EXHIBIT 10.5
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AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
June 3, 2005
among
QUIKSILVER, INC.,
QUIKSILVER AMERICAS, INC.,
as US Borrower,
The Lenders Party Hereto
BANK OF AMERICA, N.A.,
as Documentation Agent,
UNION BANK OF CALIFORNIA, N.A.,
as Syndication Agent
and
JPMORGAN CHASE BANK, N.A.,
as US Administrative Agent
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,
as Canadian Administrative Agent
X.X. XXXXXX SECURITIES INC.,
as Sole Bookrunner and Sole Lead Arranger
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................. 2
SECTION 1.1. Defined Terms.................................................................. 2
SECTION 1.2. Other Definitional Provisions.................................................. 38
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS; LETTERS OF CREDIT........................... 38
SECTION 2.1. Revolving Loans and Letters of Credit; Revolving Loan Commitment Amounts....... 38
SECTION 2.2. Swing Line Loans; Swing Line Commitment........................................ 43
SECTION 2.3. Alternate Currency Loans....................................................... 45
SECTION 2.4. Acceptances.................................................................... 49
SECTION 2.5. Letters of Credit.............................................................. 53
SECTION 2.6. Optional Prepayments; Optional Commitment Reductions........................... 58
SECTION 2.7. Mandatory Prepayments.......................................................... 59
SECTION 2.8. Conversion and Continuation Options............................................ 61
SECTION 2.9. Minimum Amounts of Tranches.................................................... 61
SECTION 2.10. Interest Rates and Payment Dates............................................... 62
SECTION 2.11. Computation of Interest and Fees............................................... 62
SECTION 2.12. Inability to Determine Interest Rate........................................... 63
SECTION 2.13. Pro Rata Treatment and Payments................................................ 64
SECTION 2.14. Illegality..................................................................... 65
SECTION 2.15. Increased Costs................................................................ 66
SECTION 2.16. Taxes.......................................................................... 67
SECTION 2.17. Indemnity...................................................................... 68
SECTION 2.18. Unused-Commitment Fees......................................................... 69
SECTION 2.19. Mitigation of Costs............................................................ 69
SECTION 2.20. Determination of US Dollar Equivalent.......................................... 69
SECTION 2.21. Funding Accounts............................................................... 69
SECTION 2.22. Protective Advances and Overadvances........................................... 70
SECTION 2.23. Replacement of Lenders Under Certain Circumstances............................. 72
SECTION 2.24. Settlement..................................................................... 73
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................... 73
SECTION 3.1. Organization and Good Standing................................................. 74
SECTION 3.2. Power and Authority............................................................ 74
SECTION 3.3. Validity and Legal Effect...................................................... 74
SECTION 3.4. No Violation of Laws or Agreements............................................. 74
SECTION 3.5. Title to Assets; Existing Encumbrances......................................... 74
SECTION 3.6. Taxes and Assessments.......................................................... 75
SECTION 3.7. Litigation and Legal Proceedings............................................... 75
SECTION 3.8. Bank Accounts.................................................................. 75
SECTION 3.9. Accuracy of Financial Information.............................................. 75
SECTION 3.10. Accuracy of Other Information.................................................. 76
SECTION 3.11. Compliance with Laws Generally................................................. 76
SECTION 3.12. Employee Benefit Plans Compliance.............................................. 76
SECTION 3.13. Environmental Compliance....................................................... 77
SECTION 3.14. Federal Regulations............................................................ 78
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SECTION 3.15. Fees and Commissions.......................................................... 78
SECTION 3.16. Solvency...................................................................... 78
SECTION 3.17. Investment Company Act........................................................ 78
SECTION 3.18. Nature of Business............................................................ 78
SECTION 3.19. Ranking of Loans.............................................................. 78
SECTION 3.20. Intellectual Property......................................................... 79
SECTION 3.21. Security Interest in Collateral............................................... 79
SECTION 3.22. Insurance..................................................................... 79
SECTION 3.23. Representations and Warranties Contained in the Purchase Agreement
Documentation and the Bridge Loan Agreement Documentation..................... 79
ARTICLE IV CONDITIONS TO BORROWING...................................................... 79
SECTION 4.1. Conditions to Closing.......................................................... 79
SECTION 4.2. Conditions to Canadian Revolving Loans, Acceptances and Acceptance
Equivalent Loans............................................................ 82
SECTION 4.3. Conditions to Each Loan or Letter of Credit.................................... 84
ARTICLE V AFFIRMATIVE COVENANTS........................................................ 85
SECTION 5.1. Financial Statements........................................................... 85
SECTION 5.2. Certificates; Other Information................................................ 86
SECTION 5.3. Payment of Obligations......................................................... 88
SECTION 5.4. Conduct of Business; Maintenance of Existence and Licenses; Contractual
Obligations................................................................. 88
SECTION 5.5. Maintenance of Property........................................................ 89
SECTION 5.6. Insurance...................................................................... 89
SECTION 5.7. Inspection; Communication with Accountants..................................... 90
SECTION 5.8. Appraisals and Field Examinations.............................................. 90
SECTION 5.9. Collateral Access Agreements................................................... 91
SECTION 5.10. Deposit Account Control Agreements............................................. 91
SECTION 5.11. Environmental Laws............................................................. 92
SECTION 5.12. Use of Proceeds................................................................ 92
SECTION 5.13. Compliance with Laws, Etc. .................................................... 92
SECTION 5.14. Additional Collateral; Further Assurances...................................... 92
SECTION 5.15. Notices........................................................................ 93
ARTICLE VI NEGATIVE COVENANTS........................................................... 94
SECTION 6.1. Financial Condition Covenants.................................................. 94
SECTION 6.2. Limitation on Indebtedness..................................................... 95
SECTION 6.3. Limitation on Liens............................................................ 96
SECTION 6.4. Limitation on Fundamental Changes.............................................. 97
SECTION 6.5. Limitation on Sale of Assets................................................... 97
SECTION 6.6. Limitation on Dividends........................................................ 97
SECTION 6.7. Limitation on Investments, Loans and Advances.................................. 98
SECTION 6.8. Transactions with Affiliates................................................... 99
SECTION 6.9. Fiscal Year.................................................................... 100
SECTION 6.10. Sale-Leaseback Transactions.................................................... 100
SECTION 6.11. Unfunded Liabilities........................................................... 100
SECTION 6.12. Hedging Obligations............................................................ 100
SECTION 6.13. Optional Payments of Certain Debt Instruments.................................. 100
SECTION 6.14. Amendments to Purchase Agreement Documentation and Tender Offer
Documentation.............................................................. 100
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SECTION 6.15. Amendments to Certain Documentation............................................ 100
SECTION 6.16. Negative Pledge Clauses........................................................ 101
SECTION 6.17. Clauses Restricting Subsidiary Distributions................................... 101
ARTICLE VII EVENTS OF DEFAULT............................................................ 102
ARTICLE VIII THE AGENTS................................................................... 104
SECTION 8.1. Appointment.................................................................... 104
SECTION 8.2. Delegations of Duties.......................................................... 105
SECTION 8.3. Exculpatory Provisions......................................................... 105
SECTION 8.4. Reliance by the Administrative Agents.......................................... 105
SECTION 8.5. Notice of Default.............................................................. 106
SECTION 8.6. Non-Reliance on the Agents and Other Lenders................................... 106
SECTION 8.7. Indemnification................................................................ 106
SECTION 8.8. Each Agent in Its Individual Capacity.......................................... 107
SECTION 8.9. Successor Administrative Agents................................................ 107
SECTION 8.10. Alternate Currency Fronting Lenders, Alternate Currency Fronting
Agent, Swing Line Lender and Issuing Banks.................................... 107
SECTION 8.11. Documentation Agent and Syndication Agent...................................... 108
SECTION 8.12. Quebec......................................................................... 108
ARTICLE IX MISCELLANEOUS................................................................ 109
SECTION 9.1. Amendments and Waivers......................................................... 109
SECTION 9.2. Notices........................................................................ 110
SECTION 9.3. No Waiver; Cumulative Remedies................................................. 112
SECTION 9.4. Survival of Representations and Warranties..................................... 112
SECTION 9.5. Payment of Expenses and Taxes.................................................. 112
SECTION 9.6. Successors and Assigns; Participations; Purchasing Lenders..................... 113
SECTION 9.7. Adjustments; True-Up; Setoff................................................... 116
SECTION 9.8. Counterparts................................................................... 117
SECTION 9.9. Severability................................................................... 117
SECTION 9.10. Integration.................................................................... 117
SECTION 9.11. GOVERNING LAW.................................................................. 117
SECTION 9.12. WAIVER OF JURY TRIAL........................................................... 117
SECTION 9.13. Acknowledgements............................................................... 118
SECTION 9.14. Headings....................................................................... 118
SECTION 9.15. Copies of Certificates, Etc.................................................... 118
SECTION 9.16. Confidentiality................................................................ 118
SECTION 9.17. Patriot Act Notice............................................................. 118
SECTION 9.18. Conversion of Currencies....................................................... 119
SECTION 9.19. Submission To Jurisdiction; Waivers............................................ 119
SECTION 9.20. Intercreditor Agreement........................................................ 120
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Exhibits
A-1 US Revolving Note
A-2 Swing Line Note
B Assignment and Assumption
C No Default/Representation Certificate
D-1 Form of New Lender Supplement
D-2 Form of Commitment Increase Supplement
E Compliance Certificate
F Continuation Notice
G-1 Revolving Loan Borrowing Notice
G-2 Alternate Currency Loan Borrowing Notice
G-3 Canadian Notice of Drawing
H-1 Swing Line Borrowing Notice
H-2 Swing Line Loan Participation Certificate
I US Security Agreement
J US Guarantee
K Borrowing Base Certificate
L Form of Legal Opinion of Xxxxxx & O'Neil LLP
M Form of Exemption Certificate
N Intercreditor Agreement
O Form of Discount Note
Schedules
1.1 US Revolving Loan Commitments
2.5 Existing Letters of Credit
3.1 Jurisdictions of Organization or Qualification to Conduct Business
3.5A Liens Against Assets of Quiksilver and Each Subsidiary
3.5B Operating Names/Trade Names
3.6 Taxes
3.7 Litigation
3.8 Bank Accounts
3.12 Canadian Benefit Plans and Canadian Pension Plans(1)
3.13 Environmental Liabilities
3.22 Insurance
4.2 Canadian Revolving Loan Commitment Allocations
6.2 Existing Indebtedness
6.7 Existing Investments
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1 Not to be completed until the Canadian Trigger Date.
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 3, 2005,
among (1) QUIKSILVER, INC., a Delaware corporation ("Quiksilver"), (2)
QUIKSILVER AMERICAS, INC., a California corporation (the "US Borrower"), (3) the
several banks and other financial institutions from time to time parties to this
Agreement (the "Lenders"), (4) BANK OF AMERICA, N.A., as documentation agent (in
such capacity, the "Documentation Agent"), (5) UNION BANK OF CALIFORNIA, N.A.,
as syndication agent (in such capacity, the "Syndication Agent"), (6) JPMorgan
Chase Bank, N.A., as US administrative agent for the US Lenders hereunder (in
such capacity, the "US Administrative Agent"), (7) JPMORGAN CHASE BANK, N.A.,
LONDON BRANCH, as an alternate currency fronting lender, (8) X.X. XXXXXX EUROPE
LIMITED, as alternate currency fronting agent (in such capacity, the "Alternate
Currency Fronting Agent") and (9) JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as
Canadian administrative agent for the Canadian Lenders hereunder (in such
capacity, the "Canadian Administrative Agent") and as an alternate currency
fronting lender.
WITNESSETH:
WHEREAS, Quiksilver intends to directly or indirectly acquire (the
"Transaction") 100% of the outstanding capital stock (the "Target Stock") of
Skis Rossignol S.A. (the "Target");
WHEREAS, prior to entering into the Purchase Agreement (referred to
below), certain existing stockholders of the Target (such stockholders, the
"Sellers") owned approximately 44.46% of the outstanding capital stock of the
Target, consisting of (i) approximately 38.44% held by a holding company (the
"Holding Company") controlled by the Sellers and (ii) approximately 6.02% of the
Target held directly by the Sellers (the "Direct Interest");
WHEREAS, upon the consummation of the Transaction, Quiksilver intends to
(i) have purchased, indirectly through the Holding Company, 75% of the Target
Stock currently held by the Sellers, with total consideration of approximately
$108,000,000, payable in a combination of 70% cash and 30% newly issued shares
of common stock of Quiksilver and (ii) have consummated the Tender Offer and, if
applicable, the Buy Out and Squeeze Out (each as defined below);
WHEREAS, on the Original Closing Date (as hereinafter defined), Quiksilver
entered into a Purchase Agreement (the "Purchase Agreement") pursuant to which
Quiksilver agreed to effect the Transaction in two stages;
WHEREAS, in the first stage of the Transaction (which occurred on the
Original Closing Date), Quiksilver (i) indirectly became the managing general
partner ("commandite") of the Holding Company, (ii) made a direct cash payment
to the Sellers in an amount of approximately $8,800,000, (iii) deposited
approximately $52,700,000 (the "Escrowed Amount"), which is currently held in
escrow in an account held at Societe Generale (such account, the "Escrow
Account") and (iv) purchased commandite shares from or of the Sellers in the
amount of approximately (euro)50,000 (collectively, the "Initial Purchase");
WHEREAS, in connection with the Initial Purchase, Quiksilver terminated
the Prior Credit Agreement (as hereinafter defined) on the Original Closing Date
(such termination, together with the Initial Purchase, the "Initial
Transactions");
WHEREAS, the second stage of the Transaction will involve, among other
things, (i) the transfer of the Escrowed Amount to the Sellers, (ii) a direct
cash payment by Quiksilver to the Sellers in the amount of approximately
$14,600,000, (iii) a non-cash payment by Quiksilver to the Sellers in the form
of newly issued shares of Quiksilver valued at approximately $31,900,000, (iv)
the purchase of the
remaining shares of Target Stock to be acquired by Quiksilver pursuant to a
tender offer under French law (offre publique d'achat) (the "Tender Offer"),
followed, if applicable, by a offre publique de retrait (the "Buy Out") and a
retrait obligatoire (the "Squeeze Out") and (v) the refinancing of certain
indebtedness of the Target;
WHEREAS, to finance the Transaction, the US Borrower entered into that
certain Credit Agreement, dated as of April 12, 2005 (the "Existing Credit
Agreement"), among Quiksilver, Quiksilver Americas, Inc., the lenders party
thereto and JPMorgan Chase Bank, N.A., as administrative agent;
WHEREAS, Quiksilver and the US Borrower have requested that the Existing
Credit Agreement be amended and restated as provided herein; and
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement and which remain outstanding or evidence repayment of
any of such obligations and liabilities and that this Agreement amend and
restate in its entirety the Existing Credit Agreement and re-evidence the
obligations of the US Borrower outstanding thereunder;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree that on the Effective
Date (as defined below) the Existing Credit Agreement shall be, and hereby is,
amended and restated in its entirety as follows:
ARTICLE I DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR" and "Alternate Base Rate": the higher of (i) the rate of interest
publicly announced by the US Administrative Agent as its prime rate in effect at
its principal office in New York City (the "Prime Rate") and (ii) the Federal
Funds Effective Rate from time to time plus 0.5%.
"ABR Loans": the loans (or any portions thereof) at such time as they (or
such portions) are made and/or being maintained at a rate of interest based upon
the Alternate Base Rate (including, without limitation, any US Protective
Advance or US Overadvance).
"Acceptance": a Draft drawn by the Canadian Borrower on a Canadian Lender
conforming to the requirements of Section 2.4 and accepted by such Canadian
Lender in accordance with Section 2.4(c). As the context shall require,
"Acceptance" shall also have the meaning ascribed to it in Section 2.4(j).
"Acceptance Equivalent Loan": an advance made under this Agreement by a
Canadian Lender evidenced by a Discount Note.
"Acceptance Exposure": at any time, the US Dollar Equivalent of the
aggregate face amount of the outstanding Acceptances and Acceptance Equivalent
Loans at such time. The Acceptance Exposure of any Canadian Lender at any time
shall be its Canadian Revolving Loan Commitment Percentage of the aggregate
Acceptance Exposure at such time.
"Acceptance Fee": has the meaning assigned to such term in Section 2.4(m).
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"Acceptance Obligation": in respect of each Acceptance, the obligation of
the Canadian Borrower to pay to the Canadian Lender that accepted such
Acceptance the face amount thereof as required by Section 2.4(e).
"Account Debtor": any Person obligated on an Account.
"Accountants": Deloitte & Touche, LLP, or such other firm of independent
certified public accountants of recognized national standing as shall be
selected by the US Borrower and satisfactory to the Administrative Agents and
the Majority Lenders.
"Accounts": as defined in Article 9 of the UCC or as defined in the PPSA,
as applicable.
"Additional Domestic Guarantors": Fidra, Inc., Hawk Designs, Inc. and
Xxxxxx Manufacturing, Inc.
"Adjusted LIBO Rate": the LIBO Rate as adjusted for statutory reserve
requirements for eurocurrency liabilities.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agents": the collective reference to the US Administrative
Agent and the Canadian Administrative Agent.
"Administrative Questionnaire": an Administrative Questionnaire in a form
supplied by the US Administrative Agent.
"Affected Alternate Currency": as defined in Section 2.12.
"Affiliate": as to any Person, any other Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control" of
a Person means the power, directly or indirectly, either to (a) vote securities
having 5% or more of the ordinary voting power for the election of directors (or
the equivalent) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agents": the collective reference to the Administrative Agents, the
Syndication Agent and the Documentation Agent.
"Aggregate Canadian Borrower Credit Exposure": at any time, the aggregate
amount of the Canadian Borrower Credit Exposure of the Lenders outstanding at
such time.
"Aggregate Canadian Credit Exposure": at any time, the aggregate amount of
the Canadian Credit Exposure of the Lenders outstanding at such time.
"Aggregate Canadian Revolving Loan Commitment": the aggregate amount of
the Canadian Revolving Loan Commitments notified in accordance with Section
4.2(a), or in the Assignment and Assumption pursuant to which a Lender becomes a
party hereto, as the same may be adjusted from time to time pursuant to the
provisions hereof. The aggregate amounts of the Canadian Revolving Loan
Commitments as of the Effective Date is US$0.
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"Aggregate Credit Exposure": at any time, the sum of the Aggregate US
Credit Exposure and the Aggregate Canadian Credit Exposure.
"Aggregate US Borrower Credit Exposure": at any time, the aggregate amount
of the US Borrower Credit Exposure of the Lenders outstanding at such time.
"Aggregate US Credit Exposure": at any time, the aggregate amount of the
US Credit Exposure of the Lenders outstanding at such time.
"Aggregate US Revolving Loan Commitment": the sum of the US Revolving Loan
Commitments set forth on Schedule 1.1 hereto, or in the Assignment and
Assumption pursuant to which a Lender becomes a party hereto, as the same may be
adjusted from time to time pursuant to the provisions hereof (including, without
limitation, Section 4.2(a)). The aggregate amount of the US Revolving Loan
Commitments as of the Effective Date is US$250,000,000.
"Agreement": this Credit Agreement, as amended, waived, supplemented or
otherwise modified from time to time.
"Agreement Currency": as defined in Section 9.18.
"Alternate Currency": any Approved Currency other than US Dollars.
"Alternate Currency Equivalent": with respect to any Alternate Currency,
on any date of determination thereof, the amount of such Alternate Currency
which could be purchased with the amount of US Dollars involved in such
computation at the spot rate at which such Alternate Currency may be exchanged
into US Dollars as set forth on such date on (i) the applicable Reuters pages,
or (ii), if such rate is not set forth on such Reuters pages, on the applicable
Telerate Service pages, or (iii) if such rate does not appear on such Reuters or
Telerate Service pages, at the spot exchange rate therefor as determined by the
US Administrative Agent, in each case as of 11:00 a.m. (London or Toronto time,
as applicable, or such other local time as the US Administrative Agent shall
deem appropriate) on such date of determination thereof.
"Alternate Currency Fronting Agent": as defined in the preamble to this
Agreement.
"Alternate Currency Fronting Lender": (a) with respect to Alternate
Currency Loans denominated in any Alternate Currency other than Canadian
Dollars, JPMorgan Chase Bank, N.A., London Branch and (b) with respect to
Alternate Currency Loans denominated in Canadian Dollars, JPMorgan Chase Bank,
N.A., Toronto Branch.
"Alternate Currency Letter of Credit": any Letter of Credit denominated in
an Alternate Currency.
"Alternate Currency Loan": as defined in Section 2.3(a).
"Alternate Currency Loan Borrowing Notice": a notice from the US Borrower
to the US Administrative Agent and the applicable Alternate Currency Fronting
Lender requesting a borrowing of Alternate Currency Loans, substantially in the
form of Exhibit G-2 hereto.
"Alternate Currency Loan Participants": with respect to each Alternate
Currency Loan, the collective reference to all of the US Lenders.
4
"Alternate Currency Sublimit": US$35,000,000.
"Amendment": as defined in Section 9.1.
"AMF": Autorites des marches financiers.
"Applicable Creditor": as defined in Section 9.18.
"Applicable Lending Office": for any Lender, its offices for Alternate
Currency Loans, Acceptances, Acceptance Equivalent Loans, LIBOR Loans, ABR
Loans, Canadian ABR Loans, Canadian Prime Rate Loans and participations in
Letters of Credit as notified to each Administrative Agent and Quiksilver or as
otherwise specified in the Assignment and Assumption, New Lender Supplement or
such other document pursuant to which it became a party hereto, any of which
offices may, upon 10 days' prior written notice to each Administrative Agent and
Quiksilver, be changed by such Lender. In connection with any Canadian Revolving
Loan made to the US Borrower, the "Applicable Lending Office" of each Canadian
Lender shall be its Counterpart Lender.
"Applicable Margin": (a) with respect to ABR Loans, Canadian ABR Loans and
Canadian Prime Rate Loans, 0% per annum and (b) with respect to LIBOR Loans and
the Acceptance Fee, 1.375% per annum; provided, that on and after the first
Adjustment Date occurring after the completion of two full fiscal quarters of
Quiksilver after the Original Closing Date, the Applicable Margin with respect
to Loans and the Acceptance Fee will be determined pursuant to the Pricing Grid.
"Approved Currencies": US Dollars, Canadian Dollars, Euros, Japanese Yen,
Australian Dollars and Pounds Sterling (each, an "Approved Currency"), and such
other currencies as shall be requested by the US Borrower to be an Approved
Currency hereunder subject to the approval of the US Administrative Agent and
the applicable Alternate Currency Fronting Lender, in their sole and absolute
discretion, in each case constituting freely transferable lawful money of the
country of issuance and in the case of each such currency (other than US
Dollars) is readily transferable and convertible into US Dollars in the London
interbank market.
"Approved Fund": any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
"Asset Disposition": the sale, sale and leaseback, transfer, conveyance,
exchange, long-term lease accorded sales treatment under GAAP or similar
disposition (including by means of a merger, consideration, amalgamation, joint
venture or other substantive combination) of any of the Properties, business or
assets of Quiksilver or any of its Subsidiaries to any Person or Persons other
than to Quiksilver or any of its Subsidiaries; provided that Asset Dispositions
shall not include (i) the sale of Inventory in the ordinary course of business
and (ii) the sale or other such disposition of other assets not exceeding
US$5,000,000 in the aggregate during any calendar year.
"Assignment and Assumption": as assignment and assumption entered into by
a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.6), and accepted by the US Administrative Agent, in the
form of Exhibit B or any other form approved by the US Administrative Agent.
"Australian Dollars": freely transferable lawful money of Australia.
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"Availability": at any time, the difference between (a) the lesser of (x)
the sum of the Aggregate US Revolving Loan Commitment and the Aggregate Canadian
Revolving Loan Commitment and (y) the sum of the US Borrowing Base and the
Canadian Borrowing Base minus (b) the Aggregate Credit Exposure, in each case at
such time.
"Availability Event": the occurrence of any date if, on such date, average
daily Availability for the preceding 30-day period was less than (x) if the
Guarantee Date has not yet occurred, US$17,000,000, or (y) on and after the
Guarantee Date, US$25,000,000; provided that such Availability Event shall be
deemed to be continuing until average daily Availability for any 90-day period
thereafter (calculated as of any date during such period to reflect average
Availability for the preceding 30 days) was no less than (x) if the Guarantee
Date has not yet occurred, US$20,000,000, or (y) on and after the Guarantee
Date, US$30,000,000.
"Availability Period": the period from and including the Effective Date to
but excluding the Revolving Loan Commitment Expiration Date.
"Available Canadian Revolving Loan Commitments": at any time, the
Aggregate Canadian Revolving Loan Commitment minus the Aggregate Canadian Credit
Exposure.
"Available US Revolving Loan Commitments": at any time, the Aggregate US
Revolving Loan Commitment minus the Aggregate US Credit Exposure.
"Banking Services": each and any of the following bank services provided
to any Loan Party by JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A.,
Toronto Branch, any other Lender or any of their Affiliates: (a) commercial
credit cards, (b) stored value cards and (c) treasury management services
(including, without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).
"Banking Services Obligations": any and all obligations of the Loan
Parties, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.
"Borrowers": the US Borrower and the Canadian Borrower.
"Borrowing Base": the collective reference to the Canadian Borrowing Base
and the US Borrowing Base.
"Borrowing Base Certificate": a certificate, signed by a Responsible
Officer of the applicable Borrower, in the form of Exhibit K or another form
which is acceptable to the Administrative Agents in their sole discretion.
"Borrowing Date": (i) in respect of Revolving Loans, any US Business Day
or Canadian Business Day, as applicable, on which the Lenders shall make
Revolving Loans to the applicable Borrower pursuant to a Revolving Loan
Borrowing Notice, (ii) in respect of Letters of Credit, any Business Day on
which the Issuing Bank issues a Letter of Credit to the US Borrower pursuant to
a Letter of Credit Request and (iii) in respect of Alternate Currency Loans, any
Eurodollar Business Day on which the applicable Alternate Currency Fronting
Lender shall make Alternate Currency Loans to the US Borrower pursuant to an
Alternate Currency Loan Borrowing Notice.
6
"Bridge Loan Agreement": the Credit Agreement, dated as of the Original
Closing Date, among Quiksilver, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent.
"Bridge Loan Agreement Documentation": the collective reference to the
Bridge Loan Agreement, the guarantee entered into in connection therewith by the
relevant Loan Parties, the exchange notes issued in connection therewith, any
indenture governing such exchange notes and all documentation entered into in
connection therewith, as such Bridge Loan Agreement Documentation may be
amended, supplemented or otherwise modified from time to time in accordance with
Section 6.15.
"Buy Out": as defined in the recitals to this Agreement.
"Calculation Date": with respect to each Alternate Currency, the fifteenth
and last day of each calendar month (or, if such day is not a US Business Day,
the next succeeding US Business Day) and such other days from time to time as
the US Administrative Agent shall designate as a "Calculation Date", provided
that each of the following shall also be a "Calculation Date": (i) the second US
Business Day preceding each Borrowing Date with respect to, and each date of any
continuation of, any Alternate Currency Loan or C$ Canadian Revolving Loan, (ii)
the US Business Day preceding each date on which (w) a fronting fee is payable
pursuant to Section 2.3(e), (x) a participation fee is payable pursuant to
Section 2.3(f), (y) a risk participation is funded pursuant to Section 2.3(h) or
(z) interest is payable pursuant to Section 2.10(b), (iii) the US Business Day
preceding each date on which a participation in an Alternate Currency Letter of
Credit is calculated pursuant to Section 2.5(d) or a reimbursement obligation
with respect to an Alternate Currency Letter of Credit is calculated pursuant to
Section 2.5(e), (iv) the US Business Day preceding the Fee Payment Date on which
any fee payable pursuant to Section 2.5(f)(i) is payable in respect of an
Alternate Currency Letter of Credit, (v) the date of issuance or amendment of a
Letter of Credit in an Alternate Currency and (vi) the date of issuance of an
Acceptance.
"Canada": Canada (including the Provinces and Territories thereof).
"Canadian ABR": for any day, a rate per annum equal to the higher of (a)
the rate of interest per annum publicly announced from time to time by the
Canadian Administrative Agent as its reference rate of interest then in effect
for determining interest rates on commercial loans denominated in US Dollars
made by it in Canada and (b) the Federal Funds Effective Rate in effect on such
day plus 0.5%.
"Canadian ABR Loans": Loans the rate of interest applicable to which is
based upon the Canadian ABR.
"Canadian Administrative Agent": JPMorgan Chase Bank, N.A., Toronto
Branch, a Canadian chartered bank, in its capacity as administrative agent for
the Canadian Lenders hereunder, together with its successors and assigns.
"Canadian Availability": at any time, the lesser of (a) the difference
between the Aggregate Canadian Revolving Loan Commitment minus the Aggregate
Canadian Credit Exposure and (b) the difference between the Canadian Borrowing
Base minus the Aggregate Canadian Borrower Credit Exposure, in each case at such
time.
"Canadian Benefit Plans": any plan, fund, program, or policy, whether oral
or written, formal or informal, funded or unfunded, insured or uninsured,
providing employee benefits, including medical, hospital care, dental, sickness,
accident, disability, life insurance, pension, retirement or savings benefits,
under which a Canadian Loan Party has any liability with respect to any employee
or former employee, but excluding any Canadian Pension Plans.
7
"Canadian Borrower": the wholly-owned Canadian Subsidiary which becomes a
Borrower hereunder in accordance with Section 4.2.
"Canadian Borrower Credit Exposure": with respect to any Canadian Lender
at any time, the US Dollar Equivalent of the sum of (i) the aggregate face
amount of outstanding Acceptance Exposure and Canadian Revolving Loans made to
the Canadian Borrower at such time and (ii) such Lender's Canadian Revolving
Loan Commitment Percentage of the aggregate principal amount of the Canadian
Protective Advances and Canadian Overadvances then outstanding.
"Canadian Borrowing Base": at any time, the sum of:
(a) 85% of Eligible Accounts of the Canadian Loan Parties at such
time, plus
(b) the lesser of (i) 75% of Eligible Inventory of the Canadian
Quiksilver Loan Parties, valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time and (ii) 85% of the
Net Orderly Liquidation Value of Eligible Inventory of the Canadian
Quiksilver Loan Parties at such time, plus
(c) the lesser of (i) 70% of Eligible Inventory of the Canadian
Target Loan Parties, valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time and (ii) 85% of the
Net Orderly Liquidation Value of Eligible Inventory of the Canadian Target
Loan Parties at such time, plus
(d) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the Canadian Quiksilver Loan Parties at such time to the
extent such Inventory would be included in the calculation of "Canadian
Quiksilver L/C Amount" and (ii) 75% of the Canadian Quiksilver L/C Amount
at such time (with the Inventory subject to the "Canadian Quiksilver L/C
Amount" definition being valued at the lower of cost or market value,
determined on a first-in-first-out basis), plus
(e) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the Canadian Target Loan Parties at such time to the extent
such Inventory would be included in the calculation of "Canadian Target
L/C Amount" and (ii) 70% of the Canadian Target L/C Amount at such time
(with the Inventory subject to the "Canadian Target L/C Amount" definition
being valued at the lower of cost or market value, determined on a
first-in-first-out basis), minus
(f) Reserves at such time.
Notwithstanding the foregoing, during the Target Seasonal Period of each year,
(1) the 70% advance rate for Eligible Inventory contained in clause (c)(i) above
shall be increased to 80% and (2) the 70% advance rate for the Target L/C Amount
contained in clause (e)(ii) above shall be increased to 80%. The maximum amount
of the combined US Borrowing Base and Canadian Borrowing Base calculation based
on Inventory shall be equal to (x) if the Guarantee Date has not yet occurred,
US$125,000,000 or, (y) after the Guarantee Date, US$175,000,000; provided,
further, that such amounts shall be subject to increase by the Canadian
Administrative Agent in its Permitted Discretion in connection with any new
Canadian Revolving Loan Commitments established in accordance with Section
2.1(c)(i).
"Canadian Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in the Provinces of Ontario or Alberta or in New York
City are authorized or required to close by law and which, in the case of a
LIBOR Loan, is a Eurodollar Business Day.
8
"Canadian Credit Exposure": with respect to any Canadian Lender at any
time, the US Dollar Equivalent of the sum of (i) the aggregate face amount of
outstanding Acceptance Exposure and Canadian Revolving Loans made to the
Canadian Borrower at such time, (ii) the aggregate principal amount of
outstanding Canadian Revolving Loans made to the US Borrower at such time and
(iii) such Lender's Canadian Revolving Loan Commitment Percentage of the
aggregate principal amount of the Canadian Protective Advances and Canadian
Overadvances then outstanding.
"Canadian Dollars" and the symbol "C$": freely transferable lawful money
of Canada.
"C$ Canadian Revolving Loans": as defined in Section 2.1(b).
"Canadian Funding Account": as defined in Section 2.21.
"Canadian Guarantee": a Guarantee, to be made by Quiksilver, each of the
Canadian Loan Parties and each Subsidiary that owns Capital Stock of the
Canadian Loan Parties in favor of the Canadian Administrative Agent, for the
benefit of the Canadian Lenders, in form and substance reasonably satisfactory
to the Canadian Administrative Agent.
"Canadian Guarantors": each Canadian Subsidiary which is party to the
Canadian Guarantee and each Subsidiary that owns Capital Stock of any Canadian
Loan Party.
"Canadian Lender": any Lender that has a Canadian Revolving Loan
Commitment or any Canadian Credit Exposure. Each Canadian Lender shall make
available Canadian Revolving Loans to the US Borrower through its Counterpart
Lender.
"Canadian Loan Parties": the collective reference to the Canadian Borrower
and each other Canadian Subsidiary from time to time party to the Canadian
Guarantee and the Canadian Security Agreement.
"Canadian Notice of Drawing": a notice of borrowing substantially in the
form of Exhibit G-3.
"Canadian Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Canadian Revolving Loans, the
Canadian Protective Advances, the Canadian Overadvances, the Acceptance
Equivalent Loans and the Acceptances, and interest accruing on or after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Canadian Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding and whether or not at a default rate) the Canadian Revolving Loans,
the Canadian Protective Advances, the Canadian Overadvances, the Acceptance
Equivalent Loans and the Acceptances and all other obligations and liabilities
of the Canadian Borrower to each Agent and the Canadian Lenders (including,
without limitation, obligations of any Canadian Loan Party in respect of
Specified Hedging Agreements and Banking Services Obligations owed to a Canadian
Lender or any of its Affiliates), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes, any
other Loan Document and any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all
reasonable fees and disbursements of counsel, and the allocated reasonable cost
of internal counsel, to each Agent or the Canadian Lenders that are required to
be paid by the Canadian Borrower pursuant to the terms of this Agreement) or
otherwise.
"Canadian Overadvance": as defined in Section 2.22(d).
9
"Canadian Pension Plans": each pension plan required to be registered
under Canadian federal or provincial law that is maintained or contributed to by
a Canadian Loan Party for its employees or former employees, but does not
include the Canada Pension Plan and the Quebec Pension Plan as maintained by the
Government of Canada or the Province of Quebec, respectively.
"Canadian Prime Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the higher of (i) the rate per
annum publicly announced from time to time by JPMorgan Chase Bank, N.A., Toronto
Branch as its prime rate in effect at its principal office in Toronto and (ii)
the one-month CDOR Rate plus 1.00% per annum.
"Canadian Prime Rate Loans": Loans the rate of interest applicable to
which is based upon the Canadian Prime Rate (including, without limitation, each
Canadian Overadvance and Canadian Protective Advance). Each change in the
Canadian Prime Rate shall be effective on the date after such change is publicly
announced.
"Canadian Protective Advance": as defined in Section 2.22(b).
"Canadian Quiksilver L/C Amount": the sum of (a) the aggregate undrawn
face amount of Trade Letters of Credit issued to finance the purchase of
Inventory (excluding any Eligible Inventory) of the Canadian Quiksilver Loan
Parties and (b) the aggregate value of Inventory (valued at the lower of cost or
market value, determined on a first-in-first-out basis, at such time) of the
Canadian Quiksilver Loan Parties financed with Trade Letters of Credit which
have been fully drawn and the Reimbursement Obligations in respect of which have
been fully paid so long as, in the case of clause (a) and (b), (i) such
Inventory shall be in transit to customers in Canada or properties owned or
leased by the Canadian Quiksilver Loan Parties in Canada, (ii) such Inventory is
not Eligible Inventory and, upon arrival in Canada, will be subject to a first
priority security interest in favor of the Canadian Administrative Agent to
secure the Canadian Obligations and shall otherwise be included in the
calculation of Eligible Inventory, and (iii) to the extent requested by the
Canadian Administrative Agent or its agent or bailee shall be named as the
consignee of the applicable xxxx of lading or other document of title.
"Canadian Quiksilver Loan Parties": all Canadian Loan Parties other than
the Canadian Target Loan Parties, if any.
"Canadian Revolving Loan Commitment": with respect to each Canadian
Lender, the commitment, if any, of such Canadian Lender to make Canadian
Revolving Loans and Acceptance Equivalent Loans and to accept Acceptances
hereunder and to participate in the Canadian Overadvances and the Canadian
Protective Advances, representing the maximum aggregate amount of such Lender's
Canadian Exposure hereunder, as such commitment may be increased or reduced from
time to time pursuant to the terms hereof. The Canadian Revolving Loan
Commitments shall be denominated in US Dollars.
"Canadian Revolving Loan Commitment Percentage": (a) with respect to each
Canadian Lender on or before the Revolving Loan Commitment Expiration Date, the
percentage equivalent of the ratio which such Lender's Canadian Revolving Loan
Commitment bears to the Aggregate Canadian Revolving Loan Commitment, as such
Lender's Canadian Revolving Loan Commitment and the Aggregate Canadian Revolving
Loan Commitment may be adjusted from time to time pursuant to the terms hereof
and (b) with respect to each Canadian Lender after the Revolving Loan Commitment
Expiration Date, the percentage equivalent of the ratio which such Lender's
Canadian Credit Exposure bears to the Aggregate Canadian Credit Exposure.
"Canadian Revolving Loans": as defined in Section 2.1(b).
10
"Canadian Revolving Note": a promissory note, in form and substance
reasonably satisfactory to the Canadian Administrative Agent.
"Canadian Security Agreement": a Canadian security agreement, to be made
by Quiksilver, each Canadian Loan Party and each Subsidiary that owns Capital
Stock of the Canadian Borrower in favor of the Canadian Administrative Agent,
for the benefit of the Canadian Lenders, in form and substance reasonably
satisfactory to the Canadian Administrative Agent, securing the Canadian
Obligations.
"Canadian Subsidiary": each Subsidiary that is incorporated or otherwise
organized under the laws of Canada or any political subdivision thereof.
"Canadian Target L/C Amount": the sum of (a) the aggregate undrawn face
amount of Trade Letters of Credit issued to finance the purchase of Inventory
(excluding any Eligible Inventory) of the Canadian Target Loan Parties and (b)
the aggregate value of Inventory (valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time) of the Canadian Target
Loan Parties financed with Trade Letters of Credit which have been fully drawn
and the Reimbursement Obligations in respect of which have been fully paid so
long as, in the case of clause (a) and (b), (i) such Inventory shall be in
transit to customers in Canada or properties owned or leased by the Canadian
Target Loan Parties in Canada, (ii) such Inventory is not Eligible Inventory
and, upon arrival in Canada, will be subject to a first priority security
interest in favor of the Canadian Administrative Agent to secure the Canadian
Obligations and shall otherwise be included in the calculation of Eligible
Inventory, and (iii) to the extent requested by the Canadian Administrative
Agent or its agent or bailee shall be named as the consignee of the applicable
xxxx of lading or other document of title.
"Canadian Target Loan Parties": each Loan Party that is, or was at any
time, a Canadian Subsidiary of the Target or any successor thereto.
"Canadian Trigger Date": the date on which the conditions precedent set
forth in Section 4.2 are satisfied.
"Capital Expenditures": for any period, collectively, for any Person, the
aggregate of all expenditures which are made during such period (whether paid in
cash or accrued as liabilities), and all contractual commitments for such
expenditures which are entered into during such period (provided that if any
such commitment is included in one fiscal year, the actual payment in a later
fiscal year shall not be included in such later fiscal year), by such Person,
for property, plant or equipment and which would be reflected as additions to
property, plant or equipment on a balance sheet of such Person prepared in
accordance with GAAP (including all Capitalized Lease Obligations).
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase, or any other securities convertible
into, any of the foregoing.
"Capitalized Lease Obligations": obligations for the payment of rent for
any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or Canadian government or
issued by any agency thereof and backed by the full faith and credit of the
United States or Canada, in each case maturing within one year from the date of
11
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or less from
the date of acquisition issued by any Lender or by any commercial bank organized
under the laws of the United States or Canada or any state thereof having
combined capital and surplus of not less than US$500,000,000; (c) commercial
paper of an issuer rated at least A-1 by Standard & Poor's Ratings Services
("S&P") or P-1 by Xxxxx'x Investors Service, Inc. ("Moody's"), or carrying an
equivalent rating by a nationally recognized rating agency, if all of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days, with respect to securities issued or fully guaranteed or insured by the
United States or Canadian government; (e) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States or province or territory of
Canada, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody's; (f) securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition;
(g) money market mutual or similar funds that invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition; or
(h) money market funds that (i) comply with the criteria set forth in SEC Rule
2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by
S&P and Aaa by Moody's and (iii) have portfolio assets of at least
US$5,000,000,000.
"CDOR Rate": on any day, the annual rate of interest which is the rate
determined as being the arithmetic average of the rates applicable to Canadian
Dollar bankers' acceptances for the applicable period displayed and identified
as such on the "Reuters' Screen CDOR Page" at approximately 10:00 a.m. on such
day for Schedule I chartered banks, or if such day is not a Canadian Business
Day then on the immediately preceding Canadian Business Day (as adjusted by a
Canadian bank after 10:00 a.m. to reflect any error in a posted rate of interest
or in the posted average annual rate of interest).
"Change in Control": (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of Rule 13d-3 of the Exchange Act as in effect on the date hereof) of
Capital Stock representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of Quiksilver; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Quiksilver by Persons who were neither (i) nominated by the board
of directors of Quiksilver nor (ii) appointed by directors so nominated; (c) the
failure by Quiksilver to own, directly or indirectly, beneficially or of record,
100% of the Capital Stock of either Borrower or (d) a "Change in Control" (or
any such similar term) under and as defined in the Bridge Loan Agreement
Documentation or the Senior Note Indenture.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all property of the Loan Parties (other than (a)
Intellectual Property Rights and (b) monies on deposit in, or released from, the
Escrow Account to the extent such monies were initially deposited therein by
Quiksilver or any of its Subsidiaries), now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.
"Collateral Access Agreement": any landlord waiver or other agreement, in
form and substance reasonably satisfactory to the relevant Administrative Agent,
between such Administrative Agent and any third party (including any bailee,
consignee, customs broker, or other similar Person) in possession of any
12
Collateral or any landlord of any Loan Party for any real Property where any
Collateral is located, as such landlord waiver or other agreement may be
amended, restated, or otherwise modified from time to time.
"Commitment Fee Rate": 0.30% per annum; provided, that on and after the
first Adjustment Date occurring after the completion of two full fiscal quarters
of the US Borrower after the Original Closing Date, the Commitment Fee Rate will
be determined pursuant to the Pricing Grid.
"Commitment Letter": the Commitment Letter, dated as of March 20, 2005,
among Quiksilver, the US Borrower, JPMorgan and the US Administrative Agent, as
amended from time to time.
"Commonly Controlled Entity": as to any Person, an entity, whether or not
incorporated, which is under common control with such Person within the meaning
of Section 4001 of ERISA or is part of a group which includes such Person and
which is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate of the Chief Financial Officer of
Quiksilver substantially in the form of Exhibit E hereto.
"Consideration": with respect to any Permitted Acquisition, the aggregate
consideration, in whatever form (including cash payments, the principal amount
of promissory notes and Indebtedness assumed, and the fair market value of other
property delivered) paid, delivered or assumed by Quiksilver or any Subsidiary
for such Permitted Acquisition and the expenses associated therewith, including
all brokerage commissions, legal fees and similar expenses.
"Consolidated Rentals": with reference to any period, the Rentals of
Quiksilver and its Subsidiaries calculated on a consolidated basis for such
period.
"Consolidated Tangible Assets": of any Person as of any date, the total
amount of assets of such Person and its Subsidiaries (less applicable reserves)
on a consolidated basis at the end of the fiscal quarter immediately preceding
such date, as determined in accordance with GAAP, less (i) Intangible Assets and
(ii) appropriate adjustments on account of minority interests of other Persons
holding equity investments in such Person's Subsidiaries.
"Continuation Notice": a request for continuation or conversion of a Loan
as set forth in Section 2.8, substantially in the form of Exhibit F hereto.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement or other undertaking to which such
Person is a party or by which it or any of its property is bound.
"Control": the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Copyrights": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to xxx for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
13
"Counterpart Lender": as to any Canadian Lender, the US Affiliate or US
branch office through which it intends to fund Canadian Revolving Loans to the
US Borrower, as set forth opposite such Canadian Lender's name in the signature
pages to the Joinder Agreement or New Lender Supplement pursuant to which it
became a party to this Agreement.
"Currency": any Approved Currency.
"Customer List": a list of the Loan Parties' customers in a form
reasonably acceptable to the US Administrative Agent.
"Debt Offering": the issuance or sale of any debt securities by Quiksilver
or any of its Subsidiaries.
"Default": any of the events specified in Article 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Deposit Account Control Agreement": an agreement, in form and substance
reasonably satisfactory to the relevant Administrative Agent, among any Loan
Party, a banking institution holding such Loan Party's funds, and the US
Administrative Agent or the Canadian Administrative Agent, as the case may be,
with respect to collection and control of all deposits and balances held in a
deposit account maintained by any Loan Party with such banking institution.
"Direct Interest": as defined in the recitals to this Agreement.
"Discount Note": a non- interest bearing, non-negotiable promissory note
of the Canadian Borrower denominated in Canadian Dollars, issued by the Canadian
Borrower to a Canadian Lender, substantially in the form of Exhibit O.
"Discount Rate": with respect to an issue of Acceptances with the same
maturity date, (a) for a Canadian Lender which is a Schedule I Lender, (i) the
average CDOR Rate for the applicable term and (b) for a Canadian Lender which is
not a Schedule I Lender, the rate determined by the Canadian Administrative
Agent based on the arithmetic average (rounded upwards to the nearest multiple
of 0.01%) of the actual discount rates, calculated on the basis of a year of 365
days, for Acceptances for such term accepted by the Schedule II or III Reference
Banks established in accordance with their normal practices at or about 10:00
A.M. (Toronto time) on the date of issuance of such Acceptances, but not to
exceed the actual rate of discount applicable to Acceptances established
pursuant to clause (a) for the same Acceptances issue plus 0.10% per annum.
"Documentation Agent": as defined in the preamble to this Agreement.
"Documents": as defined in Article 9 of the UCC or "document of title," as
defined in the PPSA, as applicable.
"Domestic Subsidiary": each Subsidiary organized under the laws of the
United States or any state thereof.
"Draft": a depository xxxx issued in accordance with the Depository Bills
and Notes Act (Canada) or a xxxx of exchange in the form used from time to time
by each Canadian Lender, respectively, in connection with the creation of
bankers' acceptances in accordance with the provisions of Section 2.4 and
payable in Canadian Dollars.
14
"EBITDA": for Quiksilver and its Subsidiaries on a consolidated basis, for
the calendar quarter most recently ended for which financial statements have
been delivered and the immediately preceding three quarters, Net Income after
eliminating extraordinary gains and losses, plus (a) provisions for income
taxes, (b) depreciation and amortization and (c) Interest Expense. For the
purposes of calculating EBITDA for any period of twelve months (each, a
"Reference Period"), (i) if at any time during such Reference Period Quiksilver
or any Subsidiary shall have made any Material Disposition, the EBITDA for such
Reference Period shall be reduced by an amount equal to the EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the EBITDA (if
negative) attributable thereto for such Reference Period and (ii) if during such
Reference Period Quiksilver or any Subsidiary shall have made a Material
Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving pro forma effect thereto as if such Material Acquisition occurred
on the first day of such Reference Period. As used in this definition, "Material
Acquisition" means the Transaction and any acquisition of property or series of
related acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by Quiksilver and its Subsidiaries in excess of US$10,000,000;
and "Material Disposition" means any disposition of property or series of
related dispositions of property that yields gross proceeds to Quiksilver or any
of its Subsidiaries in excess of US$10,000,000.
"Effective Date": the date on which the conditions precedent set forth in
Section 4.1 shall have been satisfied, which date is June 3, 2005.
"Eligible Accounts": at any time, the Accounts of the Loan Parties which
the US Administrative Agent or the Canadian Administrative Agent, as applicable,
determines in its Permitted Discretion are eligible as the basis for extensions
of credit hereunder. Without limiting either Administrative Agent's discretion
provided herein, Eligible Accounts shall not include any Account:
(a) which is not subject to a first priority perfected security
interest in favor of the US Administrative Agent or the Canadian
Administrative Agent, as applicable;
(b) which is subject to any Lien other than (i) a Lien in favor of
the US Administrative Agent or the Canadian Administrative Agent, as
applicable, and (ii) a Permitted Lien which does not have priority over
the Lien in favor of the US Administrative Agent or the Canadian
Administrative Agent, as applicable;
(c) with respect to which more than 90 days have elapsed since the
date of the original invoice therefor or which is more than 60 days past
the due date for payment; provided, that this clause (c) shall not, in and
of itself, render ineligible (i) Accounts in an aggregate amount not in
excess of US$75,000,000 with respect to which more than 90 days but less
than 120 days have elapsed since the date of the original invoice so long
as no more than 60 days have elapsed since the due date for payment and
(ii) Accounts in an aggregate amount not in excess of US$10,000,000 with
respect to which more than 90 days but less than 210 days have elapsed
since the date of the original invoice so long as no more than 30 days
have elapsed since the due date for payment;
(d) which is owing by an Account Debtor for which more than 50% of
the Accounts owing from such Account Debtor and its Affiliates are
ineligible hereunder;
(e) which is owing by an Account Debtor to the extent the aggregate
amount of Accounts owing from such Account Debtor and its Affiliates to
any Loan Party exceeds 15% of the aggregate Eligible Accounts;
15
(f) with respect to which any covenant, representation, or warranty
contained in this Agreement or any of the other Loan Documents has been breached
or is not true;
(g) which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an invoice
or other documentation reasonably satisfactory to the relevant Administrative
Agent which has been sent to the Account Debtor, (iii) represents a progress
billing, (iv) is contingent upon such Loan Party's completion of any further
performance, or (v) represents a sale on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment, cash-on-delivery or any other
repurchase or return basis;
(h) for which the goods giving rise to such Account have not been shipped
to the Account Debtor or for which the services giving rise to such Account have
not been performed by such Loan Party;
(i) with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
(j) which, unless such Account is covered by credit insurance reasonably
satisfactory to the relevant Administrative Agent, is owed by an Account Debtor
which has (i) applied for, suffered, or consented to the appointment of any
receiver, interim receiver, receiver and manager, custodian, trustee, or
liquidator of its assets, (ii) has had possession of all or a material part of
its property taken by any receiver, custodian, trustee or liquidator, (iii)
filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state or federal
bankruptcy laws, (iv) has admitted in writing its inability, or is generally
unable to, pay its debts as they become due, (v) become insolvent, or (vi)
ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or
substantially all of its assets;
(l) which is owed by an Account Debtor which (i) does not maintain its
chief executive office or principal residence in the United States or Canada,
(ii) is not organized under applicable law of the United States or Canada
unless, in either case, (x) such Account is backed by a letter of credit
acceptable to the relevant Administrative Agent which is in the possession of
such Administrative Agent, (y) (A) the Account Debtor on such Account has
investment grade debt ratings from each of Xxxxx'x Investor Service Inc. and
Standard & Poor's Ratings Group and (B) the US Dollar Equivalent of the sum of
(1) the aggregate amount of such Accounts which qualify as Eligible Accounts
plus (2) the aggregate amount of Accounts of the type described in clause (m)
below which qualify as Eligible Accounts, exceeds US$15,000,000 at any one time
or (z) such Account is deemed satisfactory by such Administrative Agent in its
Permitted Discretion;
(m) which is owed in any currency other than US Dollars or, in the case of
Eligible Accounts owed by Account Debtors which maintain their chief executive
office or principal residence in Canada, Canadian Dollars, to the extent that
the US Dollar Equivalent of the sum of (A) the aggregate amount of such Accounts
plus (B) the aggregate amount of Accounts of the type described in clause (l)(y)
above which qualify as Eligible Accounts, exceeds US$15,000,000 at any one time;
16
(n) which is owed by the government (or any department, agency,
public corporation, or instrumentality thereof) of any country other than
the United States unless such Account is backed by a letter of credit
acceptable to the relevant Administrative Agent which is in the possession
of such Administrative Agent;
(o) which (i) is owed by the government of the United States, or any
department, agency, public corporation, or instrumentality thereof and
(ii) after a request by the relevant Administrative Agent to so comply,
does not comply with the Federal Assignment of Claims Act of 1940, as
amended (31 USC. Section 3727 et seq. and 41 USC. Section 15 et seq.), and
any other steps necessary to perfect the Lien of such Administrative Agent
in such Account to such Administrative Agent's reasonable satisfaction;
(p) which is owed by any Affiliate, employee, or director of any
Loan Party;
(q) which is owed by an Account Debtor or any Affiliate of such
Account Debtor to which any Loan Party is indebted, but only to the extent
of such indebtedness;
(r) which is subject to any counterclaim, deduction, defense, setoff
or dispute but only to the extent of any such counterclaim, deduction,
defense, setoff or dispute;
(s) which is evidenced by any promissory note, chattel paper, or
instrument;
(t) which is owed by an Account Debtor located in any jurisdiction
which requires filing of a "Notice of Business Activities Report" or other
similar report in order to permit such Loan Party to seek judicial
enforcement in such jurisdiction of payment of such Account, unless such
Loan Party has filed such report or qualified to do business in such
jurisdiction; or
(u) with respect to which such Loan Party has made any agreement
with the Account Debtor for any reduction thereof, other than discounts
and adjustments given in the ordinary course of business.
"Eligible Inventory": at any time, the Inventory of the Loan Parties which
the US Administrative Agent or the Canadian Administrative Agent, as the case
may be, determines in its Permitted Discretion is eligible as the basis for
extensions of credit hereunder. Without limiting either Administrative Agent's
discretion provided herein, Eligible Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in favor
of the US Administrative Agent or the Canadian Administrative Agent, as
applicable;
(b) which is subject to any Lien other than (i) a Lien in favor of
the US Administrative Agent or the Canadian Administrative Agent, as
applicable, and (ii) a Permitted Lien which does not have priority over
the Lien in favor of the US Administrative Agent or the Canadian
Administrative Agent, as applicable;
(c) which is, in the relevant Administrative Agent's Permitted
Discretion, slow moving, obsolete, unmerchantable, defective, unfit for
sale, or not salable at prices approximating at least the cost of such
Inventory in the ordinary course of business;
(d) with respect to which any covenant, representation, or warranty
contained in this Agreement or any other Loan Document has been breached
or is not true;
17
(e) which does not conform to all standards imposed by any
governmental authority;
(f) which is not finished goods or which constitutes
work-in-process, raw materials, spare or replacement parts, subassemblies,
packaging and shipping material, manufacturing supplies, display items,
xxxx-and-hold goods, returned or repossessed goods, defective goods, goods
held on consignment, or goods which are not of a type held for sale in the
ordinary course of business;
(g) which is not located in the United States or Canada;
(h) which is in transit with a common carrier from vendors and
suppliers, to the extent the amount of such in transit Inventory exceeds,
in the aggregate, US$10,000,000;
(i) which is located in any location leased by a Loan Party unless
(i) the lessor has delivered to the relevant Administrative Agent a
Collateral Access Agreement or (ii) a Reserve for rent, charges, and other
amounts due or to become due with respect to such facility has been
established by such Administrative Agent in its Permitted Discretion;
(j) which is located in any third party warehouse or is in the
possession of a bailee and is not evidenced by a Document, unless such
warehouseman or bailee has delivered to the relevant Administrative Agent
a Collateral Access Agreement and such other documentation as such
Administrative Agent may require;
(k) which is the subject of a consignment by any Loan Party as
consignor;
(l) which is perishable (other than sports nutrition products to the
extent the useful life or sale period shall not have expired);
(m) which contains or bears any Intellectual Property Rights
licensed to any Loan Party unless the relevant Administrative Agent is
satisfied that it may sell or otherwise dispose of such Inventory without
(i) infringing the rights of such licensor, (ii) violating any contract
with such licensor, or (iii) incurring any liability with respect to
payment of royalties other than royalties incurred pursuant to sale of
such Inventory under the current licensing agreement; or
(n) which is not reflected in a current perpetual inventory report
of any Loan Party.
In the event that Inventory which was previously Eligible Inventory
ceases to be Eligible Inventory hereunder, the US Borrower or the Canadian
Borrower, as the case may be, shall notify the US Administrative Agent or the
Canadian Administrative Agent, as the case may be, thereof (i) within three (3)
US Business Days of the date such Borrower has obtained knowledge thereof if any
such Inventory has a value (based on the lower of cost, determined on a
first-in, first-out basis, or market) in excess of US$10,000,000 in the
aggregate and (ii) on and at the time of submission to the US Administrative
Agent or the Canadian Administrative Agent, as the case may be, of the next
Borrowing Base Certificate in all other cases.
"EMU Legislation": Legislative measures of the European Union for the
introduction of, changeover to or operation of the Euro in one or more member
states.
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of the United States,
Canada or any other nation, or any state, local, municipal or other
18
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or of human
health, or employee health and safety, as has been, is now, or may at any time
hereafter be, in effect.
"Equity Offering": the sale or issuance (or reissuance) by Quiksilver or
any Subsidiary of any equity interests or beneficial interests (common stock,
preferred stock, partnership interests, member interests or otherwise) or any
options, warrants, convertible securities or other rights to purchase such
equity interests or beneficial interests; provided, however, that the term
"Equity Offering" shall not include any such sale or issuance (or reissuance)
solely (i) to officers, employees, directors and/or consultants of Quiksilver
and/or any Subsidiary pursuant to one or more employee stock option or stock
purchase plans or (ii) in connection with Permitted Acquisitions (including the
Transaction).
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate": as to any Person, each trade or business including such
Person, whether or not incorporated, which together with such Person would be
treated as a single employer under Section 4001(a)(14) of ERISA.
"Escrow Account": as defined in the recitals to this Agreement.
"Escrowed Amount": as defined in the recitals to this Agreement.
"Euro": the single currency of the European Union as constituted by the
Treaty on European Union and as referred to in EMU Legislation.
"Eurodollar Business Day": with respect to any LIBOR Loans, a day (other
than a Saturday or a Sunday) on which banks are open for general business in
London and New York; and if, on that day, a payment in or a purchase of an
Alternate Currency (other than Euros) is to be made, the principal financial
center of the home country for that currency is open for business on that day;
and if, on that day, a payment in or a purchase of Euro is to be made, the day
is also a TARGET Day.
"Event of Default": any of the events specified in Article 7, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Exchange Act": the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder, as amended.
"Excluded Taxes": all taxes imposed on or by reference to the net income
of either Agent or any Lender or its Applicable Lending Office by any
Governmental Authority and all franchise taxes, taxes on doing business or taxes
measured by capital or net worth imposed on either Agent or on any Lender or its
Applicable Lending Office by any Governmental Authority.
"Existing Credit Agreement": as defined in the recitals to this Agreement.
"Existing Letters of Credit": letters of credit described in Schedule 2.5.
"Existing Loans": the loans made by JPMorgan Chase Bank, N.A. pursuant to
the Existing Credit Agreement, which are secured pursuant to the Security
Documents.
19
"Federal Funds Effective Rate": means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding US
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a US Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the US Administrative Agent (or, with respect to
Canadian ABR Loans, the Canadian Administrative Agent) from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter": the Fee Letter, dated as of March 20, 2005, among
Quiksilver, the US Borrower, JPMorgan and the US Administrative Agent, as
amended from time to time.
"Fee Payment Date": (a) the third US Business Day following the last day
of each March, June, September and December and (b) the Revolving Loan
Commitment Expiration Date.
"Fixed Charge Coverage Ratio": for Quiksilver and its Subsidiaries on a
consolidated basis, the ratio, determined as of the end of each fiscal quarter
of Quiksilver for the then most-recently ended four fiscal quarters, of (a)
EBITDA for such period minus Capital Expenditures paid in cash during such
period (other than Capital Expenditures financed with Indebtedness (other than
the Loans), it being understood that any subsequent payment of the principal of
such Indebtedness shall be deducted from EBITDA in the calculation of the Fixed
Charge Coverage Ratio with respect to the period during which such payment is
made) minus expense for taxes paid in cash for such period to (b) Fixed Charges
for such period.
"Fixed Charges": for Quiksilver and its Subsidiaries on a consolidated
basis, the sum of (a) cash Interest Expense, plus (b) scheduled principal
payments on Indebtedness made during such period, plus (c) (without duplication)
payments in respect of Capitalized Lease Obligations which reduce the amount
thereof, plus (d) cash contributions to any Plan; provided, that for any
four-quarter period ending prior to the completion of four fiscal quarters after
the Original Closing Date, Fixed Charges of the type described in clause (a) and
clause (d) above (but only, in the case of clause (d), to the extent that
regular quarterly contributions exceed $1,000,000 during the most recent
quarter) shall be equal to Fixed Charges of that type for the number of full
fiscal quarters that have elapsed since the Original Closing Date multiplied by
4, 2 or 4/3, as applicable.
"Foreign Subsidiary": each Subsidiary other than a Domestic Subsidiary.
"Funding Accounts": the collective reference to the US Funding Account and
the Canadian Funding Account.
"GAAP": generally accepted accounting principles in the United States in
effect from time to time.
"Governmental Authority": any nation or government, any federal, state or
other political subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Grantor": any Loan Party that has granted liens and/or security interests
in its assets to secure the Obligations or the Canadian Obligations.
"Guarantee Date": the date on which each of the Domestic Subsidiaries of
the Target become party to the US Guarantee and the US Security Agreement.
20
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
obligation of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counter-indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds for the purchase or payment of any such primary obligation or to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lesser of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
US Borrower in a manner and with a result reasonably satisfactory to the
Majority Lenders.
"Guarantors": the collective reference to the Canadian Guarantors and the
US Guarantors.
"Hedging Agreements": as defined in the definition of "Hedging
Obligations" in this Section 1.1.
"Hedging Obligations": of any Person, any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including dollar- denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest rate options, puts and warrants or any similar derivative transactions
("Hedging Agreements"), and (ii) any and all cancellations, buy-backs,
reversals, terminations or assignments of any of the foregoing.
"Holding Company": as defined in the recitals to this Agreement.
"Indebtedness": of any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including, in the case of Quiksilver and its Subsidiaries, the deferred
purchase price payable by QAPL to the former shareholders of QIPL for the
acquisition of the stock of QIPL by QAPL), (ii) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (iii) all
indebtedness created or arising under any conditional-sale or other
title-retention agreement with respect to property acquired by such Person, (iv)
all Capitalized Lease Obligations of such Person, (v) all Hedging Obligations of
such Person, (vi) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (vii) all Guarantee
Obligations of such Person in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to secure a credit
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i), (ii), (iii), (iv), (v) or (vi) above, and (viii) all
liabilities in
21
respect of unfunded vested benefits under plans covered by Title IV of ERISA.
For the avoidance of doubt and with respect to clause (vi) above, in the
situation where (x) one or more standby letters of credit are issued for the
account of Quiksilver or any Subsidiary to backstop (y) one or more other
letters of credit issued for the account of Quiksilver or such Subsidiary in the
same aggregate face amount, the amount of Indebtedness attributed to all such
letters of credit shall be limited to the sum of (A) the aggregate face amount
of the standby letters of credit referred to in clause (x) above plus (B) the
aggregate amount of unpaid reimbursement obligations owing in respect of such
standby letters of credit.
"Indemnitee": as defined in Section 9.1.
"Initial Purchase": as defined in the recitals to this Agreement.
"Initial Transactions": as defined in the recitals to this Agreement.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intangible Assets": all unamortized debt discount and expense,
unamortized deferred charges, goodwill, Patents, Trademarks, Copyrights,
write-ups of assets over their carrying value at the date of issuance of the
Loans or the date of acquisition, if acquired subsequent thereto, and all other
items which would be treated as intangibles on the consolidated balance sheet of
such Person prepared in accordance with GAAP.
"Intellectual Property Rights": with respect to any Person, all of such
Person's Patents, industrial designs, Copyrights, Trademarks, and Licenses, all
other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing, and
all rights to xxx for past, present, and future infringement of any of the
foregoing.
"Intercreditor Agreement": the Intercreditor Agreement, dated as of the
Original Closing Date, executed and delivered by the US Borrower, the US
Administrative Agent, on behalf of the Lenders, and the Leasehold Improvement
Lender (as such agreement may be amended, modified or restated from time to
time), in the form of Exhibit N hereto.
"Interest Expense": for any period, total cash interest expense (including
that attributable to Capital Lease Obligations) of Quiksilver and its
Subsidiaries for such period with respect to all outstanding Indebtedness of
Quiksilver and its Subsidiaries (including all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Hedging Agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP).
"Interest Payment Date": (a) as to any ABR Loan, Canadian ABR Loan or
Canadian Prime Rate Loan, the first day of each calendar month to occur while
any such Loan is outstanding, (b) as to any LIBOR Loan having an Interest Period
of three months or less, the last day of such Interest Period, (c) as to any
LIBOR Loan having an Interest Period longer than three months, each day which is
at the end of each three month-period within such Interest Period after the
first day of such Interest Period and the last day of such Interest Period, and
(d) for each of (a), (b) and (c) above, the day on which any such Loan becomes
due and payable in full or is paid or prepaid in full.
"Interest Period": with respect to any LIBOR Loan:
22
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such LIBOR Loan, and
ending one, two, three or six months thereafter, as selected by the
applicable Borrower in its Borrowing Notice or Continuation Notice, as the
case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan, and ending one,
two, three or six months thereafter, as selected by the applicable
Borrower by irrevocable notice to the relevant Administrative Agent not
less than three Eurodollar Business Days prior to the last day of the then
current Interest Period with respect thereto; provided, however, that, all
of the foregoing provisions relating to Interest Periods are subject to
the following:
(i) if any Interest Period pertaining to a LIBOR Loan would
otherwise end on a day that is not a Eurodollar Business Day, such
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(ii) any Interest Period for any Loan that would otherwise
extend beyond the date final payment is due on such Loan shall end
on the date of such final payment; and
(iii) any Interest Period pertaining to a LIBOR Loan that
begins on the last Eurodollar Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of a calendar month.
"Inventory": as defined in Article 9 of the UCC or as defined in the PPSA,
as applicable.
"Issuing Bank": as the context may require, (a) JPMorgan Chase Bank, N.A.,
with respect to Letters of Credit issued by it or (b) Union Bank of California,
N.A. or any other Lender that becomes an Issuing Bank pursuant to Section 2.5,
with respect to Letters of Credit issued by it, and in each case its successors
in such capacity.
"Japanese Yen": freely transferable lawful money of Japan.
"Joinder Agreement": as defined in Section 4.2(b).
"JPMorgan": X.X. Xxxxxx Securities Inc.
"Judgment Creditor": as defined in Section 9.18.
"Lease Expense": for any period, the aggregate minimum rental obligations
payable in respect of such period under leases of real and/or personal property
(net of income from subleases thereof), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet or in
the notes thereto.
"Leasehold Improvement Lender": Union Bank of California, N.A., in its
individual capacity, as lender of the Leasehold Improvement Loan, and any
successor or assigns thereof.
23
"Leasehold Improvement Loan": the term loan in the original principal
amount of US$12,300,000 made by the Leasehold Improvement Lender to Quiksilver
and referred to in the Intercreditor Agreement.
"Lender" or "Lenders": as defined in the preamble to this Agreement and in
Section 8.8. Each such term shall include any Lender in its capacity as an
Issuing Bank; provided that, for purposes of Sections 2.12, 2.14, 2.15, 2.16,
2.17, 2.23, 2.24 and 9.5, each Alternate Currency Fronting Lender shall, in its
capacity as such, be deemed to be a "Lender".
"Letter of Credit": as defined in Section 2.1(a).
"Letter of Credit Amount": the stated maximum amount available to be drawn
under a particular Letter of Credit, as such amount may be reduced or reinstated
from time to time in accordance with the terms of such Letter of Credit.
"Letter of Credit Disbursement": a payment made by the applicable Issuing
Bank pursuant to a Letter of - Credit.
"Letter of Credit Exposure": at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time, and (b) the
aggregate amount of all Letter of Credit Disbursements under Letters of Credit
that have not yet been reimbursed by or on behalf of the US Borrower at such
time. The Letter of Credit Exposure of any Lender at any time shall be its US
Revolving Loan Commitment Percentage of the total Letter of Credit Exposure. The
Letter of Credit Exposure shall be calculated using the US Dollar Equivalent
amounts for amounts otherwise denominated in any Alternate Currency.
"Letter of Credit Rate": 0.50% per annum; provided, that on and after the
first Adjustment Date occurring after the completion of two full fiscal quarters
of Quiksilver after the Original Closing Date, the Letter of Credit Rate will be
determined pursuant to the Pricing Grid.
"Letter of Credit Request": a request by the US Borrower for the issuance
of a Letter of Credit, on an Issuing Bank's standard form of standby or
commercial letter of credit application and agreement, as applicable, and
containing terms and conditions satisfactory to such Issuing Bank in its sole
discretion.
"LIBO Rate": with respect to an Interest Period pertaining to any LIBOR
Loan, the rate of interest determined on the basis of the rate for deposits in
US Dollars or the relevant Alternate Currency, as the case may be, for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Telerate Screen as of 11:00 A.M., London
time, two Eurodollar Business Days prior to the beginning of such Interest
Period or on the day on which it is market practice in the relevant interbank
market for prime banks to give quotations for deposits in the currency of such
Loan for delivery on the first day of such Interest Period. In the event that
such rate does not appear on such page of the Telerate Screen (or otherwise on
the Telerate Service), the "LIBO Rate" shall instead be the interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
average of the rates at which deposits in Dollars or the relevant Alternate
Currency, as the case may be, approximately equal in principal amount to
US$5,000,000 and for a maturity comparable to such Interest Period, are offered
by the principal London office of JPMorgan Chase Bank, N.A. for immediately
available funds in the London interbank market at approximately 11:00 A.M.,
London time, two Eurodollar Business Days prior to the commencement of such
Interest Period. In the event that the LIBO Rate is unable to be determined
pursuant to any of the foregoing mechanisms, the "LIBO Rate" shall instead be
the interest rate per annum reasonably determined by JPMorgan Chase Bank, N.A.
24
"LIBOR Loan": any Loan bearing interest based upon the Adjusted LIBO Rate
(including, without limitation, any Alternate Currency Loan).
"LIBOR Reserve Requirements": for any day as applied to a LIBOR Loan, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.
"License": with respect to any Person, all of such Person's right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to xxx for past,
present, and future breaches thereof.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any Capitalized Lease Obligation having substantially the same economic effect
as any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code, the PPSA, or comparable law of any jurisdiction in
respect of any of the foregoing).
"Loan": any loan made by the Lenders, the Swing Line Lender, the US
Administrative Agent, the Canadian Administrative Agent or any Alternate
Currency Fronting Lender to either Borrower pursuant to this Agreement
(including, without limitation, each Acceptance Equivalent Loan, Revolving Loan,
each Swing Line Loan, each Protective Advance, each Overadvance and each
Alternate Currency Loan).
"Loan Commitment Increase Supplement": a supplement to this Agreement in
the form of Exhibit D-2 hereto.
"Loan Documents": this Agreement, the Notes, any Letter of Credit Requests
that are executed by the US Borrower, the Letters of Credit, the Security
Documents, the US Guarantee, the Canadian Guarantee, the Intercreditor
Agreement, any Specified Hedging Agreements and any other agreement executed by
a Loan Party in connection herewith or therewith, including UCC-1 Financing
Statements, financing statements or financing change statements under the PPSA,
and any fee letters, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with the
terms hereof.
"Loan Parties": the collective reference to each Borrower and the
Guarantors.
"Majority Canadian Lenders": at any time, the holders of more than 50% of
the Canadian Revolving Loan Commitments then in effect or, if the Canadian
Revolving Loan Commitments have been terminated, the Aggregate Canadian Credit
Exposure. For purposes of determining the Majority Canadian Lenders, any amounts
denominated in Canadian Dollars shall be translated into US Dollar Equivalent as
provided in Section 2.20.
"Majority Lenders": at any time, the holders of more than 50% of the US
Revolving Loan Commitments and Canadian Revolving Loan Commitments then in
effect or, if the US Revolving Loan
25
Commitments and Canadian Revolving Loan Commitments have been terminated, the
Aggregate Credit Exposure. For purposes of determining the Majority Lenders, any
amounts denominated in Canadian Dollars shall be translated into US Dollar
Equivalent as provided in Section 2.20.
"Majority US Lenders": at any time, the holders of more than 50% of the US
Revolving Loan Commitments then in effect or, if the US Revolving Loan
Commitments have been terminated, the Aggregate US Credit Exposure.
"Margin Stock": as defined in Regulation U.
"Material Adverse Effect": a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) or prospects of
Quiksilver and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform its respective obligations under the Loan Documents or (c) the
validity or enforceability of the Loan Documents or the rights or remedies of
the Agents and the Lenders hereunder or thereunder.
"Material Domestic Subsidiary": as of any date, a Domestic Subsidiary that
(a) has a net worth (excluding in the determination thereof any Indebtedness of
such Domestic Subsidiary to Quiksilver or another Subsidiary) of at least 5% of
Quiksilver's consolidated net worth as of the last day of the most recently
ended fiscal quarter of Quiksilver, (b) has annual revenue (or annualized
revenue in the case of any Person that has not been a Subsidiary for a full
year) of at least 5% of Quiksilver's consolidated revenue for the 12-month
period ended as of the most recently ended fiscal quarter of Quiksilver or (c)
has annual net income (or annualized net income in the case of any Person that
has not been a Subsidiary for a full year) of at least 5% of Quiksilver's
consolidated net income for the 12-month period ended as of the most recently
ended fiscal quarter of Quiksilver; provided, that, notwithstanding the
foregoing, the US Borrower shall be deemed to be a Material Domestic Subsidiary
of Quiksilver at all times.
"Material Foreign Subsidiary": a Foreign Subsidiary having at any time a
net worth equal to 10% or more - of Quiksilver's consolidated net worth.
"Materials of Environmental Concern": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, molds, pollutants,
contaminants, radioactivity, and any other substances of any kind, regulated
pursuant to or that could give rise to liability under any Environmental Law.
"Monthly Reports": as defined in Section 4.1(i).
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Income": for any period, the consolidated net income (or loss) of
Quiksilver and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) except as
otherwise contemplated in the definition of "EBITDA", the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary of Quiksilver or is
merged into or consolidated with Quiksilver or any of its Subsidiaries and (b)
the income (or deficit) of any Person (other than a Subsidiary of Quiksilver) in
which Quiksilver or any of its Subsidiaries has an ownership interest, except to
the extent that any such income is actually received by Quiksilver or such
Subsidiary in the form of dividends or similar distributions.
26
"Net Orderly Liquidation Value": with respect to Inventory of any Person,
the orderly liquidation value thereof as determined in a manner acceptable to
the US Administrative Agent or the Canadian Administrative Agent, as the case
may be, by an appraiser acceptable to such Administrative Agent, net of all
costs of liquidation thereof.
"Net Proceeds": (a) with respect to any Equity Offering or Debt Offering
by Quiksilver or any Subsidiary, the net amount equal to the aggregate amount
received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other noncash consideration or otherwise, but
only as and when such cash is so received) in connection with such Equity
Offering or Debt Offering, minus the reasonable fees, commissions and other
out-of-pocket expenses incurred by Quiksilver or such Subsidiary, as applicable,
in connection with such Equity Offering or Debt Offering (other than amounts
payable to Affiliates of the Person making such Equity Offering or Debt
Offering) and (b) with respect to any Asset Disposition or Recovery Event, the
proceeds thereof in the form of cash and cash equivalents (as determined by GAAP
and including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received), net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Disposition or Recovery Event (other
than any Lien securing the Obligations or the Canadian Obligations hereunder)
and other customary fees and expenses actually incurred in connection therewith
and net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements).
"New Lender": as defined in Section 2.1(c)(ii).
"New Lender Supplement": as defined in Section 2.1(c)(ii).
"Non-Acceptance Canadian Lender": as defined in Section 2.4(i).
"Non-US Lender": as defined in Section 2.16(c).
"Note": a US Revolving Note, a Canadian Revolving Note or the Swing Line
Note, as the case may be, and "Notes" shall mean the US Revolving Notes, the
Canadian Revolving Notes and the Swing Line Note.
"Notification Instruction": as defined in Section 2.5(b).
"Obligations": the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and the Acceptances and interest
accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
each Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding and whether or not at a default rate) the Loans
and the Acceptances, the obligation to reimburse drawings under Letters of
Credit (including the contingent obligation to reimburse any drawings under
outstanding Letters of Credit), and all other obligations and liabilities of
each Borrower to each Agent, each Alternate Currency Fronting Lender, each
Issuing Bank, the Swing Line Lender and the Lenders (including, without
limitation, obligations of any Loan Party in respect of Specified Hedging
Agreements and Banking Services Obligations owed to a Lender or any of its
Affiliates), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Notes, the Letters of Credit, any
other Loan Document and any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including
27
all reasonable fees and disbursements of counsel, and the allocated reasonable
cost of internal counsel, to each Agent or the Lenders that are required to be
paid by each Borrower pursuant to the terms of this Agreement) or otherwise.
"Operating Lease": with respect to any Person, any lease of real or
personal property (other than any lease with respect to which Capitalized Lease
Obligations are owing) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Organic Documents": relative to any entity, its certificate of
incorporation, articles of incorporation, certificate of formation, certificate
of organization or partnership agreement, and its by-laws, operating agreement
or limited liability company agreement, or the equivalent documents of any
entity.
"Original Closing Date": April 12, 2005.
"Other Taxes": any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Loan Document.
"Overadvances": the collective reference to US Overadvances and Canadian
Overadvances.
"Participants": as defined in Section 9.6(b).
"Participating Member State": any member state of the EMU which has the
Euro as its lawful currency.
"Patents": with respect to any Person, all of such Person's right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof; (e)
all rights to xxx for past, present, and future infringements thereof; and (f)
all rights corresponding to any of the foregoing throughout the world.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor thereto.
"Permitted Acquisition": any transaction, or any series of transactions,
consummated after the Original Closing Date, in which Quiksilver or any
Subsidiary (in one transaction or in a series of transactions) (a) acquires any
business or all or substantially all of the assets of any Person or any division
or business unit thereof, whether through purchase of assets, merger,
amalgamation or otherwise, (b) directly or indirectly acquires control of at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors or (c) directly or
indirectly acquires control of a majority ownership in any partnership or joint
venture.
"Permitted Discretion": a determination made in good faith and in the
exercise of reasonable (from the perspective of secured asset-based lenders in
similar financings) business judgment.
"Permitted Lien": any Lien which is permitted by Section 6.3 hereunder.
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"Person": any individual, firm, partnership, joint venture, corporation,
association, limited liability company, business enterprise trust,
unincorporated organization, government or department or agency thereof or other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan": as to any Person, any employee benefit plan subject to ERISA
maintained for employees of such Person or any ERISA Affiliate of such Person
(and any such plan no longer maintained by such Person or any of such Person's
ERISA Affiliates to which such Person or any of such Person's ERISA Affiliates
has made or was required to make any contributions within any of the five
preceding years).
"Pounds Sterling": freely transferable lawful money of the United Kingdom.
"PPSA": Personal Property Security Act (British Columbia) or similar
personal property security legislation in the provinces or territories of Canada
other than British Columbia, as the same may be in effect on the date of
determination of the applicable jurisdiction.
"Prepayment Account": as defined in Section 2.7(b).
"Pricing Grid": the table set forth below.
Applicable Margin
-----------------------------------------
LIBOR Loans ABR Loans, Canadian
and Acceptance ABR Loans and Canadian Commitment Letter of
Fixed Charge Coverage Ratio Fee Prime Rate Loans Fee Rate Credit Rate
--------------------------------------- -------------- ---------------------- ---------- -----------
< or = 1.25 to 1.00 1.875% 0.375% 0.40% 0.875%
> 1.25 to 1.00 but < or = 1.50 to 1.00 1.625% 0.125% 0.35% 0.75%
> 1.50 to 1.00 but < or = 1.75 to 1.00 1.375% 0% 0.30% 0.50%
> 1.75 to 1.00 1.125% 0% 0.25% 0.40%
For the purposes of the Pricing Grid, changes in the Applicable Margin,
the Commitment Fee Rate or the Letter of Credit Rate, as the case may be,
resulting from changes in the Fixed Charge Coverage Ratio shall become effective
on the date (the "Adjustment Date") that is three US Business Days after the
date on which financial statements are delivered to the Lenders pursuant to
Section 5.1 and shall remain in effect until the next change to be effected
pursuant to this paragraph. If any financial statements referred to above are
not delivered within the time periods specified in Section 5.1, then, until the
date that is three US Business Days after the date on which such financial
statements are delivered, the highest rate set forth in each column of the
Pricing Grid shall apply. In addition, at all times while an Event of Default
shall have occurred and be continuing, the highest rate set forth in each column
of the Pricing Grid shall apply. Each determination of the Fixed Charge Coverage
Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the
determination thereof pursuant to Section 6.1.
"Prior Credit Agreement": the Credit Agreement, dated as of June 27, 2003,
as amended, among Quiksilver, the US Borrower, Quiksilver Wholesale, Inc., NA
Pali, S.A.S., Quiksilver Japan K.K., Ug, the lenders party thereto, JPMorgan
Chase Bank, N.A. as agent, and others.
"Prohibited Transaction": with respect to any Plan, a prohibited
transaction (as defined in Section 406 of ERISA) with respect to such Plan.
"Projected Pro Forma Balance Sheet": the unaudited projected pro forma
consolidated balance sheet of Quiksilver and its consolidated Subsidiaries as at
January 1, 2005, with respect to Quiksilver and
29
its Subsidiaries (other than the Target and its Subsidiaries) and January 31,
2005, with respect to the Target and its Subsidiaries (including, in each case,
the notes thereto), giving effect (as if such events had occurred on such date)
to (i) the consummation of the Transaction, (ii) the Loans made hereunder and
the loans made under the Senior Bridge Facility on the Original Closing Date and
the use of proceeds thereof, (iii) the Indebtedness to be issued on or after the
Original Closing Date for the purposes of financing the Transaction and (iv) the
payment of fees and expenses in connection with the foregoing.
"Properties": the collective reference to the real and personal property
owned, leased, used, occupied or operated by Quiksilver and its Subsidiaries.
"Protective Advances": the collective reference to the US Protective
Advances and the Canadian - Protective Advances.
"Purchase Agreement": as defined in the recitals to this Agreement.
"Purchase Agreement Documentation": collectively, the Purchase Agreement
and all schedules, exhibits and annexes thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith
as such Purchase Agreement Documentation may be amended, waived or otherwise
modified pursuant to Section 6.14.
"Purchasing Lenders": as defined in Section 9.6(c).
"QAPL": Quiksilver Australia Pty Ltd, a corporation organized under the
laws of the State of Victoria, Australia.
"QIPL": Quiksilver International Pty Ltd, a corporation organized under
the laws of the State of Victoria, Australia.
"Quiksilver": as defined in the preamble to this Agreement.
"Recovery Event": any settlement of or payment in respect of any property
or casualty insurance claim or any condemnation proceeding relating to any asset
of Quiksilver or any of its Subsidiaries; provided that Recovery Events shall
not include settlements of or payments in respect of any property or casualty
insurance claim or any condemnation proceeding not exceeding US$5,000,000 in the
aggregate during any calendar year.
"Refunded Swing Line Loans": as defined in Section 2.2(d).
"Register": as defined in Section 9.6(d).
"Regulation D": Regulation D of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"Reimbursement Obligations": the obligation of the US Borrower to
reimburse the applicable Issuing Bank pursuant to Section 2.5(e) for amounts
drawn under Letters of Credit.
30
"Reinvestment Deferred Amount": with respect to any Reinvestment Event,
the aggregate Net Proceeds received by Quiksilver or any Subsidiary in
connection therewith that are not applied to prepay the Loans pursuant to
Section 2.7(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Disposition or Recovery Event in respect
of which the relevant Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible Officer
stating that no Event of Default has occurred and is continuing and that the
relevant Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Proceeds of an Asset
Disposition or Recovery Event to acquire or repair assets useful in its
business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment Event,
the Reinvestment Deferred Amount relating thereto less any amount expended prior
to the relevant Reinvestment Prepayment Date to acquire or repair assets useful
in the relevant Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment Event,
the earlier of (a) the date occurring six months after such Reinvestment Event
and (b) the date on which the relevant Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair assets useful in the relevant
Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.
"Related Parties": with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"Rentals": with respect to any Person, means the aggregate fixed amounts
payable by such Person under any Operating Lease to which such Person is a
party.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.
"Reports": reports prepared by the relevant Administrative Agent or
another Person showing the results of appraisals, field examinations or audits
pertaining to either Borrower's assets from information furnished by or on
behalf of such Borrower, after such Administrative Agent has exercised its
rights of inspection pursuant to this Agreement, which Reports may be
distributed to the Lenders by such Administrative Agent.
"Requirement of Law": as to any Person, the Organic Documents of such
Person, and any law, treaty, rule or regulation, determination or policy
statement or interpretation of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Reserves": any and all reserves which the relevant Administrative Agent
deems necessary, in its Permitted Discretion, to maintain with respect to the
Collateral of any Loan Party.
"Responsible Officer": with respect to any Person, the chief executive
officer, the president, the managing member or members (as applicable, with
respect to any limited liability company), any executive vice president, any
senior vice president or, with respect to financial matters, the chief financial
officer, the vice president of finance or treasurer.
31
"Restricted Payments": as defined in Section 6.6.
"Revolving Loan Borrowing Notice": a notice from the US Borrower or the
Canadian Borrower, as the case may be, to the US Administrative Agent or the
Canadian Administrative Agent, as the case may be, requesting a borrowing of
Revolving Loans, substantially in the form of Exhibit G-1 hereto.
"Revolving Loan Commitment Expiration Date": April 12, 2010 or such
earlier date as the Aggregate US Revolving Loan Commitment and the Aggregate
Canadian Revolving Loan Commitment shall expire (whether by acceleration,
reduction to zero or otherwise).
"Revolving Loans": the Canadian Revolving Loans and the US Revolving
Loans.
"Schedule I Lender": any Canadian Lender named on Schedule I to the Bank
Act (Canada).
"Schedule II or III Lender": any Canadian Lender named on Schedule II or
Schedule III to the Bank Act (Canada).
"Schedule II or III Reference Banks": JPMorgan Chase Bank, N.A., Toronto
Branch, or any bank named on Schedule II or Schedule III to the Bank Act
(Canada) and agreed upon by the Canadian Administrative Agent and the Canadian
Borrower.
"Security Documents": the collective reference to the US Security
Agreement, the Canadian Security Agreement and all other security documents
hereafter delivered to the US Administrative Agent or the Canadian
Administrative Agent, as applicable, granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Sellers": as defined in the recitals to this Agreement.
"Senior Credit Engagement Letter": the Senior Credit Engagement Letter,
dated as of February 28, 2005, among Quiksilver and JPMorgan, as amended from
time to time.
"Senior Note Indenture": the Indenture to be entered into by Quiksilver
and the other Loan Parties after the Effective Date in connection with the
issuance of the Senior Notes, together with all instruments and other agreements
entered into by Quiksilver or such other Loan Party in connection therewith.
"Senior Notes": the senior unsecured notes to be issued by Quiksilver
after the Effective Date, which are intended to refinance the Bridge Loan
Agreement.
"Senior Notes Escrow Account": the escrow account into which the proceeds
of the Senior Notes are to be deposited prior to the release of such funds to
Quiksilver, which funds shall be released in accordance with escrow
documentation in form and substance reasonably satisfactory to the
Administrative Agents.
"Settlement": as defined in Section 2.1.
"Settlement Date": as defined in Section 2.1.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, that:
32
(a) the present fair salable value of such Person's assets is in
excess of the total amount of the probable liability on such Person's
liabilities;
(b) such Person is able to pay its debts as they become due; and
(c) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.
"Specified Hedging Agreement": any Hedging Agreement entered into by any
Loan Party and any Lender or - affiliate thereof in respect of interest rates,
currency exchange rates or commodity prices.
"Squeeze Out": as defined in the recitals to this Agreement.
"Subsidiary": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries,' in
this Agreement shall refer to a Subsidiary or Subsidiaries of Quiksilver.
"Super-Majority Lenders": at any time, the holders of more than 66 2/3% of
the US Revolving Loan Commitments and Canadian Revolving Loan Commitments then
in effect or, if the US Revolving Loan Commitments and Canadian Revolving Loan
Commitments have been terminated, the Aggregate Credit Exposure.
"Swing Line Borrowing Notice": a notice from the US Borrower to the US
Administrative Agent requesting a borrowing of Swing Line Loans, substantially
in the form of Exhibit H-1 hereto.
"Swing Line Commitment": as defined in Section 2.2(a).
"Swing Line Lender": JPMorgan Chase Bank, N.A.
"Swing Line Loan Participation Certificate": a certificate executed by the
Swing Line Lender - substantially in the form of Exhibit H-2.
"Swing Line Loans": has the meaning assigned to that term in Section
2.2(a).
"Swing Line Note": a promissory note in the form of Exhibit A-2 hereto.
"Syndication Agent": as defined in the preamble to this Agreement.
"Target": as defined in the recitals to this Agreement.
"Target Borrowers": as defined in Section 9.1.
"TARGET Day": a day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer payment system is open for the settlement of
payments in Euro.
33
"Target Seasonal Period": a period determined by the appraiser (and
reasonably acceptable to the Administrative Agents) which conducted the then
most recent appraisal delivered in connection with Section 5.8, based on such
appraisal.
"Target Stock": as defined in the recitals to this Agreement.
"Taxes": as defined in Section 2.16(a).
"Tender Offer": as defined in the recitals to this Agreement.
"Tender Offer Documentation": the collective reference to (a) the mandate
letter of Quiksilver appointing Calyon to act as the presenting bank for the
Tender Offer and, if applicable, the Buy Out and the Squeeze Out, (b) the draft
communique de depot to be published in connection with the Tender Offer pursuant
to article 231-17 of the AMF General Regulation, (c) the draft lettre de depot
to be filed with the AMF in accordance with article 231-14 of the AMF General
Regulation, (d) the resolutions of the supervisory board of Target regarding the
launch of the Tender Offer, and recommending the Tender Offer, (e) the draft
joint note d'information in relation to the Tender Offer issued by Quiksilver
and the Target, (f) the AMF decision de recevabilite (approval decision) of the
Tender Offer and of the AMF visa (approval) on the joint note d'information, and
(g) a certificate issued by the Company stating that the funds from the Initial
Loans drawn during the Availability Period will be used solely in relation with
the Tender Offer and, if applicable, the Buy Out and the Squeeze Out.
"Termination Event": (i) a Reportable Event, (ii) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, (iii) the appointment by the PBGC of a trustee to administer any
Single Employer Plan or (iv) the existence of any other event or condition that
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment by the PBGC of a trustee to
administer, any Single Employer Plan.
"Trade Letter of Credit": a commercial Letter of Credit issued in respect
of the purchase of Inventory or other goods or services by any Loan Party in the
ordinary course of business.
"Trademarks": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all trademarks, service marks,
logos, trade names, trade dress, trade styles, domain names and other source or
business identifiers and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (b) all
licenses of the foregoing, whether as licensee or licensor; (c) all renewals of
the foregoing; (d) all income, royalties, damages, and payments now or hereafter
due or payable with respect thereto, including, without limitation, damages,
claims, and payments for past and future infringements thereof; (e) all rights
to xxx for past, present, and future infringements of the foregoing, including
the right to settle suits involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing throughout the world.
"Tranche": the collective reference to LIBOR Loans in the same currency
the Interest Periods with respect to all of which begin on the same date and end
on the same later date (whether or not such LIBOR Loans shall originally have
been made on the same day).
"Transaction": as defined in the recitals to this Agreement.
"Transferee": as defined in Section 9.6(f).
"UCC": the Uniform Commercial Code, as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the
34
attachment, perfection or priority of, or remedies with respect to, the US
Administrative Agent's or any Lender's Lien on any Collateral.
"Ug": Ug Manufacturing Co. Pty Ltd, a corporation organized under the laws
of the State of Victoria, Australia.
"United States": the United States of America (including the States,
Commonwealths and Territories - thereof and the District of Columbia).
"US Availability": at any time, the lesser of (a) the difference between
the Aggregate US Revolving Loan Commitment minus the Aggregate US Credit
Exposure and (b) the difference between the US Borrowing Base minus the
Aggregate US Borrower Credit Exposure, in each case at such time.
"US Borrower Credit Exposure": with respect to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all US
Revolving Loans held by such Lender then outstanding, (b) the aggregate
principal amount of all Canadian Revolving Loans made to the US Borrower held by
such Lender then outstanding, (c) such Lender's US Revolving Loan Commitment
Percentage of the Letter of Credit Exposure, (d) such Lender's US Revolving Loan
Commitment Percentage of the aggregate principal amount of Swing Line Loans then
outstanding, (e) such Lender's US Revolving Loan Commitment Percentage of the US
Dollar Equivalent of the aggregate principal amount of Alternate Currency Loans
then outstanding and (f) such Lender's US Revolving Loan Commitment Percentage
of the aggregate principal amount of the US Protective Advances and US
Overadvances then outstanding.
"US Borrowing Base": at any time, the sum of:
(a) 85% of Eligible Accounts of the US Loan Parties at such time,
plus
(b) the lesser of (i) 75% of Eligible Inventory of the US
Quiksilver Loan Parties, valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time and (ii) 85% of the
Net Orderly Liquidation Value of Eligible Inventory of the US Quiksilver
Loan Parties at such time, plus
(c) the lesser of (i) 70% of Eligible Inventory of the US Target
Loan Parties, valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time and (ii) 85% of the Net Orderly
Liquidation Value of Eligible Inventory of the US Target Loan Parties at
such time, plus
(d) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the US Quiksilver Loan Parties at such time to the extent
such Inventory would be included in the calculation of "US Quiksilver L/C
Amount" and (ii) 75% of the US Quiksilver L/C Amount at such time (with
the Inventory subject to the "US Quiksilver L/C Amount" definition being
valued at the lower of cost or market value, determined on a
first-in-first-out basis), plus
(e) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the US Target Loan Parties at such time to the extent such
Inventory would be included in the calculation of "US Target L/C Amount"
and (ii) 70% of the US Target L/C Amount at such time (with the Inventory
subject to the "US Target L/C Amount" definition being valued at the lower
of cost or market value, determined on a first-in-first-out basis), minus
35
(f) Reserves at such time.
Notwithstanding the foregoing, during the Target Seasonal Period of each year,
(1) the 70% advance rate for Eligible Inventory contained in clause (c)(i) above
shall be increased to 80% and (2) the 70% advance rate for the US Target L/C
Amount contained in clause (e)(ii) above shall be increased to 80%. The maximum
amount of the combined US Borrowing Base and Canadian Borrowing Base calculation
based on Inventory shall be equal to (x) if the Guarantee Date has not yet
occurred, US$125,000,000 or, (y) after the Guarantee Date, US$175,000,000;
provided, further, that such amounts shall be subject to increase by the US
Administrative Agent in its Permitted Discretion in connection with any new US
Revolving Loan Commitments established in accordance with Section 2.1(c)(i).
"US Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law to close and which, in the case of a LIBOR Loan, is a Eurodollar Business
Day.
"US Credit Exposure": with respect to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all US Revolving Loans
held by such Lender then outstanding, (b) such Lender's US Revolving Loan
Commitment Percentage of the Letter of Credit Exposure, (c) such Lender's US
Revolving Loan Commitment Percentage of the aggregate principal amount of Swing
Line Loans then outstanding, (d) such Lender's US Revolving Loan Commitment
Percentage of the US Dollar Equivalent of the aggregate principal amount of
Alternate Currency Loans then outstanding and (e) such Lender's US Revolving
Loan Commitment Percentage of the aggregate principal amount of the US
Protective Advances and US Overadvances then outstanding.
"US Dollar Equivalent": with respect to any Alternate Currency (including
Canadian Dollars), on the date of determination thereof, the amount of US
Dollars which could be purchased with the amount of such Alternate Currency
involved in such computation at the spot rate at which such Alternate Currency
may be exchanged into US Dollars as set forth on such date on (i) the applicable
Reuters pages, or (ii), if such rate is not set forth on such Reuters pages, on
the applicable Telerate Service pages, or (iii) if such rate does not appear on
such Reuters or Telerate Service pages, at the spot exchange rate therefor as
determined by the relevant Administrative Agent, in each case as of 11:00 A.M.
(London or Toronto time, as applicable, or such other local time as such
Administrative Agent shall deem appropriate) on such date of determination
thereof.
"US Dollars": and "US$": dollars in lawful currency of the United States.
-
"US$ Canadian Revolving Loans": as defined in Section 2.1(b).
"US Funding Account": as defined in Section 2.21.
"US Guarantee": the Guarantee, dated as of the Original Closing Date,
executed and delivered by each US Guarantor, in the form of Exhibit J hereto, as
the same may be amended, restated or otherwise modified from time to time.
"US Guarantors": each of Quiksilver, each Material Domestic Subsidiary
(other than the US Borrower) and each Additional Domestic Guarantor.
"US Lender": any Lender that has a US Revolving Loan Commitment or any US
Credit Exposure.
"US Loan Parties": the collective reference to the US Borrower and each US
Guarantor.
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"US Overadvance": as defined in Section 2.22(c).
"US Quiksilver L/C Amount": the sum of (a) the aggregate undrawn face
amount of Trade Letters of Credit issued to finance the purchase of Inventory
(excluding any Eligible Inventory) of the US Quiksilver Loan Parties and (b) the
aggregate value of Inventory (valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time) of the US Quiksilver
Loan Parties financed with Trade Letters of Credit which have been fully drawn
and the Reimbursement Obligations in respect of which have been fully paid so
long as, in the case of clause (a) and (b), (i) such Inventory shall be in
transit to customers in the United States or properties owned or leased by the
US Quiksilver Loan Parties in the United States, (ii) such Inventory is not
Eligible Inventory and, upon arrival in the United States, will be subject to a
first priority security interest in favor of the US Administrative Agent to
secure the Obligations and shall otherwise be included in the calculation of
Eligible Inventory, and (iii) to the extent requested by the US Administrative
Agent or its agent or bailee shall be named as the consignee of the applicable
xxxx of lading or other document of title.
"US Quiksilver Loan Parties": all US Loan Parties other than the US Target
Loan Parties.
"US Protective Advance": as defined in Section 2.22(a).
"US Revolving Loan Commitment": with respect to each US Lender, its
commitment, if any, listed as its "US Revolving Loan Commitment" on Schedule
1.1, or in the Assignment and Assumption pursuant to which a Lender becomes a
party hereto, to make US Revolving Loans and participate in Swing Line Loans,
Letters of Credit, Protective Advances, Overadvances and Alternate Currency
Loans hereunder through its Applicable Lending Office(s), as the same shall be
adjusted from time to time pursuant to this Agreement.
"US Revolving Loan Commitment Percentage": (a) with respect to each US
Lender on or before the Revolving Loan Commitment Expiration Date, the
percentage equivalent of the ratio which such Lender's US Revolving Loan
Commitment bears to the Aggregate US Revolving Loan Commitment, as such Lender's
US Revolving Loan Commitment and the Aggregate US Revolving Loan Commitment may
be adjusted from time to time pursuant to the terms hereof and (b) with respect
to each US Lender after the Revolving Loan Commitment Expiration Date, the
percentage equivalent of the ratio which such Lender's US Credit Exposure bears
to the Aggregate US Credit Exposure.
"US Revolving Loans": as defined in Section 2.1(A)(a).
"US Revolving Note": a promissory note in the form of Exhibit A-1 hereto.
"US Security Agreement": the Security Agreement, dated as of the Original
Closing Date, executed and delivered by each US Loan Party in favor of the US
Administrative Agent, for the benefit of the Lenders and securing the
Obligations, in the form of Exhibit I hereto, as the same may be amended,
restated or otherwise modified from time to time.
"US Target L/C Amount": the sum of (a) the aggregate undrawn face amount
of Trade Letters of Credit issued to finance the purchase of Inventory
(excluding any Eligible Inventory) of the US Target Loan Parties and (b) the
aggregate value of Inventory (valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time) of the US Target Loan
Parties financed with Trade Letters of Credit which have been fully drawn and
the Reimbursement Obligations in respect of which have been fully paid so long
as, in the case of clause (a) and (b), (i) such Inventory shall be in transit to
customers in the United States or properties owned or leased by the US Target
Loan Parties in the United States, (ii) such Inventory is not Eligible Inventory
and, upon arrival in the United States, will be subject
37
to a first priority security interest in favor of the US Administrative Agent to
secure the Obligations and shall otherwise be included in the calculation of
Eligible Inventory, and (iii) to the extent requested by the US Administrative
Agent or its agent or bailee shall be named as the consignee of the applicable
xxxx of lading or other document of title.
"US Target Loan Parties": each Loan Party that is, or was at any time, a
Domestic Subsidiary of the Target or any successor thereto.
SECTION 1.2. Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any other Loan Document
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein, in any other Loan Document, and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation".
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II AMOUNT AND TERMS OF COMMITMENTS; LETTERS OF CREDIT
SECTION 2.1. Revolving Loans and Letters of Credit; Revolving Loan
Commitment Amounts. (a) Subject to the terms and conditions hereof, each US
Lender severally agrees to (i) make loans denominated in US Dollars to the US
Borrower on a revolving credit basis through its Applicable Lending Office from
time to time during the Availability Period (the "US Revolving Loans") in
accordance with the provisions of this Agreement, and (ii) participate through
its Applicable Lending Office in letters of credit issued for the account of the
US Borrower pursuant to Section 2.5 from time to time during the Availability
Period (each such letter of credit, together with the Existing Letters of
Credit, the "Letters of Credit"); provided, however, that, after giving effect
thereto, (A) the Aggregate US Borrower Credit Exposure shall not exceed the US
Borrowing Base then in effect, (B) the Aggregate US Credit Exposure shall not
exceed the Aggregate US Revolving Loan Commitment at such time, (C) the
Aggregate Credit Exposure shall not exceed the sum of the US Borrowing Base and
the Canadian Borrowing Base then in effect, (D) the Aggregate Credit Exposure
shall not exceed the sum of the Aggregate US Revolving Loan Commitment and the
Aggregate Canadian Revolving Loan Commitment at such time, and (E) the sum of
(1) the aggregate Letter of Credit Amount of all Letters of Credit outstanding
and (2) the aggregate amount of unreimbursed drawings under all Letters of
Credit shall not exceed US$100,000,000 at such time. Not later than 12:00 Noon,
New York City time on the Effective Date, the US Lenders shall make US Revolving
Loans available to the US Administrative Agent, at an account designated in
writing by the US Administrative Agent to the US Lenders, an amount in
immediately available funds equal to the aggregate outstanding principal amount
of Existing Loans outstanding on the Effective Date, plus all accrued interest,
unused commitment fees and other amounts owing in respect thereof; provided,
however, that, at the option of any US Lender that is a lender under
38
the Existing Credit Agreement immediately prior to the satisfaction of the
conditions in Section 4.1, all or a portion of the aggregate amount of the
Existing Loans of such US Lender may be deemed to satisfy the foregoing funding
requirement by notice to the US Administrative Agent to such effect given prior
to the Effective Date. Subject to the immediately preceding sentence, the US
Administrative Agent shall use the amounts made available to the US
Administrative Agent by the US Lenders to repay the principal amounts
outstanding under the Existing Credit Agreement (together with any accrued
interest and fees payable with respect thereto).
(b) Subject to the terms and conditions hereof (including, without
limitation, the occurrence of the Canadian Trigger Date), each Canadian Lender
severally agrees to make (i) loans denominated in Canadian Dollars to the
Canadian Borrower on a revolving credit basis through its Applicable Lending
Office from time to time during the Availability Period (the "C$ Canadian
Revolving Loans") in accordance with the provisions of this Agreement and (ii)
loans denominated in US Dollars to the Canadian Borrower or the US Borrower on a
revolving credit basis through its Applicable Lending Office from time to time
during the Availability Period (the "US$ Canadian Revolving Loans"; and,
together with the C$ Canadian Revolving Loans, the "Canadian Revolving Loans")
in accordance with the provisions of this Agreement; provided, however, that,
after giving effect thereto, (A) the Aggregate Canadian Borrower Credit Exposure
shall not exceed the Canadian Borrowing Base then in effect, (B) the Aggregate
Canadian Credit Exposure shall not exceed the Aggregate Canadian Revolving Loan
Commitment at such time, (C) the Aggregate US Borrower Credit Exposure shall not
exceed the US Borrowing Base then in effect, (D) the Aggregate Credit Exposure
shall not exceed the sum of the US Borrowing Base and the Canadian Borrowing
Base then in effect and (E) the Aggregate Credit Exposure shall not exceed the
sum of the Aggregate US Revolving Loan Commitment and the Aggregate Canadian
Revolving Loan Commitment at such time. Canadian Revolving Loans made to the US
Borrower by any Canadian Lender shall be funded by such Canadian Lender's
Counterpart Lender.
(c) Subject to the terms and conditions hereof, each Borrower may
borrow, prepay Revolving Loans made to it, reborrow Revolving Loans, and the US
Borrower may have Letters of Credit issued for its account. The Revolving Loans,
together with all accrued and unpaid interest thereon, shall mature and be due
and payable in US Dollars or Canadian Dollars, as the case may be, on the
Revolving Loan Commitment Expiration Date. The principal amount of each US
Revolving Loan of a US Lender shall be in an amount equal to the product of (i)
such Lender's US Revolving Loan Commitment Percentage (expressed as a fraction)
and (ii) the total amount of the US Revolving Loans requested by the US Borrower
in each instance. The principal amount of each Canadian Revolving Loan of a
Canadian Lender shall be in an amount equal to the product of (i) such Lender's
Canadian Revolving Loan Commitment Percentage (expressed as a fraction) and (ii)
the total amount of the Canadian Revolving Loans requested by the US Borrower or
the Canadian Borrower in each instance. The principal amount of each
participation of a US Lender or Canadian Lender (with respect to Canadian
Protective Advances and Canadian Overadvances made by the Canadian
Administrative Agent) in a Letter of Credit, Swing Line Loan, Alternate Currency
Loan, Overadvance or Protective Advance shall be in an amount equal to the
product of (i) such Lender's US Revolving Loan Commitment Percentage or Canadian
Revolving Loan Commitment Percentage, as applicable (expressed as a fraction)
and (ii) the total amount of the Swing Line Loan, the Letter of Credit, the
Protective Advance, the Overadvance or the Alternate Currency Loan, as
applicable, requested by the applicable Borrower in each instance. Subject to
Section 2.22, in no event shall any Lender be obligated to make a requested
Revolving Loan or participate in a requested Letter of Credit, Swing Line Loan,
Alternate Currency Loan, Overadvance or Protective Advance if after giving
effect to such Revolving Loan or such participation, such Lender's US Credit
Exposure or Canadian Credit Exposure, as the case may be, is in excess of such
Lender's US Revolving Loan Commitment or Canadian Revolving Loan Commitment, as
the case may be.
39
(i) Each Borrower and any one or more Lenders (including New
Lenders) may from time to time after the Effective Date agree that
such Lender or Lenders shall establish a new US Revolving Loan
Commitment or, after the Canadian Trigger Date, Canadian Revolving
Loan Commitment, as the case may be, or increase the amount of its
or their US Revolving Loan Commitment or Canadian Revolving Loan
Commitments, as the case may be, by executing and delivering to the
applicable Administrative Agent, in the case of each New Lender, a
New Lender Supplement meeting the requirements of Section 2.1(c)(ii)
or, in the case of each Lender which is not a New Lender, a Loan
Commitment Increase Supplement meeting the requirements of Section
2.1(c)(iii). Notwithstanding the foregoing, (w) without the consent
of all Lenders, the aggregate amount of incremental US Revolving
Loan Commitments established or increased after the Effective Date
pursuant to this paragraph shall not exceed US$100,000,000, (x) the
aggregate amount of incremental Canadian Revolving Loan Commitments
established or increased after the Canadian Trigger Date pursuant to
this paragraph shall not increase the Aggregate Canadian Revolving
Loan Commitment above US$35,000,000, and (y) unless otherwise agreed
to by the applicable Administrative Agent, each increase in the
Aggregate US Revolving Loan Commitment or the Aggregate Canadian
Revolving Loan Commitment, as the case may be, effected pursuant to
this paragraph shall be in a minimum aggregate amount of at least
US$12,500,000, in the case of increases to the Aggregate US
Revolving Loan Commitment or US$5,0000,000, in the case of increases
to the Aggregate Canadian Revolving Loan Commitment, and (z) unless
otherwise agreed by the applicable Administrative Agent, increases
in US Revolving Loan Commitments and Canadian Revolving Loan
Commitments may be effected on no more than two occasions pursuant
to this paragraph; provided, that, notwithstanding anything herein
to the contrary, in no event shall the sum of the Aggregate US
Revolving Loan Commitment and the Aggregate Canadian Revolving Loan
Commitment be permitted to exceed US$350,000,000. No Lender shall
have any obligation to participate in any increase described in this
paragraph unless it agrees to do so in its sole discretion. Upon the
occurrence and continuance of an Event of Default, the amount of the
US Revolving Loan Commitments and the amount of the Canadian
Revolving Loan Commitments may not be increased.
(ii) Any additional bank, financial institution or other
entity which, with the consent of the US Borrower and the applicable
Administrative Agent (which consents shall not be unreasonably
withheld), elects to become a "Lender" under this Agreement in
connection with any transaction described in Section 2.1(c)(i) shall
execute a New Lender Supplement (each, a "New Lender Supplement"), -
substantially in the form of Exhibit D-1, whereupon such bank,
financial institution or other - entity (a "New Lender") shall
become a Lender, with a US Revolving Loan Commitment or Canadian
Revolving Loan Commitment, as the case may be, in the amount set
forth therein that is effective on the date specified therein, for
all purposes and to the same extent as if originally a party hereto
and shall be bound by and entitled to the benefits of this
Agreement.
(iii) Any Lender, which, with the consent of the US Borrower
and the applicable Administrative Agent, elects to increase its US
Revolving Loan Commitment or Canadian Revolving Loan Commitment, as
the case may be, under this Agreement shall execute and deliver to
the US Borrower and the applicable Administrative Agent a Loan
Commitment Increase Supplement specifying (i) the amount of increase
in US Revolving Loan Commitments and/or Canadian Revolving Loan
Commitments, (ii) the amount of such Lender's total US Revolving
Loan Commitment or Canadian Revolving Loan Commitment, as the case
may be, after giving effect to such increase, and (iii) the
40
date upon which such US Revolving Loan Commitment increase or
Canadian Revolving Loan Commitment increase, as the case may be,
shall become effective.
(iv) Notwithstanding anything to the contrary in this
Agreement (including Section 2.13), unless otherwise agreed by the
applicable Administrative Agent in connection with other procedures
approved by such Administrative Agent to implement such increase, on
each date upon which the US Revolving Loan Commitments or Canadian
Revolving Loan Commitments, as the case may be, shall be increased
pursuant to this Section, the applicable Borrower shall prepay all
then outstanding Loans, which prepayment shall be accompanied by
payment of all accrued interest on the amount prepaid and any
amounts necessary to compensate the Lenders for any loss, cost or
expense attributable to such prepayment, in accordance with Section
2.17 hereof, and, to the extent it determines to do so, reborrow
Loans from all the Lenders (after giving effect to the new and/or
increased US Revolving Loan Commitments or Canadian Revolving Loan
Commitments, as the case may be, becoming effective on such date).
Any prepayment and reborrowing pursuant to the preceding sentence
shall be effected, to the maximum extent practicable, through the
netting of amounts payable between the applicable Borrower and the
respective Lenders.
(d) Subject to Sections 2.12 and 2.14, the Revolving Loans may
from time to time be (a) for US Revolving Loans, (i) LIBOR Loans, (ii) ABR Loans
or (iii) a combination thereof, (b) for C$ Canadian Revolving Loans, Canadian
Prime Rate Loans or (c) for US$ Canadian Revolving Loans, (i) LIBOR Loans, (ii)
Canadian ABR Loans (in the case of the Canadian Borrower), (iii) ABR Loans (in
the case of the US Borrower) or (iv) a combination thereof, as determined by the
applicable Borrower and notified to the applicable Administrative Agent in
accordance with either this Section 2.1 or 2.8 hereof. Each Lender may make or
maintain its applicable Revolving Loans for the account of the relevant Borrower
and each Lender may participate in Letters of Credit, Protective Advance,
Overadvance or Alternate Currency Loans to or for the account of the applicable
Borrower by or through any Applicable Lending Office.
(e) The US Revolving Loans made by each US Lender to the US
Borrower may, at the request of each US Lender, be evidenced by a US Revolving
Note, with appropriate insertions therein as to payee, date and principal
amount, payable to the order of such Lender and representing the obligation of
the US Borrower to pay the aggregate unpaid principal amount of all US Revolving
Loans made by such US Lender, the US Administrative Agent (with respect to US
Protective Advances and US Overadvances), the Canadian Administrative Agent
(with respect to Canadian Protective Advances and Canadian Overadvances), the
Swing Line Lender (with respect to Swing Line Loans) or the applicable Alternate
Currency Fronting Lender (with respect to Alternate Currency Loans) to the US
Borrower pursuant to Section 2.3(a), as applicable, in each case with interest
thereon as prescribed in Sections 2.10 and 2.11. The Canadian Revolving Loans
made by each Canadian Lender to the Canadian Borrower and the US Borrower may,
at the request of each Canadian Lender, be evidenced by a Canadian Revolving
Note, with appropriate insertions therein as to payee, date and principal
amount, payable to the order of such Canadian Lender and representing the
obligations of the Canadian Borrower and the US Borrower to pay the aggregate
unpaid principal amount of all Canadian Revolving Loans made to it by such
Canadian Lender pursuant to Section 2.1(b). Each Lender is hereby authorized
(but not required) to record the date and amount of each payment or prepayment
of principal of its Revolving Loans made to the applicable Borrower (or its risk
participation in Swing Line Loans, Protective Advances, Overadvances and
Alternate Currency Loans), each continuation thereof, and, in the case of LIBOR
Loans, the length of each Interest Period with respect thereto, in the books and
records of such Lender, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded. The failure of any
Lender to make any such recordation or notation in the books and records of the
Lender (or
41
any error in such recordation or notation) shall not affect the obligations of
either Borrower hereunder or under the US Revolving Notes or the Canadian
Revolving Notes. Each US Revolving Note and Canadian Revolving Note shall (i) be
dated the Effective Date or the Canadian Trigger Date, respectively, (ii)
provide for the payment of interest in accordance with Sections 2.10 and 2.11
and (iii) be stated to be payable on the Revolving Loan Commitment Expiration
Date.
(f) With respect to US Revolving Loans and US$ Canadian Revolving
Loans to be made available to the US Borrower, the US Borrower shall give the US
Administrative Agent (and, with respect to US$ Canadian Revolving Loans, the
Canadian Administrative Agent) irrevocable written notice (which notice must be
received by the US Administrative Agent prior to 11:00 a.m., New York City
time), one (1) US Business Day prior to the Borrowing Date of each ABR Loan
denominated in US Dollars and three (3) US Business Days prior to the Borrowing
Date of each LIBOR Loan denominated in US Dollars, requesting that the US
Lenders or the Canadian Lenders (or the Counterpart Lender of any Canadian
Lender), as applicable, make the US Revolving Loans or US$ Canadian Revolving
Loans, as applicable, on the proposed Borrowing Date and specifying (i) the
aggregate amount of Revolving Loans requested to be made, (ii) whether such
borrowing is of the US Revolving Loan Commitments or the Canadian Revolving Loan
Commitments (or, in the event that the US Borrower is borrowing under both
facilities, specifying the principal amount of Loans being borrowed under the US
Revolving Loan Commitments and the Canadian Revolving Loan Commitments,
respectively), (iii) subject to Sections 2.14 and 2.16, whether the US Revolving
Loans or US$ Canadian Revolving Loans, as applicable, are to be LIBOR Loans, ABR
Loans or a combination thereof and (iv) if the Revolving Loans are to be
entirely or partly LIBOR Loans, the length of the initial Interest Period
therefor, which shall be a period contemplated by the definition of the term
"Interest Period". Each such Revolving Loan Borrowing Notice or written
confirmation of telephonic notice shall be irrevocable, and shall be
appropriately completed to specify the date of such borrowing, the aggregate
principal amount of the Revolving Loans to be made, whether such Revolving Loans
are to be initially maintained as ABR Loans or LIBOR Loans and, in the case of
the LIBOR Loans, the initial Interest Period applicable thereto. Payments of
principal, interest and other amounts in respect of US Revolving Loans and US$
Canadian Loans made available to the US Borrower shall be made in US Dollars.
(g) With respect to C$ Canadian Revolving Loans to be made
available to the Canadian Borrower, the Canadian Borrower shall give the
Canadian Administrative Agent (with a copy to the US Administrative Agent)
irrevocable written notice (which notice must be received by the Canadian
Administrative Agent prior to 10:00 a.m., New York City time), two (2) Canadian
Business Day prior to the Borrowing Date of each Canadian Prime Rate Loan
denominated in Canadian Dollars, requesting that the Canadian Lenders make the
C$ Canadian Revolving Loans on the proposed Borrowing Date and specifying the
aggregate amount of C$ Canadian Revolving Loans requested to be made. Each such
Revolving Loan Borrowing Notice or written confirmation of telephonic notice
shall be irrevocable, and shall be appropriately completed to specify the date
of such borrowing and the aggregate principal amount of the C$ Canadian
Revolving Loans to be made. Payments of principal, interest and other amounts in
respect of C$ Canadian Revolving Loans made available to the Canadian Borrower
shall be made in Canadian Dollars.
(h) With respect to US$ Canadian Revolving Loans to be made
available to the Canadian Borrower, the Canadian Borrower shall give the
Canadian Administrative Agent (with a copy to the US Administrative Agent)
irrevocable written notice (which notice must be received by the Canadian
Administrative Agent prior to 10:00 a.m., New York City time), one (1) Canadian
Business Day prior to the Borrowing Date of each Canadian ABR Loan denominated
in US Dollars and three (3) Canadian Business Days prior to the Borrowing Date
of each LIBOR Loan denominated in US Dollars, requesting that the Canadian
Lenders make the US$ Canadian Revolving Loans on the proposed Borrowing Date and
specifying (i) the aggregate amount of US$ Canadian Revolving Loans requested to
be made,
42
(ii) subject to Sections 2.14 and 2.16, whether the US$ Canadian Revolving Loans
are to be LIBOR Loans, Canadian ABR Loans or a combination thereof and (iii) if
the US$ Canadian Revolving Loans are to be entirely or partly LIBOR Loans, the
length of the initial Interest Period therefor, which shall be a period
contemplated by the definition of the term "Interest Period". Each such
Revolving Loan Borrowing Notice or written confirmation of telephonic notice
shall be irrevocable, and shall be appropriately completed to specify the date
of such borrowing, the aggregate principal amount of the US$ Canadian Revolving
Loans to be made, whether such US$ Canadian Revolving Loans are to be initially
maintained as Canadian ABR Loans or LIBOR Loans and, in the case of the LIBOR
Loans, the initial Interest Period applicable thereto. Payments of principal,
interest and other amounts in respect of US$ Canadian Revolving Loans made
available to the Canadian Borrower shall be made in US Dollars.
(i) On receipt of any notice referred to Section 2.1(f), (g) or (h)
above, the US Administrative Agent or the Canadian Administrative Agent, as the
case may be, shall promptly notify each applicable Lender thereof, of such
Lender's proportionate share thereof and of the other matters specified in the
Revolving Loan Borrowing Notice. Not later than 12:00 noon, New York City time,
on the date specified for the borrowing of Revolving Loans, each Lender shall
make available to the applicable Administrative Agent at the applicable Funding
Account, the amount of such Lender's pro rata share of the aggregate borrowing
amount (as determined in accordance with Section 2.1(c)) in US Dollars or
Canadian Dollars, as the case may be, in immediately available funds. The
applicable Administrative Agent will then make available to the applicable
Borrower at the applicable Funding Account, in US Dollars or Canadian Dollars,
as the case may be, and in immediately available funds, the aggregate of the
amounts so made available by the Lenders prior to 2:00 p.m. (New York City time)
on such day.
(j) The US Administrative Agent or the Canadian Administrative
Agent, as the case may be, may, in the absence of notification from any Lender
that such Lender has not made its pro rata share available to such
Administrative Agent on such date, credit the account of the applicable Borrower
on the books of such office of such Administrative Agent with the aggregate
amount of Revolving Loans requested. If any Lender does not make available to
such Administrative Agent the amount required pursuant to this Section 2.1, such
Administrative Agent shall promptly notify the applicable Borrower and shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon for each day from the date of non-payment until such amount is
paid in full at the Alternate Base Rate. Nothing in this Section shall be deemed
to relieve any Lender from its obligation to make Revolving Loans hereunder.
(k) Neither the US Administrative Agent, the Canadian
Administrative Agent nor any Lender shall be responsible for the obligation or
US Revolving Loan Commitment or Canadian Revolving Loan Commitment of any other
Lender hereunder, nor will the failure of any Lender to comply with the terms of
this Agreement relieve any other Lender or any Borrower of its obligations under
this Agreement and the other Loan Documents.
(l) Subject to Section 2.5(c), the US Revolving Loan Commitment
and Canadian Revolving Loan Commitment of each Lender and the Aggregate US
Revolving Loan Commitment and the Aggregate Canadian Revolving Loan Commitment
shall terminate on the Revolving Loan Commitment Expiration Date. All
outstanding Revolving Loans shall be due and payable, to the extent not
previously paid in accordance with the terms hereof, on the Revolving Loan
Commitment Expiration Date.
SECTION 2.2. Swing Line Loans; Swing Line Commitment(a).
43
(a) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make loans in US Dollars through its Applicable Lending Office
to the US Borrower from time to time from and including the Effective Date to
but excluding the date which is five US Business Days prior to the Revolving
Loan Commitment Expiration Date (each a "Swing Line Loan" and, collectively, the
"Swing Line Loans") in an aggregate principal amount not to exceed at any time
outstanding US$25,000,000 (the "Swing Line Commitment"); provided, that (w) the
Aggregate US Credit Exposure shall not exceed the the Aggregate US Revolving
Loan Commitment at any time, (x) the Aggregate US Borrower Credit Exposure shall
not exceed the US Borrowing Base then in effect, (y) the Aggregate Credit
Exposure shall not exceed the sum of the Aggregate US Revolving Loan Commitment
and the Aggregate Canadian Revolving Loan Commitment at such time and (z) the
Aggregate Credit Exposure shall not exceed the sum of the US Borrowing Base and
the Canadian Borrowing Base then in effect. Subject to the foregoing, the US
Borrower may borrow Swing Line Loans, prepay Swing Line Loans and reborrow Swing
Line Loans. All outstanding Swing Line Loans shall be due and payable, to the
extent not previously paid in accordance with the terms hereof, on the earlier
of (x) the date of any borrowing of US Revolving Loans hereunder (with the
proceeds of each US Revolving Loan borrowing to be applied towards the
prepayment of any outstanding Swing Line Loans) and (y) the US Revolving Loan
Commitment Expiration Date. Swing Line Loans shall be ABR Loans only.
(b) The Swing Line Loans shall (to the extent requested by the
Swing Line Lender) be evidenced by the Swing Line Note, with appropriate
insertions therein as to payee, date and principal amount, payable to the order
of the Swing Line Lender and representing the obligation of the US Borrower to
pay the aggregate unpaid principal amount of the Swing Line Loans, with interest
thereon as prescribed in Sections 2.10 and 2.11. The Swing Line Lender is hereby
authorized (but not required) to record the borrowing date of each Swing Line
Loan, the amount thereof and the date and amount of each payment or prepayment
of principal thereof, in the books and records of the Swing Line Lender, and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of the Swing Line Lender to make any such
recordation or notation (or any error in such recordation or notation) shall not
affect the obligations of the US Borrower hereunder or under the Swing Line
Note. The Swing Line Note shall (x) be dated the Effective Date, (y) be stated
to mature on the Revolving Loan Commitment Expiration Date and (z) provide for
the payment of interest in accordance with Sections 2.10 and 2.11.
(c) The US Borrower shall give the US Administrative Agent
irrevocable notice (which notice may be telephonic, to be confirmed promptly in
writing), which notice must be received by the US Administrative Agent prior to
12:00 noon, New York City time, on the requested borrowing date (which shall be
a US Business Day) specifying the amount of the requested Swing Line Loan, which
shall be in a minimum amount of US$100,000. Written notice of borrowing shall be
given by submitting a Notice of Swing Line Borrowing to the US Administrative
Agent. On receipt of such notice, the US Administrative Agent shall promptly
notify the Swing Line Lender thereof. The proceeds of each Swing Line Loan will
then be made available to the US Borrower by the Swing Line Lender by crediting
the account of the US Borrower on the books of the US Administrative Agent at
its office specified in Section 9.2.
(d) The Swing Line Lender, at any time in its sole and absolute
discretion, may on behalf of the US Borrower (which hereby irrevocably directs
the Swing Line Lender to so act on their behalf) request each US Lender to make
a US Revolving Loan in an amount equal to such US Lender's US Revolving Loan
Commitment Percentage of the principal amount of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in Section 7(g) shall have occurred (in which
event the procedures of Section 2.2(e) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to the making of a US
Revolving Loan are then satisfied, each US Lender shall make the proceeds of its
US Revolving Loan
44
available to the Swing Line Lender at its office specified in Section 9.2, not
later than 12:00 noon, New York City time. The proceeds of such US Revolving
Loans shall be immediately applied to repay the Refunded Swing Line Loans.
(e) If, prior to refunding a Swing Line Loan with a US Revolving
Loan pursuant to Section 2.2(d), one of the events described in Section 7(g)
shall have occurred, then, subject to the provisions of Section 2.2(f), each US
Lender will, on the date such US Revolving Loan was to have been made, purchase
from the Swing Line Lender an undivided participation interest in the Swing Line
Loan in an amount equal to its US Revolving Loan Commitment Percentage of such
Swing Line Loan. Upon request, each US Lender will promptly transfer to the
Swing Line Lender, in immediately available funds, the amount of its
participation, and upon receipt thereof the Swing Line Lender will deliver to
such US Lender a Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.
(f) Each US Lender's obligation to make US Revolving Loans in
accordance with Section 2.2(d) and to purchase participating interests in
accordance with Section 2.2(e) shall be absolute and unconditional and shall not
be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such US Lender may have against the
Swing Line Lender, the US Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of any Event of Default; (C) any
adverse change in the condition (financial or otherwise) of any Loan Party or
any other Person; (D) any breach of this Agreement by Quiksilver, the US
Borrower or any other Person; (E) any inability of the US Borrower to satisfy
the conditions precedent to borrowing set forth in this Agreement on the date
upon which such participating interest is to be purchased or (F) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any US Lender does not make available to the Swing Line Lender
the amount required pursuant to Section 2.2(d) or (e), as the case may be, the
Swing Line Lender shall be entitled to recover such amount on demand from such
US Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the greater of the daily
average Federal Funds Effective Rate and a rate determined by the US
Administrative Agent in accordance with banking industry rules on interbank
compensation for the period until such US Lender makes such amount immediately
available to the US Administrative Agent, for the account of the Swing Line
Lender. If such amount is not made available to the US Administrative Agent, for
the account of the Swing Line Lender, by such US Lender within three US Business
Days of such due date, the Swing Line Lender shall also be entitled to recover
such amount with interest thereon at the rate per annum applicable to ABR Loans,
on demand. Notwithstanding the foregoing provisions of this Section 2.2(f), no
US Lender shall he required to make a US Revolving Loan to the US Borrower for
the purpose of refunding a Swing Line Loan pursuant to Section 2.2(d) or to
purchase a participating interest in a Swing Line Loan pursuant to Section
2.2(e) if an Event of Default has occurred and is continuing and, prior to the
making by the Swing Line Lender of such Swing Line Loan, the Swing Line Lender
has received written notice from such US Lender specifying that such Event of
Default has occurred and is continuing, describing the nature thereof and
stating that, as a result thereof, such US Lender shall cease to make such
Refunded Swing Line Loans and purchase such participating interests, as the case
may be; provided, however, that the obligation of such US Lender to make such
Refunded Swing Line Loans and to purchase such participating interests shall be
reinstated upon the earlier to occur of (y) the date upon which such US Lender
notifies the Swing Line Lender that its prior notice has been withdrawn and (z)
the date upon which the Event of Default specified in such notice no longer is
continuing.
(g) The Swing Line Commitment of the Swing Line Lender shall
terminate on the Revolving Loan Commitment Expiration Date.
SECTION 2.3. Alternate Currency Loans(b).
45
(a) Subject to the terms and conditions hereof, each Alternate
Currency Fronting Lender agrees to make loans denominated in the applicable
Alternate Currency through its Applicable Lending Office (each, an "Alternate
Currency Loan") on a revolving credit basis to the US Borrower from time to time
during the Availability Period in accordance with the provisions of this
Agreement; provided, however, that (A) the Aggregate US Borrower Credit Exposure
shall not exceed the US Borrowing Base then in effect, (B) the Aggregate US
Credit Exposure shall not exceed the Aggregate US Revolving Loan Commitment at
such time, (C) the Aggregate Credit Exposure shall not exceed the sum of the US
Borrowing Base and the Canadian Borrowing Base then in effect, (D) the Aggregate
Credit Exposure shall not exceed the sum of the Aggregate US Revolving Loan
Commitment and the Aggregate Canadian Revolving Loan Commitment at such time,
and (E) the sum of (1) the US Dollar Equivalent of the aggregate principal
amount of all Alternate Currency Loans outstanding and (2) the US Dollar
Equivalent of the Letter of Credit Exposure of all outstanding Alternate
Currency Letters of Credit shall not exceed the Alternate Currency Sublimit.
During the period from the Effective Date through the Revolving Loan Commitment
Expiration Date, the US Borrower may borrow, prepay and reborrow Alternate
Currency Loans in whole or in part, all in accordance with the terms and
conditions hereof. For the avoidance of doubt, the definition of "Alternate
Currency Fronting Lender" sets forth which institution will be funding Alternate
Currency Loans for the applicable Alternate Currency.
(b) The Alternate Currency Loans shall be LIBOR Loans. The
principal of and interest on each Alternate Currency Loan shall be paid, subject
to Section 2.3(f) and (m), in the applicable Currency for such Alternate
Currency Loan and, subject to Section 2.3(e), shall be for the account of the
relevant Alternate Currency Fronting Lender.
(c) The US Borrower shall give the US Administrative Agent and the
Alternate Currency Fronting Agent (with respect to Alternate Currency Loans
denominated in Alternate Currencies other than Canadian Dollars) or the
applicable Alternate Currency Fronting Lender (with respect to Alternate
Currency Loans denominated in Canadian Dollars) irrevocable written notice
(which notice must be received prior to 11:00 a.m., London or Toronto time, as
applicable, four Eurodollar Business Days prior to the Borrowing Date of each
LIBOR Loan denominated in an Alternate Currency) requesting that the applicable
Alternate Currency Fronting Lender make an Alternate Currency Loan on the
proposed Borrowing Date and specifying (i) the aggregate amount of Alternate
Currency Loans requested to be made, (ii) the Alternate Currency in which such
Loan is to be denominated, and (iii) the length of the initial Interest Period
therefor, which shall be a period contemplated by the definition of the term
"Interest Period". Each Alternate Currency Loan Borrowing Notice shall be
irrevocable, and shall be appropriately completed to specify the date of such
borrowing, the aggregate principal amount of the Alternate Currency Loans to be
made, the Alternate Currency in which such Alternate Currency Loan is to be
denominated and the initial Interest Period applicable thereto.
(d) The Alternate Currency Fronting Agent (with respect to
Alternate Currency Loans denominated in Alternate Currencies other than Canadian
Dollars) or the applicable Alternate Currency Fronting Lender (with respect to
Alternate Currency Loans denominated in Canadian Dollars) shall make available
to the US Borrower (through the US Administrative Agent) at the US Funding
Account, in the requested Alternate Currency, and in immediately available
funds, the aggregate amount of Alternate Currency Loans requested to be borrowed
prior to 2:00 p.m. (London or Toronto time, as applicable) on such day.
(e) The US Borrower shall pay to (x) the Alternate Currency
Fronting Agent (with respect to Alternate Currency Loans denominated in
Alternate Currencies other than Canadian Dollars) for the benefit of the
applicable Alternate Currency Lender or (y) the applicable Alternate Currency
Fronting Lender (with respect to Alternate Currency Loans denominated in
Canadian Dollars), in either case with respect to each Alternate Currency Loan
made by the applicable Alternate Currency Fronting
46
Lender (in addition to interest required to be paid pursuant to Section 2.10),
for the account of such Alternate Currency Fronting Lender, a fronting fee in
the relevant Alternate Currency with respect to the period from and including
the date of such Alternate Currency Loan to but excluding the date of repayment
thereof computed at a rate per annum agreed by the US Borrower and the
applicable Alternate Currency Fronting Lender on the average daily principal
amount of such Alternate Currency Loan outstanding during the period for which
such fee is calculated. Such fronting fee shall be payable in arrears on each
Interest Payment Date to occur after the making of such Alternate Currency Loan
and shall be nonrefundable.
(f) The US Borrower shall pay to the US Administrative Agent for
the account of the Alternate Currency Loan Participants, a participation fee
with respect to each Alternate Currency Loan for the period from and including
the date such Alternate Currency Loan was made to but excluding the date of
repayment thereof, computed at a rate per annum equal to the Applicable Margin
in respect of LIBOR Loans from time to time in effect on the average daily
principal amount of such Alternate Currency Loan outstanding during the period
for which such fee is calculated. Such participation fee shall be (i) payable in
the applicable Alternate Currency (with respect to Alternate Currency Fronting
Loans), (ii) payable in arrears on each Interest Payment Date to occur after the
making of such Alternate Currency Loan and (iii) nonrefundable. Such fee shall
be shared ratably among the Alternate Currency Loan Participants in accordance
with their respective US Revolving Loan Commitment Percentages.
(g) The US Administrative Agent shall, promptly following its
receipt thereof, distribute to the Alternate Currency Fronting Agent for
distribution to the applicable Alternate Currency Fronting Lender (with respect
to Alternate Currency Loans denominated in Alternate Currencies other than
Canadian Dollars) or the applicable Alternate Currency Fronting Lender (with
respect to Alternate Currency Loans denominated in Canadian Dollars) and the
Alternate Currency Loan Participants all fees received by the US Administrative
Agent for their respective accounts pursuant to Section 2.3(e) and (f).
(h) Each Alternate Currency Fronting Lender irrevocably agrees to
grant and hereby grants to each Alternate Currency Loan Participant (other than
such Alternate Currency Fronting Lender), and, to induce each Alternate Currency
Fronting Lender to make Alternate Currency Loans hereunder, each such Alternate
Currency Loan Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from such Alternate Currency Fronting Lender, on the terms
and conditions set forth below, for such Alternate Currency Loan Participant's
own account and risk, an undivided interest equal to such Alternate Currency
Loan Participant's US Revolving Loan Commitment Percentage of such Alternate
Currency Fronting Lender's obligations and rights in respect of each Alternate
Currency Loan made by such Alternate Currency Fronting Lender hereunder. Each
Alternate Currency Loan Participant unconditionally and irrevocably agrees with
each Alternate Currency Fronting Lender that, if any amount in respect of the
principal, interest or fees owing to such Alternate Currency Fronting Lender in
respect of an Alternate Currency Loan is not paid when due in accordance with
the terms of this Agreement, such Alternate Currency Loan Participant shall pay
to the US Administrative Agent, for the account of such Alternate Currency
Fronting Lender, upon demand an amount in US Dollars (with the US Dollar
Equivalent of the unpaid amount of such Alternate Currency Loan to be calculated
by the US Administrative Agent) equal to such Alternate Currency Loan
Participant's US Revolving Loan Commitment Percentage of such unpaid amount.
Each Alternate Currency Loan Participant's obligation to make the payment
referred to in the immediately preceding sentence shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such US Lender
may have against the applicable Alternate Currency Fronting Lender, the US
Borrower or any other Person for any reason whatsoever, (B) the occurrence or
continuance of any Event of Default; (C) any adverse change in the condition
(financial or otherwise) of any Loan Party or any other Person; (D) any breach
of this Agreement by Quiksilver, the US Borrower or any other Person; (E) any
inability of the US Borrower to satisfy the conditions
47
precedent to borrowing set forth in this Agreement on the date upon which such
participating interest is to be purchased or (F) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(i) If any amount required to be paid by any Alternate Currency
Loan Participant to the applicable Alternate Currency Fronting Lender pursuant
to this Section 2.3(e) is not made available to the US Administrative Agent when
due, such Alternate Currency Loan Participant shall pay to the US Administrative
Agent, for the account of the applicable Alternate Currency Fronting Lender, on
demand, such amount with interest thereon at a rate equal to the greater of the
daily average Federal Funds Effective Rate and a rate determined by the US
Administrative Agent in accordance with banking industry rules on interbank
compensation for the period until such Alternate Currency Loan Participant makes
such amount immediately available to the US Administrative Agent, for the
account of such Alternate Currency Fronting Lender. If such amount is not made
available to the US Administrative Agent, for the account of the applicable
Alternate Currency Fronting Lender, by such Alternate Currency Loan Participant
within three US Business Days of such due date, such Alternate Currency Fronting
Lender shall also be entitled to recover such amount with interest thereon at
the rate per annum applicable to ABR Loans, on demand. A certificate of any
Alternate Currency Fronting Lender submitted to any US Lender with respect to
any amounts owing under this Section 2.3(i) shall be conclusive in the absence
of manifest error.
(j) Whenever, at any time after the Alternate Currency Fronting
Agent or the applicable Alternate Currency Fronting Lender has received from any
Alternate Currency Loan Participant the full amount owing by such Alternate
Currency Loan Participant pursuant to and in accordance with this Section 2.3(j)
in respect of any Alternate Currency Loan, the Alternate Currency Fronting Agent
or the applicable Alternate Currency Fronting Lender receives any payment
related to such Alternate Currency Loan (whether directly from the US Borrower
or otherwise, including proceeds of collateral applied thereto by the Alternate
Currency Fronting Agent, the applicable Alternate Currency Fronting Lender or
the US Administrative Agent, on behalf of such Alternate Currency Fronting
Lender), or any payment of interest on account thereof, the Alternate Currency
Fronting Agent or the applicable Alternate Currency Fronting Lender, as
applicable, will distribute to such Alternate Currency Loan Participant its pro
rata share thereof.
(k) If any payment received by the Alternate Currency Fronting
Agent (with respect to Alternate Currency Loans denominated in Alternate
Currencies other than Canadian Dollars) or the applicable Alternate Currency
Fronting Lender (with respect to Alternate Currencies denominated in Canadian
Dollars) pursuant to Section 2.3(e) with respect to any Alternate Currency Loan
made by the applicable Alternate Currency Fronting Lender shall be required to
be returned by the Alternate Currency Fronting Agent or the applicable Alternate
Currency Fronting Lender, as the case may be, each Alternate Currency Loan
Participant shall pay to the Alternate Currency Fronting Agent (for the benefit
of the applicable Alternate Currency Fronting Lender) or the applicable
Alternate Currency Fronting Lender its pro rata share thereof.
(l) All outstanding Alternate Currency Loans shall be due and
payable, to the extent not previously paid in accordance with the terms hereof,
on the Revolving Loan Commitment Expiration Date.
(m) Following the date on which any risk participation with
respect to an Alternate Currency Loan is converted to US Dollars pursuant to
Section 2.3(h), all amounts payable in connection with such risk participation
(and the underlying obligation of the US Borrower to repay such Alternate
Currency Loan under Section 2.3(b)) shall be denominated in US Dollars for all
purposes.
48
SECTION 2.4. Acceptances. (a) Acceptance Commitment. Subject to the
terms and conditions hereof (including, without limitation, the occurrence of
the Canadian Trigger Date), each Canadian Lender severally agrees that the
Canadian Borrower may issue Acceptances denominated in Canadian Dollars, in
minimum denominations of C$100,000 or a whole multiple thereof and in minimum
aggregate amounts of C$2,000,000 or any greater whole multiple of C$100,000,
each in accordance with the provisions of this Section 2.4 from time to time
until the Revolving Loan Commitment Expiration Date with respect to such
Canadian Lender; provided, that (A) the Aggregate Canadian Borrower Credit
Exposure shall not exceed the Canadian Borrowing Base then in effect, (B) the
Aggregate Canadian Credit Exposure shall not exceed the Aggregate Canadian
Revolving Loan Commitment at such time, (C) the Aggregate Credit Exposure shall
not exceed the sum of the US Borrowing Base and the Canadian Borrowing Base then
in effect and (D) the Aggregate Credit Exposure shall not exceed the sum of the
Aggregate US Revolving Loan Commitment and the Aggregate Canadian Revolving Loan
Commitment at such time; provided, further, that at all times the outstanding
aggregate face amount of all Acceptances made by a Canadian Lender shall equal
its Canadian Revolving Loan Commitment Percentage of the outstanding face amount
of all Acceptances made by all Canadian Lenders. For purposes of this Agreement,
the full face value of an Acceptance, without discount, shall be used when
calculations are made to determine the outstanding amount of a Canadian Lender's
Acceptances; provided that in computing the face amount of Acceptances
outstanding, the face amount of an Acceptance in respect of which the Acceptance
Obligation has been prepaid by the Canadian Borrower and received by the
Canadian Lender that created the same in accordance with the terms of this
Agreement shall not be included.
(b) Terms of Acceptance. Each Draft shall be accepted by a
Canadian Lender, upon the written request of the Canadian Borrower given in
accordance with paragraph (c), by the completion and acceptance by such Canadian
Lender of a Draft (i) payable in Canadian Dollars, drawn by the Canadian
Borrower on the Canadian Lender in accordance with this Agreement, to the order
of the Canadian Lender and (ii) maturing prior to the Revolving Loan Commitment
Expiration Date with respect to such Canadian Lender on a Canadian Business Day
not less than 28 days nor more than 180 days after the date of such Draft (and
in integral maturities of one month, two months, three months or six months, or,
from time to time, such other nonstandard periods as the Canadian Borrower and
the affected Canadian Lender(s) may agree), excluding days of grace, all as
specified in the relevant Canadian Notice of Drawing to be delivered under
paragraph (c) of this Section 2.4; provided that no Acceptance shall have a
tenor in excess of the period of time which is usual and reasonably necessary to
finance transactions of similar character.
(c) Notice of Drawing and Discount of Acceptances.
(i) With respect to each requested acceptance of Drafts, the
Canadian Borrower shall give the Canadian Administrative Agent a
Canadian Notice of Drawing, substantially in the form of Exhibit G-3
(which shall be irrevocable and may be by telephone confirmed in
writing within one Canadian Business Day) to be received prior to
10:00 a.m., Toronto time, at least two Canadian Business Days prior
to the date of the requested acceptance, specifying:
(1) the date on which such Drafts are to be accepted;
(2) the aggregate face amount of such Drafts;
(3) the maturity date of such Acceptances;
49
(4) whether the Canadian Lenders must purchase or
arrange for the purchase of the Acceptances; and
(5) such additional information as the Canadian
Administrative Agent or any Canadian Lenders may reasonably
from time to time request to be included in such notices.
(ii) Upon receipt of a Canadian Notice of Drawing the
Canadian Administrative Agent shall promptly notify each Canadian
Lender of the contents thereof and of such Canadian Lender's ratable
share of the Acceptances requested thereunder. The aggregate face
amount of the Drafts to be accepted by a Canadian Lender shall be
determined by the Canadian Administrative Agent by reference to the
respective Canadian Revolving Loan Commitments of the Canadian
Lenders; provided that, if the face amount of an Acceptance which
would otherwise be accepted by a Canadian Lender is not C$100,000,
or a whole multiple thereof, the face amount shall be increased or
reduced by the Canadian Administrative Agent, in its sole
discretion, to C$100,000, or the nearest integral multiple thereof,
as appropriate.
(iii) On each date upon which Acceptances are to be accepted,
the Canadian Administrative Agent shall advise the Canadian Borrower
of the applicable Discount Rate for each of the Lenders. Not later
than 10:00 a.m., Toronto time, on such date each Canadian Lender
shall, subject to the fulfillment of the conditions precedent
specified in Section 4.3, and subject to each Non-Acceptance
Canadian Lender's making Acceptance Equivalent Loans pursuant to
paragraph (i) of this Section 2.4, (A) on the basis of the
information supplied by the Canadian Administrative Agent, as
aforesaid, complete a Draft or Drafts of the Canadian Borrower by
filling in the amount, date and maturity date thereof in accordance
with the applicable Canadian Notice of Drawing, (B) duly accept such
Draft or Drafts, (C) discount such Acceptance or Acceptances, (D)
give the Canadian Administrative Agent telegraphic or telex notice
of such Canadian Lender's acceptance of such Draft or Drafts and
confirming the discount rate at which it discounted the Acceptance
or Acceptances and the amount paid to the Canadian Administrative
Agent for the account of the Canadian Borrower and (E) remit to the
Canadian Administrative Agent in Canadian Dollars in immediately
available funds an amount equal to the proceeds of such discount
less the Acceptance Fee. Upon receipt by the Canadian Administrative
Agent of such sums from the Canadian Lenders, the Canadian
Administrative Agent shall make the aggregate amount thereof
available to the Canadian Borrower.
(iv) Each extension of credit hereunder through the
acceptance of Drafts shall be made simultaneously and pro rata by
the Canadian Lenders in accordance with their respective Canadian
Revolving Loan Commitments.
(d) Sale of Acceptances. The Canadian Borrower shall have the
right to sell any Acceptance; provided that if so specified in the Canadian
Notice of Drawing the Canadian Lenders shall purchase or arrange for the
purchase of all of the Acceptances in the market and each Canadian Lender shall
provide to the Canadian Administrative Agent the discount proceeds for the
account of the Canadian Borrower. The Acceptance Fee in respect of such
Acceptances may, at the option of the Canadian Lender, be set off against the
discount proceeds payable by such Canadian Lender hereunder.
(e) Acceptance Obligation. The Canadian Borrower is obligated, and
hereby unconditionally agrees, to pay to each Canadian Lender the face amount of
each Acceptance created by
50
such Lender in accordance with a Canadian Notice of Drawing pursuant to
paragraph (c) on the maturity date thereof, or on such earlier date as may be
required pursuant to provisions of this Agreement. With respect to each
Acceptance which is outstanding hereunder, the Canadian Borrower shall notify
the Canadian Administrative Agent prior to 10:00 a.m., Toronto time, two
Canadian Business Days prior to the maturity date of such Acceptance (which
notice shall be irrevocable) of the Canadian Borrower's intention to issue
Acceptances on such maturity date to provide for the payment of such maturing
Acceptance and shall deliver a Canadian Notice of Drawing to the Canadian
Administrative Agent or that the Canadian Borrower intends to repay the maturing
Acceptances on the maturity date. Any repayment of an Acceptance must be made at
or before 2:00 p.m. (Toronto time) on the maturity date of such Acceptance. If
the Canadian Borrower fails to provide such notice to the Canadian
Administrative Agent or fails to repay the maturing Acceptances, or if a Default
or an Event of Default has occurred and is continuing on such maturity date, the
Canadian Borrower's obligations in respect of the maturing Acceptances shall be
deemed to have been converted on the maturity date thereof into a Canadian Prime
Rate Loan in an amount equal to the face amount of the maturing Acceptances. The
Canadian Borrower waives presentment for payment and any other defense to
payment of any amounts due to a Canadian Lender in respect of any Acceptances
accepted by such Canadian Lender under this Agreement which might exist solely
by reason of those Acceptances being held, at the maturity thereof, by that
Canadian Lender in its own right and the Canadian Borrower agrees not to claim
any days of grace if that Canadian Lender, as holder, sues the Canadian Borrower
on those Acceptances for payment of the amounts payable by the Canadian Borrower
thereunder.
(f) Supply of Drafts and Power of Attorney. To enable the Canadian
Lenders to accept Drafts in the manner specified in this Section 2.4 the
Canadian Borrower hereby appoints each Canadian Lender as its attorney to sign
and endorse on its behalf, in handwriting or by facsimile or mechanical
signature as and when deemed necessary by such Canadian Lender, blank forms of
Acceptances. In this respect, it is each Canadian Lender's responsibility to
maintain an adequate supply of blank forms of Acceptances for acceptance under
this Agreement. The Canadian Borrower recognizes and agrees that all Acceptances
signed and/or endorsed on its behalf by a Canadian Lender shall bind the
Canadian Borrower as fully and effectually as if signed in the handwriting of
and duly issued by the proper signing officers of the Canadian Borrower;
provided, that such acts in each case are to be undertaken in accordance with
such Canadian Lender's obligations under this Agreement. Each Canadian Lender is
hereby authorized to issue such Acceptances endorsed in blank in such face
amounts as may be determined by such Canadian Lender; provided that the
aggregate amount thereof is equal to the aggregate amount of Acceptances
required to be accepted by such Canadian Lender. Drafts drawn by the Canadian
Borrower to be accepted as Acceptances shall be signed by a duly authorized
officer or officers of the Canadian Borrower or by its attorney-in-fact
including any attorney-in-fact appointed pursuant to this Section 2.4(f). The
Canadian Borrower hereby authorizes and requests each Canadian Lender in
accordance with each Canadian Notice of Drawing received from the Canadian
Borrower pursuant to paragraph (c) to take the measures with respect to a Draft
or Drafts of the Canadian Borrower then in possession of such Lender specified
in paragraph (c)(iii) of this Section. In case any authorized signatory of the
Canadian Borrower whose signature shall appear on any Draft shall cease to have
such authority before the acceptance of a Draft with respect to such Draft, the
obligations of the Canadian Borrower hereunder and under such Acceptance shall
nevertheless be valid for all purposes as if such authority had remained in
force until such creation. The Canadian Administrative Agent and each Canadian
Lender shall be fully protected in relying upon any instructions received from
the Canadian Borrower (orally or otherwise) without any duty to make inquiry as
to the genuineness of such instructions. The Canadian Administrative Agent and
each Canadian Lender shall be entitled to rely on instructions received from any
person identifying himself (orally or otherwise) as a duly authorized officer of
the Canadian Borrower and shall not be liable for any errors, omissions, delays
or interruptions in the transmission of such instructions.
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(g) Exculpation. No Canadian Lender shall be responsible or liable
for its failure to accept a Draft if the cause of such failure is, in whole or
in part, due to the failure of the Canadian Borrower to provide the Drafts or
the power of attorney described in paragraph (f) above to such Canadian Lender
on a timely basis nor shall any Canadian Lender be liable for any damage, loss
or other claim arising by reason of any loss or improper use of any such Draft
except loss or improper use arising by reason of the negligence or willful
misconduct of such Canadian Lender.
(h) Rights of Canadian Lender as to Acceptances. Neither the
Canadian Administrative Agent nor any Canadian Lender shall have any
responsibility as to the application of the proceeds by the Canadian Borrower of
any discount of any Acceptances. For greater certainty, each Canadian Lender
may, at any time, purchase Acceptances issued by the Canadian Borrower and may
at any time and from time to time hold, sell, rediscount or otherwise dispose of
any or all Acceptances accepted and/or purchased by it.
(i) Acceptance Equivalent Loans. Whenever the Canadian Borrower
delivers a Canadian Notice of Drawing to the Canadian Administrative Agent under
this Agreement requesting the Canadian Lenders to accept Drafts, a Canadian
Lender which cannot accept Drafts (a "Non-Acceptance Canadian Lender") shall, in
lieu of accepting Drafts, make an Acceptance Equivalent Loan. On each date on
which Drafts are to be accepted, subject to the same terms and conditions
applicable to the acceptance of Drafts, any Non-Acceptance Canadian Lender that
makes an Acceptance Equivalent Loan, upon delivery by the Canadian Borrower of
an executed Discount Note payable to the order of such Non-Acceptance Canadian
Lender, will remit to the Canadian Administrative Agent in immediately available
funds for the account of the Canadian Borrower the Acceptance equivalent
discount proceeds in respect of the Discount Notes issued by the Canadian
Borrower to the Non-Acceptance Canadian Lender. Each Non-Acceptance Canadian
Lender may agree, in lieu of receiving any Discount Notes, that such Discount
Notes may be uncertificated and the applicable Acceptance Equivalent Loan shall
be evidenced by a loan account which such Non-Acceptance Canadian Lender shall
maintain in its name, and reference to such uncertificated Discount Notes
elsewhere in this Agreement shall be deemed to include reference to the relevant
Acceptance Equivalent Loan or loan account, as applicable.
(j) Terms Applicable to Discount Notes. The term "Acceptance" when
used in this Agreement shall be construed to include Discount Notes and all
terms of this Agreement applicable to Acceptances shall apply equally to
Discount Notes evidencing Acceptance Equivalent Loans with such changes as may
in the context be necessary (except that no Discount Note may be sold,
rediscounted or otherwise disposed of by the Non-Acceptance Canadian Lender
making Acceptance Equivalent Loans). For greater certainty:
(i) a Discount Note shall mature and be due and payable on
the same date as the maturity date for Acceptances specified in the
applicable Canadian Notice of Drawing;
(ii) an Acceptance Fee will be payable in respect of a
Discount Note and shall be calculated at the same rate and in the
same manner as the Acceptance Fee in respect of an Acceptance;
(iii) a discount applicable to a Discount Note shall be
calculated in the same manner and at the Discount Rate that would be
applicable to Acceptances accepted by a Schedule II or III Lender
pursuant to the applicable Canadian Notice of Drawing;
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(iv) an Acceptance Equivalent Loan made by a Non-Acceptance
Canadian Lender will be considered to be part of a Non-Acceptance
Canadian Lender's outstanding Acceptances for all purposes of this
Agreement; and
(v) the Canadian Borrower shall deliver Discount Notes to
each Non-Acceptance Canadian Lender and grants to each
Non-Acceptance Canadian Lender a power of attorney in respect of the
completion and execution of Discount Notes, each in accordance with
Section 2.4(f).
(k) Prepayment of Acceptances and Discount Notes. No Acceptance or
Discount Note may be repaid or prepaid prior to the maturity date of such
Acceptance or Discount Note, except in accordance with the provisions of Article
VII.
(l) Depository Bills and Notes Act. At the option of the Canadian
Borrower and any Canadian Lender, Acceptances and Discount Notes under this
Agreement to be accepted by such Lender may be issued in the form of depository
bills and depository notes, respectively, for deposit with The Canadian
Depository for Securities Limited pursuant to the Depository Bills and Notes Act
(Canada). All depository bills and depository notes so issued shall be governed
by the Depository Bills and Notes Act (Canada) and the provisions of this
Section 2.4.
(m) Acceptance Fee. The Canadian Borrower agrees to pay to each
Canadian Lender a fee (the "Acceptance Fee") in advance and in Canadian Dollars,
at a rate per annum equal to the Applicable Margin, on the date of acceptance of
each Acceptance. All Acceptance Fees shall be calculated on the face amount of
the Acceptance issued and computed on the basis of the actual number of days in
the term thereof and a year of 365 days. The Acceptance Fee shall be in addition
to any other fees payable to each Canadian Lender in connection with the
issuance or discounting of such Acceptance. The discount rate for Acceptance
Fees shall be calculated under terms customary to the practice of the Canadian
Lenders and shall be based upon a year of 365 days and the term of such
Acceptance.
SECTION 2.5. Letters of Credit. (a) General. Prior to the Effective
Date, JPMorgan Chase Bank, N.A. and Union Bank of California, N.A., as
applicable, issued the Existing Letters of Credit which, from and after the
Effective Date, shall constitute Letters of Credit hereunder Subject to the
terms and conditions set forth herein, the US Borrower may request the issuance
of Letters of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit) for its own account or the account of Quiksilver or any of its
Subsidiaries, in a form reasonably acceptable to the applicable Issuing Bank
(provided that each Letter of Credit shall provide for payment against sight
drafts drawn thereunder), at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the US Borrower to, or
entered into by the US Borrower with, the applicable Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the US Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
the applicable Issuing Bank and the US Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension, the currency in which such Letter of
Credit is to be denominated (which shall be an Approved Currency), the name and
address of the beneficiary thereof and such other
53
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit, provided that in no event shall any Issuing Bank other than JPMorgan
Chase Bank, N.A. or one other Issuing Bank designated from time to time by the
US Borrower and reasonably acceptable to the US Administrative Agent issue any
Alternate Currency Letter of Credit hereunder. If requested by the applicable
Issuing Bank, the US Borrower also shall submit a letter of credit application
on such Issuing Bank's standard form in connection with any request for a Letter
of Credit. A Letter of Credit shall be issued, amended, renewed or extended only
if (and upon issuance, amendment, renewal or extension of each Letter of Credit
the US Borrower shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension (i) the Letter of
Credit Exposure shall not exceed US$100,000,000, (ii) the sum of (A) the US
Dollar Equivalent of the aggregate principal amount of all Alternate Currency
Loans outstanding and (B) the US Dollar Equivalent of the Letter of Credit
Exposure of all outstanding Alternate Currency Letters of Credit shall not
exceed the Alternate Currency Sublimit, (iii) the Aggregate US Borrower Credit
Exposure shall not exceed the US Borrowing Base then in effect, (iv) the
Aggregate US Credit Exposure shall not exceed the Aggregate US Revolving Loan
Commitment at such time, (v) the Aggregate Credit Exposure shall not exceed the
sum of the US Borrowing Base and the Canadian Borrowing Base then in effect, and
(vi) the Aggregate Credit Exposure shall not exceed the sum of the Aggregate US
Revolving Loan Commitment and the Aggregate Canadian Revolving Loan Commitment
at such time. Subsequent to the receipt by any Issuing Bank of a Notification
Instruction (as defined below) from the US Administrative Agent which shall not
have been withdrawn, such Issuing Bank will contact the US Administrative Agent
prior to the issuance or increase in any Letter of Credit to determine whether
or not such issuance or increase would result in any of the limitations set
forth in the preceding sentence being exceeded. For purposes of this Section
2.5(b), a "Notification Instruction" shall (i) mean any instruction from the US
Administrative Agent requiring that an Issuing Bank make the contacts described
in the preceding sentence, which instruction the US Administrative Agent (a) may
deliver at any time when it determines that the percentage which either (x) the
Aggregate US Credit Exposure constitutes of the Aggregate US Revolving Loan
Commitment or (y) the Aggregate US Borrower Credit Exposure constitutes of the
US Borrowing Base then in effect, in either case, is greater than 80% and (b)
will withdraw when it determines that such percentage is less than 80%, and (ii)
include the name and telephone or facsimile number of the individual or
individuals required to be contacted in accordance with the immediately
preceding sentence. For purposes of calculating currency amounts in the third
preceding sentence, the amount of any Alternate Currency Letter of Credit shall
be the US Dollar Equivalent thereof calculated on the basis of the applicable
rate of exchange determined in accordance with Section 2.20.
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five US Business Days prior to the Revolving Loan Commitment Expiration
Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the US Lenders,
such Issuing Bank hereby grants to each US Lender, and each US Lender hereby
acquires from such Issuing Bank, a participation in such Letter of Credit equal
to such US Lender's US Revolving Loan Commitment Percentage of the Letter of
Credit Amount. In consideration and in furtherance of the foregoing, each US
Lender hereby absolutely and unconditionally agrees to pay to the US
Administrative Agent in US Dollars, for the account of such Issuing Bank, such
US Lender's US Revolving Loan Commitment Percentage of (i) each Letter of Credit
Disbursement made by such Issuing Bank in US Dollars and (ii) the US Dollar
Equivalent, calculated at the time such payment is made by the US Administrative
Agent, of each Letter of Credit Disbursement made by such Issuing Bank in an
Alternate Currency and, in each case, not reimbursed by the US Borrower on the
date due as required in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the
54
US Borrower for any reason; provided, that upon calculating the US Dollar
Equivalent of each Letter of Credit Disbursement, the US Administrative Agent
shall promptly notify the applicable Issuing Bank and each US Lender. Each US
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the US
Revolving Loan Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If any Issuing Bank shall make any Letter of
Credit Disbursement in respect of a Letter of Credit, the US Borrower shall
reimburse such Letter of Credit Disbursement by paying to such Issuing Bank an
amount equal to such Letter of Credit Disbursement in US Dollars (or, subject to
Section 2.5(n), in the relevant Alternate Currency), on the date that such
Letter of Credit Disbursement is made (or, if such date is not a US Business
Day, on or before the next US Business Day); provided, that, in the case of any
such reimbursement obligation which is in an amount of not less than US$500,000,
the US Borrower may, subject to the conditions to borrowing set forth herein,
request that such payment be financed in US Dollars with an ABR Loan in an
equivalent amount, and, to the extent so financed, the US Borrower's obligation
to make such payment shall be discharged and replaced by the resulting ABR Loan.
If the US Borrower fails to make when due any reimbursement payment required
pursuant to this paragraph, the applicable Issuing Bank shall immediately notify
the US Administrative Agent, which shall promptly notify each US Lender of the
applicable Letter of Credit Disbursement, the US Dollar Equivalent thereof
calculated in accordance with the preceding sentence (if such Letter of Credit
Disbursement related to an Alternate Currency Letter of Credit), the
reimbursement payment then due from the US Borrower in respect thereof and such
US Lender's US Revolving Loan Commitment Percentage thereof. Promptly following
receipt of such notice, each US Lender (other than such Issuing Bank) shall pay
to the US Administrative Agent in US Dollars its US Revolving Loan Commitment
Percentage of the reimbursement payment then due from the US Borrower, and the
US Administrative Agent shall promptly pay to such Issuing Bank in US Dollars
the amounts so received by it from the US Lenders. Promptly following receipt by
the US Administrative Agent of any payment from the US Borrower pursuant to this
paragraph, including the US Borrower's payment of any US Dollar reimbursements
paid to the Issuing Bank by the US Lenders in connection with a Letter of Credit
Disbursement under an Alternate Currency Letter of Credit, the US Administrative
Agent shall distribute such payment to the applicable Issuing Bank or, to the
extent that US Lenders have made payments pursuant to this paragraph to
reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their
interests may appear. Any payment made by a US Lender pursuant to this paragraph
to reimburse an Issuing Bank for any Letter of Credit Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the US Borrower of its obligation to reimburse such Letter of
Credit Disbursement.
(f) Letter of Credit Fees.
(i) The US Borrower will pay a fee on all outstanding
Letters of Credit at a per annum rate equal to (A) in the case of
Letters of Credit (other than Trade Letters of Credit), the
Applicable Margin then in effect with respect to LIBOR Loans, and
(B) in the case of Trade Letters of Credit, the Letter of Credit
Rate, in each case shared ratably among the US Lenders and payable
quarterly in arrears on each Fee Payment Date after the issuance
date. In addition, the US Borrower shall pay to the Issuing Bank for
its own account a fronting fee in the percentage agreed among the US
Borrower and the applicable Issuing Bank (and, subject to a maximum
percentage to be reasonably approved by the US Administrative Agent)
computed as agreed per annum of the undrawn and unexpired amount of
each Letter of Credit, payable quarterly in arrears on
55
each Fee Payment Date after the issuance date. Each fee payable
pursuant to this Section 2.5(f) shall be payable in US Dollars
(calculated by the US Administrative Agent through determining the
US Dollar Equivalent of the fee or fronting fee, as applicable,
which would otherwise be payable hereunder in the relevant Alternate
Currency).
(ii) In addition to the foregoing fees, the US Borrower shall
pay or reimburse the Issuing Bank for such normal and customary
costs and expenses as are incurred or charged by the Issuing Bank in
issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.
(g) Obligations Absolute. The US Borrower's obligation to
reimburse Letter of Credit Disbursements as provided in paragraph (e) of this
Section shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit, any application for the issuance of a
Letter of Credit or this Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the applicable Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharged of, or provide a right of setoff against, the US
Borrower's obligations hereunder. Neither the US Administrative Agent, the US
Lenders nor any Issuing Bank, nor any of their Related Parties, shall have any
liability or responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing hereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the applicable Issuing
Bank; provided that the foregoing shall not be construed to excuse such Issuing
Bank from liability to the US Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the US Borrower to the extent permitted by applicable law) suffered by the US
Borrower that are caused by such Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, an
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(h) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Issuing Bank shall
promptly notify the US Administrative Agent and the US Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether such Issuing Bank
has made or will make a Letter of Credit Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the US
Borrower of its obligation to reimburse such Issuing Bank and the US Lenders
with respect to any such Letter of Credit Disbursement. Such notification
requirements shall only apply to demands and payments related to standby Letters
of Credit.
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(i) Interim Interest. If an Issuing Bank shall make any Letter of
Credit Disbursement, then, unless the US Borrower shall reimburse such Letter of
Credit Disbursement in full on the date such Letter of Credit Disbursement is
made (or, if such date is not a US Business Day, on or prior to the next US
Business Day), the unreimbursed amount thereof shall bear interest, for each day
from and including the date such Letter of Credit Disbursement is made to but
excluding the date that the US Borrower reimburses such Letter of Credit
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the US Borrower fails to reimburse such Letter of Credit Disbursement when
due pursuant to paragraph (e) of this Section, then the interest rate described
in Section 2.10(d) shall apply; and provided, further, that, in the case of a
Letter of Credit Disbursement made under an Alternate Currency Letter of Credit,
the amount of interest due with respect thereto shall accrue on the US Dollar
Equivalent of such Letter of Credit Disbursement and be calculated as of the
time such Letter of Credit Disbursement was made until such time as such amount
is converted to US Dollars as provided herein. Interest accrued pursuant to this
paragraph shall be for the account of the applicable Issuing Bank, except that
interest accrued on and after the date of payment by any US Lender pursuant to
paragraph (e) of this Section to reimburse such Issuing Bank shall be for the
account of such US Lender to the extent of such payment.
(j) Replacement of any Issuing Bank. Any Issuing Bank may be
replaced at any time by written agreement among the US Borrower, the US
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.
The US Administrative Agent shall notify the US Lenders of any such replacement
of such Issuing Bank. At the time any such replacement shall become effective,
the US Borrower shall pay all unpaid fees accrued for the account of the
replaced Issuing Bank. From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of such Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to include a reference to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.
(k) Cash Collateralization. If any Event of Default shall occur
and be continuing, on the US Business Day that the US Borrower receives notice
from the US Administrative Agent or the Majority US Lenders demanding the
deposit of cash collateral pursuant to this paragraph, the US Borrower shall
deposit in an account with the US Administrative Agent, in the name of the US
Administrative Agent and for the benefit of the US Lenders, an amount in US
Dollars and in cash equal to 105% of the Letter of Credit Exposure as of such
date plus any accrued and unpaid interest thereon; provided that (i) the
portions of such amount attributable to undrawn Alternate Currency Letters of
Credit shall be deposited in the applicable Alternate Currencies in the amount
of 105% of the actual amounts of such undrawn Letters of Credit and (ii) the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the US Borrower described in paragraph (g) of Article 7. Each deposit
pursuant to this paragraph shall be held by the US Administrative Agent as
collateral for the payment and performance of the obligations of the US Borrower
under this Agreement. The US Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the US
Administrative Agent and at the US Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the US
Administrative Agent to reimburse the Issuing Banks for Letter of Credit
Disbursements for which they have not been reimbursed (to be applied ratably
among them
57
according to the respective aggregate amounts of the then unreimbursed Letter of
Credit Disbursements) and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the US Borrower for the Letter
of Credit Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other obligations of the US Borrower under
this Agreement. If the US Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the US
Borrower within three US Business Days after all Events of Default have been
cured or waived.
(l) Additional Issuing Banks. The US Borrower may, at any time and
from time to time with the consent of the US Administrative Agent (which consent
shall not be unreasonably withheld) and such US Lender, and subject to the
limitation set forth in the proviso in Section 2.5(b), designate one or more
additional US Lenders to act as an issuing bank under the terms of this
Agreement. Any US Lender designated as an Issuing Bank pursuant to this
paragraph (1) shall be deemed to be an "Issuing Bank" for the purposes of this
Agreement (in addition to being a US Lender) with respect to Letters of Credit
issued by such US Lender.
(m) Reporting. Unless the US Administrative Agent otherwise
agrees, each Issuing Bank will report in writing to the US Administrative Agent
(i) on the first US Business Day of each week and on the second US Business Day
to occur after the last day of each March, June, September and December, and on
such other dates as the US Administrative Agent may reasonably request, the
daily activity during the preceding week, calendar quarter or other period, as
the case may be, with respect to Letters of Credit issued by it, including the
aggregate outstanding Letter of Credit Exposure with respect to such Letters of
Credit on each day during such week, quarter or other period, in such form and
detail as shall be satisfactory to the US Administrative Agent, (ii) on any US
Business Day on which the US Borrower fails to reimburse a Letter of Credit
Disbursement required to be reimbursed to such Issuing Bank on such day, the
date of such failure and the amount of such Letter of Credit Disbursement, and
(iii) such other information with respect to Letters of Credit issued by such
Issuing Bank as the US Administrative Agent may reasonably request.
(n) Conversion to US Dollars. Following the date on which any risk
participation with respect to an Alternate Currency Letter of Credit is
converted to US Dollars pursuant to Section 2.5(d), all amounts payable in
connection with such risk participation (and the underlying reimbursement
obligation from the US Borrower under Section 2.5(e)) shall be denominated in US
Dollars for all purposes.
SECTION 2.6. Optional Prepayments; Optional Commitment Reductions.
Each Borrower may, on the last day of any Interest Period with respect thereto
in the case of any Loans that are maintained as LIBOR Loans, or at any time and
from time to time in the case of any Loans that are maintained as ABR Loans or
Canadian Prime Rate Loans, prepay such Loans and/or permanently reduce the
Aggregate US Revolving Loan Commitment or the Aggregate Canadian Revolving Loan
Commitment, as applicable, in whole or (subject to the proviso below) in part,
without premium or penalty, upon at least three US Business Days' or Canadian
Business Days', as applicable, irrevocable written notice in the case of LIBOR
Loans and upon at least one US Business Day's or Canadian Business Day's, as
applicable, irrevocable written notice in the case of ABR Loans, Canadian ABR
Loans or Canadian Prime Rate Loans, from the applicable Borrower to the
applicable Administrative Agent (and, with respect to a prepayment of Alternate
Currency Loans, the Alternate Currency Fronting Agent (with respect to Alternate
Currency Loans denominated in Alternate Currencies other than Canadian Dollars)
or the applicable Alternate Currency Fronting Lender (with respect to Alternate
Currency Loans denominated in Canadian Dollars)), specifying the date and amount
of prepayment and/or commitment reduction, and whether, if a prepayment, the
prepayment is of (x) LIBOR Loans, ABR Loans or a combination thereof with
respect to US Revolving Loans, (y) Canadian Prime Rate Loans with respect to
58
C$ Canadian Revolving Loans, or (z) LIBOR Loans, ABR Loans (in the case of the
US Borrower), Canadian ABR Loans (in the case of the Canadian Borrower) or a
combination thereof with respect to US$ Canadian Revolving Loans. Upon receipt
of any such notice from the applicable Borrower, the applicable Administrative
Agent shall promptly notify each Lender (and, if applicable, the Alternate
Currency Fronting Agent or the applicable Alternate Currency Fronting Lender)
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable by the applicable Borrower on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial
prepayments of Loans shall be in an aggregate principal amount of no less than
US$1,000,000. Permanent reductions in the Aggregate US Revolving Loan Commitment
or the Aggregate Canadian Revolving Loan Commitment shall be in an amount equal
to US$5,000,000, or a whole multiple thereof, and shall reduce permanently the
Aggregate US Revolving Loan Commitment or Aggregate Canadian Revolving Loan
Commitment, as the case may be, then in effect.
SECTION 2.7. Mandatory Prepayments.
(a) If at any time, including without limitation, any date on
which the US Dollar Equivalent is required to be calculated pursuant to Section
2.20, (i) the Aggregate US Borrower Credit Exposure exceeds the US Borrowing
Base then in effect, (ii) the Aggregate US Credit Exposure exceeds the Aggregate
US Revolving Loan Commitment at such time, (iii) the Aggregate Canadian Borrower
Credit Exposure exceeds the Canadian Borrowing Base then in effect or (iv) the
Aggregate Canadian Credit Exposure exceeds the Aggregate Canadian Revolving Loan
Commitment at such time, then the applicable Borrower shall immediately, without
notice or request by the applicable Administrative Agent, prepay the US
Revolving Loans, Alternate Currency Fronting Loans or Canadian Revolving Loans,
as applicable, and, in the case of the US Revolving Loan Commitments,
Reimbursement Obligations in an aggregate principal amount to eliminate such
excess. If any such excess remains (in the form of outstanding and undrawn
Letters of Credit) at such time after repayment in full of all outstanding US
Revolving Loans (and, if applicable, Canadian Revolving Loans made to the US
Borrower) and Reimbursement Obligations, the US Borrower shall provide cash
collateral to the extent required to eliminate such excess.
(b) On the day of receipt by Quiksilver or any of its Subsidiaries
of any Net Proceeds with respect to an Equity Offering, a Debt Offering, an
Asset Disposition or a Recovery Event (unless, with respect to any Asset
Disposition or Recovery Event, a Reinvestment Notice shall have been delivered
in respect thereof), the Borrowers shall prepay the Loans in the aggregate
amount equal to 100% of such Net Proceeds; provided, that (i) any such Debt
Offering or Asset Disposition must be permitted by Section 6.2 or 6.5, as
applicable, or otherwise consented to by the Majority Lenders in their sole
discretion, (ii) with respect to any Asset Disposition or Recovery Event by any
Subsidiary (other than a Loan Party), any Equity Offering and any unsecured Debt
Offering, such Net Proceeds need not be applied to the prepayment of the Loans
to the extent that such Net Proceeds are required to be and are applied pursuant
to the Bridge Loan Agreement in satisfaction of obligations thereunder, (iii)
with respect to any Asset Disposition or Recovery Event by any Loan Party or any
secured Debt Offering, the applicable Borrower may, in lieu of delivering a
Reinvestment Notice or prepaying the Loans as set forth above and with the
consent of the Administrative Agents and the Majority Lenders (such consent to
be granted in their sole discretion), apply such mandatory prepayment towards
the satisfaction of obligations under the Bridge Loan Agreement, (iv) with
respect to any Asset Disposition or Recovery Event, on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to such Reinvestment Event shall be applied as set forth in the
following sentence, (v) with respect to any Asset Disposition or Recovery Event
that relates to Property that was theretofore included in the Canadian Borrowing
Base, the Net Proceeds of such Asset Disposition or Recovery Event shall be
applied first, to pay the principal, interest and fees in respect of the
Canadian Protective Advances and Canadian Overadvances, and, second, to pay the
principal, interest and fees in respect of the Canadian
59
Revolving Loans (other than Canadian Protective Advances and Canadian
Overadvances), without a concomitant reduction of the Aggregate Canadian
Revolving Loan Commitment, and (vi) with respect to any Asset Disposition or
Recovery Event that relates to Property that was theretofore included in the US
Borrowing Base, the Net Proceeds of such Asset Disposition or Recover Event
shall be applied first, to pay the principal, interest and fees in respect of
the US Protective Advances and US Overadvances, and, second, to pay the
principal, interest and fees in respect of the US Revolving Loans (other than
Protective Advances and Overadvances), without a concomitant reduction in the
Aggregate US Revolving Loan Commitment. Subject to clause (v) and (vi) of the
proviso set forth above, any such prepayment shall be applied first, to ratably
pay the principal, interest and fees in respect of the Protective Advances and
Overadvances, and, second, to ratably pay the principal, interest and fees in
respect of the Loans (other than Protective Advances and Overadvances), without
a concomitant reduction in the Aggregate US Revolving Loan Commitment or the
Aggregate Canadian Revolving Loan Commitment. On or prior to the date of any
such Equity Offering, Debt Offering, Asset Disposition or Recovery Event, the
Borrowers will provide to the Administrative Agents the calculations used by the
Borrowers in determining the amount of any such prepayment under this Section
2.7(b). Notwithstanding any of the other provisions of this Section 2.7(b), if
any prepayment of LIBOR Loans is required to be made under this Section 2.7(b) ,
other than on the last day of the Interest Period therefor, the applicable
Borrower may, in its sole discretion, deposit the amount of any such prepayment
otherwise required to be made hereunder into the Prepayment Account (as defined
below). The applicable Administrative Agent shall apply any cash deposited in
the Prepayment Account to prepay LIBOR Loans on the last day of the respective
Interest Periods therefor (or, at the direction of the relevant Borrower, on any
earlier date) until all outstanding LIBOR Loans have been prepaid or until all
cash on deposit in the Prepayment Account with respect to such Loans has been
exhausted. For purposes of this Agreement, the term "Prepayment Account" shall
collectively refer to the account established by the US Borrower with the US
Administrative Agent and the account established by the Canadian Borrower with
the Canadian Administrative Agent, as the case may be, and over which the
applicable Administrative Agent shall have exclusive dominion and control,
including the right of withdrawal for application in accordance with this
Section 2.7(b). The applicable Administrative Agent will, at the request of the
applicable Borrower, invest amounts on deposit in the relevant Prepayment
Account in Cash Equivalents that mature prior to the last day of the applicable
Interest Periods of the LIBOR Loans to be prepaid, provided that such
Administrative Agent shall not be required to make any investment that, in its
sole judgment, would require or cause such Administrative Agent to be in, or
would result in any, violation of any Requirement of Law and (ii) such
Administrative Agent shall have no obligation to invest amounts on deposit in
the relevant Prepayment Account if a Default or Event of Default shall have
occurred and be continuing. The applicable Borrower shall indemnify such
Administrative Agent for any losses relating to the investments so that the
amount available to prepay LIBOR Loans on the last day of the applicable
Interest Periods therefor is not less than the amount that would have been
available had no investments been made. Other than any interest earned on such
investments, no Prepayment Account shall bear interest. Interest or profits, if
any, on such investments shall be deposited and reinvested and disbursed as
described above. If the maturity of the Loans has been accelerated pursuant to
Article VII, the applicable Administrative Agent shall apply amounts on deposit
in the Prepayment Account to ratably prepay such LIBOR Loans. Each Borrower
hereby grant to the US Administrative Agent or the Canadian Administrative
Agent, as the case may be, for their benefit and the benefit of the Lenders or
the Canadian Lenders, as the case may be, a security interest in the relevant
Prepayment Account to secure the Obligations or the Canadian Obligations, as
applicable.
(c) If any prepayment is made in respect to any LIBOR Loan, in
whole or in part, prior to the last day of the Interest Period applicable
thereto, each Borrower agrees to indemnify the Lenders in accordance with
Section 2.17 with respect to LIBOR Loans made to such Borrower.
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(d) Each prepayment pursuant to this Section 2.7 shall be
accompanied by payment in full of all accrued interest thereon to and including
the date of such prepayment, together with any additional amounts owing pursuant
to Section 2.17.
(e) For the avoidance of doubt, no mandatory prepayment shall be
required under this Section 2.7 from proceeds received by Quiksilver or any of
its Subsidiaries from the Escrow Account or the Senior Notes Escrow Account.
SECTION 2.8. Conversion and Continuation Options
(a) Any Borrower may elect from time to time to convert LIBOR
Loans (other than Alternate Currency Loans) to ABR Loans (with respect to the US
Borrower only), Canadian ABR Loans (with respect to the Canadian Borrower only),
as the case may be, by the applicable Borrower giving the US Administrative
Agent or the Canadian Administrative Agent, as the case may be, at least two US
Business Days' or Canadian Business Days', as applicable, prior irrevocable
written notice of such election pursuant to a Continuation Notice, provided that
any such conversion of LIBOR Loans may only be made on the last day of an
Interest Period with respect thereto. The applicable Borrower may elect from
time to time to convert ABR Loans (other than Swing Line Loans, US Protective
Advances and US Overadvances), Canadian ABR Loans (other than Canadian
Protective Advances and Canadian Overadvances), as the case may be, to LIBOR
Loans by giving the applicable Administrative Agent at least three Eurodollar
Business Days' prior irrevocable written notice of such election pursuant to a
Continuation Notice. Any such notice of conversion to LIBOR Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice such Administrative Agent shall promptly notify each
relevant Lender thereof. All or any part of outstanding LIBOR Loans, ABR Loans
and Canadian ABR Loans may be converted as provided herein, provided that (i)
any such conversion may only be made if, after giving effect thereto, Section
2.9 shall not have been contravened, (ii) no Loan may be converted into a LIBOR
Loan after the date that is one month prior to the Revolving Loan Commitment
Expiration Date, (iii) no Borrower shall have the right to elect to convert to a
LIBOR Loan if a Default shall have occurred and be continuing, (iv) subject to
Section 2.12, no Alternate Currency Loan may be converted to an ABR Loan, a
Canadian Prime Rate Loan or a Canadian ABR Loan and (v) no Protective Advance or
Overadvance may be converted to a LIBOR Loan.
(b) Any LIBOR Loan may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the US Borrower or the
Canadian Borrower, as applicable, giving notice to the US Administrative Agent
or the Canadian Administrative Agent, as applicable, in accordance with the
provisions of the term "Interest Period" set forth in Section 1.1, of the length
of the next Interest Period to be applicable to such LIBOR Loan; provided,
however, that no LIBOR Loan may be continued as such (i) if, after giving effect
thereto, Section 2.9 would be contravened, (ii) after the date that is one month
prior to the Revolving Loan Commitment Expiration Date or (iii) if a Default
shall have occurred and be continuing; and further, provided, however, that, if
any Borrower shall fail to give any required notice as described above in this
Section or if such continuation is not permitted pursuant to the preceding
proviso, each applicable LIBOR Loan shall be automatically converted to an ABR
Loan (in the case of the US Borrower) or a Canadian ABR Loan (in the case of US$
Canadian Revolving Loans to the Canadian Borrower), as the case may be, on the
last day of such then expiring Interest Period.
SECTION 2.9. Minimum Amounts of Tranches. All borrowings,
conversions and continuations of LIBOR Loans hereunder and all selections of
Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the LIBOR Loans comprising each Tranche shall be equal to US$1,000,000 or a
whole multiple of US$100,000 in excess thereof (or with respect to Alternate
Currency Loans denominated in an Alternate Currency, an amount in the applicable
Alternate Currency having a US Dollar Equivalent of
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approximately US$1,000,000 or an integral multiple of US$100,000 in excess
thereof) and, in any case, there shall not be more than 8 Tranches. All ABR
Loans and Canadian ABR Loans shall be in an aggregate amount of at least
US$500,000. All Canadian Prime Rate Loans shall be in an aggregate amount of at
least C$500,000.
SECTION 2.10. Interest Rates and Payment Dates.
(a) Each Loan (other than an Alternate Currency Loan) maintained
as a LIBOR Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Adjusted LIBO Rate plus
the Applicable Margin. Each Loan maintained as an ABR Loan shall bear interest
at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.
Each Loan maintained as a Canadian Prime Rate Loan shall bear interest at a rate
per annum equal to the Canadian Prime Rate plus the Applicable Margin. Each Loan
maintained as a Canadian ABR Loan shall bear interest at a rate per annum equal
to the Canadian Base Rate plus the Applicable Margin.
(b) Each Alternate Currency Loan shall bear interest (which
interest shall be for the account of the applicable Alternate Currency Fronting
Lender) for each day during each Interest Period with respect thereto at a rate
per annum equal to the Adjusted LIBO Rate determined for such day; provided,
that, subject to Section 2.3(m), such amount shall be payable in the currency in
which such Alternate Currency Loan is denominated.
(c) Each US Protective Advance and each US Overadvance shall bear
interest (which interest shall be for the account of the US Administrative
Agent) at a rate per annum equal to the Alternate Base Rate plus the Applicable
Margin plus 2%. Each Canadian Protective Advance and each Canadian Overadvance
shall bear interest (which interest shall be for the account of the Canadian
Administrative Agent) at a rate per annum equal to the Canadian Prime Rate plus
the Applicable Margin plus 2%.
(d) If any Event of Default shall have occurred and be continuing,
all amounts outstanding hereunder shall bear interest at a rate per annum which
is the sum of the rate otherwise applicable pursuant to Section 2.10(a) or (b)
plus 2% per annum, from the date of the occurrence of such Event of Default
until such Event of Default is no longer continuing (after as well as before
judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date; provided, however, that interest accruing pursuant to paragraph (d) of
this Section shall be payable on demand.
SECTION 2.11. Computation of Interest and Fees.
(a) Interest on Loans, unused-commitment fees and all other
Obligations or Canadian Obligations, as the case may be, of the US Borrower or
the Canadian Borrower, as the case may be, shall be calculated on the basis of a
360-day year for the actual days elapsed, provided, however, that interest on
ABR Loans, Canadian ABR Loans and Canadian Prime Rate Loans and obligations
denominated in Pounds Sterling shall be calculated on the basis of a 365- (or
366-, as the case may be) day year. For purposes of disclosure pursuant to the
Interest Act (Canada), the annual rates of interest or fees to which the rates
of interest or fees provided in this Agreement and the other Loan Documents (and
stated herein or therein, as applicable, to be computed on the basis of a 360
day year in respect of Loans denominated in US Dollars and a 365 day year in
respect of Loans denominated in Canadian Dollars or any other period of time
less than a calendar year) are equivalent to the rates so determined multiplied
by the actual number of days in the applicable calendar year and divided by 360
or 365, as applicable, or such other period of time, respectively. The US
Administrative Agent or the Canadian Administrative Agent, as the case may be,
shall as soon as practicable notify the applicable Borrower and the applicable
62
Lenders of each determination of a LIBO Rate. Any change in the interest rate on
a Loan resulting from a change in the Alternate Base Rate, Canadian Base Rate,
Canadian Prime Rate or the LIBOR Reserve Requirements shall become effective as
of the opening of business on the day on which such change in the Alternate Base
Rate, Canadian Base Rate or Canadian Prime Rate is announced or such change in
the LIBOR Reserve Requirements becomes effective, as the case may be. The
applicable Administrative Agent or the applicable shall as soon as practicable
notify the relevant Borrower and such Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the applicable
Administrative Agent or the applicable Alternate Currency Fronting Lender
pursuant to any provision of this Agreement shall be conclusive and binding on
the applicable Borrower and the applicable Lenders in the absence of manifest
error.
SECTION 2.12. Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) either Administrative Agent or any Alternate Currency Fronting
Lender shall have determined (which determination shall be conclusive and
binding upon the applicable Borrower absent manifest error) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBO Rate for such Interest Period, or
(b) either Administrative Agent shall have received notice from
the Majority US Lenders or the Majority Canadian Lenders, as applicable, that
the LIBO Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period, or
(c) the US Administrative Agent or any Alternate Currency Fronting
Lender determines (which determination shall be conclusive and binding upon the
US Borrower absent manifest error) that deposits in the applicable currency are
not generally available, or cannot be obtained by such Alternate Currency
Fronting Lender, in the applicable market (any Alternate Currency affected by
the circumstances described in clause (a), (b) or (c) is referred to as an
"Affected Alternate Currency"),
such Administrative Agent shall give telecopy or telephonic notice thereof to
the applicable Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (y) pursuant to clause (a) or (b) of this
Section 2.12 in respect of LIBOR Loans, then (i) any LIBOR Loans requested to be
made on the first day of such Interest Period shall be made as ABR Loans (with
respect to LIBOR Loans requested to be made to the US Borrower) or Canadian ABR
Loans (with respect to US$ Canadian Revolving Loans requested to be made to the
Canadian Borrower), respectively, (ii) any ABR Loans and Canadian ABR Loans that
were to have been converted on the first day of such Interest Period to LIBOR
Loans shall be continued as ABR Loans and Canadian ABR Loans, respectively, and
(iii) any outstanding LIBOR Loans denominated in US Dollars shall be converted,
on the last day of the then-current Interest Period, to ABR Loans or Canadian
ABR Loans, respectively, and (z) in respect of any Alternate Currency Loans,
then (i) any Alternate Currency Loans in an Affected Alternate Currency
requested to be made on the first day of such Interest Period shall not be made
and (ii) any outstanding Alternate Currency Loans in an Affected Alternate
Currency shall be due and payable on the first day of such Interest Period.
Until such relevant notice has been withdrawn by the US Administrative Agent, no
further Alternate Currency Loans denominated in an Affected Alternate Currency
shall be made or continued as such, nor shall the US Borrower have the right to
convert ABR Loans to LIBOR Loans denominated in US Dollars.
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SECTION 2.13. Pro Rata Treatment and Payments. (i) Each borrowing by
the US Borrower or the Canadian Borrower, as the case may be, from the Lenders
hereunder, and any reduction of the Aggregate US Revolving Loan Commitment or
Aggregate Canadian Revolving Loan Commitment, as the case may be, shall be made
pro rata according to the respective US Revolving Loan Commitment Percentages or
Canadian Revolving Loan Commitment Percentages, as the case may be, of the
relevant Lenders. Each payment (including each prepayment) by any Borrower on
account of principal of and interest on the Loans (other than (w) Alternate
Currency Loans, which shall be payable to (I) with respect to Alternate Currency
Loans denominated in Alternate Currencies other than Canadian Dollars, the
Alternate Currency Fronting Agent, for the benefit of the applicable Alternate
Currency Fronting Lender or (II) with respect to Alternate Currency Loans
denominated in Canadian Dollars, the applicable Alternate Currency Fronting
Lender, (x) Swing Line Loans, which shall be payable to the Swing Line Lender,
(y) US Protective Advances and US Overadvances, which shall be payable to the US
Administrative Agent and (z) Canadian Protective Advances and Canadian
Overadvances, which shall be payable to the Canadian Administrative Agent) shall
be made pro rata according to the respective outstanding principal and interest
amounts of such Loans then held by the relevant Lenders. Subject to Section
2.13(b), all payments (including prepayments) to be made by any Borrower
hereunder and under the other Loan Documents, whether on account of principal,
interest, fees or otherwise, shall be made without setoff, deduction or
counterclaim and shall be made prior to 11:00 a.m., New York City time, on the
due date thereof to the US Administrative Agent or the Canadian Administrative
Agent, as applicable, for the account of the applicable Lenders, at the US
Administrative Agent's or Canadian Administrative Agent's office, as the case
may be, specified in Section 9.2, in US Dollars or Canadian Dollars (or, if
applicable, in the other relevant Alternate Currency), as applicable, and in
immediately available funds. All payments shall be remitted to the applicable
Administrative Agent and all such payments not relating to principal or interest
of specific Loans or not constituting payment of specific fees as specified by
the relevant Borrower, and all proceeds of any Collateral received by such
Administrative Agent, shall be applied pursuant to Section 7.03(b) of the US
Security Agreement or Section 11.06 of the US Security Agreement (or, if
applicable, the relevant provisions of the Canadian Security Agreement), as
applicable. If any payment hereunder (other than payments on the LIBOR Loans)
becomes due and payable on a day other than a US Business Day or Canadian
Business Day, as applicable, such payment shall be extended to the next
succeeding US Business Day or Canadian Business Day, as applicable, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a LIBOR Loan becomes
due and payable on a day other than a Eurodollar Business Day, the maturity
thereof shall be extended to the next succeeding Eurodollar Business Day (and
interest shall continue to accrue thereon at the applicable rate) unless the
result of such extension would be to extend such payment into another calendar
month, in which event such payment shall be made on the immediately preceding
Eurodollar Business Day.
(a) All payments (including prepayments) to be made by the US
Borrower hereunder in respect of Alternate Currency Loans, on account of
principal and interest thereon, shall be made without set off or counterclaim
and shall be made prior to 11:00 a.m., London or Toronto time, as applicable, on
the due date thereof to (i) with respect to Alternate Currency Loans denominated
in Alternate Currencies other than Canadian Dollars, the Alternate Currency
Fronting Agent, for the benefit of the applicable Alternate Currency Fronting
Lender or (ii) with respect to Alternate Currency Loans denominated in Canadian
Dollars, to the applicable Alternate Currency Fronting Lender, in each case at
the Alternate Currency Fronting Agent's or the applicable Alternate Currency
Fronting Lender's, as the case may be, office specified in Section 9.2, in the
currency in which such Alternate Currency Loans are denominated and in
immediately available funds. If any payment of principal or interest of an
Alternate Currency Loan becomes due and payable on a day other than a Eurodollar
Business Day, the maturity thereof shall be extended to the next succeeding
Eurodollar Business Day (and interest shall continue to accrue thereon at the
applicable rate) unless the result of such extension would be to extend such
payment
64
into another calendar month, in which event such payment shall be made on the
immediately preceding Eurodollar Business Day.
SECTION 2.14. Illegality. (a) Notwithstanding any other provision of
this Agreement, if, after the date hereof, (i) (A) the adoption of any law, rule
or regulation after the date of this Agreement, (B) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (C) compliance by the
applicable Alternate Currency Fronting Lender with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement, shall make it unlawful for the
applicable Alternate Currency Fronting Lender to make or maintain any Alternate
Currency Loan or to give effect to its obligations as contemplated hereby with
respect to any Alternate Currency Loan, or (ii) there shall have occurred any
change in national or international financial, political or economic conditions
(including the imposition of or any change in exchange controls, but excluding
conditions otherwise covered by this Section 2.14(a)) or currency exchange rates
which would make it unfeasible for the applicable Alternate Currency Fronting
Lender to make or maintain Alternate Currency Loans denominated in the relevant
currency to, or for the account of, the US Borrower, then, by written notice to
the US Borrower and to the US Administrative Agent:
(i) the applicable Alternate Currency Fronting Lender may declare
that Alternate Currency Loans (in the affected currency or currencies)
will not thereafter (for the duration of such unlawfulness) be made by
such Alternate Currency Fronting Lender hereunder (or be continued for
additional Interest Periods), whereupon any request for a Alternate
Currency Loan (in the affected currency or currencies) or to continue a
Alternate Currency Loan (in the affected currency or currencies), as the
case may be, for an additional Interest Period) shall, as to such Lender
or Lenders only, be of no force and effect, unless such declaration shall
be subsequently withdrawn; and
(ii) the applicable Alternate Currency Fronting Lender may require
that all outstanding Alternate Currency Loans (in the affected currency or
currencies) be repaid on the last day of the then current Interest Period
with respect thereto or, if earlier, the date on which the applicable
notice becomes effective.
For purposes of Section 2.14(a), a notice to the US Borrower by the applicable
Alternate Currency Fronting Lender shall be effective as to each Alternate
Currency Loan made by such Alternate Currency Fronting Lender, if lawful, on the
last day of the Interest Period currently applicable to such Alternate Currency
Loan; in all other cases such notice shall be effective on the date of receipt
thereof by the US Borrower.
(b) If any provision of this Agreement or any of the other Loan
Documents would obligate the Canadian Borrower to make any payment of interest
with respect to the Canadian Obligations or other amount payable to Canadian
Administrative Agent or any Canadian Lender in an amount or calculated at a rate
which would be prohibited by law or would result in a receipt by the Canadian
Administrative Agent or such Canadian Lender of interest with respect to the
Canadian Obligations at a criminal rate (as such terms are construed under the
Criminal Code (Canada)) then, notwithstanding such provision, such amount or
rates shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so
prohibited by law or so result in a receipt by Canadian Administrative Agent or
such Canadian Lender of interest with respect to the Canadian Obligations at a
criminal rate, such adjustment to be effected, to the extent necessary, as
follows:
(i) first, by reducing the amount or rates of interest required to
be paid to the Canadian Administrative Agent or the affected Canadian
Lender under this Section 2.14(b); and
65
(ii) thereafter, by reducing any fees, commissions, premiums and
other amounts required to be paid to the Canadian Administrative Agent or
the affected Canadian Lender which would constitute interest with respect
to the Canadian Obligations for purposes of Section 347 of the Criminal
Code (Canada).
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if the Canadian Administrative Agent or any Canadian
Lender shall have received an amount in excess of the maximum permitted by that
section of the Criminal Code (Canada), then the Canadian Borrower shall be
entitled, by notice in writing to the Canadian Administrative Agent or the
affected Canadian Lender, to obtain reimbursement from the Canadian
Administrative Agent or such Canadian Lender in an amount equal to such excess,
and pending such reimbursement, such amount shall be deemed to be an amount
payable by the Canadian Administrative Agent or such Canadian Lender to the
Canadian Borrower. Any amount or rate of interest under the Canadian Obligations
referred to in this Section 2.14(b) shall be determined in accordance with
generally accepted actuarial practices and principles as an effective annual
rate of interest over the term that any Canadian Revolving Loan Commitment
remains outstanding on the assumption that any charges, fees or expenses that
fall within the meaning of "interest" (as defined in the Criminal Code (Canada))
shall, if they relate to a specific period of time, be pro-rated over that
period of time and otherwise be pro-rated over the period from the Canadian
Trigger Date to the Revolving Loan Commitment Expiration Date and, in the event
of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Canadian Administrative Agent shall be conclusive for the
purposes of such determination.
SECTION 2.15. Increased Costs.
(a) In the event that any change after the Original Closing Date
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law but, if not having the force of law, generally applicable to
and complied with by banks and financial institutions of the same general type
as such Lender in the relevant jurisdiction) from any central bank or other
Governmental Authority made subsequent to the Original Closing Date:
(i) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, letters of credit or guarantees issued by, deposits
or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by,
any office of such Lender or Applicable Lending Office which is not
otherwise included in the determination of the LIBO Rate hereunder;
or
(ii) shall impose on such Lender or Applicable Lending Office
any other condition;
and the result of any of the foregoing is to increase the cost to any Issuing
Bank of issuing or maintaining any Letter of Credit by an amount which such
Issuing Bank reasonably deems to be material, or to such Lender or Applicable
Lending Office by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining LIBOR Loans, or purchasing or
maintaining any participation in a Letter of Credit or an Alternate Currency
Loan, or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, the US Borrower or the Canadian Borrower, as the case may be,
shall immediately pay to the US Administrative Agent or the Canadian
Administrative Agent, as applicable, for the account of such Issuing Bank, such
Lender or such Applicable Lending Office, as applicable, at the request of such
Issuing Bank or such Lender, as applicable, any additional amounts necessary to
compensate such Issuing Bank or such Lender, as applicable, for such increased
cost or
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reduced amount receivable. If any Issuing Bank, any Lender or any Applicable
Lending Office becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the applicable Borrower, through the
applicable Administrative Agent, of the event by reason of which it has become
so entitled. A certificate as to any additional amounts payable pursuant to this
Section submitted by such Issuing Bank, such Lender or such Applicable Lending
Office, through the applicable Administrative Agent, to the US Borrower shall be
prima facie evidence of the accuracy of the information so recorded. This
covenant shall survive the termination of this Agreement, the expiration of the
Letters of Credit and the payment in full of the Loans and all other amounts
payable hereunder.
(b) If, after the Original Closing Date, the introduction of or
any change in any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or administration
thereof, affects the amount of capital required or expected to be maintained by
any Lender or any corporation controlling any Lender, and such Lender (taking
into consideration such Lender's or such corporation's policies with respect to
capital adequacy) reasonably determines that the amount of capital maintained by
such Lender or such corporation which is attributable to or based upon the
Loans, the Acceptance Obligations, the Letters of Credit, the US Revolving Loan
Commitments, the Canadian Revolving Loan Commitments or this Agreement must be
increased as a consequence of such introduction or change by an amount deemed by
such Lender to be material, then, upon demand of the applicable Administrative
Agent at the request of such Lender, the applicable Borrower shall immediately
pay to such Administrative Agent for the account of such Lender, additional
amounts sufficient to compensate such Lender or such corporation for the
increased costs to such Lender or corporation of such increased capital. Any
such demand shall be accompanied by a certificate of such Lender setting forth
in reasonable detail the computation of any such increased costs, which
certificate shall be prima facie evidence of such amounts. This covenant shall
survive the termination of this Agreement, expiration of the Letters of Credit
and the payment in full of the Loans and all other amounts payable hereunder.
SECTION 2.16. Taxes.
(a) All payments made by the US Borrower and the Canadian
Borrower, as applicable, in respect of the Obligations or the Canadian
Obligations, as applicable, shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority or any political subdivision or taxing authority
thereof or therein, other than Excluded Taxes (all such non-Excluded Taxes being
hereinafter called "Taxes"). If any Taxes or Other Taxes are required to be
withheld from any amounts payable or paid to the US Administrative Agent, the
Canadian Administrative Agent or any Lender in respect of the Obligations or the
Canadian Obligations, as the case may be, the amounts so payable or paid to the
applicable Administrative Agent or such Lender shall be increased to the extent
necessary to yield to such Administrative Agent or such Lender (after payment of
all Taxes and Other Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Agreement and the other Loan
Documents. Such Administrative Agent or such Lender, as the case may be, shall
deliver to the applicable Borrower a certificate setting forth the amount of
such Taxes or Other Taxes, the calculation of such Taxes or Other Taxes and an
explanation of the requirement therefor, all in reasonable detail, and such
certificate shall be conclusive, absent manifest error. Whenever any Taxes or
Other Taxes are payable by any Borrower, as promptly as possible thereafter,
such Borrower shall send to the applicable Administrative Agent, for its own
account or for the account of such Lender, as the case may be, a copy of an
original official receipt received by such Borrower showing payment thereof or
such other evidence of payment reasonably satisfactory to such Administrative
Agent. If such Borrower fails to pay any Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the applicable Administrative
Agent the required receipts or other required documentary
67
evidence, such Borrower shall indemnify such Administrative Agent and the
Lenders for any incremental taxes, interest or penalties (and related reasonable
fees and expenses of counsel) that may become payable by such Administrative
Agent or any Lender as a result of any such failure. The agreements in this
Section shall survive the termination of this Agreement, the expiration of the
Letters of Credit and the payment of the Loans and all other amounts payable
hereunder.
(b) In addition, each Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Each Lender that is not a "US Person" as defined in section
7701(a)(30) of the Code (each, a "Non-US Lender") agrees that it will deliver to
the US Borrower and the US Administrative Agent (i) two duly completed copies of
United States Internal Revenue Service Form W-8BEN or W-8ECI (as applicable to
it) or, in the case of a Non-US Lender claiming exemption from United States
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest," a statement substantially in the form of
Exhibit M and a Form W-8BEN. No such form shall be required in respect of
Canadian Revolving Loans, Acceptances or Acceptance Equivalent Loans. Each such
Non-US Lender also agrees to deliver to the US Borrower and the US
Administrative Agent two further copies of the said Form W-8BEN or W-8ECI (as
applicable to it), or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the US Borrower and
the US Administrative Agent, and such extensions or renewals thereof as may
reasonably be requested by the US Borrower or the US Administrative Agent,
unless in any such case an event beyond the control of such Non-US Lender
(including any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Non-US Lender from duly
completing and delivering any such form with respect to it, and such Non-US
Lender so advised the US Borrower and the US Administrative Agent. Each such
Non-US Lender shall certify, pursuant to such Forms, that it is entitled to
receive payments under this Agreement and the other Loan Documents without
deduction or withholding of any United States federal income taxes.
SECTION 2.17. Indemnity. Each Borrower agrees to indemnify each
Lender for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by such Borrower in
making a borrowing of, conversion into or continuation of LIBOR Loans after such
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by such Borrower in making any
prepayment of or conversion from LIBOR Loans after such Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of LIBOR Loans on a day that is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section submitted to the applicable Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
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SECTION 2.18. Unused-Commitment Fees. The US Borrower agrees to pay
to the US Lenders the unused-commitment fee to be shared pro rata among the US
Lenders with respect to the US Revolving Loan Commitments for the period from
and including the Effective Date to but excluding the Revolving Loan Commitment
Expiration Date, based on the daily aggregate Available US Revolving Loan
Commitments from time to time in effect and computed at the Commitment Fee Rate.
The Canadian Borrower agrees to pay to the Canadian Lenders the
unused-commitment fee to be shared pro rata among the Canadian Lenders with
respect to the Canadian Revolving Loan Commitments for the period from and
including the Effective Date to but excluding the Revolving Loan Commitment
Expiration Date, based on the daily aggregate Available Canadian Revolving Loan
Commitments from time to time in effect and computed at the Commitment Fee Rate.
Each fee shall be payable in US Dollars and quarterly in arrears on each Fee
Payment Date, commencing on the first Fee Payment Date to occur after the
Effective Date.
SECTION 2.19. Mitigation of Costs. If any Lender, by changing its
Applicable Lending Office or taking any other reasonable action, so long as
making such change or taking such other action is not disadvantageous to it in
any financial, regulatory or other respect, can mitigate any adverse effect on
the US Borrower or the Canadian Borrower, as applicable, under Section 2.12,
2.14, 2.15 or 2.16, such Lender shall take such action.
SECTION 2.20. Determination of US Dollar Equivalent. (a) No later
than 1:00 P.M., New York City time, on each Calculation Date with respect to any
Canadian Revolving Loan, Alternate Currency Loan or Alternate Currency Letter of
Credit, the US Administrative Agent shall determine the US Dollar Equivalent as
of such Calculation Date with respect to such Canadian Revolving Loan, Alternate
Currency Loan or Alternate Letter of Credit. The US Dollar Equivalent so
determined shall become effective on the relevant Calculation Date (a "Reset
Date"), shall remain effective until the next succeeding Reset Date, except as
otherwise provided, and shall for all purposes of this Agreement be the US
Dollar Equivalent employed in converting any amounts between US Dollars and
Alternate Currencies.
(b) No later than 5:00 P.M., New York City time, on each Reset
Date, the US Administrative Agent shall determine the aggregate amount of the US
Dollar Equivalent of the principal amounts of the Canadian Revolving Loans and
the Alternate Currency Loans then outstanding (after giving effect to any
Canadian Revolving Loans or Alternate Currency Loans to be made or repaid on
such date) and the aggregate amount of the Letter of Credit Exposure in respect
of Alternate Currency Letters of Credit.
(c) The US Administrative Agent shall promptly notify the
applicable Borrower of each determination pursuant to this Section 2.20.
SECTION 2.21. Funding Accounts. The US Borrower delivered to the US
Administrative Agent, on the Original Closing Date, a notice setting forth the
deposit account of the US Borrower (the "US Funding Account") to which each
Administrative Agent (and, with respect to Alternate Currency Loans, each
Alternate Currency Fronting Lender) is authorized by the US Borrower to transfer
the proceeds of any Loans requested pursuant to this Agreement. On or before the
Canadian Trigger Date, the Canadian Borrower shall deliver to the Canadian
Administrative Agent and the US Administrative Agent a notice setting forth the
deposit account of the Canadian Borrower (the "Canadian Funding Account") to
which the Canadian Administrative Agent is authorized by the Canadian Borrower
to transfer the proceeds of any Loans requested pursuant to this Agreement. Each
Borrower may designate a replacement Funding Account from time to time by
written notice to the applicable Administrative Agent. Any designation by each
Borrower of the Funding Account must be reasonably acceptable to such
Administrative Agent.
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SECTION 2.22. Protective Advances and Overadvances. (a) Subject to
the limitations set forth below, the US Administrative Agent is authorized by
the US Borrower and the US Lenders, from time to time in the US Administrative
Agent's sole discretion (but shall have absolutely no obligation to), to make US
Revolving Loans to the US Borrower, on behalf of all US Lenders, in an aggregate
amount outstanding at any time not to exceed 10% of the Aggregate US Revolving
Loan Commitment, which the US Administrative Agent, in its Permitted Discretion,
deems necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to or required to be paid by the US Borrower pursuant to the terms of
this Agreement, including costs, fees, and expenses as described in Section 9.5
(any of such US Revolving Loans are herein referred to as "US Protective
Advances"); provided that, no US Protective Advance shall cause any Lender's US
Credit Exposure to exceed its US Revolving Loan Commitment, or the Aggregate US
Credit Exposure to exceed the Aggregate US Revolving Loan Commitment. US
Protective Advances may be made even if the conditions precedent set forth in
Section 4.3 have not been satisfied. The US Protective Advances shall be secured
by the Liens in favor of the US Administrative Agent in and to the Collateral
and shall constitute Obligations hereunder. All US Protective Advances shall be
ABR Loans, shall bear interest at the rate set forth in Section 2.10(c) and
shall be payable on the earlier of demand or the Revolving Loan Commitment
Expiration Date. The Majority US Lenders may at any time revoke the US
Administrative Agent's authorization to make US Protective Advances. Any such
revocation must be in writing and shall become effective prospectively upon the
US Administrative Agent's receipt thereof. At any time that there is sufficient
US Availability and the conditions precedent set forth in Section 4.3 have been
satisfied, the US Administrative Agent may request the US Revolving Lenders to
make a US Revolving Loan to repay a US Protective Advance. At any other time the
US Administrative Agent may require the US Lenders to fund their risk
participations described in Section 2.22(e).
(b) Subject to the limitations set forth below, the Canadian
Administrative Agent is authorized by the Canadian Borrower and the Canadian
Lenders, from time to time in the Canadian Administrative Agent's sole
discretion (but shall have absolutely no obligation to), to make Canadian
Revolving Loans denominated in Canadian Dollars to the Canadian Borrower, on
behalf of all Canadian Lenders, in an aggregate amount outstanding at any time
not to exceed 10% of the Aggregate Canadian Revolving Loan Commitment, which the
Canadian Administrative Agent, in its Permitted Discretion, deems necessary or
desirable (i) to preserve or protect the Collateral, or any portion thereof,
(ii) to enhance the likelihood of, or maximize the amount of, repayment of the
Loans and other Canadian Obligations, or (iii) to pay any other amount
chargeable to or required to be paid by the Canadian Borrower pursuant to the
terms of this Agreement, including costs, fees, and expenses as described in
Section 9.5 (any of such Canadian Revolving Loans are herein referred to as
"Canadian Protective Advances"); provided that, no Canadian Protective Advance
shall cause any Lender's Canadian Credit Exposure to exceed its Canadian
Revolving Loan Commitment, or the Aggregate Canadian Credit Exposure to exceed
the Aggregate Canadian Revolving Loan Commitment. Canadian Protective Advances
may be made even if the conditions precedent set forth in Section 4.3 have not
been satisfied. The Canadian Protective Advances shall be secured by the Liens
in favor of the Canadian Administrative Agent in and to the Collateral and shall
constitute Canadian Obligations hereunder. All Canadian Protective Advances
shall be Canadian Prime Rate Loans, shall bear interest at the rate set forth in
Section 2.10(c) and shall be payable on the earlier of demand or the Revolving
Loan Commitment Expiration Date. The Majority Canadian Lenders may at any time
revoke the Canadian Administrative Agent's authorization to make Canadian
Protective Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Canadian Administrative Agent's receipt
thereof. At any time that there is sufficient Canadian Availability and the
conditions precedent set forth in Section 4.3 have been satisfied, the Canadian
Administrative Agent may request the Canadian Lenders to make a Canadian
Revolving Loan to repay a Canadian Protective Advance. At any other time the
Canadian
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Administrative Agent may require the Canadian Lenders to fund their risk
participations described in Section 2.22(e).
(c) Any provision of this Agreement to the contrary notwithstanding,
at the request of the US Borrower, the US Administrative Agent may in its sole
discretion (but shall have absolutely no obligation to), make US Revolving Loans
to the US Borrower, on behalf of the US Lenders, in amounts that exceed US
Availability (any such excess Advances are herein referred to collectively as
"US Overadvances"); provided, that, (i) no such event or occurrence shall cause
or constitute a waiver of the US Administrative Agent's, any Alternate Currency
Fronting Lender's or the Lenders' right to refuse to make any further US
Overadvances or other Loans or issue Letters of Credit, as the case may be, at
any time that an US Overadvance exists, and (ii) no US Overadvance shall result
in a Default or an Event of Default due to the US Borrower's failure to comply
with Sections 2.1, 2.2, 2.3, 2.4 or 2.5 for so long as the US Administrative
Agent permits such US Overadvance to remain outstanding, but solely with respect
to the amount of such US Overadvance. In addition, US Overadvances may be made
even if a Default or an Event of Default exists, but may not be made if the
conditions precedent set forth in Section 4.3 have not been satisfied (other
than the conditions set forth in Section 4.3(a)(ii) (solely to the extent such
lack of US Availability is caused by US Borrowing Base noncompliance) and
4.3(c)). All US Overadvances shall be secured by the Liens in favor of the US
Administrative Agent in and to the Collateral and shall constitute Obligations
hereunder. All US Overadvances shall be ABR Loans, shall bear interest at the
rate set forth in Section 2.10(c) and shall be payable on the earlier of demand
or the Revolving Loan Commitment Expiration Date. The authority of the US
Administrative Agent to make US Overadvances is limited to: (x) an aggregate
amount not to exceed US$10,000,000 at any time, (y) US Overadvances (whether
borrowed on the same date or on different dates) may not be outstanding
hereunder for a period of more than thirty days and (z) no US Overadvance shall
cause any Lender's US Credit Exposure to exceed its US Revolving Loan Commitment
or the Aggregate US Credit Exposure to exceed the Aggregate US Revolving Loan
Commitment; provided that, the Majority US Lenders may at any time revoke the US
Administrative Agent's authorization to make US Overadvances. Any such
revocation must be in writing and shall become effective prospectively upon the
US Administrative Agent's receipt thereof.
(d) Any provision of this Agreement to the contrary notwithstanding,
at the request of the Canadian Borrower, the Canadian Administrative Agent may
in its sole discretion (but shall have absolutely no obligation to), make
Canadian Revolving Loans denominated in Canadian Dollars to the Canadian
Borrower, on behalf of the Canadian Lenders, in amounts that exceed Canadian
Availability (any such excess Advances are herein referred to collectively as
"Canadian Overadvances"); provided, that, (i) no such event or occurrence shall
cause or constitute a waiver of the Canadian Administrative Agent's or the
Canadian Lenders' right to refuse to make any further Canadian Overadvances or
other Loans or issue Acceptances, as the case may be, at any time that an
Canadian Overadvance exists, and (ii) no Canadian Overadvance shall result in a
Default or an Event of Default due to the Canadian Borrower's failure to comply
with Sections 2.1, 2.2, 2.3. 2.4 or 2.5 for so long as the Canadian
Administrative Agent permits such Canadian Overadvance to remain outstanding,
but solely with respect to the amount of such Canadian Overadvance. In addition,
Canadian Overadvances may be made even if a Default or an Event of Default
exists, but may not be made if the conditions precedent set forth in Section 4.3
have not been satisfied (other than the conditions set forth in Section
4.3(a)(ii) (solely to the extent such lack of Canadian Availability is caused by
Canadian Borrowing Base noncompliance) and 4.3(c)). All Canadian Overadvances
shall be secured by the Liens in favor of the Canadian Administrative Agent in
and to the Collateral and shall constitute Canadian Obligations hereunder. All
Canadian Overadvances shall be Prime Rate Loans, shall bear interest at the rate
set forth in Section 2.10(c) and shall be payable on the earlier of demand or
the Revolving Loan Commitment Expiration Date. The authority of the Canadian
Administrative Agent to make Canadian Overadvances is limited to: (x) an
aggregate amount not to exceed US$1,000,000 at any time, (y) Canadian
Overadvances (whether
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borrowed on the same date or on different dates) may not be outstanding
hereunder for a period of more than thirty days and (z) no Canadian Overadvance
shall cause any Lender's Canadian Credit Exposure to exceed its Canadian
Revolving Loan Commitment or the Aggregate Canadian Credit Exposure to exceed
the Aggregate Canadian Revolving Loan Commitment; provided that, the Majority
Canadian Lenders may at any time revoke the Canadian Administrative Agent's
authorization to make Canadian Overadvances. Any such revocation must be in
writing and shall become effective prospectively upon the Canadian
Administrative Agent's receipt thereof.
(e) Upon the making of a Protective Advance or an Overadvance by the
US Administrative Agent or the Canadian Administrative Agent, as the case may be
(whether before or after the occurrence of a Default or an Event of Default and
regardless of whether the applicable Administrative Agent has requested a
Settlement with respect to such Protective Advance or Overadvance), such
Administrative Agent shall be deemed, without further action by any party
hereto, to have unconditionally and irrevocably sold to each US Lender or
Canadian Lender, as applicable, and each US Lender or Canadian Lender, as
applicable, shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the applicable Administrative
Agent, without recourse or warranty, an undivided interest and participation in
such Protective Advance or Overadvance in proportion to its US Revolving Loan
Commitment Percentage or Canadian Revolving Loan Commitment Percentage, as the
case may be. From and after the date, if any, on which any Lender is required to
fund its participation in any Protective Advance or Overadvance purchased
hereunder, the US Administrative Agent or the Canadian Administrative Agent, as
the case may be, shall promptly distribute to such US Lender or such Canadian
Lender, as the case may be, such Lender's US Revolving Loan Commitment
Percentage or Canadian Revolving Loan Commitment Percentage, as the case may be,
of all payments of principal and interest and all proceeds of Collateral
received by the applicable Administrative Agent in respect of such Protective
Advance or Overadvance.
SECTION 2.23. Replacement of Lenders Under Certain Circumstances.
The US Borrower shall be permitted to replace with a financial institution any
Lender that (a) requests reimbursement for amounts owing pursuant to Section
2.15 or 2.16 or gives a notice of illegality pursuant to Section 2.14, (b)
defaults in its obligation to make Loans hereunder, or (c) that has refused to
consent to any waiver or amendment with respect to any Loan Document that has
been consented to by the Super-Majority Lenders, provided, that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.19 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 2.15 or 2.16 or to eliminate such illegality pursuant
to Section 2.14, (iv) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (v) the relevant Borrower shall be liable to such
replaced Lender under Section 2.17 (as though Section 2.17 were applicable) if
any LIBOR Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (vi) the replacement
financial institution shall be reasonably satisfactory to the applicable
Administrative Agent, the applicable Alternate Currency Fronting Lender and each
Issuing Bank (such consent not to be unreasonably withheld), (vii) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 9.6 (provided, that the US Borrower shall be obligated to
pay (or cause to be paid) the registration and processing fee referred to
therein), (viii) the relevant Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.15 or 2.16, as the case may be, in respect of any
period prior to the date on which such replacement shall be consummated, (ix)
any such replacement shall not be deemed to be a waiver of any rights that the
relevant Borrower, the applicable Administrative Agent or any other Lender shall
have against the replaced Lender and (x) such replacement Lender shall, with
respect to clause (c) above, agree to consent to such amendment or waiver.
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SECTION 2.24. Settlement. Each US Lender's or Canadian Lender's, as
the case may be, funded portion of the US Revolving Loans or Canadian Revolving
Loans, as the case may be, is intended by the relevant Lenders to be equal at
all times to such Lender's US Revolving Loan Commitment Percentage or Canadian
Revolving Loan Commitment Percentage, as the case may be, of the outstanding US
Revolving Loans or Canadian Revolving Loans, as the case may be. Notwithstanding
such agreement, the Administrative Agents and the Lenders agree (which agreement
shall not be for the benefit of or enforceable by the Loan Parties) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the US Revolving Loans and the Canadian
Revolving Loans, as applicable, including the applicable Protective Advances and
the applicable Overadvances, shall take place on a periodic basis as follows.
The US Administrative Agent and the Canadian Administrative Agent shall request
settlement (a "Settlement") with the US Lenders or the Canadian Lenders, as
applicable, on at least a weekly basis, or on a more frequent basis at either
Administrative Agent's election, by notifying the US Lenders or Canadian
Lenders, as applicable, of such requested Settlement by telecopy, telephone, or
e-mail no later than 1:00 p.m. New York city time on the date of such requested
Settlement (the "Settlement Date"). Each US Lender (other than the US
Administrative Agent, in the case of the US Protective Advances and US
Overadvances) shall transfer the amount of such Lender's US Revolving Loan
Commitment Percentage of the outstanding principal amount of the applicable Loan
with respect to which Settlement is requested to the US Administrative Agent, to
such account of the US Administrative Agent as the US Administrative Agent may
designate, not later than 3:00 p.m. (New York City time) on the Settlement Date
applicable thereto. Each Canadian Lender (other than the Canadian Administrative
Agent, in the case of the Canadian Protective Advances and Canadian
Overadvances) shall transfer the amount of such Lender's Canadian Revolving Loan
Commitment Percentage of the outstanding principal amount of the applicable Loan
with respect to which Settlement is requested to the Canadian Administrative
Agent, to such account of the Canadian Administrative Agent as the Canadian
Administrative Agent may designate, not later than 3:00 p.m. (New York City
time) on the Settlement Date applicable thereto. Settlements may occur during
the existence of a Default or an Event of Default and whether or not the
applicable conditions precedent set forth in Section 4.3 have then been
satisfied. Any such amounts transferred to the US Administrative Agent shall be
applied against the amounts of the applicable Loan and, together with the US
Administrative Agent's US Revolving Loan Commitment Percentage of such US
Protective Advance or US Overadvance, shall constitute US Revolving Loans of
such US Lenders, respectively. Any such amounts transferred to the Canadian
Administrative Agent shall be applied against the amounts of the applicable Loan
and, together with the Canadian Administrative Agent's Canadian Revolving Loan
Commitment Percentage of such Canadian Protective Advance or Canadian
Overadvance, shall constitute Canadian Revolving Loans of such Canadian Lenders,
respectively. If any such amount is not transferred to the applicable
Administrative Agent by any relevant Lender on the Settlement Date applicable
thereto, such Administrative Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at a rate equal to the
greater of the daily average Federal Funds Effective Rate and a rate determined
by such Administrative Agent in accordance with banking industry rules on
interbank compensation for the period until such Lender makes such amount
immediately available to such Administrative Agent. If such amount is not made
available to such Administrative Agent by such Lender within three US Business
Days of such due date, such Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans (with respect to amounts owed to the US Administrative Agent) or
Canadian Prime Rate Loans (with respect to amounts owed to the Canadian
Administrative Agent), on demand.
ARTICLE III REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Agents to enter into this Agreement, to
induce each Alternate Currency Fronting Lender to make the Alternate Currency
Loans, induce the Lenders to make the Revolving Loans and the US Lenders to
participate in the Letters of Credit and the Alternate Currency
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Loans, to induce the Canadian Lenders to issue Acceptances, to induce the
Administrative Agents to make Protective Advances and Overadvances and to induce
the Issuing Banks to issue the Letters of Credit, Quiksilver, the US Borrower
and (on and after the Canadian Trigger Date) the Canadian Borrower hereby
severally represent and warrant to the Agents and each Lender that:
SECTION 3.1. Organization and Good Standing. Quiksilver and each
Subsidiary (a) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (b) has all requisite power and
authority (corporate, partnership, limited liability company and otherwise) to
own its properties and to conduct its business as now conducted and as currently
proposed to be conducted and (c) except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is duly qualified to conduct business in, and is currently in
good standing in, every jurisdiction where such qualification is required. Each
jurisdiction in which Quiksilver and each Subsidiary is organized or is
qualified to conduct business is listed on Schedule 3.1. In addition, Schedule
3.1 separately sets forth, for each Loan Party, the type of entity, the
organizational number issued to it by its state of organization and its federal
employer identification number.
SECTION 3.2. Power and Authority. The US Borrower has, and the
Canadian Borrower will have (on and after the Canadian Trigger Date), all
requisite power and authority under applicable Requirements of Law to borrow
hereunder. Quiksilver and each other Loan Party has all requisite power and
authority under applicable Requirements of Law to execute, deliver and perform
the obligations under the Loan Documents to which it is a party. All actions,
waivers and consents (corporate, regulatory and otherwise) necessary for each
Loan Party to execute, deliver and perform the Loan Documents to which it is a
party have been taken and/or received.
SECTION 3.3. Validity and Legal Effect. This Agreement constitutes,
and the other Loan Documents to which any Loan Party is a party constitute (or
will constitute when executed and delivered), the legal, valid and binding
obligations of such Loan Party enforceable against it in accordance with the
terms thereof, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 3.4. No Violation of Laws or Agreements. The execution,
delivery and performance of the Loan Documents (a) will not violate or
contravene any material Requirement of Law, (b) will not result in any material
breach or violation of, or constitute a material default under, any material
agreement or instrument by which Quiksilver or any Subsidiary or any of their
respective properties may be bound, and (c) will not result in or require the
creation of any Lien (other than pursuant to the Loan Documents) upon or with
respect to any properties of Quiksilver or any Subsidiary, whether such
properties are now owned or hereafter acquired. To the knowledge of Quiksilver
and the US Borrower, the Target is not, nor will it be upon the consummation of
the Transaction, in default under or with respect to any agreements evidencing
Indebtedness of the Target.
SECTION 3.5. Title to Assets; Existing Encumbrances. Each of
Quiksilver and its Subsidiaries has good and marketable title to all Properties
purported to be owned thereby, free and clear of any Liens, except (i) the Liens
granted to the applicable Administrative Agent for the benefit of the relevant
Lenders under the Loan Documents, (ii) the other Liens against the assets of
Quiksilver and each Subsidiary set forth on Schedule 3.5A and (iii) Permitted
Liens. The property and assets of Quiksilver and its Subsidiaries are in good
order and repair (ordinary wear and tear excepted) and are fully covered by the
insurance required under the Loan Documents. Neither Quiksilver nor any Material
Domestic Subsidiary or Additional Domestic Guarantor or Canadian Subsidiary has
used (or permitted the filing of any financing statement under) any legal or
operating name at any time during the twelve consecutive
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calendar months immediately preceding the execution of this Agreement, except as
identified on Schedule 3.5B.
SECTION 3.6. Taxes and Assessments. Except as otherwise identified
on Schedule 3.6, each of Quiksilver and its Subsidiaries has timely filed all
required tax returns and reports (federal, state and local) or has properly
filed for extensions of the time for the filing thereof. Except as otherwise
identified on Schedule 3.6, neither Quiksilver nor the US Borrower has knowledge
of any deficiency, penalty or additional assessment due or appropriate in
connection with any such taxes. All taxes (federal, state and local) imposed
upon Quiksilver or any Subsidiary or any of its properties, operations or income
have been paid and discharged prior to the date when any interest or penalty
would accrue for the nonpayment thereof, except for (a) those taxes being
contested in good faith by appropriate proceedings diligently prosecuted and
with adequate reserves reflected on the financial statements in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect. There are no taxes imposed on
Quiksilver or its Subsidiaries by any political subdivision or taxing authority
due or payable either on or by virtue of the execution and delivery by the Loan
Parties, the Agents, or the Lenders of this Agreement or any other Loan Document
to which the Loan Parties are party, or on any payment to be made by the Loan
Parties pursuant hereto or thereto.
SECTION 3.7. Litigation and Legal Proceedings. Except as disclosed
on Schedule 3.7, there is no litigation, claim, investigation, administrative
proceeding, labor controversy or similar action that is pending or, to the best
of Quiksilver's knowledge, threatened (i) with respect to any Loan Document or
the transactions contemplated thereby or (ii) against Quiksilver or any
Subsidiary that, if adversely resolved, could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.8. Bank Accounts. As of the Effective Date, Schedule 3.8
contains a complete and accurate list of all bank accounts maintained by each
Loan Party with any bank or other financial institution.
SECTION 3.9. Accuracy of Financial Information. (a) All financial
information (other than the Projected Pro Forma Balance Sheet and the Monthly
Reports) previously furnished to the US Administrative Agent and the Lenders
that was prepared by or on behalf of the US Borrower concerning the financial
condition and operations of Quiksilver and its Subsidiaries, including the
audited consolidated financial statements of Quiksilver as of October 31, 2002,
October 31, 2003 and October 31, 2004, for the applicable fiscal year then ended
and the unaudited consolidated financial statements of Quiksilver as of January
31, 2003, January 31, 2004 and January 31, 2005 for the applicable 3-month
fiscal period then ended, (A) has been prepared in accordance with GAAP
consistently applied (provided that the unaudited financial statements are
subject to normal year-end audit adjustments and do not include all of the
footnotes required under GAAP for annual financial statements), (B) is true,
accurate and complete in all material respects, (C) fairly presents the
financial condition of the organizations covered thereby as of the dates and for
the periods covered thereby and (D) discloses all material liabilities
(contingent and otherwise) of Quiksilver and its Subsidiaries. The Monthly
Reports have been prepared based on the books and records of Quiksilver and its
Subsidiaries for use by senior and financial management of Quiksilver and its
Subsidiaries and present fairly in all material respects the financial condition
of the organizations covered thereby as of the dates and for the periods covered
thereby. The Projected Pro Forma Balance Sheet has been prepared based on the
best information available to the US Borrower as of the date of delivery
thereof, and, to the knowledge of the US Borrower, presents fairly in all
material respects on a pro forma basis the estimated financial position of
Quiksilver and its consolidated Subsidiaries as at January 31, 2005 (with
respect to Quiksilver and its Subsidiaries (other than the Target and its
Subsidiaries)) and as at September 30, 2004 (with respect to the Target and its
Subsidiaries), assuming that the Transaction had been consummated on such date.
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(b) Since October 31, 2004 there has been no event or condition
resulting in a Material Adverse Effect.
SECTION 3.10. Accuracy of Other Information. All information
contained in any material application, schedule, report, certificate, or any
other document (including any Customer List) given to the Agents or any Lender
by Quiksilver, the US Borrower, the Canadian Borrower or any other Person on
behalf of either Borrower in connection with the Loan Documents is (or, in the
case of information concerning the Target or any of its Subsidiaries, is, to the
best knowledge of Quiksilver and the US Borrower) in all material respects true,
accurate and complete, and no such Person has omitted to state therein (or
failed to include in any such document) any material fact or any fact necessary
to make such information not misleading. All projections given to the Agents or
any Lender by the Quiksilver, the US Borrower, the Canadian Borrower or any
other Person on behalf of either Borrower have been prepared with a reasonable
basis and in good faith making use of such information as was available at the
date such projection was made. The projections and pro forma financial
information contained in such materials are based upon good faith estimates and
assumptions believed by the US Borrower to be reasonable at the time made and as
of the Original Closing Date, it being recognized that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results.
SECTION 3.11. Compliance with Laws Generally. Each of Quiksilver and
its Subsidiaries is in compliance in all material respects with all Requirements
of Law applicable to it, its operations and its properties.
SECTION 3.12. Employee Benefit Plans Compliance. (a) Each of
Quiksilver, each Subsidiary and each Plan is in compliance in all material
respects with all applicable provisions of ERISA and the Code, and all rules,
regulations and orders implementing ERISA and the Code.
(b) Neither Quiksilver nor any Subsidiary or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which Quiksilver, such Subsidiary or any ERISA
Affiliate thereof could have any withdrawal liability.
(c) Neither Quiksilver nor any Subsidiary or any ERISA Affiliate
thereof sponsors, maintains or contributes to any Plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived.
(d) The liability for accrued benefits under each Plan that will be
sponsored, maintained or contributed to by Quiksilver, any Subsidiary or any
ERISA Affiliate thereof (determined on the basis of the actuarial assumptions
utilized by the PBGC) does not exceed the aggregate fair market value of the
assets under each such Plan.
(e) The aggregate liability of Quiksilver, each Subsidiary and each
ERISA Affiliate thereof arising out of or relating to a failure of any Plan to
comply with provisions of ERISA or the Code will not have a Material Adverse
Effect.
(f) There does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the Plan in preparing
the most recent annual report) of Quiksilver, any Subsidiary or any ERISA
Affiliate thereof under any Plan, program or arrangement providing
post-retirement, life or health benefits.
(g) No Reportable Event and no Prohibited Transaction (as defined in
ERISA) has occurred or is occurring with respect to any Plan with which
Quiksilver or any Subsidiary is associated.
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(h) To the extent that Quiksilver or any Subsidiary is subject to
the pension law of any jurisdiction other than the United States, each of the
representations contained in Sections 3.13(a) through (g) would be true and
correct if (i) a reference to the corresponding provisions of such foreign
pension law were substituted for any reference to "ERISA" and the "Code" therein
or in the definition of any defined term used therein; (ii) any reference to an
"ERISA Affiliate" were deemed to be a reference to any person or entity with
respect to which Quiksilver or any Subsidiary would have secondary or joint and
several liability under such foreign pension law; and (iii) to the extent the
foreign jurisdiction has a pension benefit insurance agency comparable to the
PBGC, a reference to such agency were substituted for each reference to the PBGC
therein
(i) As of the Canadian Trigger Date, Schedule 3.12 shall list all
Canadian Benefit Plans and Canadian Pension Plans maintained or contributed to
by Canadian Loan Parties as of such date. The Canadian Pension Plans are duly
registered under all applicable laws which require registration and no event has
occurred which is reasonably likely to cause the loss of such registered status.
All material obligations of each Canadian Loan Party (including fiduciary,
funding, investment and administration obligations) required to be performed in
connection with the Canadian Pension Plans and the funding agreements therefor
have been performed in a timely fashion. There have been no improper withdrawals
or applications of the assets of the Canadian Pension Plans or the Canadian
Benefit Plans. There are no material outstanding disputes concerning the assets
held under the funding agreements for the Canadian Pension Plans or the Canadian
Benefit Plans. Each of the Canadian Pension Plans is fully funded both on a
going concern basis and on a solvency basis (using actuarial methods and
assumptions which are consistent with the valuations last filed with the
applicable Governmental Authorities and which are consistent with generally
accepted actuarial principles). No promises of benefit improvements under the
Canadian Pension Plans or the Canadian Benefit Plans have been made except where
such improvement could not reasonably be expected to have a Material Adverse
Effect and in any event no such improvements could reasonably be expected to
result in a solvency deficiency or going concern unfunded liability in the
affected Canadian Pension Plans. All contributions or premiums required to be
made or paid by any Canadian Loan Party to the Canadian Pension Plans or the
Canadian Benefit Plans have been made or paid in a timely fashion in accordance
with the terms of such plans and all applicable laws, except for the failure to
make any contribution or premium which (i) could not reasonably be expected to
result in a Material Adverse Effect and (ii) is disclosed in writing to the
Canadian Administrative Agent and the Canadian Lenders (with any supporting
documentation as reasonably requested by the Canadian Administrative Agent or
any Canadian Lender). All employee contributions to the Canadian Pension Plans
or the Canadian Benefit Plans by way of authorized payroll deduction or
otherwise have been properly withheld or collected by and fully paid into such
plans in a timely manner. The pension fund under each Canadian Pension Plan is
exempt from the payment of any income tax and there are no taxes, penalties or
interest owing in respect of any such pension fund which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
All material reports and disclosures relating to the Canadian Pension Plans
required by such plans and any applicable laws to be filed or distributed have
been filed or distributed in a timely manner. Except as shall be set forth on
Schedule 3.12, there are no material outstanding disputes concerning the assets
of the Canadian Pension Plans or the Canadian Benefit Plans.
SECTION 3.13. Environmental Compliance. (a) Each of Quiksilver and
each Subsidiary has received all permits and made all filings and notifications
necessary under and is otherwise in compliance in all material respects with all
applicable Environmental Laws.
(b) Neither Quiksilver nor any Subsidiary has given any written or
oral notice to any Governmental Authority with regard to any actual or
imminently threatened removal, storage, transportation, spill, release or
discharge of any Materials of Environmental Concern either (i) on properties now
or formerly owned, operated or leased by Quiksilver or any Subsidiary or (ii)
otherwise in
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connection with the conduct of its business and operations, and there is no
basis for giving any such notice.
(c) Neither Quiksilver nor any Subsidiary has received any written
request for information, or been notified that it is potentially responsible for
costs of clean-up of any actual or imminently threatened spill, release or
discharge of any Materials of Environmental Concern or with respect to any
Environmental Laws, and there is no basis for any such request or notice.
(d) No judicial proceeding or governmental or administrative action
is pending, or, to the knowledge of Quiksilver or either Borrower, threatened,
under or relating to any Environmental Laws to which Quiksilver or any
Subsidiary is named as a party, nor are there any consent decrees or ether
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Laws
with respect to Quiksilver, any Borrower, any Subsidiary or the Properties.
(e) To the knowledge of Quiksilver and the US Borrower, except as
set forth in Schedule 3.13, neither Quicksilver nor any Subsidiary has assumed
or retained, by contract or operation of law, any liabilities of any kind, fixed
or contingent, known or unknown, under any Environmental Law or with respect to
any Materials of Environmental Concern that could reasonably be expected to
result in a material liability to any of them.
SECTION 3.14. Federal Regulations. No Letter of Credit and no part
of the proceeds of any Loans are intended to be or will be used, directly or
indirectly for any purpose which violates the provisions of the Regulations of
the Board of Governors of the Federal Reserve System. If requested by any Lender
or any Agent, the applicable Borrower will furnish to each Agent and each Lender
a statement to the foregoing effect in conformity with the requirements of Form
U-1 referred to in Regulation U.
SECTION 3.15. Fees and Commissions. Except as required by Section
2.18, neither Quiksilver nor any Subsidiary owes or will owe any fees or
commissions of any kind in connection with this Agreement or the transactions
contemplated hereby, and Quiksilver does not know of any claim (or any basis for
any claim) for any fees or commissions in connection with this Agreement or such
transactions.
SECTION 3.16. Solvency. Immediately prior to, upon and immediately
following the execution of this Agreement, Quiksilver, both individually and
together with its Subsidiaries, was, is and will be Solvent.
SECTION 3.17. Investment Company Act. Neither Quiksilver nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.18. Nature of Business. Neither Quiksilver nor any
Subsidiary is engaged in any business other than the ownership and operation of
retail apparel stores, the design, sourcing , manufacture and distribution of
consumer products and services, primarily apparel and accessories, and the
marketing, advertising and promotion of those products and services, and the
lifestyle associated with such products and services.
SECTION 3.19. Ranking of Loans. This Agreement and the other Loan
Documents to which each Borrower is, or will be, a party, when executed, and the
Loans and Acceptances, when borrowed are and will be the direct and general
obligations of the applicable Borrower. Each Borrower's
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obligations hereunder and thereunder rank and will rank at least pari passu in
priority of payment to all other senior Indebtedness of such Borrower.
SECTION 3.20. Intellectual Property. Each of Quiksilver and its
Subsidiaries owns, or is licensed to use, all Intellectual Property Rights
necessary for the conduct of its business as currently conducted in all material
respects. No material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property Rights of
Quiksilver or any of its Subsidiaries or the validity or effectiveness of any
such Intellectual Property Rights, nor does Quiksilver or the US Borrower know
of any valid basis for any such claim. To the knowledge of Quiksilver and the US
Borrower, the use of Intellectual Property Rights by Quiksilver and each of its
Subsidiaries does not infringe on the rights of any Person in any material
respect.
SECTION 3.21. Security Interest in Collateral. The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the US Administrative Agent or (on and after the
Canadian Trigger Date) the Canadian Administrative Agent, as the case may be,
for the benefit of such Administrative Agent and the relevant Lenders, and such
Liens constitute perfected and continuing Liens on the applicable Collateral,
securing the Obligations or Canadian Obligations, as the case may be,
enforceable against the applicable Loan Party and all third parties, and having
priority over all other Liens on such Collateral except in the case of (a)
Permitted Liens, to the extent any such Permitted Liens would have priority over
the Liens in favor of such Administrative Agent pursuant to any applicable law
and (b) Liens perfected only by possession (including possession of any
certificate of title) to the extent the applicable Administrative Agent has not
obtained or does not maintain possession of such Collateral.
SECTION 3.22. Insurance. Schedule 3.22 lists in all material
respects all insurance policies of any nature maintained, as of the Effective
Date, by Quiksilver and each Subsidiary, as well as a summary of the terms of
each such policy.
SECTION 3.23. Representations and Warranties Contained in the
Purchase Agreement Documentation and the Bridge Loan Agreement Documentation.
Each of the Purchase Agreement Documentation and the Bridge Loan Agreement
Documentation (in each case, to the extent executed and delivered on or before
the Effective Date) have been duly executed and delivered by Quiksilver, the US
Borrower and each Subsidiary party thereto and, to the best knowledge of
Quiksilver and the US Borrower, have been duly executed and are in full effect.
The representations and warranties of Quiksilver and the US Borrower, and the
representations and warranties of the Subsidiaries party thereto, are accurate
and correct in all material respects with respect to each of the Purchase
Agreement Documentation and the Bridge Loan Agreement Documentation.
ARTICLE IV CONDITIONS TO BORROWING
SECTION 4.1. Conditions to Closing. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions precedent
(a) Credit Agreement. The US Administrative Agent shall have
received this Agreement, duly executed and delivered by Quiksilver, the US
Borrower, the Agents and each of the US Lenders, together with the
acknowledgment by each of the US Guarantors set forth in the signature pages
hereof.
(b) Other Loan Documents. The US Administrative Agent shall have
received (i) the US Revolving Notes (to the extent requested by the relevant
Lender) and (ii) all other agreements
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or instruments required to create or perfect a security interest in the
applicable Collateral, in each case executed and delivered by officers of the US
Borrower and the US Guarantors, as applicable.
(c) Purchase Agreement and Tender Offer Documentation. The Purchase
Agreement shall not have been amended, waived or otherwise modified, except with
respect to any such amendment, waiver or other modification which is in form and
substance reasonably satisfactory to the Administrative Agents and which shall
have been received by the Administrative Agents. The Lenders shall have received
the most recent drafts of the Tender Offer Documentation, and such documentation
shall be, in each case, in form and substance reasonably satisfactory to the
Lenders.
(d) Fees and Costs. The US Lenders and the Administrative Agents
shall have received all fees required to be paid, and all expenses for which
invoices have been presented (including the reasonable fees and expenses of
legal counsel), on or before the Effective Date.
(e) Approvals. All governmental and third party approvals necessary
in connection with this Agreement and the continuing operations of Quiksilver
and its Subsidiaries and the transactions contemplated hereby shall have been
obtained and be in full force and effect, and all applicable waiting periods
shall have expired without any action being taken or threatened by any competent
authority that would restrain, prevent or otherwise impose adverse conditions on
the financing contemplated hereby.
(f) Financial Statements; Projected Pro Forma Balance Sheet. The
Lenders shall have received (i) audited financial statements of Quiksilver and
the Target, in each case for the three most recent fiscal years, (ii) unaudited
interim consolidated financial statements of Quiksilver for each quarterly
period ended after the latest fiscal year referred to in clause (i) above (other
than financial statements for the fiscal quarter ended April 30, 2005) and such
unaudited consolidated financial statements for the same period of the prior
fiscal year, (iii) unaudited interim consolidated financial statements of the
Target for each semi-annual period ended after the latest fiscal year referred
to in clause (i) above and such unaudited consolidated financial statements for
the same period of the prior fiscal year, (iv) to the extent available to
management, monthly financial data generated by Quiksilver's internal accounting
systems for use by senior and financial management or any monthly financial data
of the Target available to Quiksilver (collectively, the "Monthly Reports") for
each month ended after the latest fiscal period referred to in clause (ii) or
(iii) above, as applicable and (v) the Projected Pro Forma Balance Sheet. The
foregoing financial statements and Monthly Reports shall not reflect any
material adverse change in the consolidated financial condition of Quiksilver
and its subsidiaries or the Target and its subsidiaries from what was reflected
in the financial statements previously furnished to the Lenders.
(g) Projections. The Lenders shall have received satisfactory
projections through 2010, which shall include monthly projections for the 2005
fiscal year.
(h) Filings, Registrations and Recordings. Each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the US Administrative Agent to
be filed, registered or recorded in order to create in favor of the US
Administrative Agent, for the benefit of the Lenders, a perfected Lien on the
Collateral described therein, prior and superior in right to any other Person
(other than with respect to Permitted Liens), shall have been filed.
(i) Pledged Stock; Stock Powers; Pledged Notes. The US
Administrative Agent shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Security Documents, together
with an undated stock power for each such certificate executed in blank by a
duly Responsible Officer of the pledgor thereof and (ii) each promissory note
(if any) pledged to the US
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Administrative Agent pursuant to the Security Documents endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.
(j) Legal Opinions. The US Administrative Agent shall have received
the legal opinion of Xxxxxx & X'Xxxx LLP, counsel to Quiksilver and its
Subsidiaries, substantially in the form of Exhibit L. This legal opinion shall
cover such other matters incident to the transactions contemplated by this
Agreement as the US Administrative Agent may reasonably require.
(k) Borrowing Base Certificate. The US Borrower shall have delivered
a US Borrowing Base Certificate which calculates the US Borrowing Base, as of a
date no more than thirty days prior to the Effective Date, with customary
supporting documentation and supplemental reporting in form and substance
reasonably satisfactory to the US Administrative Agent.
(l) Secretary's Certificates. The US Administrative Agent shall have
received certificates dated as of the Effective Date of the Secretary or an
Assistant Secretary of each US Loan Party, in each case attaching (i) a copy of
the resolutions of the Board of Directors of such US Loan Party, authorizing (A)
the execution, delivery and performance of the Loan Documents to which such US
Loan Party is party and (B) in the case of the US Borrower, the borrowings
contemplated hereunder, (ii) copies of the Organic Documents of such US Loan
Party and (iii) a certificate, dated a recent date, of the Secretary of State of
the state of formation of such US Loan Party and each other jurisdiction where
such US Loan Party is required to be qualified to do business under such
jurisdiction's law, certifying as to the existence and good standing of, and the
payment of taxes by, each US Loan Party in such state.
(m) No Default / Representations. No Default shall have occurred and
be continuing on the Effective Date or would occur after giving effect to the US
Revolving Loans requested to be made, or Letters of Credit requested to be
issued, on the Effective Date, and the representations and warranties contained
in this Agreement and each other Loan Document and certificate or other writing
delivered to the Lenders in satisfaction of the conditions set forth in this
Section 4.1 prior to or on the Effective Date shall be correct in all material
respects on and as of the Effective Date, and the US Administrative Agent shall
have received a certificate of the US Borrower to such effect in the form of
Exhibit C, dated as of the Effective Date and executed by a Responsible Officer
of the US Borrower.
(n) Regulatory Matters. All legal (including tax implications) and
regulatory matters, including, but not limited to compliance with applicable
requirements of Regulations U, T and X of the Board of Governors of the Federal
Reserve System, shall be reasonably satisfactory to the Administrative Agents
and the Lenders.
(o) Subsidiary Certificate. The US Borrower shall have delivered to
the US Administrative Agent a closing certificate, which shall set forth (a) a
correct and complete list of the name and relationship to Quiksilver of each and
all of Quiksilver's Material Domestic Subsidiaries and Material Foreign
Subsidiaries and of each Additional Domestic Guarantor, (b) the location of the
chief executive office of Quiksilver, each Material Domestic Subsidiary and each
Additional Domestic Guarantor and each other location where any of them have
maintained their chief executive office in the past five years, (c) a true and
complete listing of each class of each of Quiksilver's authorized Capital Stock,
of which all of such issued shares are validly issued, outstanding, fully paid
and non-assessable, and owned beneficially and of record by the Persons
identified on such closing certificate, and (d) the type of entity of
Quiksilver, each of its Material Domestic Subsidiaries and each of the
Additional Domestic Guarantors. With respect to each Loan Party, such closing
certificate shall also set forth the employer or taxpayer identification number
of each Loan Party and the organizational identification number issued by each
Loan Party's jurisdiction of organization or a statement that no such number has
been issued.
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Upon the satisfaction (in the good faith judgment of the US Administrative
Agent) of the foregoing conditions, the US Administrative Agent shall notify the
US Borrower and the Lenders of the satisfaction thereof, and such notice shall
be conclusive and binding. Upon the receipt of such notice, the Lenders shall
make available to the US Administrative Agent an amount equal to the Loan or
Loans to be made by such Lender as contemplated in Section 2.1, and the US
Administrative Agent shall use such funds to repay in full the outstanding
principal amount of the Existing Loans under the Existing Credit Agreement
(other than the Existing Loans of any Lender who has requested that all or a
portion of the aggregate amount of the Existing Loans of such Lender be deemed
to satisfy the funding requirement as contemplated by the second proviso in
Section 2.1(a)), and the Effective Date shall be deemed to occur when such
transfer has been made.
SECTION 4.2. Conditions to Canadian Revolving Loans, Acceptances and
Acceptance Equivalent Loans. The obligation of each Canadian Lender to make
Canadian Revolving Loans and Acceptance Equivalent Loans and issue Acceptances
hereunder is subject to the satisfaction of the following conditions precedent:
(a) Notice of Canadian Revolving Commitment Utilization. The US
Borrower shall have delivered to the US Administrative Agent and the Canadian
Administrative Agent a notice setting forth: (i) its desire to put in place
Canadian Revolving Loan Commitments hereunder and (ii) the amount of the
requested Canadian Revolving Loan Commitments (such amount, the "Requested
Canadian Revolving Loan Commitment Amount"), which shall be an amount (x) of no
less than US$10,000,000 (or any US$5,000,000 integral multiple thereof) and (y)
of no greater than US$35,000,000. Each of the US Lenders acknowledge on the
Effective Date that Schedule 4.2 hereto sets forth (i) the legal names of the
Affiliates of such US Lenders that are intended to provide such Canadian
Revolving Loan Commitments, (ii) the name of the applicable Counterpart Lender
and (iii) the percentage of the Requested Canadian Revolving Loan Commitment
that each will assume on and after the Canadian Trigger Date. Notwithstanding
anything herein to the contrary, Schedule 4.2 can be amended on or before the
Canadian Trigger Date with the consent of the US Borrower, the Canadian
Administrative Agent and each Canadian Lender (or other financial institution)
whose percentage allocation is increased (or initially put in place). On the
Canadian Trigger Date, the Aggregate US Revolving Loan Commitment shall be
permanently reduced, dollar for dollar, by the Requested Canadian Revolving Loan
Commitment Amount; provided, that (i) in the event that any Canadian Revolving
Loan Commitments are provided by a Canadian Lender who has an Affiliate that is
a US Lender, the US Revolving Loan Commitments of such US Lender shall be
reduced, dollar for dollar, by the amount of Canadian Revolving Loan Commitments
of such Canadian Lender, and (ii) in the event that the Canadian Revolving Loan
Commitments are provided by a Canadian Lender that does not have an Affiliate
that is a US Lender, the US Revolving Loan Commitments of all US Lenders shall
be ratably reduced by the amount of the Canadian Revolving Loan Commitments of
any such Canadian Lender.
(b) Joinder. The Canadian Administrative Agent shall have received a
Joinder Agreement, in form and substance reasonably satisfactory to the Canadian
Administrative Agent, duly executed and delivered by the Canadian Borrower, the
Canadian Administrative Agent and each of the institutions which agree to serve
as Canadian Lenders. The Joinder Agreement shall, among other things, set forth
the Canadian Revolving Loan Commitment of each of the Canadian Lenders (and the
name of the Counterpart Lender of such Canadian Lender).
(c) Other Loan Documents. The Canadian Administrative Agent shall
have received (i) the Canadian Revolving Notes ( to the extent requested by the
relevant Canadian Lender), (ii) the Canadian Guarantee, duly executed and
delivered by Quiksilver, the Canadian Loan Parties and each Subsidiary that owns
Capital Stock of the Canadian Loan Parties, (iii) the Canadian Security
Agreement, duly executed by Quiksilver, the Canadian Loan Parties and each
Subsidiary that owns Capital Stock of
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the Canadian Loan Parties, and (iv) all other agreements or instruments required
to create of perfect a security interest in the applicable Collateral, in each
case executed and delivered by the officers of the applicable Loan Parties.
(d) Lien Searches. The Canadian Administrative Agent shall have
received the results of a recent lien search in each of the Canadian
jurisdictions (including any provinces or territories) where assets of the Loan
Parties are located, and such search shall reveal no liens on any of the assets
of the Loan Parties except for Permitted Liens or Liens discharged on or prior
to the Effective Date pursuant to documentation reasonably satisfactory to the
Canadian Administrative Agent.
(e) Filings, Registrations and Recordings. Each document required by
the Canadian Security Agreement or under law or reasonably requested by the
Canadian Administrative Agent to be filed registered or recorded in order to
create in favor of the Canadian Administrative Agent, for the benefit of the
Canadian Lenders, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person.
(f) Pledged Stocks; Stock Powers; Pledged Notes. The Canadian
Administrative Agent shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Canadian Security Agreement,
together with an undated stock power for each such certificate executed in blank
by a duly Responsible Officer of the pledgor thereof and (ii) each promissory
note (if any) pledged to the Canadian Administrative Agent pursuant to the
Canadian Security Agreement endorsed (without recourse) in blank (or accompanied
by an executed transfer form in blank) by the Pledgor thereof. The US
Administrative Agent shall have received the certificates representing the
shares of any Capital Stock required to be pledged pursuant to the US Security
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly Responsible Officer of the pledgor thereof;
provided, that no shares of Capital Stock of any Foreign Subsidiary which is not
a first-tier Subsidiary of Quiksilver or any of its Domestic Subsidiaries shall
be required to be pledged thereunder.
(g) Legal Opinions. The Canadian Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Fraser Xxxxxx Casgrain LLP, a
Canadian counsel to Quiksilver, in form and substance reasonably
satisfactory to the Canadian Administrative Agent; and
(ii) the legal opinion of such other special and local counsel
as may be required by the Canadian Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transaction contemplated by this Agreement as the Canadian Administrative Agent
may reasonably require.
(h) Borrowing Base Certificate. The Canadian Borrower shall have
delivered a Borrowing Base Certificate which calculates the Canadian Borrowing
Base, as of a date no more than five days prior to the Canadian Trigger Date,
with customary supporting documentation and supplemental reporting in form and
substance reasonably satisfactory to the Canadian Administrative Agent.
(i) No Default / Representations. No Default shall have occurred and
be continuing on the Canadian Trigger Date or would occur after giving effect to
the Loans requested to be made on the Canadian Trigger Date, and the
representations and warranties contained in this Agreement and each other Loan
Documents and certificate or other writing delivered to the Canadian Lenders in
satisfaction of
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the conditions set forth in this Section 4.2 prior to or on the Canadian Trigger
Date shall be correct in all material respects on and as of the Canadian Trigger
Date, and the Canadian Administrative Agent shall have received a certificate of
the Canadian Borrower to such effect in the form of Exhibit C, dated as of the
Canadian Trigger Date and executed by a Responsible Officer of the Canadian
Borrower.
(j) Subsidiary Certificate. The Canadian Borrower shall have
delivered to the Canadian Administrative Agent a closing certificate which shall
set forth (a) a correct and complete list of the name and relationship to
Quiksilver of each all of Quiksilver's Canadian Subsidiaries, (b) the location
of the chief executive office or domicile (within the meaning of the Quebec
Civil Code) of the Canadian Subsidiaries and each other location where any of
them have maintained their chief executive office or domicile (within the
meaning of the Quebec Civil Code) in the past five years, and (c) the type of
entity of each of the Canadian Subsidiaries. With respect to each Loan Party,
such closing certificate shall also set forth the employer or tax identification
number of each Loan Party and the organizational identification number issued by
each Loan Party's jurisdiction of organization or a statement that no such
number has been issued.
(k) Asset Appraisal. The Loan Parties shall have delivered Canadian
asset appraisals (covering inventory), reasonably satisfactory to the Canadian
Administrative Agent, prepared by an independent firm engaged directly by the
Canadian Administrative Agent.
(l) Field Examination. The Canadian Administrative Agent shall have
conducted a satisfactory field examination of the accounts receivable, inventory
and related working capital matters and financial information of the Canadian
Loan Parties and of the related data processing and other systems.
(m) Secretary's Certificates. The Canadian Administrative Agent
shall have received certificates dated as of the Effective Date of the Secretary
or an Assistant Secretary of Quiksilver and each Canadian Loan Party, in each
case attaching (i) a copy of the resolutions of the Board of Directors of such
Person, authorizing (A) the execution, delivery and performance of the Loan
Documents to which such Person is or will be a party and (B) in the case of the
Canadian Borrower, the borrowings contemplated hereunder, (ii) copies of the
Organic Documents of such Person and (iii) a certificate, dated a recent date,
of the Secretary of State (or the equivalent) of the state of formation of such
Person and each other jurisdiction where such Person is required to be qualified
to do business under such jurisdiction's law, certifying as to the existence and
good standing of, and the payment of taxes by, each Person in such state or
jurisdiction.
SECTION 4.3. Conditions to Each Loan or Letter of Credit. Subject to
Section 2.22, the agreement of each Lender to make each Loan, the agreement of
each Canadian Lender to issue an Acceptance, the agreement of each Issuing Bank
to issue each Letter of Credit and the agreement of each Alternate Currency
Fronting Lender to make each Alternate Currency Loan, requested to be made or
issued by it is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan or the issuance of such Acceptance or
Letter of Credit, of the following conditions precedent:
(a) Representations and Warranties; No Default. The following
statements shall be true, and the applicable Borrower's acceptance of the
proceeds of such Loan or its delivery of an executed Letter of Credit Request
shall be deemed to be a representation and warranty of such Borrower on the date
of such Loan or as of the date of issuance of such Acceptance or Letter of
Credit, as applicable, that:
(i) The representations and warranties contained in this
Agreement and in each other Loan Document and certificate or other
writing delivered to the Lenders prior to, on or after the Original
Closing Date pursuant hereto and on or prior to the date for
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such Loan or the issuance of such Letter of Credit are correct on
and as of such date in all material respects as though made on and
as of such date except to the extent that such representations and
warranties expressly relate to an earlier date; and
(ii) No Default or Event of Default has occurred and is
continuing or would result from the making of the Loan to be made on
such date or the issuance of such Letter of Credit as of such date.
(b) Legality. The making of such Loan or the issuance of such
Acceptance or Letter of Credit, as applicable, shall not contravene any law,
rule or regulation applicable to any Lender or the applicable Borrower or any
other Loan Party.
(c) Availability. After giving effect to such Loan or the issuance
of such Acceptance or Letter of Credit, neither US Availability or Canadian
Availability would be less than zero.
(d) Borrowing Notice, Letter of Credit Request. The US
Administrative Agent or the Canadian Administrative Agent, as the case may be
(and, with respect to Alternate Currency Loans, the Alternate Currency Fronting
Agent (with respect to Alternate Currency Loans denominated in Alternate
Currencies other than Canadian Dollars) or the applicable Alternate Currency
Fronting Lender (with respect to Alternate Currency Loans denominated in
Canadian Dollars)) shall have received a Revolving Loan Borrowing Notice, a
Canadian Notice of Drawing, an Alternate Currency Loan Borrowing Notice, a Swing
Line Borrowing Notice, and/or a Letter of Credit Request, as applicable,
pursuant to the provisions of this Agreement from the applicable Borrower.
ARTICLE V AFFIRMATIVE COVENANTS
Each of Quiksilver, the US Borrower and (on and after the Canadian Trigger
Date) the Canadian Borrower hereby agree that from and after the Original
Closing Date, so long as any US Revolving Loan Commitment or Canadian Revolving
Loan Commitment remains in effect, any Loan remains outstanding and unpaid, any
other amount is owing to any Lender or the Agents hereunder or any Letter of
Credit remains outstanding:
SECTION 5.1. Financial Statements.
(a) Within 105 days (or, if earlier, the date on which such
financial statements are filed by Quiksilver with the Securities and Exchange
Commission) after the end of each fiscal year, Quiksilver shall deliver to the
Lenders a complete set of audited annual consolidated financial statements of
Quiksilver, and unaudited consolidating financial statements with respect to
Quiksilver, each Domestic Subsidiary (to the extent included in Quiksilver's
consolidating financial statements immediately before the date hereof), each
Material Domestic Subsidiary (and, in any event, the US Borrower) and each
Material Foreign Subsidiary (and, in any event, the Canadian Borrower on and
after the Canadian Trigger Date), including a balance sheet, an income statement
and a cash flow statement (with accompanying notes and schedules) and a capital
expenditure schedule for such fiscal year segmented by domestic and foreign
operations; provided, that in the event that Quiksilver is unable to deliver
unaudited consolidating financial statements with respect to one or more
Material Foreign Subsidiaries, it shall provide such other financial statements
with respect thereto in form and substance reasonably satisfactory to the
Administrative Agents. Such financial statements (i) must be prepared in
accordance with GAAP (or in the case of the Canadian Borrower, generally
accepted accounting principles in Canada) consistently applied and (ii) must be
certified without qualification or exception by the Accountants. Together with
the audited financial statements, the Administrative Agents must also receive
(A) a copy of the opinion of the Accountants (without a "going concern" or like
qualification or exception, and without any
85
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly the financial condition
and results of operations of Quiksilver and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, (B) a
certificate executed by the Chief Financial Officer of Quiksilver certifying
that the financial statements fairly present the financial condition of
Quiksilver and its Subsidiaries as of the date thereof and for the period
covered thereby and that as of the date of such certificate such officer has
obtained no knowledge of any Default except as specified in such certificate,
and (C) a Compliance Certificate.
(b) Within 60 days (or, if earlier, the date on which such financial
statements are filed by Quiksilver with the Securities and Exchange Commission)
after the end of each of Quiksilver's first three fiscal quarters, Quiksilver
shall deliver to the Lenders the unaudited quarterly consolidated financial
statements of Quiksilver and unaudited consolidating financial statements with
respect to Quiksilver, each Domestic Subsidiary (to the extent included in
Quiksilver's consolidating financial statements immediately before the date
hereof), each Material Domestic Subsidiary (and, in any event, the US Borrower)
and each Material Foreign Subsidiary (and, in any event, the Canadian Borrower
on and after the Canadian Trigger Date), including a balance sheet, an income
statement and a cash flow statement (with accompanying notes and schedules);
provided, that in the event that Quiksilver is unable to deliver unaudited
consolidating financial statements with respect to one or more Material Foreign
Subsidiaries, it shall provide such other financial statements with respect
thereto in form and substance reasonably satisfactory to the Administrative
Agents. Such financial statements shall be prepared in accordance with GAAP (or
in the case of the Canadian Borrower, generally accepted principles of
accounting in Canada) consistently applied (it being understood that such
financial statements are subject to normal year-end audit adjustments and do not
include all of the footnotes required under GAAP for annual financial
statements). Together with the quarterly financial statements, the Lenders must
also receive (i) a certificate executed by the Chief Financial Officer of
Quiksilver (A) stating that the financial statements fairly present the
financial condition of Quiksilver and its Subsidiaries as of the date thereof
and for the period covered thereby and (B) certifying that as of the date of
such certificate such officer has obtained no knowledge of any Default except as
specified in such certificate and (ii) a Compliance Certificate.
(c) Within 105 days after the end of each fiscal year, Quiksilver
shall deliver to the Lenders projections with respect to the financial
performance of Quiksilver and its Subsidiaries for the fiscal year commencing on
the immediately preceding November 1. Such projections shall include quarterly
cash-flow forecasts, quarterly consolidating balance sheets, quarterly
consolidating income statements and shall set forth in reasonable detail all
material assumptions made in connection with such projections and shall
otherwise be in form and scope reasonably satisfactory to the Administrative
Agents; provided, that in the event that Quiksilver is unable to deliver
quarterly consolidating balance sheets with respect to any Foreign Subsidiaries,
it shall be permitted to deliver consolidated balance sheets with respect
thereto.
SECTION 5.2. Certificates; Other Information. Quiksilver shall
furnish to the Administrative Agent, for distribution to the Lenders:
(a) within 10 days after the same are filed, copies of all financial
statements and reports which Quiksilver or any Subsidiary may make to, or file
with, the Securities and Exchange Commission, the AMF or any successor
Governmental Authority;
(b) promptly but, in any event, within 10 days after receipt
thereof, copies of all financial reports (including management letters), if any,
submitted to Quiksilver or any Subsidiary by the Accountants in connection with
any annual or interim audit of the books thereof;
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(c) (A) as soon as possible and in any event within 30 days after
Quiksilver knows or has reason to know that any Termination Event with respect
to any Plan has occurred, a statement of a Responsible Officer of Quiksilver
describing such Termination Event and the action, if any, which Quiksilver
proposes to take with respect thereto, (B) promptly and in any event within ten
days after receipt thereof by Quiksilver or any ERISA Affiliate of Quiksilver
from the PBGC, copies of each notice received by Quiksilver or such ERISA
Affiliate of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan, (C) promptly and in any event within 30 days
after the filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan maintained for or covering employees of
Quiksilver or any Subsidiary if the present value of the accrued benefits under
the Plan exceeds its assets by an amount in excess of US$500,000, (D) promptly
and in any event within ten days after receipt thereof by Quiksilver or any
ERISA Affiliate of Quiksilver from a sponsor of a Multiemployer Plan or from the
PBGC, a copy of each notice received by Quiksilver or such ERISA Affiliate
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or indicating that such Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA, and (E) the information that would be
required under clauses (A) through (D) if the corresponding provisions of the
pension law of any foreign jurisdiction under which Quiksilver or any Subsidiary
may have liability were substituted for each reference to ERISA and the Code
therein and in the definition of any defined term used therein;
(d) promptly after the commencement thereof, but in any event not
later than 10 days after service of process with respect thereto on, or the
obtaining of knowledge by, Quiksilver or any Subsidiary, notice of (i) each
material action, suit or proceeding before any Governmental Authority and (ii)
any material claim under any Environmental Law;
(e) as soon as available but in any event within 15 days of the end
of each calendar month, and at such other times as may be requested by the US
Administrative Agent or the Canadian Administrative Agent, as of the month then
ended, a Borrowing Base Certificate and supporting information in connection
therewith;
(f) as soon as available but in any event within 15 days of the end
of each calendar month (or, in the case of clauses (iv) and (v) below, each
fiscal quarter) and at such other times as may be requested by the US
Administrative Agent or the Canadian Administrative Agent, as of the month (or
quarter, as the case may be) then ended:
(i) a detailed aging of the Loan Parties' Accounts (1)
including all invoices aged by due date and (2) reconciled to the
Borrowing Base Certificate delivered as of such date prepared in a
manner reasonably acceptable to the applicable Administrative Agent,
together with a summary specifying the name, address, and balance
due for each Account Debtor;
(ii) a schedule detailing the Loan Parties' Inventory, in form
reasonably satisfactory to the applicable Administrative Agent,
including by division, by season and by class (i.e., raw materials
and finished goods);
(iii) a worksheet of calculations prepared by the applicable
Borrower to determine Eligible Accounts and Eligible Inventory, such
worksheets reasonably detailing the Accounts and Inventory excluded
from Eligible Accounts and Eligible Inventory and the reason for
such exclusion;
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(iv) a reconciliation of the Loan Parties' Accounts and
Inventory between the amounts shown in the applicable Borrower's
(or, to the extent applicable, the Target Loan Parties') general
ledger and financial statements and the reports delivered pursuant
to clauses (i) and (ii) above; and
(v) a reconciliation of the loan balance per the applicable
Borrower's (or, to the extent applicable, the Target Loan Parties')
general ledger to the loan balance under this Agreement;
(g) as soon as available but in any event within 15 days of the end
of each calendar month and at such other times as may be requested by the US
Administrative Agent or the Canadian Administrative Agent, as of the month then
ended, a schedule of the Loan Parties' accounts payable in form and substance
reasonably satisfactory to such Administrative Agent;
(h) promptly upon any Administrative Agent's request:
(i) copies of invoices in connection with the invoices issued
by any Loan Party in connection with any Accounts, credit memos,
shipping and delivery documents, and other information related
thereto;
(ii) copies of purchase orders, invoices, and shipping and
delivery documents in connection with any Inventory or Equipment
purchased by any Loan Party; and
(iii) a schedule detailing the balance of all intercompany
accounts of any Loan Party;
(i) within 25 days of each October 31, an updated Customer List;
(j) promptly upon any Subsidiary's becoming a Material Domestic
Subsidiary or a Material Foreign Subsidiary, or upon Quiksilver's direct or
indirect creation or acquisition of a Material Domestic Subsidiary or a Material
Foreign Subsidiary, notice of the same; and
(k) promptly, such additional financial information as any Lender,
through the Administrative Agent, may from time to time reasonably request.
Following the occurrence and during the continuation of an Availability Event,
either Administrative Agent may, in its sole discretion, require more frequent
reporting with respect to Sections 5.2(e), (f), (g) and (i).
SECTION 5.3. Payment of Obligations. Quiksilver shall, and shall
cause each of its Subsidiaries to, pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature (including all taxes, assessments, governmental
charges and levies), except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of
Quiksilver or such Subsidiaries, as the case may be.
SECTION 5.4. Conduct of Business; Maintenance of Existence and
Licenses; Contractual Obligations. Quiksilver shall, and shall cause each of its
Subsidiaries to, (a) continue to engage in business of the same general type as
conducted by Quiksilver and such Subsidiaries as of the date hereof, (b)
preserve, renew and keep in full force and effect its corporate or other legal
existence,
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unless the Board of Directors of any Subsidiary (other than the US Borrower, any
Canadian Loan Party (on and after the Canadian Trigger Date), any Material
Domestic Subsidiary, any Material Foreign Subsidiary or an Additional Domestic
Guarantor) determines that the preservation of its corporate or other legal
existence is no longer desirable, and the loss thereof could not reasonably be
expected to have a Material Adverse Effect, (c) maintain all rights,
registrations, licenses, privileges and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to so maintain
would not have a Material Adverse Effect, and (iv) comply with all Contractual
Obligations except to the extent that failure to comply therewith would not have
a Material Adverse Effect.
SECTION 5.5. Maintenance of Property. Quiksilver shall, and shall
cause each of its Subsidiaries to, do all things necessary to (i) maintain,
preserve, protect and keep its Property in good repair, working order and
condition (normal wear and tear excepted), and make all necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times and (ii) obtain and maintain in
effect at all times all material franchises, governmental authorizations,
Intellectual Property Rights, licenses and permits, which are necessary for it
to own its Property or conduct its business as conducted on the Effective Date.
SECTION 5.6. Insurance. (a) Quiksilver shall, and shall cause each
of its Subsidiaries to, at all times maintain, with financially sound and
reputable carriers having a Financial Strength rating of at least A- by A.M.
Best Company, insurance against: (i) loss or damage by fire and loss in transit;
(ii) theft, burglary, pilferage, larceny, embezzlement, and other criminal
activities; (iii) business interruption; (iv) general liability and (v) and such
other hazards, as is customary in the business of Quiksilver or such Subsidiary.
All such insurance shall be in amounts, cover such assets and be under policies
acceptable to the US Administrative Agent or the Canadian Administrative Agent,
as applicable, in its Permitted Discretion. In the event any Collateral is
located in any area that has been designated by the Federal Emergency Management
Agency as a "Special Flood Hazard Area", Quiksilver or such Subsidiary shall
purchase and maintain flood insurance on such Collateral (including any personal
Property which is located on any real Property leased by Quiksilver or any
Subsidiary within a "Special Flood Hazard Area"). The amount of all insurance
required by this Section 5.6 shall at a minimum comply with applicable law,
including the Flood Disaster Protection Act of 1973, as amended. All premiums on
such insurance shall be paid when due by Quiksilver or the relevant Subsidiary,
and copies of the policies delivered to the relevant Administrative Agent. If
Quiksilver or any of its Subsidiaries fails to obtain any insurance as required
by this Section, the relevant Administrative Agent at the direction of the
Majority Lenders may obtain such insurance at the applicable Borrower' expense.
By purchasing such insurance, such Administrative Agent shall not be deemed to
have waived any Default or Event of Default arising from Quiksilver's or any
Subsidiary's failure to maintain such insurance or pay any premiums therefor.
Quiksilver shall, and shall cause each of its Subsidiaries to, use such Property
in compliance with applicable law and not to use it in any manner which might
render inapplicable any insurance coverage.
(b) All insurance policies required under Section 5.6(a) with
respect to Domestic Subsidiaries and Canadian Subsidiaries shall name the US
Administrative Agent or the Canadian Administrative Agent, as the case may be,
(for the benefit of the US Administrative Agent and the Lenders or the Canadian
Administrative Agent and the Canadian Lenders, respectively) as an additional
insured or as loss payee, as applicable, and shall provide that, or contain loss
payable clauses or mortgagee clauses, in form and substance satisfactory to such
Administrative Agent, which provide that:
(i) all proceeds thereunder with respect to any Collateral
shall be payable to the relevant Administrative Agent (to the extent
such proceeds are required to be applied to prepay the Obligations
or Canadian Obligations in accordance with Section 2.7 or to
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the extent otherwise required pursuant to the US Security Agreement
or Canadian Security Agreement, as applicable);
(ii) no such insurance shall be affected by any act or neglect
of the insured or owner of the Property described in such policy;
and
(iii) such policy and loss payable clauses may be canceled,
amended, or terminated only upon at least thirty days prior written
notice given to the relevant Administrative Agent.
SECTION 5.7. Inspection; Communication with Accountants. Quiksilver
shall, and shall cause each of its Subsidiaries to, permit each Administrative
Agent and the Lenders, by their respective employees, representatives and
agents, from time to time upon two US Business Days' prior notice as frequently
as such Administrative Agent reasonably determines to be appropriate, to (a)
inspect any of the Property, the Collateral, and the books and financial records
of any Loan Party, (b) examine, audit and make extracts or copies of the books
of accounts and other financial records of any Loan Party, (c) have access to
its properties, facilities, the Collateral and its advisors, officers, directors
and employees to discuss the affairs, finances and accounts of any Loan Party
and (d) review, evaluate and make test verifications and counts of the Accounts,
Inventory and other Collateral of such Loan Party. If a Default or an Event of
Default has occurred and is continuing, Quiksilver shall, and shall cause each
of its Subsidiaries to, provide such access to the Administrative Agents and to
each Lender at all times and without advance notice. Furthermore, so long as any
Default has occurred and is continuing, Quiksilver shall, and shall cause each
of its Subsidiaries to, provide the Administrative Agents and each Lender with
access to its suppliers. Quiksilver shall, and shall cause each of its
Subsidiaries to, promptly make available to the relevant Administrative Agent
and its counsel originals or copies of all books and records that such
Administrative Agent may reasonably request. Quiksilver and each Borrower
acknowledges that from time to time each Administrative Agent may prepare and
may distribute to the Lenders certain audit reports pertaining to the Loan
Parties' assets for internal use by such Administrative Agent and the Lenders
from information furnished to it by or on behalf of the Loan Parties, after such
Administrative Agent has exercised its rights of inspection pursuant to this
Agreement. Upon reasonable notice and at such reasonable times during usual
business hours, Quiksilver shall, and shall cause each of its Subsidiaries to,
permit representatives of the US Administrative Agent or the Canadian
Administrative Agent, as applicable (on behalf of the relevant Lenders) to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of Quiksilver and its Subsidiaries with its Accountants;
provided that such Administrative Agent shall give notice of any such
communication to Quiksilver and allow Quiksilver the opportunity to be present
during such communication.
SECTION 5.8. Appraisals and Field Examinations. Whenever a Default
or Event of Default exists, and at such other times (not more frequently than
once per calendar year or, if average daily Availability for any period of
thirty consecutive days during such calendar year is less than (x) if the
Guarantee Date has not yet occurred, US$25,000,000, or (y) on and after the
Guarantee Date, US$40,000,000, twice per calendar year) as the US Administrative
Agent or the Canadian Administrative Agent, as applicable, requests, Quiksilver
shall, and shall cause each other Loan Party to, at their sole expense, permit
such Administrative Agent to conduct field examinations and/or provide such
Administrative Agent with appraisals or updates thereof of their Inventory from
an appraiser selected and engaged by such Administrative Agent, and prepared on
a basis satisfactory to such Administrative Agent, such appraisals and updates
to include, without limitation, information required by applicable law and
regulations and by the internal policies of the Lenders; provided, however, that
such Administrative Agent and the Lenders shall at all times, at their own
expense, have the right (after reasonable notice to
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the Loan Parties) to conduct field examinations and/or obtain appraisals or
updates of the Inventory of the Loan Parties. Notwithstanding anything herein to
the contrary, it is understood and agreed that a field examination and an
Inventory appraisal (each in form and substance reasonably satisfactory to such
Administrative Agent) shall be performed with respect to any Domestic
Subsidiaries and Canadian Subsidiaries of the Target on or before the date on
which Accounts and Inventory of such Subsidiaries are eligible for inclusion in
the "Eligible Accounts" and "Eligible Inventory" definitions.
SECTION 5.9. Collateral Access Agreements. Quiksilver shall, and
shall cause each of its Subsidiaries to, use commercially reasonable efforts to
obtain a Collateral Access Agreement, from the lessor of each leased property,
mortgagee of owned property or bailee or consignee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall provide access rights,
contain a waiver or subordination of all Liens or claims that the landlord,
mortgagee, bailee or consignee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to the US Administrative Agent or the Canadian Administrative Agent, as
applicable. With respect to such locations or warehouse space leased or owned as
of the Original Closing Date and thereafter, if such Administrative Agent has
not received a Collateral Access Agreement as of the Original Closing Date (or,
if later, as of the date such location is acquired or leased), the Loan Parties'
Eligible Inventory at that location shall be subject to such Reserves as may be
established by the Administrative Agent. After the Original Closing Date, no
real property or warehouse space shall be leased by any Loan Party and no
Inventory shall be shipped to a processor or converter under arrangements
established after the Original Closing Date, unless and until a satisfactory
Collateral Access Agreement shall first have been obtained with respect to such
location and if it has not been obtained, the Loan Parties' Eligible Inventory
at that location shall be subject to the establishment of Reserves acceptable to
the Administrative Agent. Quiksilver shall, and shall cause each Loan Party to,
timely and fully pay and perform its obligations under all leases and other
agreements with respect to each leased location or third party warehouse where
any Collateral is or may be located. Notwithstanding the foregoing or anything
set forth in Article VII to the contrary, the sole remedy for failure to comply
with the first and third sentences of this Section 5.9 shall be the
establishment of Reserves acceptable to the applicable Administrative Agent with
respect to any affected Collateral.
SECTION 5.10. Deposit Account Control Agreements. Within 90 days
after the Original Closing Date (with respect to US Loan Parties) and within 90
days after the Canadian Trigger Date (with respect to Canadian Loan Parties),
Quiksilver will provide to the US Administrative Agent or the Canadian
Administrative Agent, as applicable, a Deposit Account Control Agreement, duly
executed on behalf of each financial institution holding a deposit account of a
Loan Party as set forth in the US Security Agreement or the Canadian Security
Agreement, as applicable. Thereafter, Quiksilver shall provide to the applicable
Administrative Agent, upon such Administrative Agent's request, a Deposit
Account Control Agreement duly executed on behalf of each financial institution
holding a deposit account of a Loan Party as set forth in the US Security
Agreement or the Canadian Security Agreement, as applicable. Following the
occurrence and during the continuance of an Availability Event, funds deposited
into a deposit account subject to a Deposit Account Control Agreement will be
swept on a daily basis into a blocked account with the applicable Administrative
Agent, and such funds (other than collections representing Net Proceeds from an
Asset Disposition or a Recovery Event with respect to which a Reinvestment
Notice has been delivered, so long as such Net Proceeds are not required to be
applied to prepay Loans pursuant to Section 2.7) shall be applied toward the
prepayment of the Loans hereunder. At all times during the term of this
Agreement, Quiksilver shall cause each Loan Party to have established and shall
maintain Union Bank of California, N.A., JPMorgan Chase Bank, N.A. or any other
Lender approved by the applicable Administrative Agent, as such Loan Party's
principal depository bank(s), including for the maintenance of operating,
administrative, cash management, collection activity, and other deposit accounts
for the conduct of its business. Each Borrower herby authorizes the applicable
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Administrative Agent to transfer funds to controlled disbursement accounts of
any Loan Party hereunder to the extent necessary to pay items to be drawn on
such controlled disbursement accounts.
SECTION 5.11. Environmental Laws. Quiksilver shall, and shall cause
each of its Subsidiaries to:
(a) Comply in all material respects with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply in all material respects with any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(c) Generate, use, treat, store, release, dispose of, and otherwise
manage Materials of Environmental Concern in a manner that would not reasonably
be expected to result in a material liability to Quiksilver or any of its
Subsidiaries or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating,
using, treating, storing, releasing, disposing of, or otherwise managing
Materials of Environmental Concern in a manner that could reasonably be expected
to result in a material liability to, or materially affect any real property
owned or operated by, Quiksilver or any of its Subsidiaries.
SECTION 5.12. Use of Proceeds. Each Borrower will use the proceeds
of the Loans and the Acceptances to (x) with respect to the US Borrower,
refinance the Indebtedness of the US Borrower under the Existing Credit
Agreement, (y) finance a portion of, to the extent also financed by additional
loans under the Bridge Loan Agreement, the other Transactions, (z) provide funds
for working capital, capital expenditures, acquisitions permitted by Section 6.7
and general corporate purposes of such Borrower. Letters of Credit shall be used
solely for general corporate purposes of the US Borrower. Notwithstanding
anything herein to the contrary, no Loan, Acceptance or Letter of Credit shall
be used for the purchasing or carrying of any Margin Stock.
SECTION 5.13. Compliance with Laws, Etc. Quiksilver shall comply,
and shall cause each of its Subsidiaries to comply, in all material respects
with all applicable Requirements of Law.
SECTION 5.14. Additional Collateral; Further Assurances. (a) The US
Borrower shall at all times remain party to the US Security Agreement and, on
and after the Canadian Trigger Date, the Canadian Security Agreement and the
Canadian Guarantee. Subject to the last sentence of Section 5.14(d), Quiksilver
shall, and shall cause each of its Material Domestic Subsidiaries (other than
the US Borrower) and each of the Additional Domestic Guarantors to, at all times
(1) guarantee payment and performance of the Obligations pursuant to the US
Guarantee, (ii) guarantee payment and performance of the Canadian Obligations
pursuant to the Canadian Guarantee and (3) be party to the US Security Agreement
and the Canadian Security Agreement.
(b) On and after the Canadian Trigger Date, the Canadian Borrower
shall at all times remain party to the Canadian Security Agreement. Subject to
the last sentence of Section 5.14(d) below, Quiksilver shall cause each Material
Foreign Subsidiary which is also a Canadian Subsidiary (other than the Canadian
Borrower) formed or acquired after the Canadian Trigger Date to (1) guarantee
payment and
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performance of the Canadian Obligations pursuant to the Canadian Guarantee and
(2) become party to the Canadian Security Agreement.
(c) Quiksilver shall cause (i) 100% of the issued and outstanding
Capital Stock of each of its Material Domestic Subsidiaries and of each of the
Additional Domestic Guarantors, (ii) with respect to the Obligations, 65% (or
such greater percentage that, due to a change in an applicable law after the
date hereof, (1) could not reasonably be expected to cause the undistributed
earnings of its Material Foreign Subsidiary as determined for United States
federal income tax purposes to be treated as a deemed dividend to such Material
Foreign Subsidiary's United States parent and (2) could not reasonably be
expected to cause any material adverse tax consequences) of the issued and
outstanding Capital Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in
each Material Foreign Subsidiary directly owned by Quiksilver or any Domestic
Subsidiary and (iii) with respect to the Canadian Obligations (and on and after
the Canadian Trigger Date), 100% of the issued and outstanding Capital Stock of
each of its Material Foreign Subsidiaries which is also a Canadian Subsidiary,
in each case to be subject at all times to a first priority, perfected Lien in
favor of the US Administrative Agent and/or the Canadian Administrative Agent,
as applicable, pursuant to the terms and conditions of the Loan Documents or
other security documents as the applicable Administrative Agent shall reasonably
request; provided, that, notwithstanding the foregoing, neither Quiksilver nor
any Borrower shall be required to pledge any Capital Stock of the Target or the
Holding Company unless the Holding Company and/or the Target, as applicable,
remains a first-tier Material Foreign Subsidiary on the date which is ninety
(90) days following the completion of the Tender Offer.
(d) Without limiting the foregoing, Quiksilver shall, and shall
cause each of the Domestic Subsidiaries and Canadian Subsidiaries which is
required to become a Loan Party pursuant to the terms of this Agreement to,
execute and deliver, or cause to be executed and delivered, to the US
Administrative Agent and/or the Canadian Administrative Agent, as applicable,
such documents and agreements, and shall take or cause to be taken such actions
as each Administrative Agent may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.
Following the completion of the Tender Offer, (a) Quiksilver shall, and shall
cause each of its Subsidiaries to, use commercially reasonable efforts to have
each of the Material Domestic Subsidiaries (to the extent that such Material
Domestic Subsidiaries are also Subsidiaries of the Target) promptly become party
to both the US Guarantee and the US Security Agreement and, on and after the
Canadian Trigger Date, the Canadian Guarantee and the Canadian Security
Agreement, and (b) Quiksilver shall, and shall cause each of its Subsidiaries
to, use commercially reasonable efforts to have each of the Material Foreign
Subsidiaries (to the extent that such Material Foreign Subsidiaries are also
Canadian Subsidiaries of the Target) promptly following the Canadian Trigger
Date become party to both the Canadian Guarantee and the Canadian Security
Agreement.
SECTION 5.15. Notices. Each of Quiksilver and each Borrower will
give prompt notice in writing to the relevant Administrative Agent and the
applicable Lenders of:
(a) the occurrence of any Default or Event of Default;
(b) any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect;
(c) receipt of any written notice (i) that Quiksilver or any
Subsidiary is subject to any investigation by any governmental entity with
respect to any potential or alleged material violation of any applicable
Environmental Laws, (ii) that any Governmental Authority may deny or refuse to
renew any material permit, license, approval, registration, exemption or other
authorization required under any
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Environmental Law, or (iii) of imposition of any Lien against any Property of
Quiksilver or any Subsidiary for any liability with respect to damages arising
from, or costs resulting from, any violation of any Environmental Laws;
(d) receipt of any notice of litigation commenced or threatened
against Quiksilver or any Subsidiary that (i) seeks damages in excess of
US$10,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted
against any Plan, its fiduciaries or its assets, (iv) alleges criminal
misconduct by Quiksilver or any Subsidiary, (v) alleges the material violation
of any law regarding, or seeks remedies in connection with, any Environmental
Control Statutes; or (vi) involves any product recall;
(e) any material Lien (other than Permitted Liens) or material claim
made or asserted against any of the Collateral;
(f) its decision (i) to change any Loan Party's name or type of
entity or (ii) to make any other material change to any Loan Party's articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by-laws, or operating or other
management agreement; provided, that, in no event shall the applicable
Administrative Agent receive notice of such change less than ten days prior
thereto;
(g) commencement of any proceedings involving Quiksilver or any
Subsidiary contesting any tax, fee, assessment, or other governmental charge in
excess of US$10,000,000;
(h) the opening of any new deposit account by any Loan Party with
any bank or other financial institution;
(i) any loss, damage, or destruction to the Collateral in the amount
of US$10,000,000 or more, whether or not covered by insurance;
(j) any and all material default notices received under or with
respect to any leased location or public warehouse where a material amount of
Collateral is located (which shall be delivered within two US Business Days
after receipt thereof); and
(k) any other matter as any Administrative Agent may reasonably
request.
ARTICLE VI NEGATIVE COVENANTS
Each of Quiksilver, the US Borrower and (on and after the Canadian Trigger
Date) the Canadian Borrower hereby agree that from and after the Original
Closing Date, so long as any US Revolving Loan Commitment or Canadian Revolving
Loan Commitment remains in effect, any Loan remains outstanding and unpaid, any
other amount is owing to any Lender or any Agent hereunder or any Letter of
Credit remains outstanding:
SECTION 6.1. Financial Condition Covenants. To the extent that
average daily Availability for the preceding 30-day period is at any date less
than (x) if the Guarantee Date has not yet occurred, US$17,000,000, or (y) on
and after the Guarantee Date, US$25,000,000, Quiksilver will not from and after
such date permit the Fixed Charge Coverage Ratio, calculated as of the date of
the most recent financial statements of Quiksilver delivered in accordance with
Section 5.1, to be less than 1.1 to 1.0; provided, that if at any time
thereafter average daily Availability (calculated as of any date to reflect
average Availability for the preceding 30 days) is greater than or equal to (x)
if the Guarantee Date has not yet occurred, US$20,000,000, or (y) on and after
the Guarantee Date, US$30,000,000, for ninety
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consecutive days, this Section 6.1 shall no longer be applicable (until such
time as it may thereafter become applicable as set forth above).
SECTION 6.2. Limitation on Indebtedness. Each of Quiksilver and the
Borrowers shall not create, incur, assume or suffer to exist any Indebtedness,
and shall not permit any of their Subsidiaries, to create, incur, assume or
suffer to exist any Indebtedness, except for:
(a) Indebtedness created hereunder and under the other Loan
Documents;
(b) Indebtedness of Quiksilver and its Subsidiaries outstanding on
the date hereof and listed, together with all lines of credit and other credit
facilities to which they are a party, including any renewals and/or replacements
thereof on Schedule 6.2;
(c) Indebtedness (i) evidenced by performance bonds issued in the
ordinary course of business or reimbursement obligations in respect thereof,
provided that such Indebtedness, when combined with Indebtedness permitted by
Section 6.2(i), does not exceed US$20,000,000 in aggregate principal amount at
any time outstanding, (ii) evidenced by a letter of credit facility related to
insurance associated with claims for work-related injuries or (iii) for bank
overdrafts incurred in the ordinary course of business that are promptly repaid;
(d) trade credit incurred to acquire goods, supplies and services
incurred in the ordinary and normal course of business;
(e) Lease Expenses;
(f) Indebtedness of QAPL to the former shareholders of QIPL for the
deferred purchase price for the acquisition of the shares of QIPL by QAPL, and
Indebtedness of Quiksilver in respect of its guaranty of such Indebtedness of
QAPL;
(g) Indebtedness of Foreign Subsidiaries (other than Indebtedness of
the Canadian Borrower and the other Canadian Loan Parties hereunder) in an
amount at any one time outstanding up to the greater of (a) 75% of such Foreign
Subsidiaries' Consolidated Tangible Assets or (b) the US Dollar Equivalent of
US$300,000,000;
(h) Indebtedness of Quiksilver (and Guarantee Obligations of any
other Loan Party) under (x) the Bridge Loan Agreement Documentation in an
aggregate principal amount not to exceed US$350,000,000 and (y) the Senior Note
Indenture in an aggregate principal amount not to exceed US$450,000,000;
provided, that (i) the Senior Note Indenture and related documentation contains
terms and conditions reasonably satisfactory to the Administrative Agents and
(ii) the proceeds of the Senior Notes are used, among other uses, to repay the
principal of all outstanding Indebtedness under the Bridge Loan Agreement
Documentation following the release of any such proceeds from the Senior Notes
Escrow Account, if any;
(i) Indebtedness of Quiksilver and/or the US Borrower with respect
to the Leasehold Improvement Loan together with up to US$35,000,000 of
additional leasehold improvement financing described in Section 6.3(h);
(j) Capitalized Lease Obligations incurred to acquire, construct or
improve capital assets; provided, that (i) the principal amount of such
Capitalized Lease Obligations does not exceed the amount of such acquisition,
construction or improvement and (ii) such Capitalized Lease Obligations are
incurred no later than 180 days after the date of such acquisition, construction
or improvement;
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(k) other unsecured Indebtedness of Quiksilver and its Domestic
Subsidiaries; provided, that, (i) no Default or Event of Default has occurred
and is continuing or would result from the incurrence of such unsecured
Indebtedness; (ii) average daily Availability is at least (x) if the Guarantee
Date has not yet occurred, US$25,000,000, or (y) on and after the Guarantee
Date, US$40,000,000, for any period of thirty consecutive days during the
12-month period ending on the date on which such incurrence is to occur, (iii)
the Fixed Charge Coverage Ratio exceeds 1.25 to 1.00 after giving pro forma
effect to such incurrence of Indebtedness as if such Indebtedness was incurred
on the first day of the relevant period and (iv) such unsecured Indebtedness
shall have no scheduled amortization prior to the date that is six months after
the Revolving Loan Commitment Expiration Date;
(l) Indebtedness of (i) any Loan Party to any other Loan Party and
(ii) Quiksilver or any Borrower to any Subsidiary (other than any Loan Party)
and of any Subsidiary to Quiksilver, any Borrower or any other Subsidiary;
provided, that no such Indebtedness of any Subsidiary (other than any Loan
Party) to any Loan Party shall be permitted to be incurred to the extent that
(x) after giving pro forma effect to such incurrence, average daily Availability
was less than (A) if the Guarantee Date has not yet occurred, US$25,000,000, or
(B) on and after the Guarantee Date, US$40,000,000, for any period of thirty
consecutive days during the 12-month period ending on the date on which such
incurrence is to occur and (y) no Default or Event of Default has occurred and
is continuing or would be caused thereby; and
(m) other Indebtedness of Quiksilver or of any Subsidiary in
addition to the foregoing, provided that such Indebtedness does not exceed
US$35,000,000 in aggregate principal amount at any time outstanding.
SECTION 6.3. Limitation on Liens. Each of Quiksilver and the
Borrowers shall not, and shall not permit any of their Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any of their property, assets or
revenues (including trademarks, copyrights and other intellectual-property
rights), whether now owned or hereafter acquired, except for:
(a) Liens created hereunder or under any of the other Loan
Documents;
(b) Liens existing on any Property (other than trademarks,
copyrights and other intellectual property rights) at the time of the
acquisition of such Property and not created in anticipation of such
acquisition; provided however, with respect to a Subsidiary, the stock of which
is acquired by Quiksilver or another Subsidiary, of such Property shall be
deemed to be acquired a the time the stock of such Subsidiary is acquired by
Quiksilver or such other Subsidiary;
(c) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of Quiksilver or any Subsidiary, as the case
may be, in conformity with GAAP or accounting principles generally accepted in
the applicable jurisdiction;
(d) Liens created by operation of law not securing the payment of
Indebtedness for money borrowed or guaranteed, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 45 days or which are being contested in good faith by appropriate
proceedings;
(e) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
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(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, would not cause a Material Adverse Effect;
(h) Liens in favor of (i) the Leasehold Improvement Lender (x)
securing the Leasehold Improvement Loan and (y) granted by the US Borrower in
favor of the Leasehold Improvement Lender pursuant to a security agreement,
dated as of October 29, 2004, executed by the US Borrower securing its
obligations under its guaranty, dated as of October 29, 2004, of the obligations
of Quiksilver under the Leasehold Improvement Loan Agreement, and an
intercreditor agreement acceptable to the Administrative Agent, to secure an
aggregate amount of up to US$35,000,000 of additional financing for the
build-out retail stores expected to be opened and/or existing stores which may
be expanded, which Liens are subject to the terms of the Intercreditor Agreement
or an intercreditor agreement in form and substance reasonably satisfactory to
the Administrative Agent;
(i) any Lien on assets (other than trademarks, copyrights and other
intellectual-property rights) of Foreign Subsidiaries securing Indebtedness of
the relevant Foreign Subsidiary permitted under Section 6.2(g);
(j) Liens securing Indebtedness incurred after the date hereof to
purchase, or to finance the purchase of, fixed assets, provided that (i) any
such Lien is limited to the fixed asset or assets acquired or financed, and any
subsequent improvements thereto, and (ii) such Indebtedness is otherwise
permitted under Section 6.2(j) or (m); and a Lien on QIPL's trademark rights to
Quiksilver name, logo and related intellectual property in the territories of
Australia and New Zealand, in favor of the former shareholders of QIPL, to
secure the obligation of QAPL to pay the final installment of the purchase price
for the acquisition of the shares of QIPL by QAPL; and
(k) Liens granted pursuant to the Escrow Security Agreement (as
defined in the Bridge Loan Agreement) and Liens granted with respect to monies
on deposit in the Senior Notes Escrow Account pursuant to documentation
reasonably satisfactory to the Administrative Agents.
SECTION 6.4. Limitation on Fundamental Changes. Quiksilver shall
not, and shall not permit any of its Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), except as permitted by Section 5.4, or
create or acquire any Subsidiary, or convey, sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its property, business or
assets, except that Quiksilver may consummate Permitted Acquisitions permitted
by Section 6.7 (including, without limitation, the Transaction).
SECTION 6.5. Limitation on Sale of Assets. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, make any Asset Disposition unless
(i) such Asset Disposition is for fair market value, (ii) the consideration for
such Asset Disposition is all cash, (iii) no Default or Event of Default has
occurred and is continuing or would result from such Asset Disposition and (iv)
the consideration for such Asset Disposition, (x) when aggregated with the
consideration for all previous Asset Dispositions by Quiksilver or any Domestic
Subsidiary during the same calendar year, does not exceed US$10,000,000 and (y)
when aggregated with the consideration for all previous Asset Dispositions by
any Foreign Subsidiary during the term of this Agreement, does not exceed
US$75,000,000.
SECTION 6.6. Limitation on Dividends. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, (a) if a corporation, declare or
pay any dividend (other than dividends payable
97
solely in common stock of Quiksilver or its Subsidiaries) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of Quiksilver or its Subsidiaries or
any warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, and (b) if a partnership or a limited liability company,
make any distribution with respect to the ownership interests therein, or, in
either case, any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Quiksilver or any
Subsidiary (such declarations, payments, setting apart, purchases, redemptions,
defeasance, retirements, acquisitions and distributions being herein called
"Restricted Payments") provided, however, that (i) Quiksilver shall be permitted
to make payments on account of, and set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of any shares of its common stock, or any warrants or options to
purchase its common stock, not exceeding US$20,000,000 in the aggregate, so long
as no Default or Event of Default has occurred and is continuing or would be
caused by any of the foregoing, (ii) Quiksilver and its Subsidiaries shall be
permitted to make other Restricted Payments so long as (x) after giving pro
forma effect thereto, average daily Availability was not less than (x) if the
Guarantee Date has not yet occurred, US$25,000,000, or (y) on and after the
Guarantee Date, US$40,000,000, for any period of thirty consecutive days during
the 12-month period ending on the date on which such Restricted Payment is to be
made, (y) the Fixed Charge Coverage Ratio exceeds 1.25 to 1.00 after giving pro
forma effect to such Restricted Payment as if such Restricted Payment was paid
on the first day of the relevant period and (z) no Default or Event of Default
has occurred and is continuing or would be caused thereby and (iii) the
Subsidiaries shall in any case be permitted to pay cash dividends and other
distributions, directly or indirectly, to Quiksilver or any Subsidiary, to the
extent paid ratably to all stockholders of the Person paying the applicable
dividend or contribution.
SECTION 6.7. Limitation on Investments, Loans and Advances.
Quiksilver shall not, and shall not permit any of its Subsidiaries to, make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in (any of the
foregoing, an "investment"), any Person, or otherwise make any Permitted
Acquisition, except for:
(a) Quiksilver's ownership interests in its current Subsidiaries;
(b) investments in marketable securities, liquid investments and
other financial instruments that are acquired for investment purposes and may be
readily sold or otherwise liquidated, that have a value which may be readily
established and which are investment grade;
(c) extensions of trade credit in the ordinary course of business;
(d) investments in the form of Permitted Acquisitions or other
investments in Persons or businesses, in each case, in the same line of business
as that described in Section 3.18, provided that (i) no Default or Event of
Default has occurred and is continuing or would result from the consummation of
such Permitted Acquisition or other investment, (ii) such Permitted Acquisition
is not opposed by the Person to be, or whose business is to be, acquired and
(iii) in the case of any Permitted Acquisition or other investment by Quiksilver
or any of its Domestic Subsidiaries (A) with respect to Permitted Acquisitions
or other investments involving aggregate cash Consideration in excess of
US$5,000,000, the US Borrower shall have delivered to the US Administrative
Agent a Compliance Certificate showing pro forma calculations, as of the most
recent quarter-end for which a Compliance Certificate has been provided by the
US Borrower, and as of each of the three subsequent quarter-ends and on an
annual basis, thereafter through the Revolving Loan Commitment Expiration Date,
assuming such Permitted Acquisition had been consummated or such other
investment had been made, as applicable, (B) the aggregate cash Consideration
therefor shall not exceed US$10,000,000 annually, and
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US$50,000,000 in the aggregate, during the term of this Agreement (provided,
that no restriction on the cash Consideration for Permitted Acquisitions shall
be applicable if, after giving pro forma effect thereto, average daily
Availability was not less than (x) if the Guarantee Date has not yet occurred,
US$25,000,000, or (y) on and after the Guarantee Date, US$40,000,000, for any
period of thirty consecutive days during the 12-month period ending on the date
on which such Permitted Acquisition is to be consummated) and (C) with respect
to any Permitted Acquisition, the US Administrative Agent or the Canadian
Administrative Agent, as the case may be, shall have received, reviewed and
approved all documents requested by the US Administrative Agent or the Canadian
Administrative Agent, as the case may be, to insure that the Lenders have a
first-priority security interest in, and assignment of, all personal property
assets and interests acquired (other than Intellectual Property Rights), to the
extent that a security interest in such assets and interests is required by the
terms of this Agreement, including consents of third parties if reasonably
requested;
(e) investments existing on the date hereof and listed on Schedule
6.7;
(f) loans and advances to officers and employees of Quiksilver or
any Subsidiary, provided that such loans and advances do not exceed US$5,000,000
in aggregate principal amount at any time outstanding; provided, however, that
an individual's use of a cashless exercise procedure to pay the exercise price
and required tax withholding (or either of them) in connection with his exercise
of a compensatory option to purchase stock issued by Quiksilver shall not give
rise to a loan or advance for the purposes of this section 6.7(f) to the extent
that all funds representing full payment of such option exercise price and
required tax withholding are actually remitted to Quiksilver before the close of
business on either (i) the date of exercise of the stock option or (ii) the date
of issuance of the stock pursuant to the option exercise;
(g) investments entered into in connection with the Transaction and
pursuant to the terms of the Purchase Agreement Documentation (including,
without limitation, (i) the Initial Purchase, the purchase of the Direct
Interest and the Tender Offer and (ii) following the completion of the Tender
Offer, the transfer by Quiksilver of shares of the Target and/or the Holding
Company to QS Holdings S.a x.x.);
(h) the purchase by Quiksilver, or one of its Subsidiaries, of the
distribution rights for the DC Shoes brand in Canada pursuant to a purchase
agreement to be signed prior to October 31, 2005 and for an amount of up to
8,000,000 Canadian Dollars;
(i) investments in an aggregate amount not to exceed US$5,000,000 by
Quiksilver, the US Borrower or QS Holdings S.a x.x. in Quiksilver Mexico JV
pursuant to a joint venture agreement to be signed prior to October 31, 2005;
and
(j) investments of up to US$10,000,000 by the US Borrower in a core
surf apparel company based in California pursuant to an agreement to be signed
prior to October 31, 2005; and
(k) other investments not to exceed US$10,000,000 during the term of
this Agreement.
SECTION 6.8. Transactions with Affiliates. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction,
including any purchase, sale, lease or exchange of property or the rendering of
any service, with any Affiliate or with any Subsidiary that is not a Loan Party,
unless such transaction is in the ordinary course of Quiksilver's or such
Subsidiary's business and is upon terms no less favorable to Quiksilver or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person not an Affiliate or a Subsidiary.
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SECTION 6.9. Fiscal Year. Quiksilver shall not permit its fiscal
year or the fiscal year of any of its Subsidiaries (other than Foreign
Subsidiaries) to end on a day other than October 31.
SECTION 6.10. Sale-Leaseback Transactions. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, sell, assign or otherwise transfer
any of its Properties, rights or assets (whether now owned or hereafter
acquired) to any Person and thereafter directly or indirectly lease back the
same or similar property for consideration exceeding US$5,000,000 in the
aggregate in any calendar year.
SECTION 6.11. Unfunded Liabilities. Quiksilver shall not permit
unfunded liabilities for any and all Plans maintained for or covering employees
of Quiksilver or any Subsidiary to exceed US$1,000,000 in the aggregate at any
time.
SECTION 6.12. Hedging Obligations. Quiksilver shall not, and shall
not permit any of its Subsidiaries to, enter into any Hedging Arrangement,
except that Quiksilver or any Subsidiary may enter into any Hedging Arrangement
that (a) is of a non-speculative nature, (b) is for the purpose of hedging
Quiksilver's or such Subsidiary's reasonably estimated interest rate, foreign
currency or commodity exposure (c) in the case of Quiksilver or any Domestic
Subsidiary, is with a US Lender or any Affiliate of a US Lender and (d) in the
case of Quiksilver or any Canadian Subsidiary, is with a Canadian Lender or an
Affiliate of a Canadian Lender.
SECTION 6.13. Optional Payments of Certain Debt Instruments.
Quiksilver shall not, and shall not permit any of its Subsidiaries to make or
offer to make any optional or voluntary payment, prepayment, repurchase or
redemption of or otherwise optionally or voluntarily defease or segregate funds
with respect to the Bridge Loan Agreement, the Senior Notes or any Indebtedness
incurred pursuant to Section 6.2(k); provided, that Quiksilver shall be
permitted to optionally prepay or redeem the Bridge Loan Agreement, the Senior
Notes or any Indebtedness incurred pursuant to Section 6.2(k) to the extent that
(a) after giving pro forma effect thereto, average daily Availability was not
less than (x) if the Guarantee Date has not yet occurred, US$25,000,000, or (y)
on and after the Guarantee Date, US$40,000,000, for any period of thirty
consecutive days during the 12-month period ending on the date on which such
prepayment or redemption is to be made, (b) the Fixed Charge Coverage Ratio
exceeds 1.25 to 1.00 after giving pro forma effect to such prepayment or
redemption as if such prepayment or redemption was paid on the first day of the
relevant period and (c) no Default or Event of Default has occurred and is
continuing or would be caused thereby.
SECTION 6.14. Amendments to Purchase Agreement Documentation and
Tender Offer Documentation. (a) Quiksilver shall not, and shall not permit any
of its Subsidiaries to, enter into definitive Tender Offer Documentation, unless
such documentation is in form and substance reasonably satisfactory to the
Administrative Agents.
(b) Quiksilver shall not, and shall not permit any of its
Subsidiaries to, amend, supplement or otherwise modify the terms and conditions
of the Purchase Agreement Documentation, the Tender Offer Documentation or any
such other documents except for (i) with respect to any such amendment,
supplement or modification which becomes effective on or prior to the
consummation of the Transaction (including, without limitation, the Tender
Offer), to the extent consented to by each Administrative Agent and the Majority
Lenders and (ii) with respect to any such amendment, supplement or modification
which becomes effective following the consummation of the Transaction, to the
extent not materially adverse to the interests of the Lenders.
SECTION 6.15. Amendments to Certain Documentation. Quiksilver shall
not, and shall not permit any of its Subsidiaries to, amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
(a) any Bridge Loan Documentation or (b) the Senior Note
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Indenture and related documentation in such a manner that is materially adverse
to the interests of the Lenders.
SECTION 6.16. Negative Pledge Clauses. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of such
Person to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, to secure its
obligations under the Loan Documents to which it is a party other than (a) this
Agreement and the other Loan Documents and (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby).
SECTION 6.17. Clauses Restricting Subsidiary Distributions.
Quiksilver shall not, and shall not permit any of its Subsidiaries to, enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of Quiksilver to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, Quiksilver or any other Subsidiary of
Quiksilver, (b) make loans or advances to, or other Investments in, Quiksilver
or any other Subsidiary of Quiksilver or (c) transfer any of its assets to
Quiksilver or any other Subsidiary of Quiksilver, except for such encumbrances
or restrictions existing under or by reason of (i) any restrictions existing
under the Loan Documents, (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with
the disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary, (iii) any encumbrance or restriction pursuant to the Bridge
Loan Agreement or the Senior Notes Indenture; (iv) any encumbrance or
restriction with respect to a Foreign Subsidiary pursuant to any agreement
relating to Indebtedness incurred by such Foreign Subsidiary pursuant to Section
6.2(g); (v) any encumbrance or restriction with respect to a Subsidiary pursuant
to an agreement relating to any Capital Stock or Indebtedness incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by
Quiksilver or any other Subsidiary (other than Capital Stock or Indebtedness
incurred as consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary of Quiksilver
or was acquired by Quiksilver or any other Subsidiary or in contemplation of the
transaction) and outstanding on such date, provided, that any such encumbrance
or restriction shall not extend to any assets or property of Quiksilver or any
other Subsidiary other than the assets and property so acquired; (vi) any
encumbrance or restriction with respect to a Subsidiary pursuant to an agreement
effecting a refunding, replacement or refinancing of Indebtedness incurred
pursuant to an agreement referred to in clauses (c)(i), (iii), (iv) or (v) or
this clause (c)(vi) or contained in any amendment to an agreement referred to in
clauses (c)(i), (iii), (iv) or (v) or this clause (c)(vi); provided, however,
that the encumbrances and restrictions with respect to such Subsidiary contained
in any such agreement or amendment are no less favorable in any material respect
to the Lenders than the encumbrances and restrictions with respect to such
Subsidiary contained in such agreements referred to in clauses (c)(i), (iii),
(iv) or (v) on the Original Closing Date or the date such Subsidiary became a
Subsidiary, whichever is applicable; (vii) in the case of clause (c) above, any
encumbrance or restriction (1) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or the assignment or transfer of any such
lease, license or other contract, (2) contained in mortgages, pledges or other
security agreements permitted under this Agreement securing Indebtedness of
Quiksilver or a Subsidiary to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such mortgages, pledges or
other security agreements or (3) pursuant to customary provisions restricting
dispositions of real property interests set forth in any reciprocal easement
agreements of Quiksilver or any Subsidiary; (viii) (A) purchase money
obligations for property acquired in the ordinary course of business and (B)
Capitalized Lease Obligations permitted under this Agreement, in each case, that
impose encumbrances or restrictions of the nature described in clause (c) above
on the property so acquired;
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(ix)any restriction with respect to a Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Subsidiary (or the property or assets that are subject to such restriction)
pending the closing of such sale or disposition; (x) any customary provisions in
joint venture agreements relating to joint ventures that are not Subsidiaries
and other similar agreements entered into in the ordinary course of business;
(xi) net worth provisions in leases and other agreements entered into by
Quiksilver or any Subsidiary in the ordinary course of business; (xii)
encumbrances or restrictions arising or existing by reason of applicable law, or
any applicable rule, regulation or order; and (xiii) customary restrictions
imposed on the transfer of, or in Licenses related to, Copyrights, Patents,
Trademarks or other Intellectual Property Rights and contained in agreements
entered into in the ordinary course of business.
ARTICLE VII EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal on any Loan,
Acceptance Obligation or Reimbursement Obligation when due, or any Borrower
shall fail to pay any interest on any Loan, Acceptance Obligation or
Reimbursement Obligation, any fee referred to in this Agreement (including,
without limitation, Section 4.1(g)) or any other amount payable hereunder within
three days after any such interest or other amount becomes due in accordance
with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made;
or
(c) Quiksilver or any Borrower shall default in the observance or
performance of any agreement contained in Sections 5.10, 5.12 or 5.15(a) or in
any provision of Article 6; or
(d) Any Loan Party shall default in the observance or performance of
any other material agreement contained in this Agreement or the other Loan
Documents (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30 days
after the earlier of (i) notice thereof from the US Administrative Agent or the
Canadian Administrative Agent, as the case may be, to the applicable Borrower
and (ii) actual knowledge thereof by a Responsible Officer of such Loan Party;
or
(e) Any material provision of any Loan Document shall at any time
for any reason be declared null and void, or the validity or enforceability of
any Loan Document shall at any time be contested by any Loan Party, or a
proceeding shall be commenced by any Loan Party, or by any Governmental
Authority or other Person having jurisdiction over any Loan Party, seeking to
establish the invalidity or unenforceability thereof, or any Loan Party shall
deny that it has any liability or obligation purported to be created under any
Loan Document; or
(f) Quiksilver or any Subsidiary shall (i) default in any payment of
principal or interest, regardless of the amount, due in respect of any (A)
Indebtedness (other than the Loans and other extensions of credit made
hereunder), issued under the same indenture or other agreement, if the original
principal amount of Indebtedness covered by such indenture or agreement is
US$10,000,000 or greater or (B) Guarantee Obligation with respect to an amount
of US$10,000,000 or greater, in either case beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created, whether or not such default has been waived by
the holders of such Indebtedness or Guarantee Obligation; or (ii) default in the
observance or performance of any other
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material agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Guarantee Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable or such Indebtedness to be required to be
defeased or purchased; provided, however, that any default by Quiksilver or such
Subsidiary under a Guarantee Obligation with respect to a real property lease
shall not constitute a Default under this Section 7(f) if Quiksilver or such
Subsidiary is contesting the validity of such default in good faith by
appropriate proceedings, Quiksilver or such Subsidiary is maintaining reserves
in conformity with GAAP with respect thereto and such default could not
reasonably be expected to have a Material Adverse Effect; or
(g) (i) Quiksilver or any Subsidiary shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, interim receiver, receiver and manager,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or Quiksilver or any Subsidiary shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Quiksilver or any Subsidiary any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged, unstayed or unbonded for a period of 60 days;
or (iii) there shall be commenced against Quiksilver or any Subsidiary any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof, or (iv) Quiksilver or any Subsidiary shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) Quiksilver or any Subsidiary shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due or
there shall be a general assignment for the benefit of creditors; or
(h) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee would reasonably be
expected to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA (other than a standard termination), (v) Quiksilver or any Commonly
Controlled Entity would reasonably be expected to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, (vi) any other similar event or condition shall occur or
exist with respect to a Plan or (vii) any of clauses (i) through (v) would be
true if a reference under the laws of any foreign jurisdiction having a pension
law similar to ERISA if a reference to the corresponding provisions of such law
were substituted for each reference to ERISA and the Code therein and in the
definition of any defined term used therein and in each case regarding clauses
(i) through (vii) herein, such event or condition, together with all other such
events or conditions, if any, would reasonably be expected to subject Quiksilver
or any Commonly Controlled Entity to any tax, penalty or other liabilities in
the aggregate to exceed US$1,000,000; or
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(i) One or more judgments or decrees shall be entered against
Quiksilver or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of US$10,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof or in any event five days before the date
of any sale pursuant to such judgment or decree; or any non-monetary judgment or
order shall be entered against Quiksilver or any Subsidiary that is reasonably
likely to have a Material Adverse Effect and either (i) enforcement proceedings
shall have been commenced by any Person upon such judgment which have not been
stayed pending appeal or (ii) there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(j) Any material provision of any Loan Document, after delivery
thereof pursuant to the provisions hereof, shall, for any reason, cease to be
valid or enforceable in accordance with its terms, or any security interest
created under any Loan Document shall, for any reason, cease to be a valid and
perfected first-priority Lien (except as permitted by Section 6.3) in any
material portion of the Collateral or the property purported to be covered
thereby; or
(k) a Change in Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically the US Revolving Loan Commitments, the
Canadian Revolving Loan Commitments and the commitment to issue Letters of
Credit and Acceptance Obligations shall immediately terminate and the Loans and
Acceptances made to each Borrower hereunder (with accrued interest thereon) and
all other Obligations and Canadian Obligations shall immediately become due and
payable and, to the extent any Letters of Credit are then outstanding, the US
Borrower shall make a cash collateral deposit, to be held by the US
Administrative Agent as collateral under the US Security Agreement, in the
amount equal to 105% of the aggregate Letter of Credit Amount of such Letters of
Credit and (B) if such event is any other Event of Default, with the consent of
the Majority Lenders, the US Administrative Agent and the Canadian
Administrative Agent may, or upon the request of the Majority Lenders , the US
Administrative Agent and the Canadian Administrative Agent shall, take any or
all of the following actions: (i) by notice to the each Borrower, declare the US
Revolving Loan Commitments, the Canadian Revolving Loan Commitments and the
commitment to issue Acceptances and Letters of Credit to be terminated
forthwith, whereupon the US Revolving Loan Commitments, the Canadian Revolving
Loan Commitments and the commitment to issue Acceptances and Letters of Credit
shall immediately terminate; and (ii) by notice to each Borrower, declare the
Loans (with accrued interest thereon), Acceptance Obligations and all other
Obligations and Canadian Obligations under this Agreement and the other Loan
Documents to be due and payable forthwith, whereupon (x) the same shall
immediately become due and payable and (y) to the extent any Letters of Credit
are then outstanding, the US Borrower shall make a cash collateral deposit, to
be held by the US Administrative Agent as collateral under the US Security
Agreement, in an amount equal to 105% of the aggregate Letter of Credit Amount
of the Letters of Credit outstanding. In all cases, with the consent of the
Majority Lenders, each Administrative Agent may enforce any or all of the Liens
and security interests and other rights and remedies created pursuant to any
Loan Document or available at law or in equity. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived by each Borrower.
ARTICLE VIII THE AGENTS
SECTION 8.1. Appointment. Each US Lender hereby irrevocably
designates and appoints JPMorgan Chase Bank, N.A., as US Administrative Agent of
such US Lender under this Agreement and the other Loan Documents, and each such
US Lender irrevocably authorizes JPMorgan Chase Bank, N.A., as the US
Administrative Agent for such Lender, to take such action on its behalf
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under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
US Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Each Canadian Lender hereby irrevocably designates and appoints JPMorgan Chase
Bank, N.A., Toronto Branch, as Canadian Administrative Agent of such Canadian
Lender under this Agreement and the other Loan Documents, and each such Canadian
Lender irrevocably authorizes JPMorgan Chase Bank, N.A., Toronto Branch, as the
Canadian Administrative Agent for such Canadian Lender, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Canadian Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, no Administrative Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any
Administrative Agent.
SECTION 8.2. Delegations of Duties. Each Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. No Administrative
Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 8.3. Exculpatory Provisions. Neither Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by Quiksilver, any
Subsidiary or any other Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by any Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of Quiksilver, any
Subsidiary or any other Loan Party to perform its obligations hereunder or
thereunder. No Agent shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of Quiksilver, any Subsidiary or any
other Loan Party.
SECTION 8.4. Reliance by the Administrative Agents. Each
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including counsel to
either Borrower), the Accountants and independent accountants and other experts
selected by such Administrative Agent with reasonable care. Each Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with such Administrative Agent. Each Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Super-Majority Lenders, the Majority Lenders, the Majority
US Lenders, the Majority Canadian Lenders or all Lenders, as it deems
appropriate, or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense (except to the extent incurred as a
result of such Administrative Agent's gross negligence or
105
willful misconduct) which may be incurred by it by reason of taking or
continuing to take any such action. Each Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Super-Majority
Lenders, the Majority Lenders, the Majority US Lenders, the Majority Canadian
Lenders or all Lenders, as may be required, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future Lenders.
SECTION 8.5. Notice of Default. Neither the US Administrative Agent
nor the Canadian Administrative Agent, as the case may be, shall be deemed to
have knowledge or notice of the occurrence of any Default hereunder unless such
Administrative Agent has received notice from a Lender or the applicable
Borrower referring to this Agreement, describing such Default and stating that
such notice is a "notice of default". In the event that such Administrative
Agent receives such a notice, such Administrative Agent shall use its best
efforts to give prompt notice thereof to the Lenders; provided, however, that no
failure or delay by such Administrative Agent in giving such notice shall
relieve any Lender of any obligation hereunder or give rise to any liability of
such Administrative Agent. Each Administrative Agent shall take such action with
respect to such Default as shall be reasonably directed by the Super-Majority
Lenders, the Majority Lenders, the Majority US Lenders, the Majority Canadian
Lenders or all Lenders as appropriate; provided, however, that unless and until
such Administrative Agent shall have received such directions, such
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Lenders or as such Administrative Agent
shall believe necessary to protect the Lenders' interests in the Collateral.
SECTION 8.6. Non-Reliance on the Agents and Other Lenders. Each
Lender expressly acknowledges that neither the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
either Agent hereafter taken, including any review of the affairs of Quiksilver,
any Subsidiary or any other Loan Party, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Quiksilver, each Subsidiary and the other Loan Parties and made its own decision
to make its Loans, issue its Acceptances, and participate in Letters of Credit,
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agents or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of Quiksilver, its Subsidiaries and the other Loan Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the applicable Administrative Agent hereunder, such
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of Quiksilver,
any Subsidiary or any other Loan Party which may come into the possession of
such Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
SECTION 8.7. Indemnification. The Lenders agree to indemnify each
Agent in their respective capacities as such (to the extent not reimbursed by
Quiksilver, its Subsidiaries or the other Loan Parties and without limiting the
obligation of such Persons to do so), ratably according to the respective
aggregate amounts of their US Revolving Loan Commitments and Canadian Revolving
Loan Commitments, as applicable, from and against any and all liabilities,
obligations, losses, damages,
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penalties, actions, judgments, suits, costs (including the allocated cost of
internal counsel), expenses or disbursements of any kind whatsoever which may at
any time (including at any time following the payment in full of the Loans and
the other amounts payable hereunder) be imposed on, incurred by or asserted
against such Agent in its respective capacity, as the case may be, but not as a
Lender hereunder, in any way relating to or arising out of this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided, however, that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from such Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment in full of the Loans and
all other amounts payable hereunder and the expiration of the Letters of Credit.
SECTION 8.8. Each Agent in Its Individual Capacity. Each Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with Quiksilver, any Subsidiary and the other Loan Parties
as though such Agent was not the US Administrative Agent, the Canadian
Administrative Agent, the Documentation Agent or the Syndication Agent, as
applicable, hereunder and under the other Loan Documents. With respect to each
Agent, the Loans made or renewed and the Letters of Credit issued or
participated in by such Agent, and any Note issued to such Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender, and such Agent may exercise the same as though it were not the US
Administrative Agent, Canadian Administrative Agent, Documentation Agent or
Syndication Agent, as the case may be, and the terms "Lender" and "Lenders"
shall include such Agent in its individual capacity.
SECTION 8.9. Successor Administrative Agents. Each Administrative
Agent may resign as US Administrative Agent or Canadian Administrative Agent, as
applicable, upon 30 days' notice to the Lenders. If any Administrative Agent
shall resign as US Administrative Agent or Canadian Administrative Agent, as
applicable, under this Agreement and the other Loan Documents, then the Majority
US Lenders or the Majority Canadian Lenders, as the case may be, shall appoint
from among the US Lenders or the Canadian Lenders, as applicable, a successor
agent for such Lenders, which successor agent shall be approved by the relevant
Borrower (which consent shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the US
Administrative Agent or Canadian Administrative Agent, as applicable, and the
term "US Administrative Agent" or "Canadian Administrative Agent", as
applicable, shall mean such successor agent, effective upon its appointment, and
the former applicable Administrative Agent's rights, powers and duties as US
Administrative Agent or Canadian Administrative Agent, as the case may be, shall
be terminated, without any other or further act or deed on the part of such
former applicable Administrative Agent or any of the parties to this Agreement.
After any retiring US Administrative Agent's or Canadian Administrative Agent's,
as applicable, resignation as the applicable Administrative Agent, the
provisions of this Section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the applicable Administrative Agent under
this Agreement and the other Loan Documents. In addition, after the replacement
of a US Administrative Agent or Canadian Administrative Agent hereunder, the
retiring applicable Administrative Agent shall remain a party hereto and shall
continue to have all the rights and obligations of the applicable Administrative
Agent under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of
Credit.
SECTION 8.10. Alternate Currency Fronting Lenders, Alternate
Currency Fronting Agent, Swing Line Lender and Issuing Banks. Each Issuing Bank,
the Swing Line Lender, the Alternate Currency Fronting Agent and each Alternate
Currency Fronting Lender shall act on behalf of the Lenders with respect to
Letters of Credit, Swing Line Loans and Alternate Currency Loans issued or made
under this Agreement and the documents associated therewith. It is understood
and agreed that each Issuing
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Bank, the Swing Line Lender, the Alternate Currency Fronting Agent and each
Alternate Currency Fronting Lender (a) shall have all of the benefits and
immunities (i) provided to the Agents in this Section 8 with respect to acts
taken or omissions suffered by each Issuing Bank, the Swing Line Lender, the
Alternate Currency Fronting Agent and each Alternate Currency Fronting Lender in
connection with Letters of Credit, Swing Line Loans and Alternate Currency Loans
issued or made under this Agreement and the documents associated therewith as
fully as if the terms "Agent", "US Administrative Agent" and "Canadian
Administrative Agent", as used in this Section 8, included each Issuing Bank,
the Swing Line Lender, the Alternate Currency Fronting Agent and each Alternate
Currency Fronting Lender with respect to such acts or omissions and (ii) as
additionally provided in this Agreement and (b) shall have all of the benefits
of the provisions of Section 8.7 or Section 9.5 as fully as if the terms
"Agent", "US Administrative Agent" and "Canadian Administrative Agent" as used
in Section 8.7 or Section 9.5, included each Issuing Bank, the Swing Line
Lender, the Alternate Currency Fronting Agent and each Alternate Currency
Fronting Lender.
SECTION 8.11. Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
SECTION 8.12. Quebec. For greater certainty, and without limiting
the powers of the Agents or any other Person acting as an agent,
attorney-in-fact or mandatary for the Administrative Agents under this Agreement
or under any of the other Loan Documents, each Lender, hereby (a) irrevocably
constitutes, to the extent necessary, the Canadian Administrative Agent as the
holder of an irrevocable power of attorney (fonde de pouvoir within the meaning
of Article 2692 of the Civil Code of Quebec) for the purposes of holding any
Liens, including hypothecs, granted or to be granted by any Borrower or any
Guarantor on movable or immovable property pursuant to the laws of the Province
of Quebec to secure obligations of any Borrower or any Guarantor under any bond
issued by any Borrower or any Guarantor; and (b) appoints and agrees that the
Canadian Administrative Agent, acting as agent for the relevant Lenders, may act
as the bondholder and mandatary with respect to any bond that may be issued and
pledged from time to time for the benefit of the Lenders.
The said constitution of the fonde de pouvoir (within the meaning of
Article 2692 of the Civil Code of Quebec) as the holder of such irrevocable
power of attorney and of the Canadian Administrative Agent as bondholder and
mandatary with respect to any bond that may be issued and pledged from time to
time for the benefit of the Lenders shall be deemed to have been ratified and
confirmed by any Assignee by the execution of an Assignment and Assumption;
Notwithstanding the provisions of Section 32 of An Act respecting
the special powers of legal persons (Quebec), or any other law, the Canadian
Administrative Agent may purchase, acquire and be the holder of any bond issued
by any Borrower or any Guarantor. Each Borrower and each Guarantor hereby
acknowledges that any such bond shall constitute a title of indebtedness, as
such term is used in Article 2692 of the Civil Code of Quebec.
The Canadian Administrative Agent herein appointed as fonde de
pouvoir shall have the same rights, powers and immunities as the Administrative
Agents as stipulated in this Article VIII, which shall apply mutatis mutandis.
Without limitation, the provisions of Section 8.11 of this Agreement shall apply
mutatis mutandis to the resignation and appointment of a successor to the
Canadian Administrative Agent acting as fonde de pouvoir.
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ARTICLE IX MISCELLANEOUS
SECTION 9.1. Amendments and Waivers. Neither this Agreement, any
Note, any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. With the prior written consent of the Majority Lenders, the US Borrower
(and on and after the Canadian Trigger Date) the Canadian Borrower (and, in the
case of any Loan Document other than this Agreement, the relevant Loan Party),
the Borrowers may, from time to time, enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purposes of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders, the Borrowers or any other Loan Party
hereunder or thereunder or waiving, on such terms and conditions as may be
specified in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default and its consequences; provided, however,
that no such waiver and no such amendment, supplement or modification shall (i)
(a) reduce the amount or extend the maturity of any Loan, Acceptance Obligation
or any installment due thereon, or reduce the rate or extend the time of payment
of interest thereon, or reduce the amount or extend the time of payment of any
fee, indemnity or reimbursement payable to any Lender hereunder, or change the
amount of any Lender's US Revolving Loan Commitment or Canadian Revolving Loan
Commitment, or amend, modify or waive any provision of Section 2.6 or 2.7, or
require any Lender to fund any Loan, Acceptance or other amount in any Currency
other than what is set forth in this Agreement, in each case without the written
consent of each Lender affected thereby; or (b) amend, modify or waive any
provision of this Section 9.1 or reduce the percentage specified in or otherwise
modify the definition of "Majority Lenders", "Majority US Lenders", "Majority
Canadian Lenders" or "Super-Majority Lenders," without the written consent of
all of the Lenders (or, with respect to the definitions of "Majority US Lenders"
and "Majority Canadian Lenders", without the written consent of all of the US
Lenders or Canadian Lenders, as applicable), or consent to the assignment or
transfer by any Loan Party of any of its rights and obligations under this
Agreement and the other Loan Documents (except as permitted under Section 6.4);
or (c) release any Loan Party from any liability under its respective Loan
Documents; or (d) release any material portion of the Collateral, except for any
Asset Disposition permitted by this Agreement or any other Loan Document; or (e)
amend, modify or waive, directly or indirectly, any of the provisions of Section
2.1(k), 2.13, 2.14 or 7(g); or (f) amend, modify or waive any provision of this
Agreement requiring the consent or approval of all Lenders, in each case set
forth in clauses (i)(b) through (i)(f) above without the written consent of all
the Lenders; or (ii) amend, modify or waive any provision of Section 4.3 with
respect to the making of a Loan or the issuance of a Letter of Credit without
the written consent of the Majority Lenders; or (iii) amend, modify or waive any
provision of Article 8 or any provision of this Agreement relating to Protective
Advances or Overadvances without the written consent of the US Administrative
Agent or the Canadian Administrative Agent, as applicable, or any provision
affecting the rights and duties of any Issuing Bank as the issuer of Letters of
Credit (including, without limitation, Section 8.10) without the consent of such
Issuing Bank; or (iv) amend, modify or waive any provision of Section 8.10 or
any provision relating to Alternate Currency Loans without the consent of the
applicable Alternate Currency Fronting Lender; or (v) amend, modify or waive any
provision of Section 2.2 or Section 8.10 without the consent of the Swing Line
Lender; or (vi) (x) increase the percentage advances rates or components of
either Borrowing Base if such increase would increase US Availability or
Canadian Availability, as applicable, or (y) include additional categories of
Collateral in either Borrowing Base if such inclusion would increase US
Availability or Canadian Availability, as applicable, in each case without the
prior written consent of the Super-Majority Lenders; or (vii) effect any waiver,
amendment or modification that by its terms affects the US Lenders only without
the prior written consent of the Majority US Lenders, or affects the Canadian
Lenders only without the prior written consent of the Majority Canadian Lenders
or affects the rights and interests of US Lenders differently than those of
Canadian Lenders, or affects the rights and interests of Canadian Lenders
differently than those of US Lenders, without in any such case the prior written
consent of the Majority US Lenders and the Majority Canadian Lenders, as
separate classes. Any
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such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrowers, the
other Loan Parties, the Lenders, the Agents and all future Lenders. In the case
of any waiver, the Borrowers, the other Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default,
or impair any right consequent thereon.
The Lenders acknowledge that, at the US Borrower's request, this
Agreement shall be amended (the "Amendment") to provide the US Borrower with the
option to cause one or more of the Domestic Subsidiaries of the Target acquired
in the Acquisition (the "Target Borrowers") to incur additional Indebtedness not
otherwise permitted hereunder for working capital purposes. The terms of the
Amendment shall be subject to the agreement and approval of the US Borrower and
the Required Lenders at the time the US Borrower makes the request, if ever,
contemplated by the preceding sentence (with changes to the other provisions of
the Credit Agreement reasonably satisfactory to the Required Lenders as the
Required Lenders may reasonably request).
SECTION 9.2. Notices. All notices, requests and demands or other
communications to or upon the respective parties hereto to be effective shall be
in writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or 3 days after being deposited in the United States mail, certified and postage
prepaid and return receipt requested, or, in the case of telecopy notice, when
received, in each case addressed as follows in the case of the Borrowers and the
Administrative Agents, and as set forth on the signature page hereto, or in the
Assignment and Assumption pursuant to which a Person becomes a party hereto, in
the case of the Lenders, or to such other address as may be hereafter notified
by the respective parties hereto and any future Lenders:
The US Borrower: Quiksilver Americas, Inc.
15202 Graham Street
Huntington Beach, California 92649
Attention: Bill Bussiere/Erik Johnson
Telecopy: (714) 889-4467/2766
with a copy to:
Quiksilver Americas, Inc.
15202 Graham Street
Huntington Beach, California 92649
Attention: Thomas Webster
Telecopy: (714) 893-5566
Canadian Borrower: As set forth in the Joinder Agreement.
The US Administrative Agent: JPMorgan Loan and Agency
1111 Fannin, 10th Floor
Houston, Texas 77002
Attention: Denise Ramon, Account Manager
Telecopy: (713) 750-2938
With a copy to:
JPMorgan Chase Bank, N.A.
110
270 Park Avenue
New York, New York 10017
Attention: Paul O'Neil
Telecopy: (212) 270-7449
With a copy to: JPMorgan Chase Bank, N.A
277 Park Avenue 22nd Floor
New York, NY 10172
Attention: Louis Mastrianni
Telecopy: (646) 534-0693
The Canadian Administrative:
Agent JPMorgan Chase Bank, N.A., Toronto Branch
200 Bay Street, Suite 1800
Royal Bank Plaza, South Tower
Toronto, Ontario M5J 2J2
Attention: Funding Office
Telecopy: 416-981-9128
Telephone: 416-981-9123
The Alternate Currency
Fronting Agent(2): J.P. Morgan Europe Limited
125 London Wall,
London EC2Y 5AJ
Attention: Ching Loh
Telecopy: (44) 207-777-2360
Alternate Currency Fronting
Lender -- Canadian Dollars(3) JPMorgan Chase Bank, N.A., Toronto Branch
200 Bay Street, Suite 1800
Royal Bank Plaza, South Tower
Toronto, Ontario M5J 2J2
Attention: Funding Office
Telecopy: 416-981-9128
Telephone: 416-981-9123
provided, however, that any notice, request or demand to or upon any
Administrative Agent or the Lenders pursuant to Section 2.1, 2.2, 2.5, 2.6 or
2.8 shall not be effective until received. Notices and other communications to
the Lenders, the Swing Line Lender, the Alternate Currency Fronting Agent, any
Alternate Currency Fronting Lender and each Issuing Bank hereunder may be
delivered or furnished by electronic communication (including e-mail and
internet or intranet websites) pursuant to procedures approved by the applicable
Administrative Agent or as otherwise determined by the applicable Administrative
Agent, provided that, the foregoing shall not apply to notices to any Lender,
the Swing Line Lender, the Alternate Currency Fronting Agent, any Alternate
Currency Fronting Lender or any
-------------------------
(2) Notices for Alternate Currency Loans denominated in Alternate Currencies
other than Canadian Dollars should be sent to the Alternate Currency
Fronting Agent and the US Administrative Agent.
(3) Notices for Alternate Currency Loans denominated in Canadian Dollars
should be sent to this Alternate Currency Fronting Lender and the US
Administrative Agent.
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Issuing Bank pursuant to Section 2.1, 2.2, 2.3 or 2.5 if such Person has
notified the applicable Administrative Agent that it is incapable of receiving
notices under such Section by electronic communication. Each Administrative
Agent and each Borrower may, in its respective discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it or as it otherwise determines, provided
that such determination or approval may be limited to particular notices or
communications. Notwithstanding the foregoing, in every instance, Quiksilver or
the applicable Borrower shall be required to provide paper copies of the
Compliance Certificates.
Unless the Administrative Agents otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender's receipt of an acknowledgement from the intended recipient (such as
by the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next US Business Day or Canadian Business Day, as applicable, for the
recipient, and (ii) notices or communications posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.
SECTION 9.3. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the applicable Administrative Agent
or any Lender, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
SECTION 9.4. Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the other Loan Documents.
SECTION 9.5. Payment of Expenses and Taxes. Each Borrower agrees (a)
to pay or reimburse each Agent for all its reasonable costs and out-of-pocket
expenses (including lien searches and travel and other expenses incurred by it
or its agents in connection with performing due diligence with regard hereto)
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including syndication efforts in connection with this Agreement
and, the reasonable fees and disbursements of counsel to such Agent (including
the allocated costs of internal counsel to such Agent), (b) to pay or reimburse
each Agent and each Lender for all its reasonable costs and out-of-pocket
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or any
insolvency or bankruptcy proceeding, including reasonable fees and disbursements
of legal counsel and financial advisors to each Agent and each Lender (including
the allocated costs of internal counsel to such Agent and each Laneder), (c) to
pay or reimburse each Agent and each Lender for all its reasonable costs and
out-of-pocket expenses incurred in connection with appraisals of all or any
portion of the Collateral, which appraisals shall be in conformity with the
applicable requirements of any law or any governmental rule, regulation, policy,
guideline or directive
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(whether or not having the force of law), or any interpretation thereof,
including, without limitation, the provisions of Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended, reformed
or otherwise modified from time to time, and any rules promulgated to implement
such provisions (including travel, lodging, meals and other out of pocket
expenses), (d) to pay or reimburse each Agent and each Lender for all its
reasonable costs and out-of-pocket expenses incurred in connection with field
examinations and audits and the preparation of Reports at such Agent's then
customary charge plus travel, lodging, meals and other out of pocket expenses,
(e) to pay or reimburse each Agent and each Lender for all its reasonable costs
and out-of-pocket expenses incurred in connection with costs and expenses of
forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Funding Accounts and lock boxes, and costs and
expenses of preserving and protecting the Collateral, (f) to pay, indemnify and
hold harmless each Agent, each Lender, their respective Affiliates, and each of
their directors, officers, directors, agents and employees (each, an
"Indemnitee") from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents and (g) to
pay, and indemnify and hold harmless each Indemnitee from and against, any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs (including the allocated cost of internal counsel and
the reasonable legal fees and disbursements of outside counsel to the Lenders
and each Agent), expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement and the other Loan Documents, the Permitted Acquisitions or
the use of the proceeds of the Loans, Acceptances or the Letters of Credit and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans and Acceptances or the violation of, noncompliance with or
liability under, any Environmental Law and the reasonable fees and expenses of
legal counsel in connection with claims, actions or proceedings by any
Indemnitee against any Obligor under any Loan Document (all the foregoing,
collectively, the "indemnified liabilities"), provided, however, that the
Borrowers shall have no obligation hereunder to any Indemnitee with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of such Indemnitee. Without limiting the foregoing, and to the extent permitted
by applicable law, each of Quiksilver and the Borrowers agrees not to assert and
to cause its Subsidiaries not to assert, and hereby waives and agrees to cause
its Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws that any of them might have by statute or
otherwise against any Indemnitee. The agreements in this Section shall survive
repayment of the Loans, the Acceptance Obligations and all other amounts payable
hereunder. Each Agent and the Lenders agree to provide reasonable details and
supporting information concerning any costs and expenses required to be paid by
either Borrower pursuant to the terms hereof.
SECTION 9.6. Successors and Assigns; Participations; Purchasing
Lenders. (a) This Agreement shall be binding upon and inure to the benefit of
each Borrower, the Lenders, the Agents, all future Lenders and their respective
successors and assigns, except that neither Borrower may assign, transfer or
delegate any of their rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
or finance business and in accordance with applicable law, at any time sell to
one or more lenders or financial institutions ("Participants") participating
interests in any Loan or Acceptance Obligation owing to such Lender, any Letter
of Credit participated in by such Lender, any Note held by such Lender, any US
Revolving Loan Commitment or Canadian Revolving Loan Commitment of such Lender
or any other
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interest of such Lender hereunder and under the other Loan Documents; provided,
however, that the holder of any such participation, other than an Affiliate of
such Lender, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting the extension of the
maturity of any portion of the principal amount of a Loan, an Acceptance
Obligation, US Revolving Loan Commitment or Canadian Revolving Loan Commitment,
the expiration of a Letter of Credit or any portion of interest or fees related
thereto allocated to such participation or a reduction of the principal amount
or principal payment amount of or the rate of interest payable on the Loans and
the Acceptance Obligations or any fees related thereto or reduction of the
amount to be reimbursed under any Letter of Credit, or a release of any Loan
Party or any substantial portion of the Collateral or any increase in
participation amounts. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note and the participant in any such Letter
of Credit for all purposes under this Agreement and the other Loan Documents,
and the Borrowers and the Agents shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. Each Borrower agrees that if amounts
outstanding under this Agreement and the other Loan Documents are due or unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount continuing of
its participating interest were owing directly to it as a Lender under this
Agreement or any Note; provided, however, that such Participant shall only be
entitled to such right of setoff if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with the Lenders the proceeds thereof as provided in Section 9.7. Each Borrower
also agrees that each Participant shall be entitled to the benefits of Sections
2.15, 2.16 and 2.17 with respect to its participation in the US Revolving Loan
Commitments, the Canadian Revolving Loan Commitments and the Loans, the
Acceptance Obligations and the Letters of Credit outstanding from time to time;
provided, however, that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
or finance business and in accordance with applicable law, at any time, with the
consent of the applicable Administrative Agent, each Alternate Currency Fronting
Lender (with respect to any assignment of US Revolving Commitments) and each
Issuing Bank (with respect to any assignment of US Revolving Commitments) (in
each case, such consent not to be unreasonably withheld), sell to any lenders or
financial institutions, which lenders or financial institutions (but not any
Lender, any Affiliate of any Lender or any Approved Fund) shall be subject to
the consent of the US Borrower (such consent not to be unreasonably withheld and
not to be required if a Default has occurred and is continuing) ("Purchasing
Lenders"), all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Assumption, executed
by such Purchasing Lender and such transferor Lender and delivered to the
applicable Administrative Agent for its Assumption and recording in the Register
(as defined in (d) below); provided, however, that (i) any such sale must be in
an amount not less than US$5,000,000 (or, if less, the entire remaining amount
of the selling Lender's obligations) under this Agreement and the other Loan
Documents, (ii) the Purchasing Lender, if it shall not be a Lender, shall
deliver to the applicable Administrative Agent an Administrative Questionnaire
and (iii) with respect to any assignment of Canadian Revolving Commitments, the
Purchasing Lender must be able to designate a Counterpart Lender, pursuant to
which it intends to fund Canadian Revolving Loans to the US Borrower. Upon such
execution, delivery, assumption and recording, from and after the transfer
effective date determined pursuant to such Assignment and Assumption, (x) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and Assumption, have
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the rights and obligations of a Lender hereunder with a US Revolving Loan
Commitment or Canadian Revolving Loan Commitment, as applicable, as set forth
therein, and (y) the transferor Lender thereunder shall, to the extent of such
assigned portion and as provided in such Assignment and Assumption, be released
from its obligations under this Agreement and the other Loan Documents (and, in
the case of an Assignment and Assumption covering all or the remaining portion
of a transferor Lender's rights and obligations under this Agreement, such
transferor Lender shall cease to be a party hereto). Such Assignment and
Assumption shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the US Revolving Loan Commitment Percentages or Canadian
Revolving Loan Commitment Percentages, as applicable, arising from the purchase
by such Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under this Agreement and the other Loan Documents. On or
prior to the transfer effective date determined pursuant to such Assignment and
Assumption, the applicable Borrower, at its own expense, shall (upon the request
of the relevant Lender) execute and deliver to the applicable Administrative
Agent in exchange for the surrendered US Revolving Credit Note(s) or Canadian
Revolving Credit Note(s), as the case may be, new Note(s) to the order of such
Purchasing Lender in an amount equal to the US Revolving Loan Commitments or
Canadian Revolving Loan Commitments, as applicable, assumed by it pursuant to
such Assignment and Assumption, and if the transferor Lender has retained a US
Revolving Loan Commitment or Canadian Revolving Loan Commitment hereunder, new
US Revolving Notes or Canadian Revolving Notes, as applicable, to the order of
the transferor Lender in an amount equal to the US Revolving Loan Commitments or
Canadian Revolving Loan Commitments, as applicable, retained by it hereunder.
Such new Notes shall be dated the Effective Date and shall otherwise be in the
form of the Notes replaced thereby. The Notes surrendered by the transferor
Lender shall be returned by the applicable Administrative Agent to the
applicable Borrower marked "canceled."
(d) Each of the US Administrative Agent and the Canadian
Administrative Agent, as applicable, shall maintain at its address referred to
in Section 9.2 a copy of each Assignment and Assumption delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the US Revolving Loan Commitments and Canadian Revolving Loan
Commitments of, and principal amount of the US Revolving Loans, Canadian
Revolving Loans and Acceptance Obligations owing to, and, if applicable, the
Letters of Credit and Alternate Currency Loans participated in by, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the applicable Borrower, the applicable
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the US Revolving Loans, Canadian
Revolving Loans and Acceptance Obligations and the participant in the Letters of
Credit and Alternate Currency Loans, if applicable, recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
each Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Assumption executed by a
transferor Lender and Purchasing Lender (and, in the case of a Purchasing Lender
that is not then a Lender or an Affiliate thereof, by the Borrowers and the
applicable Administrative Agent) together with payment to the applicable
Administrative Agent (except in the case of a Lender assigning to its Affiliate)
of a registration and processing fee of US$3,500, such Administrative Agent
shall (i) promptly accept such Assignment and Assumption and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such Assumption and recordation to
the Lenders and each Borrower.
(f) Each Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning Quiksilver and its Subsidiaries and Affiliates which
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has been delivered to such Lender by or on behalf of such Borrower pursuant to
this Agreement or any other Loan Document or which has been delivered to such
Lender by or on behalf of such Borrower in connection with such Lender's credit
evaluation of Quiksilver and its Subsidiaries and Affiliates prior to becoming a
party to this Agreement.
(g) If, pursuant to this Section, any interest in this Agreement,
any Letter of Credit or any Note is transferred to any Transferee which is a
Non-US Lender, the transferor Lender shall cause such Transferee, concurrently
with the effectiveness of such transfer, (i) to represent to the transferor
Lender and each Agent (for the benefit of the transferor Lender, each Agent and
each Borrower) that under applicable law and treaties no taxes will be required
to be withheld by either Agent, either Borrower or the transferor Lender with
respect to any payments to be made to such Transferee in respect of the Loans or
the Letters of Credit, (ii) to furnish to the transferor Lender, each Agent and
each Borrower United States Internal Revenue Service Form W-8BEN or W-8ECI (as
applicable to it) or, in the case of a Non-US Lender claiming exemption from
United States federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest," a statement substantially in
the form of Exhibit M and a Form W-8BEN (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder) (except that no such form shall be required in
respect of Canadian Revolving Loans, Acceptances or Acceptance Equivalent Loans)
and (iii) to agree (for the benefit of the transferor Lender, each Agent and
each Borrower) to provide the transferor Lender, each Agent and each Borrower a
new Form W-8BEN or W-8ECI (as applicable to it) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Transferee, and to comply from time to time
with all applicable United States laws and regulations with regard to such
withholding tax exemption.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under its Notes, or, if applicable, its
participation in any Letter of Credit, to any Federal Reserve Bank in accordance
with applicable law.
SECTION 9.7. Adjustments; True-Up; Setoff. (a) If any Lender (a
"benefited Lender") shall at any time receive any payment of all or part of its
Loans or Acceptances, its participations in Letters of Credit, or interest
thereon, or fees, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by setoff, pursuant to events or proceedings of
the nature referred to in Section 7(g), or otherwise), in a greater proportion
than any such payment to or collateral received by any other applicable Lender,
if any, in respect of such other Lender's Loans, its participations in Letters
of Credit, or interest thereon, or fees, such benefited Lender shall purchase
for cash from such other Lenders such portion of each such other Lender's Loans,
participations in Letters of Credit, or fees, or shall provide such other Lender
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of such other Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans or its participations in Letters
of Credit may exercise all rights of payment (including rights of setoff) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(b) Notwithstanding any of the foregoing, in the event that, from
and after the time of any Event of Default under Section 7(a) or 7(g), any US
Lender or Canadian Lender, or group of US Lenders or Canadian Lenders, recovers
a higher pro rata share on account of its Loans, Reimbursement Obligations and
Acceptance Obligations than another Lender or group, such Lender or group shall
make payments to the other in exchange for participation in their Loans,
Reimbursement Obligations and/or
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Acceptance Obligations, as the case may be, in order to ensure equivalent
recoveries from the time of such continuing Event of Default, as well as
determined in accordance with reasonable procedures as established by the US
Administrative Agent.
(c) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, exercisable upon the occurrence and
during the continuance of an Event of Default, without prior notice to the US
Borrower or the Canadian Borrower, as applicable, any such notice being
expressly waived by such Borrower to the extent permitted by applicable law, to
set off and appropriate and apply against the Obligations or Canadian
Obligations, as applicable, any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by such
Lender or any branch or agency thereof or bank controlling such Lender to or for
the credit or the account of such Borrower. Each Lender agrees promptly to
notify such Borrower after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.
SECTION 9.8. Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.9. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.10. Integration. This Agreement (and with respect to
Quiksilver, the US Borrower and the US Administrative Agent only, the Commitment
Letter, the Fee Letter and the Senior Credit Engagement Letter) represents the
entire agreement of Quiksilver, the Borrowers, the Agents and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agents or any Lender relative to the
subject matter hereof not expressly set forth or referred to in the Commitment
Letter, the Fee Letter and the Senior Credit Engagement Letter (with respect to
Quiksilver, the US Borrower and the US Administrative Agent only), herein or in
the other Loan Documents.
SECTION 9.11. GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.
SECTION 9.12. WAIVER OF JURY TRIAL. IN CONNECTION WITH ANY ACTION OR
PROCEEDING, WHETHER BROUGHT IN STATE OR FEDERAL COURT, THE BORROWERS, THE
LENDERS AND THE AGENTS HEREBY EXPRESSLY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY
RIGHT THEY MAY OTHERWISE HAVE TO TRIAL BY JURY OF ANY CLAIM, CAUSE OF ACTION,
ACTION, DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY OF THEM, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, THAT ARISES OUT OF OR RELATES TO (a) ANY OF
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THE LOAN DOCUMENTS, (b) ANY NEGOTIATIONS OR COMMUNICATIONS RELATING TO ANY OF
THE LOAN DOCUMENTS, WHETHER OR NOT INCORPORATED INTO THE LOAN DOCUMENTS OR ANY
INDEBTEDNESS EVIDENCED THEREBY, OR (c) ANY ALLEGED AGREEMENTS, PROMISES,
REPRESENTATIONS OR TRANSACTIONS IN CONNECTION THEREWITH.
SECTION 9.13. Acknowledgements. Each of Quiksilver and the Borrowers
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agents nor any Lender has any fiduciary relationship
to Quiksilver or the Borrowers solely by virtue of any of the Loan Documents,
and the relationship pursuant to the Loan Documents between the Agents and the
Lenders, on one hand, and Quiksilver and the Borrowers on the other hand, is
solely that of creditor and debtor; and
(c) no joint venture exists among the Lenders or among Quiksilver
and the Borrowers, on one hand and the Lenders, on the other hand.
SECTION 9.14. Headings. Section headings are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 9.15. Copies of Certificates, Etc. Whenever any Borrower is
required to deliver notices, certificates, opinions, statements or other
information hereunder to any Administrative Agent for delivery to any Lender
(including under Article 4), it shall do so in such number of copies as such
Agent shall reasonably specify.
SECTION 9.16. Confidentiality. Each of the Agents and the Lenders
shall take normal and reasonable precautions to maintain the confidentiality of
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrowers, but may, in any
event, make disclosures (i) reasonably required by any bona fide transferee,
assignee or participant in connection with the contemplated transfer or
assignment of any US Revolving Loan Commitments, Canadian Revolving Loan
Commitments or Loans or participations therein or participations in Letters of
Credit or (ii) as required or requested by any governmental agency or
representative thereof or as required pursuant to legal process or (iii) to its
attorneys and accountants or (iv) as required by law or (v) in connection with
litigation involving any Lender, or (vi) to any and all persons, without
limitation of any kind, of the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions and other tax
analyses, if any) that are provided to the taxpayer relating to such tax
treatment and tax structure, provided that (a) such transferee, assignee or
participant agrees to comply with the provisions of this Section 9.16 unless
specifically prohibited by applicable law or court order and (b) in no event
shall any Lender be obligated or required to return any materials furnished by
Quiksilver or the Subsidiary.
SECTION 9.17. Patriot Act Notice. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that identifies
each person or entity that opens an account, including any deposit account,
treasury management account, loan, other extension of credit, or other financial
services product. What this means for each Borrower: When such Borrower opens an
account, if such Borrower is an individual, the applicable Administrative Agent
and the
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Lenders will ask for such Borrower's name, residential address, date of birth,
and other information that will allow such Administrative Agent and the Lenders
to identify such Borrower, and, if such Borrower is not an individual, such
Administrative Agent and the Lenders will ask for such Borrower's name, employer
identification number, business address, and other information that will allow
such Administrative Agent and the Lenders to identify such Borrower. Such
Administrative Agent and the Lenders may also ask, if such Borrower is an
individual, to see such Borrower's driver's license or other identifying
documents, and, if such Borrower is not an individual, to see such Borrower's
legal organizational documents or other identifying documents.
SECTION 9.18. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which, in accordance with normal banking procedures in the
relevant jurisdiction, the first currency could be purchased with such other
currency on the US Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of any Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the US Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may, in
accordance with normal banking procedures in the relevant jurisdiction, purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, each Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 9.18 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 9.19. Submission To Jurisdiction; Waivers. Each of
Quiksilver, the US Borrower and the Canadian Borrower hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court or forum and agrees not to plead
or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the applicable
Borrower at the address specified in Section 9.2 or at such other address of
which the applicable Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
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(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
SECTION 9.20. Intercreditor Agreement. By executing this Agreement
as a Lender, or by becoming a Lender hereunder pursuant to an Assignment and
Assumption, each Lender hereby agrees to the terms of the Intercreditor
Agreement, acknowledges that certain of its rights hereunder shall be subject
thereto, and consents to the execution thereof by the US Administrative Agent on
behalf of such Lender, which occurred on the Original Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly Responsible Officers as of
the day and year first above written.
QUIKSILVER, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
BORROWER:
QUIKSILVER AMERICAS, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
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US ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK, N.A.,
as US Administrative Agent and as a Lender
By: ________________________________________
Name: __________________________________
Title: _________________________________
ALTERNATE CURRENCY FRONTING LENDERS
JPMORGAN CHASE BANK, N.A., LONDON BRANCH, as Alternate
Currency Fronting Lender (with respect to Alternate
Currency Loans denominated in Alternate Currencies other
than Canadian Dollars)
By: ________________________________________
Name: __________________________________
Title: _________________________________
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ALTERNATE CURRENCY FRONTING AGENT
J.P. MORGAN EUROPE LIMITED, as Alternate Currency
Fronting Agent
By: ________________________________________
Name: __________________________________
Title: _________________________________
By: ________________________________________
Name: __________________________________
Title: _________________________________
CANADIAN ADMINISTRATIVE AGENT/ ALTERNATE CURRENCY
FRONTING LENDER
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as
Canadian Administrative Agent and Alternate Currency
Fronting Lender with respect to Alternate Currency
Loans denominated in Canadian Dollars
By: ________________________________________
Name: __________________________________
Title: _________________________________
DOCUMENTATION AGENT
BANK OF AMERICA, N.A., as Documentation Agent and as
a Lender
By: ________________________________________
Name: __________________________________
Title: _________________________________
SYNDICATION AGENT
UNION BANK OF CALIFORNIA, N.A., as Syndication Agent
and as a Lender
By: ________________________________________
Name: __________________________________
Title: _________________________________
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______________________________
(Name of US Lender)
By: __________________________
Name:
Title:
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______________________________
(Name of US Lender)
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
The US Guarantors hereby consent and agree to this Amended and
Restated Credit Agreement as of the date hereof and reaffirm their obligations
under the US Security Agreement, the US Guarantee and the other Loan Documents
to which they are party.
QS RETAIL, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
QS WHOLESALE, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
DC SHOES, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
HAWK DESIGNS, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
MERVIN MANUFACTURING, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
FIDRA, INC.
By: ________________________________________
Name: __________________________________
Title: _________________________________
