EXHIBIT 10.2
AMENDMENT NUMBER TWO TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This AMENDMENT NUMBER TWO TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment"), dated as of June 27, 2003, is entered into among
DECKERS OUTDOOR CORPORATION, a Delaware corporation ("Parent"), and UGG
Holdings, Inc., a California corporation ("UGG") (collectively, referred to
herein as "Borrowers" and individually as a "Borrower"), on the one hand, and
COMERICA BANK-CALIFORNIA, a California banking corporation ("Bank"), on the
other hand, with reference to the following facts:
A. Borrowers and Bank previously entered into that certain
Amended and Restated Revolving Credit Agreement, dated as of November 25, 2002,
as amended by that certain Amendment Number One to Amended and Restated
Revolving Credit Agreement, dated as of April 29, 2003 (the "Agreement"); and
B. Borrowers and Bank desire to further amend the Agreement in
accordance with the terms of this Amendment.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:
1. Defined Terms. All initially capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Agreement.
2. Amendments to Section 1.1.
(a) The following new definition is hereby added to
Section 1.1 of the Agreement in appropriate alphabetical order:
"Consolidated Total Liabilities to
Consolidated Effective Tangible Net Worth Ratio" means, as of
the date of determination, the ratio of (i) Borrowers'
consolidated total liabilities, calculated in accordance with
GAAP, less Subordinate Debt, to (ii) Consolidated Effective
Tangible Net Worth."
(b) The definitions of "Overadvance Limit" and\
"Overadvance Period" set forth in Section 1.1 of the Agreement are hereby
deleted in their entirety.
(c) The definitions of "Borrowing Base," and "Inventory
Sublimit" and "Revolving Credit Commitment" set forth in Section 1.1 of the
Agreement are hereby amended in their entirety as follows:
"'Borrowing Base' means, as of the date of
determination, the lesser of (a) the Revolving Credit
Commitment or (b) (i) the Eligible Accounts
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times the Applicable A/R Advance Rate, plus (ii) the lesser of
(x) 50% of the Eligible Inventory, (y) the Inventory Sublimit,
or (z) the aggregate Dollar amount of outstanding Borrowings
against Eligible Accounts (provided, that this clause (z)
shall not apply during July and August of each year and during
any Inventory Sublimit Increase Period); less the amount of
outstanding Obligations (other than Obligations in respect of
the Term Loan) and less the Foreign Exchange Reserve;
provided, however, Bank may reduce the advance rates or create
additional reserves against the Eligible Accounts and/or the
Eligible Inventory, in its sole and absolute discretion,
without declaring an Event of Default if it reasonably
determines that there has occurred a Material Adverse Effect."
"'Inventory Sublimit' means (i) during any
Inventory Sublimit Increase Period, Ten Million Seven Hundred
Fifty Thousand Dollars ($10,750,000), (ii) during the fourth
fiscal quarter of Parent of each year, Nine Million Dollars
($9,000,000), and (iii) at all other times, Seven Million Five
Hundred Thousand Dollars ($7,500,000)."
"'Revolving Credit Commitment' means
Eighteen Million Dollars ($18,000,000) from May 1 through and
including October 31 of each year, and Twenty Million Dollars
($20,000,000) at all other times."
3. Amendment to Section 2.1. Section 2.1 of the Agreement is
hereby amended in its entirety as follows:
"2.1 Revolving Loans. Provided that no
Event of Default or Unmatured Event of Default has occurred
and is continuing, and subject to the other terms and
conditions hereof, Bank agrees to make revolving loans
("Revolving Loans") to Borrowers, upon notice in accordance
with Section 2.5(b), from the Closing Date up to but not
including the Revolving Loans Maturity Date, the proceeds of
which shall be used only for the purposes allowed in Section
7.1(a), subject to the following conditions and limitations:
"(a) the outstanding
Obligations (other than Obligations in respect of the Term
Loan) after giving effect to any proposed Borrowing shall not
exceed the Borrowing Base;
"(b) Borrowers shall not be
permitted to borrow, and Bank shall not be obligated to make,
any Revolving Loans to Borrowers, unless and until all of the
conditions for a Borrowing set forth in Section 4.2 have been
met to the reasonable satisfaction of Bank; and
"(c) if, at any time or for any
reason, the amount of the Obligations exceeds the Borrowing
Base (an "Overadvance"), Borrowers shall immediately pay to
Bank, upon Bank's election and demand, in cash, the amount of
such Overadvance to be used by Bank to repay outstanding
Borrowings.
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"Borrowers may repay and, subject to the
terms and conditions hereof, reborrow Revolving Loans. All
such repayments shall be without penalty or premium except as
otherwise required by Section 2.7 with respect to repayments
of LIBOR Lending Rate Portions. Borrowers shall give Bank at
least three (3) LIBOR Business Days' prior written notice of
any repayment of a LIBOR Lending Rate Portion. On the
Revolving Loans Maturity Date, Borrowers shall pay to Bank the
entire unpaid principal balance of the Revolving Loans
together with all accrued but unpaid interest thereon."
4. Amendment to Section 2.2. Clause (c) of Section 2.2 of the
Agreement is hereby amended in its entirety as follows:
"(c) The outstanding Obligations after giving
effect to any proposed incurrence of a Currency Obligation by
Parent shall not exceed the Borrowing Base;"
5. Amendment to Section 3.1. Clause (i) of Section 3.1(a) of the
Agreement is hereby amended in its entirety as follows:
"(i) The face amount of the Letter of
Credit requested, if and when issued, must not cause the
Obligations to exceed the Borrowing Base;"
6. Amendments to Section 7.15.
(a) Clause (d) of Section 7.15 of the Agreement is hereby
amended in its entirety as follows:
"(d) Intentionally Deleted."
(b) Clause (f) of Section 7.15 of the Agreement is hereby
amended in its entirety as follows:
"(f) Consolidated Effective Tangible Net Worth,
measured as of the end of each fiscal quarter of Parent,
commencing with the fiscal quarter ending December 31, 2002,
at any time to be less than the sum of (i) $18,500,000 plus,
(ii) on a cumulative basis, 75% of the Consolidated Net Profit
(but in no event less than zero) for each fiscal year,
commencing with the fiscal year ending December 31, 2003,
minus (iii) on a cumulative basis, any payments made to
Peninsula that are permitted to be made pursuant to the terms
of the Subordination Agreement (Peninsula), and minus (iv)
amount paid to Xxxxxxxx by Parent during July 2003 (but in no
event more than $3,200,000) to redeem shares of preferred
stock issued to Xxxxxxxx."
(c) A new clause (g) is hereby added to Section 7.15 of
the Agreement as follows:
"(g) The Consolidated Total Liabilities to
Consolidated Effective Tangible Net Worth Ratio at any time,
tested at the end of each fiscal
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quarter of Parent, to be greater than the ratio set forth in
the table below opposite the applicable fiscal quarter:
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FISCAL QUARTER ENDING: MAXIMUM CONSOLIDATED TOTAL LIABILITIES TO
CONSOLIDATED EFFECTIVE TANGIBLE NET WORTH
RATIO:
--------------------------------------------------------------------------------------------
3/31/03 1.50:1.0
6/30/03
9/30/03
12/31/03
1/31/04
3/31/04
9/30/04
12/31/04
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1/31/05 and each fiscal quarter thereafter 1.00:1.0
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7. Replacement of Exhibit 1.1B. Exhibit 1.1 B attached to the
Agreement is hereby replaced with Exhibit 1.1B attached hereto.
8. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to and contingent upon the
fulfillment of each and every one of the following conditions:
(a) Bank shall have received this Amendment, duly
executed by the Borrowers and Bank;
(b) No Event of Default, Unmatured Event of Default or
Material Adverse Effect shall have occurred and be continuing; and
(c) All of the representations and warranties set forth
herein, in the Loan Documents and in the Agreement shall be true, complete and
accurate in all respects as of the date hereof (except for representations and
warranties which are expressly stated to be true and correct as of the Closing
Date).
9. Representations and Warranties. In order to induce Bank to
enter into this Amendment, Borrowers hereby represent and warrant to Bank that:
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(a) No Event of Default or Unmatured Event of Default is
continuing;
(b) All of the representations and warranties set forth
in the Agreement and the Loan Documents are true, complete and accurate in all
respects (except for representations and warranties which are expressly stated
to be true and correct as of the Closing Date); and
(c) This Amendment has been duly executed and delivered
by the Borrowers, and after giving effect to this Amendment, the Agreement and
the Loan Documents continue to constitute the legal, valid and binding
agreements and obligations of the Borrowers, enforceable in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
and similar laws and equitable principles affecting the enforcement of
creditors' rights generally.
10. Counterparts; Telefacsimile Execution. This Amendment may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
11. Integration. The Agreement as amended by this Amendment
constitutes the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and thereof, and supersedes any and
all prior agreements and understandings, oral or written, relating to the
subject matter hereof and thereof.
12. Reaffirmation of the Agreement. The Agreement as amended
hereby and the other Loan Documents remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment as of the date first hereinabove written.
DECKERS OUTDOOR CORPORATION,
a Delaware corporation
By /s/ M. Xxxxx Xxx
____________________________________
Name: M. Xxxxx Xxx
Title: Chief Financial Officer
UGG HOLDINGS, INC.,
a California corporation
By /s/ M. Xxxxx Xxx
____________________________________
Name: M. Xxxxx Xxx
Title: Chief Financial Officer
COMERICA BANK - CALIFORNIA,
a California banking corporation
By: /s/ Xxxxx X. Xxxxx
___________________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
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Exhibit 1.1B
To
Revolving Credit Agreement
Form of Borrowing Base Certificate
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BORROWING BASE CERTIFICATE
To: Comerica Bank - California
00000 Xxxxxxx Xxxx.
Xxxxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Initially capitalized terms used but not defined in this Borrowing Base
Certificate shall have the meanings given to such terms in the Amended and
Restated Credit Agreement.
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I. CALCULATION OF ELIGIBLE ACCOUNTS
---------------------------------------------------------------------------------------------------------------
1. Face amount of all Accounts: $_____________
2. (a) Less: Accounts that the Account Debtor has failed to pay
within 90 days of invoice date: $____________;
(b) Plus: Accounts for Teva(R) ineligible under line 2(a)
above with selling terms up to 120 days from invoice date
created from November 1 through January 31 of each year
that are not past due:
$________________
(c) Plus: Accounts ineligible under line 2(a) above
pre-approved in writing by Bank owing to UGG with selling
terms up to 120 days from invoice date that are not unpaid
150 days from invoice date:
$______________(1)
Total lines 2(a), (b) and (c): $_____________
3. Less: Accounts owed by an Account Debtor or its Affiliates where
25% or more of all Accounts owed by that Account Debtor
(or its Affiliates) are deemed ineligible under line (2)
above: $_____________
4. Less: Accounts with respect to which the Account Debtor is an
officer, director, shareholder, employee, Affiliate, or agent of
any Borrower: $_____________
---------------------------------------
(1) May not exceed $5,000,000.
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5. Less: Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval,
xxxx and hold, or other terms by reason of which the payment by
the Account Debtor may be conditional: $_____________
6. Less: Accounts that are not payable in Dollars or with respect to
which the Account Debtor: (i) does not maintain its chief executive
office in the United States, or (ii) is not organized under the
laws of the United States or any State thereof, or (iii) is the
government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an
irrevocable letter of credit reasonably satisfactory to Bank (as to
form, substance, and issuer or domestic confirming bank) that must
be directly drawn upon Bank, or (z) the Account is covered by
credit insurance in form and amount, and by an insurer, reasonably
satisfactory to Bank: $_____________
7. Less: Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality
of the United States (exclusive, however, of Accounts with respect
to which the applicable Borrower has complied, to the reasonable
satisfaction of Bank, with the Assignment of Claims Act, 31
USC Section 3727), or (ii) any state of the United States (exclusive,
however, of (y) Accounts owed by any state that does not have a
statutory counterpart to the Assignment of Claims Act, or (z)
Accounts owed by any state that does have a statutory counterpart
to the Assignment of Claims Act as to which the applicable Borrower
has complied to Bank's reasonable satisfaction): $_____________
8. Less: Accounts with respect to which the Account Debtor is a
creditor of any Borrower, and either has or has asserted a right of
setoff, has disputed its liability, or has made any claim with
respect to the Account, to the extent of such setoff, dispute or
claim: $_____________
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9. Less: Accounts with respect to an Account Debtor whose total
obligations owing to any Borrower exceed 20% of all Eligible
Accounts, to the extent of the obligations owing by such Account
Debtor in excess of such percentage: $_____________
10. Less: Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which any Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor, or whose credit
standing is reasonably unacceptable to Bank and Bank has so
notified Borrower: $_____________
11. Less: Accounts the collection of which Bank, in its reasonable
credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition: $_____________
12. Less: Accounts which are in default or collection: $_____________
13. Less: Accounts on C.O.D. terms: $_____________
14. Less: Accounts with respect to which the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, the
services giving rise to such Account have not been performed and
accepted by the Account Debtor, or the Account otherwise does not
represent a final sale: $_____________
15. Less: Accounts that are not subject to a valid and perfected
first priority Lien in favor of Bank: $_____________
16. Less: Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, Indiana, or West
Virginia (or any other state that requires a creditor to file a
Business Activity Report or similar document in order to bring suit
or otherwise enforce its remedies against such Account Debtor in
the courts or through any judicial process of such state), unless
the applicable Borrower has qualified to do business in New Jersey,
Minnesota, Indiana, West Virginia, or such other states, or has
filed a Notice of Business Activities Report with the applicable
division of taxation, the department of revenue, or with such other
state offices, as
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appropriate, for the then-current year, or is exempt from such
filing requirement: $_____________
17. Less: Accounts that represent progress payments or other advance
xxxxxxxx that are due prior to the completion of performance by the
applicable Borrower of the subject contract for goods or services: $_____________
18. Total ineligible Accounts (sum of lines 2 through 17): $_____________
19. Total Eligible Accounts (line 1 minus line 18): $_____________
II. CALCULATION OF ELIGIBLE INVENTORY
20. Total Inventory consisting of shoes, footwear and apparel finished
goods held for sale in the ordinary course of any Borrower's
business located at one of any Borrower's business locations set
forth on Schedule 1.1E (or in-transit between any such locations)
to the Revolving Credit Agreement, that complies with each of the
representations and warranties respecting Eligible Inventory made
by Borrowers in the Loan Documents, valued at the lower of cost or
market on a basis consistent with Borrowers' historical accounting
practices: $_____________
21. Less: Inventory that a Borrower does not have good, valid, and
marketable title thereto: $_____________
22. Less: Inventory not located at one of the locations in the United
States set forth on Schedule 1.1E to the Revolving Credit Agreement
or in transit from one such location to another such location: $_____________
23. Less: Inventory located on real property leased by a Borrower or in
a contract warehouse, in each case, unless it is subject to a
Collateral Access Agreement executed by the lessor, warehouseman,
or other third party, as the case may be, and unless it is
segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises: $_____________
24. Less: Inventory not subject to a valid and perfected first
priority Lien in favor of Bank: $_____________
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25. Less: Goods returned or rejected by the applicable Borrower's
customers: $_____________
26. Less: Goods that are (x) obsolete or not in the following season's
line and more than six (6) months old, (y) restrictive or custom
items, work-in-process, or raw materials, or (z) goods that
constitute spare parts, packaging and shipping materials, supplies
used or consumed in a Borrower's business, xxxx and hold goods,
defective goods, "seconds," or Inventory acquired on consignment: $_____________
27. Total ineligible Inventory (sum of lines 21 through 25): $_____________
28. Total Eligible Inventory (line 20 minus line 27): $_____________
III. CALCULATION OF BORROWING BASE AND AVAILABILITY
29. Availability from Eligible Accounts (____%(2) of line 19): $_____________
30. (a) 50% of line 28: $_____________
(b) the amount of the Inventory Sublimit: $__________,(3)
(c) the amount of line 29: $__________(4)
Availability from Eligible Inventory (the lesser of lines
30(a), (b) or (c)): $_____________
31. Sum of lines 29 and 30: $_____________
32. Revolving Credit Commitment: $ 18,000,000
33. The lesser of lines 31 and 32: $_____________
---------------------------------------
(2) Enter the Applicable A/R Advance Rate.
(3) Enter: $10,750,000 during any Inventory Sublimit Increase Period; or
$9,000,000 during the fourth fiscal quarter of Parent of each year; or
$7,500,000 at all other times.
(4) Enter "n/a" during any Inventory Sublimit Increase Period.
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34. Less: the outstanding Obligations in respect of Revolving Loans: $_____________
35. Less: the Foreign Exchange Reserve: $_____________
36. Less: other reserves established by Bank: $_____________
37. Availability (line 33 minus lines 34, 35 and 36) $_____________
Each of the undersigned hereby represents and warrants to Comerica Bank
- California that the information set forth above is true and correct as of the
date set forth hereinbelow, and based upon the information set forth in
Borrowers' books and records.
Dated:_______________, 20__
DECKERS OUTDOOR CORPORATION
By________________________________________
Name:_____________________________________
Title:____________________________________
UGG HOLDINGS, INC.
By________________________________________
Name:_____________________________________
Title:____________________________________
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