UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): June 1, 1999
GARGOYLES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 0-21355 91-1247269
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(STATE OR OTHER JURISDIC-) (COMMISSION (IRS EMPLOYER
TION OF INCORPORATION FILE NUMBER) IDENTIFICATION NO.)
5866 South 194th Street
Kent, Washington 98032
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (253) 796-2752
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Refinancing and Recapitalization Transaction with U.S. Bank National
Association.
On June 1, 1999, Gargoyles, Inc. completed a transaction with its lender,
U.S. Bank National Association, for the restructure of its credit facility with
the bank and a recapitalization of the company. The new financing relieves the
immediate liquidity concerns that have faced Gargoyles throughout 1998 and
gives Gargoyles needed working capital. As a result of the refinancing, the
company's indebtedness to U.S. Bank has been decreased by $10 million, and the
balance of the loans has been restructured into $19.5 million of term loans
with maturity dates of June 1, 2005, and a commitment for a $9 million
revolving loan. No principal payments are due under $10 million of the term
loans until their maturity date, and principal payments under the remaining
$9.5 million term loan are much lower in the first two years than in the last
four years of the loan. In exchange for $10 million of debt, the company
issued 10 million shares of Gargoyles, Inc. Series A Preferred Stock to U.S.
Bank. The bank's Series A Preferred Stock is convertible into 31,600,342
shares of Gargoyles, Inc. Common Stock, or 79% of the authorized capital of the
company on a fully-diluted basis. U.S. Bank's affiliate, U.S. Bankcorp,
currently owns 400,000 shares of Gargoyles, Inc. common stock, or 1% of the
authorized capital of the company, giving U.S. Bank and its affiliate
beneficial ownership, in the aggregate, of 80% of the authorized capital of
Gargoyles on a fully-diluted basis.
As a condition to closing the transaction with U.S. Bank, directors
Timothy C. Potts, Paul S. Shipman, Walter F. Walker and Robert G. Wolfe
resigned from the board of directors of Gargoyles, Inc. and all committees of
the board effective as of the closing of the U.S. Bank transaction. The board
resignations were effective June 1, 1999. William D. Ruckelshaus remained on
the Gargoyles board of directors following the closing of the U.S. Bank
transaction.
On June 1, 1999, the board of directors of Gargoyles appointed Daniel C.
Regis and William C. Thompson, and reappointed Paul S. Shipman, to the board to
serve until the 1999 annual meeting of shareholders of Gargoyles, which is
scheduled for June 29, 1999. Mr. Ruckelshaus' term on the board expires as of
the June 29th shareholders' meeting, and it is contemplated that Mr.
Ruckelshaus will not stand for reelection.
Daniel C. Regis is the President of Kirlan Venture Capital, Inc. which
provides investment consulting services to several venture capital funds.
Prior to joining Kirlan Venture Capital, Inc. in 1996, Mr. Regis was the
Managing Partner of Price Waterhouse LLP for the Northwest Region. Mr. Regis
worked for Price Waterhouse LLP for more than 32 years serving many notable
clients during his career, including NIKE, Longview Fibre and Precision
Castparts.
William C. Thompson is the President of Worldwide Marketing Consultants.
From 1996 to 1998, Mr. Thompson was the Executive Vice President and Chief
Marketing Officer of Umbro International, a $600 million brand marketed through
a subsidiary/licensee network in 55 countries. From 1987 to 1995 Mr. Thompson
was Vice Chairman and Chief Marketing Officer of J.Walter Thompson, a $6
billion international advertising agency.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit
Number
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1.1 Stock Purchase Agreement dated May 28, 1999, between
Gargoyles, Inc. and U. S. Bank National Association
1.2 Second Amended and Restated Credit Agreement dated
May 28, 1999, between Gargoyles, Inc. and U.S. Bank
National Association
99.1 Press Release of Registrant dated June 2, 1999
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARGOYLES, INC.
Date: June 7, 1999 By: /s/ LEO ROSENBERGER
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Leo Rosenberger, Chief Executive
Officer and Chief Financial Officer
Exhibit
Number
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1.1 Stock Purchase Agreement dated May 28, 1999, between
Gargoyles, Inc. and U. S. Bank National Association
1.2 Second Amended and Restated Credit Agreement dated
May 28, 1999, between Gargoyles, Inc. and U.S. Bank
National Association
99.1 Press Release of Registrant dated June 2, 1999