www.eXFILE.com 888-775-4789 --- SIGNATURE EYEWEAR, INC. -- FORM 10Q


    EXHIBIT
10.1

     

    AMENDMENT NO.1 TO LOAN AND
SECURITY AGREEMENT

     

    This
Amendment No. 1 to Loan and Security Agreement (this “Amendment”) is made on
December 15, 2009 (“Effective Date”) by and among COMERICA BANK, a Texas banking
association (“Bank”), and SIGNATURE EYEWEAR, INC., a California corporation
(“Borrower”).

     

    Borrower
and Bank entered into a Loan and Security Agreement dated September 14, 2007
(“Loan Agreement”) providing terms and conditions governing certain loans and
other credit accommodations extended by Bank to Borrower
(“Indebtedness”).  Borrower and Bank have agreed to amend the terms of
the Loan Agreement, as provided in this Amendment.

     

    Accordingly,
Borrower and Bank agree as follows:

     

    1.  Capitalized
Terms.  In this Amendment, capitalized terms that are used
without separate definition shall have the meanings given to them in the Loan
Agreement.

     

    2.  Amendments.  The
Loan Agreement is amended as follows:

     

    (a) The
following terms, which are defined in the Loan Agreement, are given the
following amended definitions:

     

    “Advance”
shall mean a borrowing requested by Borrower and made by Bank under this
Agreement, including a LIBOR Option Advance and/or a Prime Referenced Rate
Option Advance.

     

    “Credit
Limit” shall mean Four Million Dollars ($4,000,000).

     

    “First
Amendment Effective Date” shall mean December 15, 2009.

     

    “Inventory
Advances” shall mean any Advances made by Bank which are thirty five percent
(35%) of the lower of cost or market value of Borrower’s Eligible Inventory, and
as may be adjusted by Bank, in Bank’s discretion, for age and seasonality or
other factors affecting the value of the Inventory, up to advances outstanding
at any one time of not greater than the Inventory Sublimit upon Borrower’s
concurrent execution and delivery to Bank of a Designation of Inventory, or
Certification of Borrowing Base, in form customarily used by
Bank.  “Eligible Inventory” shall mean Borrower’s Inventory that (a)
consists of finished goods (i.e., frames) or eyeglass cases, (b) is less than
(i) 730 days old from the First Amendment Effective Date until February 28,
2010, and (ii) 365 days old thereafter, and (c) is located in the United States
of America.

     

    “LIBOR”
shall mean the rate per annum (rounded upward if necessary, to the nearest whole
1/8 of 1%) and determined pursuant to the following formula:

     

    LIBOR
=                 LIBOR
Base

    100% - LIBOR Reserve
Percentage

    


    provided, however, in no event
and at no time shall LIBOR be less than one (1%) percent per annum.

     

    “LIBOR
Option” shall mean a rate equal to three (3.00%) percent above Bank’s
LIBOR.

     

    (b) As of
January 31, 2010, the following term which Is defined In the Loan Agreement, is
given the following amended definition:

     

    “Tangible
Effective Net Worth” shall mean, with respect to any Person and as of any
applicable date of determination, Tangible Wet Worth plus Subordinated Debt,
plus (or minus) the negative (or positive) change in deferred tax assets of such
Person.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) On the
Debt Repayment Date (as defined in Section 3 of this Amendment), the following
term which is defined in the Loan Agreement, shall be given the following
amended definition:

     

    “Subordinated
Debt” shall mean indebtedness of the Borrower to any Person which has been
subordinated to the Indebtedness pursuant to a Subordination Agreement in form
and content satisfactory to Bank.

     

    (d) The
following terms and their respective definitions are hereby added to Section 1.1
of the Loan Agreement in their respective alphabetical order;

     

    “Business
Day” means any day, other than a Saturday, Sunday or any other day designated as
a holiday under Federal or applicable State statute or regulation, on which Bank
is open for all or substantially all of Its domestic and International business
(including dealings in foreign exchange) in San Jose, California, and, in
respect of notices and determinations relating to LIBOR, LIBOR Option Advances
and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar
deposits are also carried on in the London interbank market and on which banks
are open for business in London, England.

     

    “Daily
Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is
equal to the quotient of the following;

     

    (a)           for
any day, the per annum rate of interest determined on the basis of the rate for
deposits in United States Dollars for a period equal to one (1) month appearing
on Page BBAM of the Bloomberg Financial Markets Information Service as of 8:00
a.m. (California time) (or as soon thereafter as practical) on such day, or if
such day is not a Business Day, on the immediately preceding Business
Day.  In the event that such rate does not appear on Page BBAM of the
Bloomberg Financial Markets Information Service (or otherwise on such Service)
on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by
reference to such other publicly available service for displaying eurodollar
rates as may be reasonably selected by Bank, or, in the absence of such other
service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be
determined based upon the average of the rates at which Bank is offered dollar
deposits at or about 8:00 a.m. (California time) (or as soon thereafter as
practical), on such day, or if such day is not a Business Day, on the
immediately preceding Business Day, in the interbank eurodollar market in an
amount comparable to the applicable principal amount of Indebtedness hereunder
and for a period equal to one (1) month;

     

    divided
by

     

    (b)           1.00
minus the maximum rate (expressed as a decimal) on such day at which Bank is
required to maintain reserves on “Euro-currency Liabilities” as defined in and
pursuant to Regulation D of the Board of Governors of the Federal Reserve System
or, if such regulation or definition is modified, and as long as Bank is
required to maintain reserves against a category of liabilities which includes
eurodollar deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained on such
category.

     

    “Inventory
Sublimit” shall mean (i) One Million Dollars ($1,000,000) from the First
Amendment Effective Date until February 28, 2010, and (ii) Seven Hundred and
Fifty Thousand Dollars ($750,000) at all times thereafter.

     

    “Prime
Rate” shall mean the per annum interest rate established by Bank as its prime
rate for its borrowers, as such rate may vary from time to time, which rate is
not necessarily the lowest rate on loans made by Bank at any such
time.

     

    “Prime
Referenced Rate” means, for any day, a per annum interest rate which is equal to
the Prime Rate in effect on such day, but in no event and at no time shall the
Prime Referenced Rate be less than the sum of the Daily Adjusting LIBOR Rate for
such day plus two and one-half percent (2.50%) per annum.  If, at any
time, Bank 

     

    
      
        
        

      

      
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    determines
that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for
any day, the Prime Referenced Rate for each such day shall be the Prime Rate in
effect at such time, but not less than two and one-half percent (2.50%) per
annum.

     

    “Prime
Referenced Rate Option” shall mean a rate equal to one percent (1.00%) above the
Prime Referenced Rate.

     

    “Prime
Referenced Rate Option Advance” shall mean an Advance bearing interest at the
Prime Referenced Rate Option.

     

    (e) (i)           The
defined terms “Base Rate”, “Base Rate Option”, “Base Rate Option Advance” and
“LIBOR Business Day” in Sections 1.6, 1.7, 1.8 and 1.31 of the Loan Agreement
respectively, shall each be replaced with “Intentionally Omitted” in
substitution therefor.

     

    (ii)           All
other references in the Loan Agreement to “Base Rate”, ‘Base Rate Option”, “Base
Rate Option Advance” and “LIBOR Business Day” shall be deleted in their entirety
and replaced with “Prime Referenced Rate”, “Prime Referenced Rate Option”,
“Prime Referenced Rate Option Advance” and “Business Day”
respectively.

     

    (f) The third
sentence of Section 2.3 of the Loan Agreement is amended and restated in its
entirety as follows:

     

    “Borrower
shall pay to Bank (a) a letter of credit fee of 2.25% per annum on the stated
amount of any standby letter of credit (payable in advance and computed on a
basis of actual days to expiry over a year of 360 days) and (b) any standard
issuance and other fees that Bank notifies Borrower it will charge for issuing
and processing letters of credit.”

     

    (g) Section
2.4 of the Loan Agreement is amended and restated in its entirety as
follows:

     

    “Borrower
shall pay to Bank:

     

    (a)           a
non-refundable facility fee payable in equal quarterly installments of Two
Thousand Five Hundred Dollars ($2,500) on the last day of each of its fiscal
quarters and at maturity, commencing December 31, 2009; and

     

    (b)           a
non-refundable renewal fee in the amount of Fourteen Thousand Dollars ($14,000),
which renewal fee is payable in four equal quarterly installments of Three
Thousand Five Hundred Dollars ($3,500) on December 31, 2009, March 31, 2010,
June 30, 2010 and September 30, 2010.”

     

    (h) The first
sentence of Section 3.1 of the Loan Agreement is amended and restated in its
entirety as follows:

     

    “3.1           This
Agreement shall remain in full force and effect until December 1, 2011 unless
earlier terminated by notice by Borrower or by Bank pursuant to Section
8.1.”

     

    (i) The last
sentence of Section 6.6 of the Loan Agreement is amended and restated as
follows:

     

    “Notwithstanding
anything to the contrary in this Section 6.6, Borrower may make Capital
Expenditures in an aggregate amount that is not greater than One Hundred Forty
Thousand Dollars ($140,000) in any fiscal year.”

     

    (j) Section
6.16 c(6) of the Loan Agreement Is amended and restated as follows:

     

    
      
        
        

      

      
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    “(6)           Financial
projections for each fiscal year within sixty (60) days after the last day of
the prior fiscal year.”

     

    (k) Sections
6.17 b and c of the Loan Agreement are amended and restated in their entirety as
follows:

     

    b.           a
Quick Ratio of not less than 0.33:1.00 as of the last day of each fiscal
quarter; and

     

    c.           a
Leverage Ratio of not more than 5.00:1.00 as of the last day of each fiscal
quarter.

     

    (l) Exhibit A
to the Loan Agreement (Form of Compliance Certificate) shall be amended end
replaced with Exhibit A attached to this Amendment.

     

    3.  Consent to Debt Repayment
and Amendment to Subordinated Debt Definition.  Borrower has
requested Bank’s consent to the repayment of the loan from ASHFORD CAPITAL, LLC
(“Junior Creditor’) to Borrower evidenced by a promissory note in the original
principal amount of $125,000 by Borrower in favor of Junior Creditor dated April
23, 2007 (“Debt Repayment”).  Notwithstanding anything to the contrary
contained in the Loan Agreement or Loan Documents, Bank hereby grants its
consent to the Debt Repayment, subject to the following:

     

    (a) The
amount of the Debt Repayment shall not exceed $125,000 plus accrued interest
thereon and shall occur no later than December 31, 2010;

     

    (b) No
default or event of default under the Loan Agreement or any Loan Document shall
have occurred and be continuing at the time of the Debt Repayment nor shall any
such default or event of default result or reasonably be expected to result from
the Debt Repayment; and

     

    (c) Borrower
shall provide Bank with satisfactory evidence of the Debt Repayment (“Debt
Repayment Evidence”).

     

    Upon
receipt by Bank of the Debt Repayment Evidence (“Debt Repayment Date”), the term
“Subordinated Debt”, which is defined in Section 1 of the Lean Agreement, shall
be amended as set forth in Section 2 (c) of this Amendment

     

    4.  Representations.  Borrower
represents and agrees that

     

    (a) Except as
expressly modified in this Amendment, (a) the representations and warranties set
forth in the Loan Agreement and in each related document, agreement, and
instrument remain true and correct in all respects, except to the extent that
they expressly speak as of a specific prior date, and (b) the covenants set
forth in the Loan Agreement continue to be satisfied in all respects, and are
legal, valid and binding obligations with the same force and effect as If
entirely restated in this Amendment.

     

    (b) When
executed, this Amendment will be a duly authorized, legal, valid, and binding
obligation of Borrower enforceable in accordance with its terms.

     

    (c) the
Articles of Incorporation, Bylaws and Corporate Resolutions and Incumbency
Certificate delivered to Bank on or about September 14, 2007 remain in full
force and effect, have not been amended, repealed or rescinded in any respect
and may continue to be relied upon by Bank until written notice to the contrary
is received by Bank, and Borrower continues to he in good standing under the
laws of the State of California.

     

    (d) There is
no default continuing under the Loan Agreement, or any related document,
agreement, or instrument, and no event has occurred or condition exists that is
or, with the giving of notice or lapse of time or both, would be such a
default.

     

    
      
        
        

      

      
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    5.  Conditions
Precedent.  The effectiveness of this Amendment is subject to
Bank’s receipt of all of the following:

     

    (a) this
Amendment and such other agreements and instruments reasonably requested by Bank
pursuant hereto (including such documents as are necessary to create and perfect
Bank’s interest in the Collateral), each duly executed by Borrower;

     

    (b) payment
of all bank expenses Incurred through the date of this Amendment;
and

     

    (c) such
other documents and completion of such other matters as Bank may reasonably deem
necessary or appropriate.

     

    6.  No Other
Changes.  Except as specifically provided In this Amendment, It
does not vary the terms and provisions of any note, mortgage, security
agreement, or other document, instrument, or agreement evidencing, securing or
relating to the Indebtedness or the Loan Agreement (“Loan
Documents”).  This Amendment shall not impair the rights, remedies,
and security given in and by the Loan Documents.  The terms of this
Amendment shall control any conflict between its terms and those of the Loan
Agreement.

     

    7.  Ratification.  Except
for the modifications under this Agreement, the parties ratify and confirm the
Loan Agreement and the Loan Documents and agree that they remain in full force
and effect.

     

    8.  Further Modification; No
Reliance.  This Amendment may be altered or modified only by
written Instrument duly executed by Borrower and Bank.  In executing
this Amendment, Borrower Is not relying on any promise or commitment of Bank
that is not in writing signed by Bank.

     

    9.  Successors and
Assigns.  This Amendment shall inure to the benefit of and be
binding upon the parties and their respective successors and
assigns.

     

    10.  Governing
Law.  The parties agree that the terms and provisions of this
Amendment shall be governed by and construed in accordance with the internal
laws of the State of California, without regard to principles of conflicts of
law.

     

    11.  No
Defenses.  Borrower acknowledges, confirms, and warrants to
Bank that as of the date hereof Borrower has absolutely no defenses, claims,
rights of set-off, or counterclaims against Bank under, arising out of, or in
connection with, this Amendment, the Loan Agreement, the Loan Documents and/or
the individual advances under the Indebtedness, or against any of the
indebtedness evidenced or secured thereby.

     

    12.  Expenses.  Borrower
shall promptly pay all out-of-pocket fees, costs, charges, expenses, and
disbursements of Bank incurred in connection with the preparation, execution,
and delivery of this Amendment, and the other documents contemplated by this
Amendment.

     

    13.  Counterparts.  This
Amendment may be executed in one or more counterparts, and by separate parties
on separate counterparts, all of which shall constitute one and the same
agreement.

     

     

    
      [end of
amendment — signature page follows]

    

    
      
        
        

      

      
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    This
Amendment No. 1 to Loan and Security Agreement is executed and delivered as of
the Effective Date.

     

    


    
      	 
      	
              SIGNATURE
      EYEWEAR, INC.

               

               

            
	 
      	
              By:
         /s/ M. Prince
      (CEO)                              

              Michael Prince

              Its:             
        Chief Executive Officer

               

            
	 
      	
              COMERICA
      BANK

               

               

            
	 
      	
              By:
         /s/ Bianca
      Barredo                                

              Bianca Barredo

              Its:               
      Assistant Vice President

               

            


    

     

     

     

     

     

     

     

     

    
      
        
        

      

      
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    EXHIBIT
A

    COMPLIANCE
CERTIFICATE

     

    Please
send all Required Reporting
to:                                                                             Comerica
Bank

    301 E. Ocean Blvd.

    Ste. 1800 MC 4444

    Long Beach, CA 90802

    Attn.: ______________

    


    FROM:   SIGNATURE
EYEWEAR, INC.

     

    The
undersigned authorized Officer of SIGNATURE EVEWEAR, INC. (“Borrower’), hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the Agreement), (i) Borrower is in
complete compliance for the period ending 7/31/2001 with all required covenants,
except as noted below, and (ii) all representations and warranties of Borrower
stated in the Agreement are true end correct in all material respects as of the
date hereof.  Attached herewith are the required documents supporting
the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

     

    Please
indicate compliance status by circling Yes/No under “Complies”
column.

     

    
      	
              REPORTING COVENANTS

            	
              REQUIRED

            	
              COMPLIES

            
	
              Consolidated
      Financial Statements

            	
              Monthly,
      within 35 days

            	
              YES

            	
              NO

            
	
              Consolidated
      Financial Statements

            	
              Quarterly,
      within 45 days

            	
              YES

            	
              NO

            
	
              Audited
      Consolidated Financial Statements

            	
              Annually,
      within 120 days

            	
              YES

            	
              NO

            
	
              A/R
      Aging

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              A/R
      Aging

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Inventory
      Report

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Borrowing
      Base Certificate

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Financial
      Projections

            	
              Annually,
      within 60 days after FYE

            	
              YES

            	
              NO

            


    

    


    
      	
              FINANCIAL COVENANTS

            	
              REQUIRED

            	
              ACTUAL

            	
              COMPLIES

            
	
              TO
      BE TESTED QUARTERLY

            	 
      	 
      	 
      	 
      
	
              Minimum
      2 Qrt. Pre-Tax Income

            	
              $200,000

            	
              $_______

            	
              YES

            	
              NO

            
	
              Maximum
      Leverage Ratio

            	
              5.00:1.00

            	
              _____:1.00

            	
              YES

            	
              NO

            
	
              Minimum
      Quick Ratio

            	
              0.33:1.00

            	
              _____:1.00

            	
              YES

            	
              NO

            
	
              YTD
      Capital Expenditures

            	
              $140,000
      annually

            	
              $________

            	
              YES

            	
              NO

            


    

    


    Please
Enter Below Comments Regarding Covenant Violations:

     

    The
Officer further acknowledges that at any time Borrower is not in compliance with
all the terms set forth in the Agreement, including, without limitation, the
financial covenants, no credit extensions will be made.

     

    Very
truly yours,

     

    
      	
              SIGNATURE
      EYEWEAR, INC.

               

            	 	
              BANK
      USE ONLY

            
	
               

              
                
      

              Authorized
      Signer

               

              
                Name:          

                  
      

              

              Title:              

              

                
      

            	 	
              Rec’d
      by:          

              

                
      Date:                                                                    

              
                
      

              Reviewed
      by:                                                                    

              
                
      Date:                                                                    
      

                
      

              Financial
      Compliance
  Status:     YES/NO

            


    

    


    
      
        
        

      

      
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