the
Credit Agreement, any Loan Document and any other instrument or agreement of
Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under its Guaranty for
all of Borrower’s present and future indebtedness to Bank.

 
AG ACQUISITION CORPORATION

By: /s/ Jason Hodell
Name: Jason Hodell
Title: Chief Financial Officer

 
SKULLCANDY NORTH AMERICA, LLC

By: /s/ Jason Hodell
Name: Jason Hodell
Title: Chief Financial Officer