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                                                                    EXHIBIT 10.1

                  FIRST AMENDMENT TO FIRST AMENDED AND RESTATED
                                CREDIT AGREEMENT


         This first amendment to first amended and restated credit agreement
("Amendment") is made and entered into as of July 15, 1997, by and among U. S.
BANK, a national banking association ("U. S. Bank"), and GARGOYLES, INC., a
Washington corporation ("Borrower").

                                R E C I T A L S:

         A. On or about April 7, 1997, U. S. Bank and Borrower entered into that
certain first amended and restated credit agreement (together with all
amendments, supplements, exhibits, and modifications thereto, the "Credit
Agreement") whereby U. S. Bank agreed to extend certain credit facilities to
Borrower.

         B. Borrower has requested U. S. Bank to (1) temporarily increase the
Revolving Loan commitment to $17,000,000, (2) modify the Borrowing Base, and (3)
modify the Senior Debt Ratio. The purpose of this Amendment is to set forth the
terms and conditions upon which U. S. Bank will grant Borrower's requests.

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, the parties agree as follows:

ARTICLE I. AMENDMENT

         The Credit Agreement, as well as all of the other Loan Documents, are
hereby amended as set forth herein. Except as specifically provided for herein,
all of the terms and conditions of the Credit Agreement and each of the other
Loan Documents shall remain in full force and effect throughout the terms of the
Loans, as well as any extensions or renewals thereof.

ARTICLE II. DEFINITIONS

         As used herein, capitalized terms shall have the meanings given to them
in the Credit Agreement, except as otherwise defined herein, or as the context
otherwise requires. Section 1.1 of the Credit Agreement is hereby amended to
modify or add (as the case may be) the following definitions:

         "Eligible Accounts Receivable" means the accounts receivable of
Borrower and the Subsidiaries excluding the following: (a) accounts receivable
that have been 



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outstanding in excess of 90 days from the date of invoice, (b) all accounts
receivable from any single customer of Borrower or any of the Subsidiaries if 10
percent or more of such customer's accounts owed to Borrower or any of the
Subsidiaries are ineligible for any reason, (c) accounts receivable due from
officers, employees, or Affiliates of Borrower, (d) accounts receivable that are
partially or wholly subject to the right of setoff, (e) accounts receivable
resulting from COD sales, finance charges, and consignments, (f) accounts
receivable due from the federal government, (g) accounts receivable that
constitute any retainage, (h) accounts receivable that constitute dated billings
other than approved by U. S. Bank in writing, (i) accounts receivable in which
any Person other than U. S. Bank has a security interest, (j) all accounts
receivable from any single customer of Borrower or any of the Subsidiaries in
excess of 10 percent of the aggregate amount of Eligible Accounts Receivable,
except (i) as otherwise approved in writing by U. S. Bank, and (ii) the
limitation set forth in this clause (j) does not apply to accounts receivable
from Sunglass Hut International, and (k) all accounts receivable from Sunglass
Hut International in excess of the lesser of (i) $3,500,000, or (ii) an amount
equal to 35 percent of the aggregate amount of Eligible Accounts Receivable;
provided that such percentage may be reduced to not less than 10 percent by U.
S. Bank, upon not less than 60 days prior written notice from U. S. Bank to
Borrower. Notwithstanding the foregoing, "Eligible Accounts Receivable" shall
not include any accounts receivable unless and until U. S. Bank holds a first,
valid, binding, and perfected security interest in any such accounts receivable.

         "Eligible Foreign Accounts Receivable" means the accounts receivable of
Borrower and the Subsidiaries due from Persons not residents of the United
States, excluding the following: (a) accounts receivable that have been
outstanding in excess of 90 days from the date of invoice, (b) all accounts
receivable from any single customer of Borrower or any of the Subsidiaries if 10
percent or more of such customer's accounts owed to Borrower or any of the
Subsidiaries are ineligible for any reason, (c) accounts receivable due from
officers, employees, or Affiliates of Borrower, (d) accounts receivable that are
partially or wholly subject to the right of setoff, (e) accounts receivable
resulting from COD sales, finance charges, and consignments, (f) accounts
receivable that constitute any retainage, (g) accounts receivable that
constitute dated billings other than approved by U. S. Bank in writing, (h)
accounts receivable in which any Person other than U. S. Bank has a security
interest, and (i) all accounts receivable from any single customer of Borrower
or any of the Subsidiaries in excess of 10 percent of the aggregate amount of
Eligible Accounts Receivable. Notwithstanding the foregoing, "Eligible Foreign
Accounts Receivable" shall not include any accounts receivable unless and until
U. S. Bank holds a first, valid, binding, and perfected security interest in any
such accounts 



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receivable. There shall be no duplication between Eligible Foreign Accounts
Receivable and Eligible Accounts Receivable.

ARTICLE III. MODIFICATION OF REVOLVING LOAN

3.1      TEMPORARY INCREASE

         Section 2.1 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:

         2.1      LOAN COMMITMENT

                  Subject to and upon the terms and conditions set forth herein
         and in reliance upon the representations, warranties, and covenants of
         Borrower contained herein or made pursuant hereto, U. S. Bank will make
         Fundings to Borrower from time to time during the period ending June
         30, 1999 ("Commitment Period"), but such Fundings (together with any
         outstanding Letters of Credit) shall not exceed, in the aggregate
         principal amount at any one time outstanding, (a) $17,000,000 during
         the period commencing July 15, 1997, and ending December 31, 1997, and
         (b) $15,000,000 at all other times during the Commitment Period (the
         "Revolving Loan"). Borrower may borrow, repay, and reborrow hereunder
         either the full amount of the Revolving Loan or any lesser sum.

3.2      RENEWAL REVOLVING NOTE

         Concurrently with the execution of this Amendment, Borrower shall
execute and deliver to U. S. Bank a renewal promissory note in the form attached
hereto as Exhibit A ("Renewal Revolving Note") which shall be in substitution
for, but not in payment of, the Revolving Note and any previous renewals
thereof, all of which shall be marked "renewed" and retained by U. S. Bank until
the Revolving Loan has been repaid in full and U. S. Bank's commitments under
the Credit Agreement are terminated.

3.3      MODIFICATION OF BORROWING BASE

         Section 2.8(a) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

                  (a) The outstanding balance of principal and interest on the
         Revolving Loan (including outstanding Letters of Credit) shall at no
         time exceed an amount equal to:



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                  (i)      80 percent of Eligible Accounts Receivable, plus

                  (ii)     65 percent of Eligible Foreign Accounts Receivable;
         provided that the maximum advance based upon Eligible Foreign Accounts
         Receivable is limited to $1,000,000, plus

                  (iii)    50 percent of Eligible Inventory; provided that the
         maximum advance based upon Eligible Inventory is limited to $6,000,000
         ("Borrowing Base").

ARTICLE IV. MODIFICATION OF EQUIPMENT LINE

         Section 4.1 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:

         4.1      LOAN COMMITMENT

                  Subject to and upon the terms and conditions set forth herein
         and in reliance upon the representations, warranties, and covenants of
         Borrower contained herein or made pursuant hereto, U. S. Bank will make
         available to Borrower a $4,000,000 nonrevolving equipment line of
         credit during the Commitment Period (the "Equipment Line"). Each
         individual Funding under the Equipment Line shall constitute a separate
         loan ("Equipment Loan"). The aggregate principal amount of all
         Equipment Loans shall not exceed $4,000,000.

ARTICLE V. SENIOR DEBT RATIO

5.1      MODIFICATION OF SENIOR DEBT RATIO

         Effective as of June 30, 1997, Section 8.18 of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

         8.18     SENIOR DEBT RATIO

                  Permit the Senior Debt Ratio to be greater than (a) 4.0:1.0 as
         of June 30, 1997, for the trailing four quarters then ended, (b)
         3.5:1.0 as of September 30, 1997, for the trailing four quarters then
         ended, or (c) 2.5:1.0 as of the last day of any fiscal quarter of
         Borrower thereafter for the trailing four quarters then ended.



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5.2      COVENANT FEE

         Within 30 days after the end of Borrower's fiscal quarters ending June
30, 1997, and September 30, 1997, Borrower shall pay U. S. Bank a nonrefundable
fee in an amount equal to $100 for each full .01 that the Senior Debt Ratio
(calculated on a trailing four-quarter basis) exceeds 3.0:1.0 as of each such
date.

ARTICLE VI. CONDITIONS PRECEDENT

         The modifications set forth in this Amendment shall not be effective
unless and until the following conditions have been fulfilled to U. S. Bank's
satisfaction:

         (a)      U. S. Bank shall have received this Amendment and the Renewal
Revolving Note duly executed and delivered by the parties thereto.

         (b)      Borrower shall have paid to U. S. Bank a nonrefundable fee for
the increase in the Revolving Loan in the amount of $5,000.

         (c)      There shall not exist any Default or Event of Default under
the Credit Agreement or any other Loan Document.

         (d)      All representations and warranties of Borrower contained in
the Credit Agreement or otherwise made in writing in connection therewith or
herewith shall be true and correct and in all material respects have the same
effect as though such representations and warranties had been made on and as of
the date of this Amendment.

         (e)      U. S. Bank shall have received a certified resolution of the
board of directors of each of the Borrower in the forms attached hereto as
Exhibit B.

ARTICLE VII. LOAN FEES

         Sections 2.6 and 3.6 of the Credit Agreement are hereby amended to
reflect that the $200,000 in unpaid commitment fees earned by U. S. Bank in
connection with the Credit Agreement shall be due and payable on or before
December 31, 1997, as opposed to on or before September 30, 1997.



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ARTICLE VIII. GENERAL PROVISIONS

8.1      REPRESENTATIONS AND WARRANTIES

         Borrower hereby represents and warrants to U. S. Bank that as of the
date of this Amendment, there exists no Default or Event of Default. All
representations and warranties of Borrower contained in the Credit Agreement and
the Loan Documents, or otherwise made in writing in connection therewith, are
true and correct as of the date of this Amendment. Borrower acknowledges and
agrees that all of Borrower's Indebtedness to U. S. Bank is payable without
offset, defense, or counterclaim.

8.2      SECURITY

         All Loan Documents evidencing U. S. Bank's security interest in the
Collateral shall remain in full force and effect, and shall continue to secure,
without change in priority, the payment and performance of the Loans, as amended
herein, and any other Indebtedness owing from Borrower to U. S. Bank.

8.3      GUARANTIES

         The parties hereto agree that the Guaranties shall remain in full force
and effect and continue to guarantee the repayment of the Loans to U. S. Bank as
set forth in such Guaranties.

8.4      PAYMENT OF EXPENSES

         Borrower shall pay on demand all costs and expenses of U. S. Bank
incurred in connection with the preparation, negotiation, execution, and
delivery of this Amendment, including, without limitation, attorneys' fees
incurred by U. S. Bank.

8.5      SURVIVAL OF CREDIT AGREEMENT

         The terms and conditions of the Credit Agreement and each of the other
Loan Documents shall survive until all of Borrower's obligations under the
Credit Agreement have been satisfied in full.

8.6      COUNTERPARTS

         This Amendment may be executed in one or more counterparts, each of
which shall constitute an original agreement, but all of which together shall
constitute one and the same agreement.



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8.7      STATUTORY NOTICE

         ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

         IN WITNESS WHEREOF, U. S. Bank and Borrower have caused this Amendment
to be duly executed by their respective duly authorized signatories as of the
date first above written.

                                      GARGOYLES, INC., a Washington corporation


                                      By      /s/ Stephen R. Kingma     
                                         ---------------------------------------

                                      Title   VP-CFO
                                            ------------------------------------

                                      By      /s/ Travis Worth
                                         ---------------------------------------

                                      Title   SVP-COO
                                            ------------------------------------


                                      U.S. BANK


                                      By      /s/ Gerald L. Sorensen
                                         --------------------------------------
                                         Gerald L. Sorensen,
                                         Senior Vice President



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         Each of the undersigned Guarantors hereby (i) reaffirms its Guaranty
and its Security Agreement, (ii) agrees that its Guaranty guarantees the
repayment of the Loans, as amended herein, (iii) agrees that its respective
Security Agreement and related collateral documents secures the payment and
performance of the Secured Obligations described in such Security Agreement, and
(iv) acknowledges that its obligations pursuant to its Guaranty and Security
Agreement are enforceable without defense, offset, or counterclaim.

                                      H.S.C., a Washington corporation


                                      By     /s/ Douglas B. Hauff
                                         ---------------------------------------
                                      Title  President and CEO
                                            ------------------------------------


                                      SUNGOLD EYEWEAR, INC., 
                                      a Washington corporation


                                      By     /s/ Douglas B. Hauff
                                         ---------------------------------------
                                      Title  Chief Executive Officer
                                            ------------------------------------


                                      PRIVATE EYES SUNGLASS CORPORATION, 
                                      a Washington  corporation
                                                    


                                      By     /s/ Douglas B. Hauff
                                         ---------------------------------------
                                      Title  Chief Executive Officer
                                            ------------------------------------


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                                    EXHIBIT A

                             RENEWAL REVOLVING NOTE



$17,000,000                                                        July 15, 1997



         For value received, the undersigned, GARGOYLES, INC. ("Borrower"),
promises to pay to the order of U. S. BANK OF WASHINGTON, NATIONAL ASSOCIATION
("U. S. Bank"), at its principal place of business, 1420 Fifth Avenue, Seattle,
Washington 98101, or such other place or places as, the holder hereof may
designate in writing, the principal sum of Seventeen Million Dollars
($17,000,000) or so much thereof as advanced by U. S. Bank in lawful,
immediately available money of the United States of America, in accordance with
the terms and conditions of that certain first amended and restated credit
agreement dated as April 7, 1997, as amended, including that certain first
amendment to first amended and restated credit agreement of even date herewith
(the "First Amendment"), by and between Borrower and U. S. Bank (together with
the First Amendment, all supplements, exhibits, amendments and modifications
thereto, the "Credit Agreement"). Borrower also promises to pay interest on the
unpaid principal balance hereof, commencing as of the first date of an advance
hereunder, in like money in accordance with the terms and conditions, and at the
rate or rates provided for in the Credit Agreement. All principal, interest, and
other charges are due and payable in full on June 30, 1999.

         Borrower and all endorsers, sureties, and guarantors hereof jointly and
severally waive presentment for payment, demand, notice of nonpayment, notice of
protest, and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default, dishonor, or enforcement of the
payment of this Note except such notices as are specifically required by this
Note or by the Credit Agreement, and they agree that the liability of each of
them shall be unconditional without regard to the liability of any other party
and shall not be in any manner affected by any indulgence, extension of time,
renewal, waiver, or modification granted or consented to by U. S. Bank. Borrower
and all endorsers, sureties, and guarantors hereof (1) consent to any and all
extensions of time, renewals, waivers, or modifications that may be granted by
U. S. Bank with respect to the payment or other provisions of this Note and the
Credit Agreement; (2) consent to the release of any property now or hereafter
securing this Note with or without substitution; and 



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(3) agree that additional makers, endorsers, guarantors, or sureties may become
parties hereto without notice to them and without affecting their liability
hereunder.

         This Note is the Renewal Revolving Note referred to in the First
Amendment and as such is entitled to all of the benefits and obligations
specified in the Credit Agreement, including but not limited to any Collateral
and any conditions to making advances hereunder. Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the repayment of this Note and the
acceleration of the maturity hereof.


                                      GARGOYLES, INC., a Washington corporation


                                      By:
                                         ---------------------------------------

                                      Title:
                                            ------------------------------------