SECOND AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.35
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated effective as of July 27, 2023, is entered into by and between ZUMIEZ INC., a Washington corporation (“Parent”), ZUMIEZ SERVICES INC., a Washington corporation (together with Parent, each individually and collectively, as the context requires, "Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Xxxxxxxx is currently indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated December 7, 2018, as amended from time to time ("Credit Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:
1. Section 4.9 is hereby deleted in its entirety, and the following substituted therefor:
“SECTION 4.9. FINANCIAL CONDITION. Maintain the financial condition of Parent and its consolidated subsidiaries as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):
(a) EBITDA not less than (i) $12,000,000 as of each fiscal quarter ending July 29, 2023 and October 28, 2023 and (ii) $20,000,000 as of the fiscal quarter ending February 3, 2024 and each fiscal quarter ending thereafter, in each case, determined on a rolling 4-quarter basis and with “EBITDA” defined as net profit before tax plus interest expense (net of capitalized interest expense), depreciation expense and amortization expense; provided, that, there shall be added to EBITDA all charges for impairment of goodwill, other intangibles, leased right-to-use assets, and up to an aggregate of
$5,000,000 of store fixed asset impairment, in each case, as shown on the balance sheet.
(b) Quick Ratio not less than 1.25:1.0 determined at fiscal quarter end. The Quick Ratio is the sum of cash plus cash equivalents plus marketable securities plus accounts receivable divided by the aggregate amount of all credit extensions (including the principal amount of all loans and the Stated Amount of all letters of credit under this Agreement.”
2. Section 5.2 is hereby amended and restated in its entirety to read as following:
“SECTION 5.2. CAPITAL EXPENDITURES. During a Springing Event Period (as defined below), make any investment in fixed assets in excess of an aggregate of $30,000,000, measured for Parent and its subsidiaries on a consolidated basis, during the four fiscal quarters of Parent immediately following the fiscal quarter of Parent in which a Springing Event occurs; provided, however, that notwithstanding anything to the contrary herein, no investment in fixed assets shall be made if, on a proforma basis after giving effect to the usage of any cash or cash equivalents to fund such investment, (a) a Springing Event would occur and (b) investments in fixed assets for such period would exceed $30,000,000, with such usage deemed to have occurred in the most recently ended fiscal quarter of Parent prior to the fiscal quarter in which the investment is made.
As used herein:
(a) “Springing Event” means that as of the last day of any fiscal quarter of Parent, Parent and its consolidated subsidiaries have less than $80,000,000 of cash and cash equivalents (including, without
limitation, Permitted Investments described in clauses (b) – (g) of Section 5.6) as listed on Parent’s balance sheet as included within Parent’s 10-Q (or in the case of the last fiscal quarter of any fiscal year of Parent, Parent’s 10-K) as filed with the Securities and Exchange Commission;
(b) “Springing Event Cure” means that as of the last day of any fiscal quarter of Parent after the occurrence of a Springing Event, Parent and its consolidated subsidiaries have at least $80,000,000 of cash, cash equivalents (including, without limitation, Permitted Investments described in clauses (b) – (g) of Section 5.6) as listed on Parent’s balance sheet as included within Parent’s 10-Q (or, in the case of the last fiscal quarter of any fiscal year of Parent, Parent’s 10-K) as filed with the Securities and Exchange Commission; and
(c) “Springing Event Period” means the period commencing on the date upon which a Springing Event occurs, and ending on the date of a Springing Event Cure occurs, if any.”
3. The effective date of this Amendment shall be the date that all of the following conditions set forth in this Section have been satisfied, as determined by Bank and evidenced by Bank’s system of record. Notwithstanding the occurrence of the effective date of this Amendment, Bank shall not be obligated to extend credit under this Amendment or any other Loan Document until all conditions to each extension of credit set forth in the Credit Agreement have been fulfilled to Bank's satisfaction.
(a) Approval of Bank Counsel. All legal matters incidental to the effectiveness of this Amendment shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed by all parties:
(i) This Amendment and each promissory note or other instrument or document required hereby.
(ii) Guarantors’ Consent and Reaffirmation attached hereto.
(iii) Such other documents as Bank may require under any other Section of this Amendment.
(c) Regulatory and Compliance Requirements. All regulatory and compliance requirements, standards and processes shall be completed to the satisfaction of Bank.
4. Except as specifically provided herein, all terms and conditions of the Credit Agreement remain in full force and effect, without waiver or modification. All terms defined in the Credit Agreement shall have the same meaning when used in this Amendment. This Amendment and the Credit Agreement shall be read together, as one document.
5. Borrower hereby remakes all representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein. Borrower further certifies that as of the date of this Amendment and as of the date of Xxxxxxxx’s execution of this Amendment there exists no Event of Default as defined in the Credit Agreement, 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.
6. Borrower hereby covenants that Borrower shall provide to Bank from time to time such other information as Bank may request for the purpose of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes. Borrower hereby represents and warrants to Bank that all information provided from time to time by Borrower or any Third Party Obligor to Bank for the purpose of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes was complete and correct at the time such information was provided and, except as specifically identified to Bank in a subsequent writing, remains complete and correct today, and shall be complete and correct at each time Borrower is required to reaffirm the representations and warranties set forth in the Credit Agreement.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
TO FORBEAR ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Amendment to be effective as of the effective date set forth herein.
XXXXX FARGO BANK,
ZUMIEZ SERVICES INC. NATIONAL ASSOCIATION
By: ____________________________ By: ____________________________
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxx
Title: Secretary Title: Vice President
By: ____________________________
Name: Xxxxxxxxxxx X. Work
Title: CFO
GUARANTORS' CONSENT AND REAFFIRMATION
Each of the undersigned guarantors of all indebtedness of ZUMIEZ INC. and ZUMIEZ SERVICES INC. to XXXXX FARGO BANK, NATIONAL ASSOCIATION hereby: (i) consents to the foregoing Amendment; (ii) reaffirms its obligations under its respective Continuing Guaranty; (iii) reaffirms its waivers of each and every one of the defenses to such obligations as set forth in its respective Continuing Guaranty; and (iv) reaffirms that its obligations under its respective Continuing Guaranty are separate and distinct from the obligations of any other party under said Amendment and the other Loan Documents described therein.
GUARANTORS:
ZUMIEZ PUERTO RICO LLC
By: Zumiez Inc., its sole member and manager
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Secretary
ZUMIEZ NEVADA, LLC
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Manager
ZUMIEZ INTERNATIONAL, LLC
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Manager
ZUMIEZ DISTRIBUTION LLC
By: Zumiez Inc., its sole member and manager
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Secretary
ZIC, LLC
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Manager
[SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]
ZIC II, LLC
By: ____________________________
Name: Xxxxx X. Xxxxxx
Title: Manager
