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EXHIBIT 10.2
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT, dated as of April 25, 2000, between QUIKSILVER,
INC., a Delaware corporation (the "Borrower"), and UNION BANK OF CALIFORNIA,
N.A., (the "Lender").
RECITALS
The Borrower has requested that the Lender extend to it a term loan to
finance improvements to the Borrower's headquarters building located at 00000
Xxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, upon the terms and conditions set
forth below:
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Accountants": Deloitte & Touche, LLP, or such other firm of independent
certified public accountants of recognized national standing as shall be
selected by the Borrower and satisfactory to the Lender.
"Acquisitions": any transaction, or any series of transactions, consummated
after the Closing Date, in which the Borrower 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 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.
"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.
"Agreement": this Term Loan Agreement, as amended, waived, supplemented or
otherwise modified from time to time.
"Applicable Lending Office": for the Lender, its office specified below its
signature on the signature pages hereof.
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"Applicable Term Loan Margin": 1.50%.
"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, consolidation, amalgamation, joint
venture or other substantive combination) of any of the Properties, business or
assets (other than marketable securities, including "margin stock" within the
meaning of Regulation U, liquid investments and other financial instruments but,
including the assignment of any lease, license or permit relating to the
Properties) of the Borrower or any of its Subsidiaries to any Person or Persons
other than to the Borrower or any of its Subsidiaries.
"Base Rate": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Reference Rate in effect
on such day and (b) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. "Reference Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Lender as its "reference rate" in effect at
its office in Los Angeles, California. "Federal Funds Effective Rate" shall
mean, for any day, the weighted average 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 Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day of such
transactions received by the Lender from three federal funds brokers of
recognized standing selected by it. If, for any reason, the Lender shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Lender to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Reference Rate or the Federal Funds Effective
Rate shall be effective on the effective date of such change in the Reference
Rate or the Federal Funds Effective Rate, respectively.
"Borrower": as defined in the preamble hereto.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in the State of California are authorized or required by law to
close and which, in the case of any portion of the Term Loan accruing interest
based on the Adjusted LIBOR Rate, is a Eurodollar Business Day.
"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).
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"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.
"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.
"Closing Date": the date on which the conditions precedent set forth in
Section 4.1 have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all of the property (tangible or intangible) purported to be
subject to the lien or security interest purported to be created by any security
agreement, pledge agreement, assignment, mortgage, deed of trust, or other
security document heretofore or hereafter executed by the Borrower as security
for all or part of the Obligations.
"Collateral Documents": the Security Agreement, Form UCC-1 Financing
Statements, amendments thereto, and any other document encumbering the
Collateral or evidencing or perfecting a security interest therein for the
benefit of the Lender executed by the Borrower.
"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.
"Consideration": with respect to any Acquisition, the aggregate
consideration, in whatever form (including cash payments, the principal amount
of promissory note and Indebtedness assumed, and the fair market value of other
property delivered) paid, delivered or assumed by the Borrower or any Subsidiary
for such Acquisition and the expenses associated therewith, including all
brokerage commissions, legal fees and similar expenses.
"Continuation Notice": a request for continuation pursuant to Section 2.3,
substantially in the form of Exhibit D.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Covenant Compliance Certificate": a certificate of the Chief Financial
Officer of the Borrower substantially in the form of Exhibit C hereto.
"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.
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"Dollars" and "$": dollars in lawful currency of the United States.
"Domestic Subsidiary": each Subsidiary organized under the laws of the
United States or any state thereof.
"EBITDA": for any period, for the fiscal quarter most recently ended and
the immediately preceding three fiscal quarters, Net Income after eliminating
extraordinary gains and losses, plus (i) provisions for income taxes, (ii)
depreciation and amortization and (iii) Interest Expense.
"Environmental Control Statutes": as defined in Section 3.12.
"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.
"Eurodollar Business Day": shall mean any day on which banks are open for
dealings in Dollar deposits in the London Inter-bank Market.
"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.
"Excluded Taxes": all taxes imposed on or by reference to the net income of
the 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 the Lender or its Applicable Lending Office by any Governmental
Authority.
"Federal Funds Effective Rate": as defined in the definition of "Base Rate"
contained in this Section 1.1.
"Fixed Charge Coverage Ratio": for the Borrower and its Subsidiaries on a
consolidated basis for the fiscal quarter most recently ended and the
immediately preceding three fiscal quarters, the ratio of (a) EBITDA minus (i)
income taxes paid, minus (ii) Capital Expenditures not financed through
long-term debt or long-term Capitalized Lease Obligations to (b) Fixed Charges
for such period.
"Fixed Charges": for the Borrower and its Subsidiaries on a consolidated
basis, the sum of (i) Interest Expense and (ii) regularly scheduled principal
payments due within twelve months on Funded Debt (excluding optional prepayments
made pursuant to Section 2.2), including the principal component of Capitalized
Lease Obligations.
"Foreign Subsidiary": each Subsidiary other than a Domestic Subsidiary.
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"Funded Debt": the sum of the outstanding principal balance of all
Indebtedness of the Borrower and its Subsidiaries described in clauses (i),
(ii), (iii) and (iv) of the definition of "Indebtedness" set forth herein.
Notwithstanding the foregoing, Funded Debt shall not include trade payables and
accrued expenses incurred by the Borrower or its Subsidiaries in accordance
with, customary practices and in the ordinary course of business of the Borrower
or its Subsidiaries.
"GAAP": generally accepted accounting principles in the United States in
effect from time to time. If, at any time, GAAP changes in a manner which will
materially affect the calculations determining compliance by the Borrower with
any of the covenants in Section 6.1, such covenants shall continue to be
calculated in accordance with GAAP in effect prior to such changes in GAAP.
"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.
"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
Borrower in good faith.
"Guarantees": each guarantee made by a Guarantor in favor of the Lender, in
form and substance satisfactory to the Lender, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Guarantors": each Subsidiary which executes a Guarantee in favor of the
Lender.
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"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.
"Indebtedness": of any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services, (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, airway release,
steamship guaranty 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 clause
(i), (ii), (iii), (iv), (v) or (vi) above and (vii) all liabilities in respect
of unfunded vested benefits under plans covered by Title IV of ERISA.
"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.
"Intercreditor Agreement": an intercreditor agreement, in form and
substance satisfactory to the Lender, between the Lender, on the one hand, and
the Revolving Loan Lenders, on the other hand, as it may be amended, modified or
restated from time to time.
"Interest Expense": as of any date, for the fiscal quarter most recently
ended and the immediately preceding three fiscal quarters, the sum of (i) the
amount of all interest on Funded Debt which was paid, payable and/or accrued for
such period and (ii) all commitment, standby letter of credit, commercial letter
of credit or line of credit fees paid, payable and/or accrued for such period to
any lender in exchange for such lender's commitment to lend.
"Interest Payment Date": (a) with respect to each Interest Period of three
months or less, the last day of such Interest Period, (b) with respect to each
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 (c) for each of (a)
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and (b) above, on the day on which the Term Loan becomes due and payable in full
or is paid or prepaid in full.
"Interest Period": with respect to any portion of the Term Loan selected by
the Borrower, subject to Section 2.4:
(a) initially, the period commencing on the Closing Date and ending one,
two, three or six months thereafter, as selected by the Borrower in its Term
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 portion and ending one, two, three
or six months thereafter, as selected by the Borrower by irrevocable notice to
the Lender not less than three Eurodollar Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
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 Business Day;
(ii) any Interest Period that would otherwise extend beyond the date
final payment is due on the Term Loan shall end on the date of such final
payment;
(iii) any Interest Period that begins on the last 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 Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Tranche during an Interest Period.
"Interest Rate Agreement": any interest rate protection agreement, interest
rate future, interest rate option, interest rate swap, interest rate cap or
other interest rate hedge or arrangement entered into between the Lender (or any
Affiliate of the Lender) and the Borrower.
"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.
"Lender": as defined in the preamble hereto.
"LIBOR": with respect to each day during each Interest Period, the rate of
interest determined by the Lender to be the rate per annum at which deposits in
dollars would be offered to the Lender by leading banks in the London Interbank
Market at or about 9:00 a.m., Los Angeles time, two Eurodollar Business Days
prior to the beginning of such Interest Period, for
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delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the portion of
the Term Loan to be subject to such Interest Period.
"LIBOR Adjusted Rate": with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
LIBOR
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1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements": for any day as applied to that portion of the
Term Loan accruing interest at a rate based on the Adjusted LIBOR Rate, 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 such
Federal Reserve System.
"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 or comparable law of any jurisdiction in respect of any
of the foregoing).
"Loan Documents": this Agreement, the Term Note, the Collateral Documents,
the Guarantees, the Intercreditor Agreement, any Interest Rate Agreement and any
other agreement executed by the Borrower or any Subsidiary in connection
herewith or therewith, including UCC-1 Financing Statements 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.
"Margin Stock": as defined in Regulation U.
"Material Adverse Effect": a material adverse effect on (a) the business,
operations, property, condition or prospects (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower,
any Material Domestic Subsidiary or any Material Foreign Subsidiary 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 Lender
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 the Borrower or another Subsidiary) of at least 5%
of the Borrower's consolidated net worth as
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of the last day of the most recently ended fiscal quarter of the Borrower, (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 the Borrower's consolidated
revenue for the 12-month period ended as of the most recently ended fiscal
quarter of the Borrower 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 the Borrower's consolidated net income for the 12-month period ended
as of the most recently ended fiscal quarter of the Borrower.
"Material Foreign Subsidiary": a Foreign Subsidiary having at any time a
net worth equal to 10% or more of the Borrower's consolidated net worth.
"Maximum Leverage Ratio": for the Borrower and its Subsidiaries on a
consolidated basis, the ratio of Funded Debt to EBITDA.
"Multiemployer Plan": a plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Na Pali": Na Pali, S.A.S. (Europe), a French corporation and a Subsidiary
of the Borrower.
"Net Income": for the Borrower and its Subsidiaries on a consolidated
basis, net income as determined in accordance with GAAP.
"Obligations": the unpaid principal of and interest on (including interest
accruing after the maturity of the Term Loan 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 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 Term Note, and all other obligations
and liabilities of the Borrower to the Lender, 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 Term Note, 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 the Lender that are required to be paid
by the Borrower pursuant to the terms of this Agreement) or otherwise.
"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.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor thereto.
"Person": any individual, firm, partnership, joint venture, corporation,
association, limited liability company, business enterprise trust,
unincorporated organization, government or
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department or agency thereof or other entity, whether acting in an individual,
fiduciary or other capacity.
"Plan": as to any Person, any plan (other than a Multiemployer Plan)
subject to Title IV of 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).
"Prohibited Transaction": with respect to any Plan, a prohibited
transaction (as defined in Section 406 of ERISA) with respect to such Plan.
"Properties": the collective reference to the real and personal property
owned, leased, used, occupied or operated by the Borrower and its Subsidiaries.
"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.
"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(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.
"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.
"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 any vice president or, with respect to financial
matters, the chief financial officer, the vice president of finance, treasurer
or controller.
"Revolving Loan Facility": that certain revolving loan facility in a
maximum aggregate principal amount not to exceed $90,000,000 made (or to be
made) by the Revolving Loan Lenders to the Borrower.
"Revolving Loan Lenders": the lenders from time to time party to the
Revolving Loan Facility, and any successor or assigns thereof.
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"Security Agreement": the Security Agreement, in form and substance
satisfactory to the Lender, made by the Borrower in favor of the Lender in
respect of the tangible and intangible personal property of the Borrower
described therein, as the same may be amended from time to time in accordance
with the terms hereof.
"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:
(i) 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;
(ii) such Person is able to pay its debts as they become due; and
(iii) 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.
"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 the Borrower.
"Taxes": as defined in Section 2.11.
"Term Borrowing Notice": a notice from the Borrower to the Lender
requesting the borrowing of the Term Loan on the Closing Date, substantially in
the form of Exhibit E hereto.
"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.
"Term Loan": as defined in Section 2.1(a).
"Term Loan Commitment": $12,300,000.
"Term Loan Maturity Date": April 1, 2007 or such earlier date as the Term
Loan shall become due and payable (whether by acceleration or otherwise).
"Term Note": as defined in Section 2.1(b).
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"Tranche": one or more portions of the Term Loan the Interest Periods with
respect to all of which begin on the same date and end on the same later date.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Term Note, any other Loan
Document or any certificate or other document made or delivered pursuant hereto
or thereto.
(b) As used herein, in the Term Note, 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 2. AMOUNT AND TERM OF LOAN; COMMITMENT AMOUNT
2.1 Term Loan; Term Loan Commitment.
(a) Subject to the terms and conditions hereof, the Lender agrees to make a
term loan to the Borrower on the Closing Date through its Applicable Lending
Office in an aggregate principal amount equal to the amount of the Term Loan
Commitment (the "Term Loan").
(b) The Term Loan shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit A (the "Term Note"). The Lender is hereby
authorized (but not required) to record the date and amount of each payment or
prepayment of principal of the Term Loan made to the Borrower, each continuation
thereof, and the length of each Interest Period with respect thereto, in the
books and records of the Lender, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded. The failure of
the Lender to make any such recordation or notation in the books and records of
the Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Term Note. The Term Note
shall (i) be dated the Closing Date, (ii) provide for the payment of interest in
accordance with Sections 2.5 and 2.6 and (iii) be stated to be payable in
installments of principal in accordance with, and subject to the provisions of,
Section 2.1(c).
(c) The Borrower shall repay the principal of the Term Loan in (i)
eighty-three monthly installments of $102,500 each, payable on the first
Business Day of each month, commencing on May 1, 2000, and (ii) a final
installment in the amount of all principal of the
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Term Loan outstanding on the Term Loan Maturity Date, payable on the Term Loan
Maturity Date. No amount repaid hereunder shall be available for reborrowing.
2.2 Optional Prepayments. The Borrower may, subject to Section 2.12, prepay
the Term Loan in whole or in part, without premium or penalty, provided the
Borrower pays to the Lender any additional amount due to the Lender under any
Interest Rate Agreement, upon at least three Business Day's irrevocable written
notice, from the Borrower to the Lender, specifying the date and amount of
prepayment. If any such notice is given, the amount specified in such notice
shall be due and payable by the Borrower on the date specified therein, together
with accrued interest to such date on the amount prepaid. Partial prepayments of
the Term Loan shall be in the minimum principal amount of $100,000. No amount
prepaid hereunder shall be available for reborrowing.
2.3 Continuation of Interest Periods. Each Interest Period shall be
continued upon the expiration thereof by the Borrower giving notice to the
Lender, in accordance with the applicable provisions of the term "Interest
Period" set forth in Section 1.1, of the length of the next Interest Period,
provided that the selection of an Interest Period by the Borrower shall be
subject to Section 2.4 and provided, further, that if the Borrower shall fail to
give any required notice as described above in this Section with respect to any
portion of the Term Loan, the Borrower shall be deemed to have selected an
Interest Period of one month with respect to such portion.
2.4 Minimum Amounts of Tranches. All selections and continuations of
Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the principal amount of the
portion of the Term Loan comprising each Tranche shall be at least $102,500 and,
in any case, there shall not be more than 6 Tranches.
2.5 Interest Rates and Payment Dates.
(a) Subject to Section 2.7, the outstanding principal amount of the Term
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the LIBOR Adjusted Rate plus the Applicable
Term Loan Margin.
(b) If any Event of Default shall have occurred and be continuing, all
amounts outstanding shall bear interest at a rate per annum equal to the Base
Rate plus 2% 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).
(c) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (b) of this Section shall
be payable on demand.
2.6 Computation of Interest and Fees.
(a) Interest on the Term Loan shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Lender shall as soon as practicable notify
the Borrower of each determination of a LIBOR Adjusted Rate. Any change in the
interest rate on a Loan resulting from a change in the LIBOR Reserve
Requirements shall become effective as of the opening of business on the day on
which such change in the LIBOR Reserve Requirements becomes
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effective. The Lender shall as soon as practicable notify the Borrower of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Lender pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower in
the absence of manifest error.
2.7 Inability to Determine Interest Rate. In the event that prior to the
first day of any Interest Period:
(a) the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower absent manifest error) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Adjusted Rate for such Interest Period, or
(b) the Lender shall have determined, acting in good faith, that the LIBOR
Adjusted Rate for such Interest Period will not adequately and fairly reflect
the cost to the Lender (as conclusively certified by the Lender) of maintaining
the Term Loan at a rate based upon the Adjusted LIBOR Rate during such Interest
Period, the Lender shall give telecopy or telephonic notice thereof to the
Borrower as soon as practicable thereafter.
If such notice is given, that portion of the outstanding balance of the
Term Loan which would have been subject to such Interest Period shall instead
accrue interest at the Base Rate (as determined by the Lender) until such time
as such notice has been withdrawn by the Lender. All interest accruing at such
rate shall be payable quarterly in arrears, on the first day of each January,
April, July and October.
2.8 Payments. All payments (including prepayments) to be made by the
Borrower hereunder and under the Term Note, whether on account of principal,
interest, fees or otherwise, shall be made without set off or counterclaim and
shall be made on the due date thereof to the Lender, at the Lender's office
specified in Section 8.2, in Dollars and in immediately available funds. Such
payments shall be automatically debited to the Borrower's Account No.
455-0000000 maintained with the Lender. If any payment hereunder (other than
payments of interest accruing at the Adjusted LIBOR Rate) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment of interest accruing at the Adjusted LIBOR Rate
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.
2.9 Illegality. Notwithstanding any other provision herein, if any change
after the Closing Date in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for the Lender or its Applicable
Lending Office to maintain the Term Loan at a rate based upon the Adjusted LIBOR
Rate as contemplated by this Agreement, (a) the commitment of the Lender
hereunder to maintain the Term Loan at such rate shall forthwith be
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suspended during such period of illegality and (b) each portion of
the Term Loan then accruing interest at such rate shall be converted
automatically, on the respective last days of the then current Interest Periods
with respect thereto, or within such earlier period as required by law, to loans
accruing interest at the Base Rate (as determined by the Lender). If any such
conversion occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to the Lender such
amounts, if any, as may be required pursuant to Section 2.12.
2.10 Increased Costs.
(a) In the event that any change after the 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 the Lender in
the relevant jurisdiction) from any central bank or other Governmental Authority
made subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirements against assets held 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 the Lender or Applicable Lending Office which is not otherwise
included in the determination of the LIBOR Adjusted Rate hereunder; or
(ii) shall impose on the Lender or Applicable Lending Office any other
condition;
and the result of any of the foregoing is to increase the cost to the Lender or
Applicable Lending Office, by an amount which the Lender deems to be material,
of making, converting into, continuing or maintaining the Term Loan, or to
reduce any amount receivable hereunder in respect thereof then, in any such
case, the Borrower shall immediately pay to the Lender, upon the demand of the
Lender, any additional amounts necessary to compensate the Lender for such
increased cost or reduced amount receivable. If the Lender or any Applicable
Lending Office becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower 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 the Lender or Applicable Lending Office to
the Borrower shall be conclusive evidence of the accuracy of the information so
recorded, absent manifest error. This covenant shall survive the termination of
this Agreement and the payment of the Term Note and all other amounts payable
hereunder.
(b) If, after the 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 the Lender or any
corporation controlling the Lender, and the Lender (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy)
determines that the amount of capital maintained by the Lender or such
corporation which is attributable to or based
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upon the Term Loan or this Agreement must be increased as a consequence of such
introduction or change by an amount deemed by the Lender to be material, then,
upon demand of the Lender, the Borrower shall immediately pay to the Lender
additional amounts sufficient to compensate the Lender or such corporation for
the increased costs to the Lender or corporation of such increased capital. Any
such demand shall be accompanied by a certificate of the Lender setting forth in
reasonable detail the computation of any such increased costs, which certificate
shall be conclusive, absent manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Term Note and all other
amounts payable hereunder.
2.11 Taxes. All payments made by the Borrower in respect of the Obligations
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 are required to be withheld from any amounts payable to the Lender
in respect of the Obligations, the amounts so payable to the Lender shall be
increased to the extent necessary to yield to the Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Term Note. The Lender shall
deliver to the Borrower a certificate in good faith setting forth the amount of
such Taxes, the calculation of such Taxes and an explanation of the requirement
therefor, all in reasonable detail and such certificate shall be conclusive,
absent manifest error. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Lender a copy of
an original official receipt received by the Borrower showing payment thereof or
such other evidence of payment reasonably satisfactory to the Lender. If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties (and related reasonable fees and expenses of counsel) that
may become payable by the Lender as a result of any such failure. The agreements
in this Section shall survive the termination of this Agreement, the payment of
the Term Note and all other amounts payable hereunder.
2.12 Indemnity. The Borrower agrees to indemnify the Lender and to hold the
Lender harmless from and to pay the Lender within 5 Business Days of such
Lender's demand the amount of any liability, loss or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained (including reasonable fees and
expenses of counsel) which the Lender may sustain or incur as a consequence of
(a) default by the Borrower in payment when due of the principal amount of or
interest on the Term Loan, (b) default by the Borrower in making any prepayment,
or continuing any Interest Period, after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making by the
Borrower of a prepayment of any portion of the Term Loan on a day which is not
the last day of an Interest Period with respect thereto (including any
prepayment required as a result of acceleration of the Term Loan under Article
7). The Lender's certificate as to such liability, loss or expense shall be
deemed conclusive, absent manifest error. This covenant shall survive the
termination of this Agreement, the payment of the Term Note and all other
amounts payable hereunder.
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2.13 Mitigation of Costs. If the 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 Borrower
under Section 2.7, 2.9, 2.10 or 2.11, the Lender shall take such action.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Term
Loan, the Borrower hereby represents and warrants to the Lender that:
3.1 Organization and Good Standing. The Borrower 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) is duly qualified to conduct business as a
foreign organization, and is currently in good standing, in each state and other
jurisdiction in which its failure to be so qualified or in good standing could
reasonably be expected to have a Material Adverse Effect. Each state and other
jurisdiction in which the Borrower or any Subsidiary is organized or is
qualified to conduct business is listed on Schedule 3.1 hereto.
3.2 Power and Authority. The Borrower has all requisite power and authority
under applicable Requirements of Law to borrow hereunder. The Borrower 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 the Borrower to execute, deliver and perform the Loan Documents to
which it is a party have been taken and/or received.
3.3 Validity and Legal Effect. This Agreement constitutes, and the other
Loan Documents to which the Borrower is a party constitute (or will constitute
when executed and delivered), the legal, valid and binding obligations of the
Borrower 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.
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 agreement or
instrument by which the Borrower or any of its property 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 the Borrower,
whether such properties are now owned or hereafter acquired.
3.5 Title to Assets; Existing Encumbrances. The Borrower has good and
marketable title to all Properties purported to be owned thereby, free and clear
of any Liens, except the Liens permitted by Section 6.3. The property and assets
of the Borrower are in good order and repair (ordinary wear and tear excepted)
and are fully covered by the insurance required under the Loan
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Documents. The Borrower owns all furniture, fixtures and equipment located in or
at the Subject Property; none of such property is owned by a Subsidiary. The
Borrower has not used (or permitted the filing of any financing statement under)
any legal or operating name at any time during the twelve consecutive calendar
months immediately preceding the execution of this Agreement, except as
identified on Schedule 3.5 hereto.
3.6 Taxes and Assessments. The Borrower and each Subsidiary 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. The Borrower
does not have 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 the Borrower 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 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. There are no taxes imposed on the Borrower 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 Borrower or the
Lender of this Agreement or any other Loan Document to which the Borrower is
party, or on any payment to be made by the Borrower pursuant hereto or thereto.
3.7 Litigation and Legal Proceedings. Except as disclosed on Schedule 3.7
hereto, there is no litigation, claim, investigation, administrative proceeding,
labor controversy or similar action that is pending or, to the best of the
Borrower's knowledge, threatened (i) with respect to any Loan Document or the
transactions contemplated thereby or (ii) against the Borrower or any Subsidiary
that, if adversely resolved, could reasonably be expected to have a Material
Adverse Effect.
3.8 Accuracy of Financial Information.
(a) All information previously furnished to the Lender that was prepared by
or on behalf of the Borrower concerning the financial condition and operations
of the Borrower and its Subsidiaries, including the audited consolidated
financial statements of the Borrower as of October 31, 1999 for the fiscal year
then ended, (A) have been prepared in accordance with GAAP consistently applied,
(B) are true, accurate and complete in all material respects, (C) fairly present
the financial condition of the organizations covered thereby as of the dates and
for the periods covered thereby and (D) disclose all material liabilities
(contingent and otherwise) of the Borrower and its Subsidiaries.
(b) Since October 31, 1999 there has been no event or condition resulting
in a Material Adverse Effect.
3.9 Accuracy of Other Information. All information contained in any
material application, schedule, report, certificate, or any other document given
to the Lender by the Borrower or any other Person in connection with the Loan
Documents is 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 Lender by the Borrower or any other Person on
behalf
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of the 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
Borrower to be reasonable at the time made and as of the 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.
3.10 Compliance with Laws Generally. The Borrower and each Subsidiary is in
compliance in all material respects with all Requirements of Law applicable to
it, its operations and its properties.
3.11 ERISA Compliance.
(a) The Borrower and each Subsidiary is in compliance in all material
respects with all applicable provisions of ERISA, and all rules, regulations and
orders implementing ERISA.
(b) Neither the Borrower, nor any Subsidiary or any ERISA Affiliate thereof
maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which the Borrower, any Subsidiary or any ERISA
Affiliate thereof could have any withdrawal liability.
(c) Neither the Borrower, nor any Subsidiary or any ERISA Affiliate thereof
sponsors or maintains any defined benefit pension plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code,
whether or not waived.
(d) The liability for accrued benefits under each defined benefit pension
plan that will be sponsored or maintained by the Borrower, 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 defined benefit pension plan.
(e) The aggregate liability of the Borrower, each Subsidiary and each ERISA
Affiliate thereof arising out of or relating to a failure of any employee
benefit plan within the meaning of Section 3(2) of ERISA 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 the Borrower, 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 the Borrower or
any Subsidiary is associated.
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3.12 Environmental Compliance.
(a) The Borrower and each Subsidiary has received all permits and filed all
notifications necessary under and is otherwise in compliance in all material
respects with all national, federal, state and local laws, rules and
regulations, whether domestic or foreign, governing the control, removal,
storage, transportation, spill, release or discharge of hazardous or toxic
wastes, substances and petroleum products, including as provided in the
provisions of and the regulations under (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986, (ii) the Solid Waste Disposal Act,
(iii) the Clean Water Act and the Clean Air Act, (iv) the Hazardous Materials
Transportation Act, (v) the Resource Conservation and Recovery Act of 1976 and
(vi) the Federal Water Pollution Control Act Amendments of 1972 (all of the
foregoing enumerated and non-enumerated statutes, including any applicable state
or local statutes, all as amended, collectively, the "Environmental Control
Statutes").
(b) Neither the Borrower nor any Subsidiary has given any written or oral
notice to the Environmental Protection Agency ("EPA") or any state or local
agency with regard to any actual or imminently threatened removal, storage,
transportation, spill, release or discharge of hazardous or toxic wastes,
substances or petroleum products either (i) on properties owned or leased by the
Borrower or such Subsidiary or (ii) otherwise in connection with the conduct of
its business and operations.
(c) Neither the Borrower nor any Subsidiary has received notice that it is
potentially responsible for costs of clean-up of any actual or imminently
threatened spill, release or discharge of hazardous or toxic wastes or
substances or petroleum products pursuant to any Environmental Control Statute.
(d) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Control Statute to which the Borrower or any of its Subsidiaries
is named as a party with respect to the Properties or the business conducted at
the Properties, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Control Statute with
respect to the Properties or such business.
3.13 Federal Regulations. No part of the proceeds of the Term Loan 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 the Lender, the Borrower will furnish to
the Lender a statement to the foregoing effect in conformity with the
requirements of Form U-1 referred to in Regulation U.
3.14 Fees and Commissions. Except as referred to in Section 4.1(f), neither
the Borrower 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 the Borrower 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.
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3.15 Solvency. Immediately prior to and upon the execution of this
Agreement and the funding of the Term Loan on the Closing Date, the Borrower,
both individually and together with its Subsidiaries, was, is and will be
Solvent.
3.16 Investment Company Act; Other Regulations. Neither the Borrower 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.
3.17 Nature of Business. Neither the Borrower nor any Subsidiary is engaged
in any business other than the ownership and operation of retail apparel stores,
the marketing, advertising and promotion of consumer products, the design and
arrangement of apparel manufacturing and the importing of apparel and
accessories.
3.18 Ranking of Loans. This Agreement and the other Loan Documents to which
the Borrower is a party, when executed, and the Term Loan, when borrowed, are
and will be the direct and general obligations of the Borrower. The Borrower's
obligations hereunder and thereunder rank and will rank at least pari passu in
priority of payment to all other senior Indebtedness of the Borrower.
3.19 Subsidiaries. The Borrower has no Subsidiaries other than those listed
on Schedule 3.19 hereto.
ARTICLE 4. CONDITIONS PRECEDENT
4.1 Conditions to Closing Date. The agreement of the Lender to make the
Term Loan on the Closing Date is subject to the satisfaction, immediately prior
to or concurrently with the making of the Term Loan, of the following conditions
precedent:
(a) Term Loan Agreement. The Lender shall have received this Agreement,
executed and delivered by an officer of the Borrower as of the Closing Date.
(b) Other Loan Documents. The Lender shall have received the Term Note, the
Security Agreement, the Intercreditor Agreement and all UCC-1 Financing
Statements and other agreements or instruments required to create or perfect a
security interest in the Collateral executed in connection herewith, in each
case executed and delivered by an officer of the Borrower.
(c) Incumbency Certificates. The Lender shall have received an incumbency
certificate of the Borrower dated as of the Closing Date, executed by its
Secretary or Assistant Secretary.
(d) Corporate Proceedings. The Lender shall have received a copy of the
resolutions of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of the Loan Documents to which it is or will
be a party and (ii) the borrowing contemplated hereunder, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Closing Date,
which certificate states that such resolutions thereby certified have not been
amended, modified, revoked or rescinded and are in full force and effect.
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(e) Organic Documents. The Lender shall have received copies of the Organic
Documents of the Borrower certified as of the Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary thereof.
(f) Fees and Costs. The Lender shall have received payment of all fees,
costs and expenses, including legal fees (if requested by the Lender), accrued
and unpaid and otherwise due and payable on or before the Closing Date by the
Borrower in connection with this Agreement.
(g) Lien Searches. The Lender shall have received such UCC and other Lien
searches as it shall deem necessary.
(h) Good Standing Certificates. The Lender shall have received a
certificate, dated a recent date, of the Secretary of State of the state of
formation of the Borrower and each other jurisdiction where the Borrower 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, the Borrower in such state.
(i) No Default/Representations. No Default shall have occurred and be
continuing on the Closing Date or would occur after giving effect to the Term
Loan requested to be made, and the representations and warranties contained in
this Agreement and each other Loan Document and certificate or other writing
delivered to the Lender in satisfaction of the conditions set forth in this
Section 4.1 prior to or on the Closing Date shall be correct in all material
respects on and as of the Closing Date, and the Lender shall have received a
certificate of the Borrower to such effect in the form of Exhibit B, dated as of
the Closing Date and executed by a Responsible Officer of the Borrower.
(j) Insurance Policies. The Lender shall have received evidence that the
insurance policies provided for in Section 5.5 are in full force and effect,
certified by the insurance broker therefor.
(k) Borrowing Notice. The Lender shall have received the Term Loan
Borrowing Notice.
(l) Additional Proceedings. The Lender shall have received such other
approvals, opinions and documents as the Lender may reasonably request and all
legal matters incident to the making of such loan shall be satisfactory to the
Lender.
ARTICLE 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that from and after the Closing Date, so long as
the Term Note remains outstanding and unpaid or any other amount is owing to the
Lender:
5.1 Financial Statements
(a) Within 105 days after the end of each fiscal year, the Borrower shall
deliver to the Lender a complete set of audited annual consolidated financial
statements of the Borrower and
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unaudited consolidating financial statements with respect to the Borrower,
including a balance sheet, an income statement and a cash flow statement (with
accompanying notes and schedules). Such financial statements (i) must be
prepared in accordance with GAAP consistently applied and (ii) must be certified
without qualification by the Accountants. Together with the audited financial
statements, the Lender must also receive (A) a certificate signed by such
Accountants, at the time of the completion of the annual audit, stating that the
financial statements fairly present the consolidated financial condition of the
Borrower as of the date thereof and for the periods covered thereby, (B) a
certificate executed by the Chief Financial Officer of the Borrower certifying
that the financial statements fairly present the financial condition of the
Borrower 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
Covenant Compliance Certificate.
(b) Within 60 days after the end of each of the Borrower's first three
fiscal quarters, the Borrower shall deliver to the Lender the consolidated
financial statements of the Borrower and the unaudited consolidating financial
statements for such quarter, including a balance sheet, an income statement and
a cash flow statement (with accompanying notes and schedules). Such financial
statements shall be prepared in accordance with GAAP consistently applied.
Together with the quarterly financial statements, the Lender must also receive
(i) a certificate executed by the Chief Financial Officer of the Borrower (A)
stating that the financial statements fairly present the financial condition of
the Borrower 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 Covenant Compliance Certificate.
5.2 Certificates; Other Information. The Borrower shall furnish to the
Lender:
(a) within 10 days after the same are filed, copies of all financial
statements and reports which the Borrower or any Subsidiary may make to, or file
with, the Securities and Exchange Commission 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 the Borrower or any Subsidiary by the Accountants in connection
with any annual or interim audit of the books thereof;
(c) as soon as possible and in any event within five Business Days after
the occurrence of a Default or, in the good faith determination of a Responsible
Officer of the Borrower, a Material Adverse Effect, the written statement by a
Responsible Officer of the Borrower, setting forth the details of such Default
or Material Adverse Effect and the action which the Borrower proposes to take
with respect thereto;
(d) (A) as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know that any Termination Event with respect to
any Plan has occurred, a statement of a Responsible Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower
proposes to take with respect thereto, (B) promptly and in any event within ten
days after receipt thereof by the Borrower or any ERISA Affiliate of the
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Borrower from the PBGC, copies of each notice received by the Borrower 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 the Borrower or any Subsidiary if the present value of the accrued benefits
under the Plan exceeds its assets by an amount in excess of $500,000 and (D)
promptly and in any event within ten days after receipt thereof by the Borrower
or any ERISA Affiliate of the Borrower from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by the Borrower 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;
(e) 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, the Borrower or any Subsidiary, notice of (i) each material
action, suit or proceeding before any Governmental Authority and (ii) any claim
under any Environmental Control Statute;
(f) promptly upon any Subsidiary's becoming a Material Domestic Subsidiary,
or upon the Borrower's direct or indirect creation or acquisition of a Material
Domestic Subsidiary, notice of the same; and
(g) promptly, such additional financial information as the Lender may from
time to time reasonably request.
5.3 Payment of Obligations. The Borrower 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 the Borrower
or its Subsidiaries, as the case may be.
5.4 Conduct of Business; Maintenance of Existence and Licenses; Contractual
Obligations. The Borrower shall, and shall cause each of its Subsidiaries to,
(i) continue to engage in business of the same general type as conducted by the
Borrower and such Subsidiaries as of the Closing Date, (ii) preserve, renew and
keep in full force and effect its corporate or other legal existence, unless the
Board of Directors of any Subsidiary other than a Material Domestic Subsidiary
or a Material Foreign Subsidiary 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, (iii)
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.
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5.5 Maintenance of Property; Insurance. The Borrower shall, and shall cause
each of its Subsidiaries to, keep all property useful or necessary in its
business in good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies or
associations insurance on such of its property in at least such amounts and
against such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the Lender
evidence of the continued effectiveness of such insurance at all times (but with
respect to Foreign Subsidiaries, only upon request by the Lender). All such
policies of insurance on the property of the Borrower constituting Collateral
shall contain an endorsement, in form and substance satisfactory to the Lender,
(i) showing the Lender, as additional insured or loss payee, as appropriate, and
(ii) providing that the insurance companies will give the Lender at least 20
days' prior written notice before any such policy or policies of insurance shall
be materially altered or canceled. All policies of insurance required to be
maintained under this Agreement shall be in customary form and with insurers
reasonably acceptable to the Lender and all such policies shall be in such
amounts as shall be customary for similar companies in the same or similar
business in the same geographical area. The Borrower shall deliver to the Lender
insurance certificates certified by the Borrower's insurance brokers, as to the
existence and effectiveness of each policy of insurance and evidence of payment
of all premiums then due and payable therefor. In addition, the Borrower shall
notify the Lender promptly of any occurrence causing a material loss of any
insured Property constituting Collateral and the estimated (or actual, if
available) amount of such loss. In addition, the Borrower shall cause the
insurance policies maintained by it and the Domestic Subsidiaries to be in
conformity with the following:
(i) Each policy for liability insurance shall provide for all losses
to be paid on behalf of the Lender and the Borrower as their respective
interests may appear, and each policy for property damage insurance shall,
to the extent applicable to Collateral, provide for all losses (except for
losses of less than $1,000,000 per occurrence, which may be paid directly
to the Borrower) to be paid directly to the Lender.
(ii) Reimbursement under any liability insurance maintained by the
Borrower or its Subsidiaries pursuant to this Section 5.5 may be paid
directly to the Person who shall have incurred liability covered by such
insurance. In the case of any loss involving damage to Collateral as to
which clause (iii) of this Section 5.5 is not applicable, the Borrower will
make or cause to be made the necessary repairs to or replacements of such
Collateral, and any proceeds of insurance maintained by the Borrower
pursuant to this Section 5.5 shall be paid by the insurer or the Lender, as
applicable, to the Borrower or the applicable Domestic Subsidiary, upon
presentation of invoices and other evidence of obligations, as
reimbursement for the costs of such repairs or replacements. Any such
payment by the Lender shall not be unreasonably withheld or delayed.
(iii) Upon the occurrence and during the continuance of a Default, all
insurance proceeds in respect of such Collateral shall be paid to the
Lender and applied in repayment of the Term Loan.
Notwithstanding any provision in this Section 5.5 to the contrary, the Borrower
shall have until June 30, 2000 to deliver to the Lender evidence, in form and
substance reasonably satisfactory thereto, that the Borrower has complied with
the requirements of this Section 5.5, provided that
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the Borrower shall deliver to the Lender by the Closing Date, pursuant to
Section 4.1(j), evidence of insurance complying with the first sentence of this
Section 5.5.
5.6 Inspection of Property; Books and Records; Discussions The Borrower
shall, and shall cause each of its Subsidiaries to, keep proper books of records
and account in which full, true and correct entries in conformity with GAAP and
all material Requirements of Law shall be made of all material dealings and
transactions in relation to its business and activities; and upon reasonable
notice and at such reasonable times during usual business hours, permit
representatives of the Lender 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 the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its Accountants.
5.7 Environmental Laws. The Borrower 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 Control
Statutes and obtain and comply in all material respects with any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Control Statutes;
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Control
Statutes and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Control
Statutes except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(c) Defend, indemnify and hold harmless the Lender and its respective
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance with or
liability under any Environmental Control Statutes applicable to the operations
of the Borrower or any of its Subsidiaries, or the Borrower's or any of such
Subsidiaries' interest in Properties, or any orders, requirements or demands of
Governmental Authorities related thereto, including attorneys' and consultants'
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. This indemnity shall continue in full force and effect regardless of
the termination of this Agreement, the payment of the Term Note and all other
amounts payable hereunder.
5.8 Use of Proceeds. The Borrower will use the proceeds of the Term Loan
solely to refinance the existing financing that was used to finance the
improvements at the Borrower's headquarters building located at 00000 Xxxxxx
Xxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, and for no other use.
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5.9 Compliance With Laws, Etc. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all applicable
Requirements of Law.
5.10 Guarantees. The Borrower will cause each of its Material Domestic
Subsidiaries to execute and deliver to the Lender, promptly upon request
thereby, a Guarantee guaranteeing the Obligations and (A) a favorable written
opinion of counsel satisfactory to the Lender as to such matters relating
thereto as the Lender may reasonably request, in form and substance satisfactory
to the Lender, (B) such other agreements, instruments, approvals or other
documents as the Lender may reasonably request, and (C) copies of the
organizational documents, resolutions and incumbency certificates of such
Domestic Subsidiary.
ARTICLE 6. NEGATIVE COVENANTS
The Borrower hereby agrees that from and after the Closing Date, so long as
the Term Note remains outstanding and unpaid or any other amount is owing to the
Lender hereunder:
6.1 Financial Condition Covenants. The Borrower shall not:
(a) Maximum Leverage Ratio. Permit the Maximum Leverage Ratio of the
Borrower and its Subsidiaries on a consolidated basis, as of the end of any
fiscal quarter of the Borrower, to exceed 1.75:1.
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio of
the Borrower and its Subsidiaries on a consolidated basis, as of the end of any
fiscal quarter of the Borrower, to be less than 1.25:1.
(c) Minimum Profitability. Permit, with respect to the Borrower and its
Subsidiaries on a consolidated basis, a net loss to exist for any two
consecutive fiscal quarters of the Borrower.
(d) Indebtedness of Na Pali. Permit Na Pali and its Subsidiaries to have
outstanding at any time credit commitments thereto (including commitments in the
form of borrowing commitments, commitments to issue letters of credit and bank
overdraft line commitments), and Indebtedness resulting therefrom or otherwise,
in an aggregate principal amount in excess of $95,000,000.
6.2 Limitation on Indebtedness. The Borrower shall not create, incur,
assume or suffer to exist any Indebtedness, and shall not permit any of its
Domestic 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 the Borrower outstanding on the Closing Date and listed
on Schedule 6.2;
(c) Indebtedness (i) evidenced by performance bonds or letters of credit
issued in the ordinary course of business or reimbursement obligations in
respect thereof, (ii) evidenced by a
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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, services and incurred
in the ordinary and normal course of business;
(e) Lease Expenses;
(f) Indebtedness of the Borrower and its Domestic Subsidiaries with respect
to the Revolving Loan Facility; and
(g) in addition to the foregoing, Indebtedness of the Borrower not
exceeding $5,000,000 in aggregate principal amount at any time outstanding.
6.3 Limitation on Liens. The Borrower shall not, and shall not permit any
of its Domestic Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, 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 at the time of its acquisition and not
created in anticipation of such acquisition;
(c) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Domestic Subsidiaries, as the
case may be, in conformity with GAAP;
(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;
(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 the Revolving Loan Lenders securing the Revolving
Loan Facility, which Liens are subject to the terms of an Intercreditor
Agreement.
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(i) 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(g).
6.4 Limitation on Fundamental Changes. The Borrower 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 the Borrower may consummate Acquisitions permitted by Section 6.7(d).
6.5 Limitation on Sale of Assets. The Borrower 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 has occurred and is continuing
or would result from such Asset Disposition and (iv) the Consideration for such
Asset Disposition, when aggregated with the consideration for all previous Asset
Dispositions during the same calendar year, does not exceed $10,000,000.
Notwithstanding the foregoing, the Borrower shall not, without the prior written
consent of the Lender, make any Asset Disposition of property constituting
Collateral that, when aggregated with the Consideration for all previous Asset
Dispositions of Collateral, exceeds $1,000,000.
6.6 Limitation on Dividends. The Borrower shall not, and shall not permit
any of its Subsidiaries to, (a) if a corporation, declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower 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
the Borrower 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 the Borrower or any Subsidiary (such declarations, payments,
setting apart, purchases, redemptions, defeasance, retirements, acquisitions and
distributions being herein called "Restricted Payments"), provided, however,
that (i) the Borrower and its Subsidiaries shall be permitted to make Restricted
Payments so long as no Default has occurred and is continuing and (ii) the
Subsidiaries shall in any case be permitted to pay cash dividends to the
Borrower.
6.7 Limitation on Investments, Loans and Advances. The Borrower 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 Acquisition, except for:
(a) the Borrower's ownership interest in its Subsidiaries;
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(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) Acquisitions of Persons or businesses in the same line of business as
that described in Section 3.17; provided that (i) no Default has occurred and is
continuing or would result from the consummation of such Acquisition (and the
Borrower shall have delivered to the Lender a Covenant Compliance Certificate
showing pro forma calculations assuming such Acquisition had been consummated);
and (ii) the aggregate Consideration for all such Acquisitions in any calendar
year shall not exceed $10,000,000;
(e) investments existing on the Closing Date and listed on Schedule 6.7;
and
(f) loans and advances to officers and employees of the Borrower or any
Subsidiary, provided that such loans and advances do not exceed $1,000,000 in
aggregate principal amount at any time outstanding.
6.8 Transactions with Affiliates. The Borrower 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 has not executed a Guarantee,
unless such transaction is in the ordinary course of the Borrower's or such
Subsidiary's business and is upon terms no less favorable to the Borrower 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.
6.9 Fiscal Year. The Borrower shall not permit its fiscal year or the
fiscal year of any of its Subsidiaries to end on a day other than October 31.
6.10 Sale-Leaseback Transactions. The Borrower 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 $5,000,000 in the aggregate in any calendar
year.
6.11 Unfunded Liabilities. The Borrower shall not permit unfunded
liabilities for any and all Plans maintained for or covering employees of the
Borrower or any Subsidiary to exceed $500,000 in the aggregate at any time.
6.12 Hedging Obligations. The Borrower shall not, and shall not permit any
of its Subsidiaries to, enter into any Hedging Agreement, except that the
Borrower or any Subsidiary may enter into any Hedging Agreement that (a) is of a
non-speculative nature and (b) is for the purpose of hedging the Borrower's or
such Subsidiary's reasonably estimated interest rate, foreign currency or
commodity exposure.
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ARTICLE 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal on the Term Note when due,
or the Borrower shall fail to pay any interest on the Term Note, any fee
referred to in this Agreement or any other amount payable hereunder when due; or
(b) Any representation or warranty made or deemed made by the Borrower
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) The Borrower shall default in the observance or performance of any
agreement contained in Sections 5.2(c), 5.6, 5.8 or 5.10 or in any provision of
Article 6; or
(d) The Borrower 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 Lender to the Borrower and (ii) actual knowledge
thereof by a Responsible Officer of the Borrower; 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 the Borrower, or a proceeding shall
be commenced by the Borrower, or by any Governmental Authority or other Person
having jurisdiction over the Borrower, seeking to establish the invalidity or
unenforceability thereof, or the Borrower shall deny that it has any liability
or obligation purported to be created under any Loan Document; or
(f) The Borrower 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 Term Note), issued under the same indenture or
other agreement, if the original principal amount of Indebtedness covered by
such indenture or agreement is $750,000 or greater or (B) Guarantee Obligation
with respect to an amount of $750,000 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
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; or any "Event of
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Default" (as defined in the Credit Agreement evidencing the Revolving Loan
Facility) shall occur; provided that any default by the Borrower or any
Subsidiary under a Guarantee Obligation with respect to a real property lease
shall not constitute a Default under this Section 7(f) if the Borrower or such
Subsidiary, as applicable, is contesting the validity of such default in good
faith by appropriate proceedings, the Borrower or such Subsidiary, as
applicable, 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) The Borrower 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, trustee, custodian or other similar official for it
or for all or any substantial part of its assets, or the Borrower or any
Subsidiary shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against any the Borrower 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 the Borrower
or any Subsidiary or 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) the Borrower 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) the Borrower 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) or (v) the Borrower 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;
and in each case regarding clauses (i) through (v) above, such event or
condition, together with all other such events or conditions, if any, would
reasonably be expected to subject the Borrower or any Subsidiary to any tax,
penalty or other liabilities in the aggregate to exceed $500,000; or
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(i) One or more judgments or decrees shall be entered against the Borrower
or any Subsidiary involving in the aggregate a liability (not paid or fully
covered by insurance) of $250,000 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 any the Borrower 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 has 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
(k) Any event or condition shall occur which the Lender reasonably believes
could have a Material Adverse Effect;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically the Term Loan made to the Borrower
hereunder (with accrued interest thereon) and all other Obligations shall
immediately become due and payable, and (B) if such event is any other Event of
Default, the Lender may by notice to the Borrower, declare the Term Loan (with
accrued interest thereon) and all other Obligations under this Agreement and the
Term Note to be due and payable forthwith, whereupon the same shall immediately
become due and payable. In all cases, the Lender 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 the Borrower.
ARTICLE 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement, the Term Note, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in a writing executed by the Lender and the
Borrower.
8.2 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 respectively addressed as follows, or to such other address as may
be hereafter notified by the respective parties hereto and any future holders of
the Term Note:
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The Borrower: Quiksilver, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: (000) 000-0000
The Lender: Union Bank of California, N.A., as Lender
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
provided that any notice, request or demand to or upon the Lender pursuant to
Section 2.2 or 2.3 shall not be effective until received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the 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.
8.4 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 Term Note.
8.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Lender for all its reasonable costs and out-of-pocket expenses
(including 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 Term Note 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 the reasonable fees and disbursements of counsel to the
Lender (including the allocated costs of internal counsel to the Lender), (b) to
pay or reimburse the 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 Term Note, 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 the Lender
(including the allocated costs of internal counsel to the Lender), (c) to pay,
indemnify and hold harmless the Lender 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,
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this Agreement, the Term Note, the other Loan Documents and any such other
documents and (d) to pay, and indemnify and hold harmless the Lender 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 Lender), expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the Term Note and the other Loan Documents, any Acquisitions
or the use of the proceeds of the Term Loan and any such other documents (all
the foregoing, collectively, the "indemnified liabilities"), provided, that the
Borrower shall have no obligation hereunder to the Lender with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Lender. The agreements in this Section shall survive repayment of the
Term Note and all other amounts payable hereunder. The Lender agrees to provide
reasonable details and supporting information concerning any costs and expenses
required to be paid by the Borrower pursuant to the terms hereof.
8.6 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lender, all future holders of the Term Note and their respective
successors and assigns, except that the Borrower may not assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Lender.
(b) The Lender may sell participations in or assign the Term Loan, in whole
or in part, and may exchange financial information about the Borrower and its
Subsidiaries with actual or potential participants or assignees. If a
participation is sold or the Term Loan is assigned (whether in whole or in
part), the purchaser will have the right of set-off against the Borrower. The
lender accepting the participation or assignment shall execute an assignment
agreement in form and substance acceptable to the Lender.
8.7 Set-Off. In addition to any rights and remedies of the Lender provided
by law, the Lender shall have the right, exercisable upon the occurrence and
during the continuance of an Event of Default, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, to set-off and appropriate and apply against the
Obligations any and all 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 the Lender or any branch or agency thereof or bank
controlling the Lender to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
8.8 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.
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8.9 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.
8.10 Integration. This Agreement represents the entire agreement of the
Borrower and the Lender with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE TERM NOTE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE TERM NOTE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES).
8.12 Alternative Dispute Resolution.
(a) Claims Subject To Judicial Reference; Selection Of Referee. All Claims,
including any and all questions of law or fact relating thereto, shall, at the
written request of any Party, be determined by Reference. The Parties shall
select a single neutral referee, who shall be a retired state of federal judge
with at least five years of judicial experience in civil matters. In the event
that the Parties cannot agree upon a referee, the referee shall be appointed by
the court. The Parties shall equally bear the fees and expenses of the referee
unless the referee otherwise provides in the statement of decision.
(b) Waiver Of Jury Trial. In connection with a Reference or any other
action or proceeding, whether brought in state or federal court, the Parties
hereby expressly, intentionally and deliberately waive any right they may
otherwise have to trial by jury of any Claim.
(c) Conduct Of Reference. Except as provided in this Section 8.12, the
Reference shall be conducted pursuant to Applicable State Law. The referee shall
determine all issues relating to the applicability, interpretation, legality and
enforceability of this Section 8.12.
(d) Provisional Remedies, Self-Help And Foreclosure. No provision of this
Section 8.12 shall limit the right of any party to (i) exercise self-help
remedies including set-off, (ii) foreclose against or sell any Collateral, by
power of sale or otherwise or (iii) obtain or oppose provisional or ancillary
remedies from a court of competent jurisdiction before, after or during the
pendency of the Reference. The exercise of, or opposition to, any such remedy
does not waive the right of any Party to Reference pursuant to this Section
8.12.
(e) Limitation On Damages. In the event that punitive damages are permitted
under Applicable State Law, the amount thereof shall not exceed a sum equal to
three times the amount of actual damages as determined by the referee.
(f) Severability. In the event that any provision of this Section 8.12 is
found to be illegal or unenforceable, the remainder of this Section 8.12 shall
remain in full force and effect.
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(g) Miscellaneous. In the event that multiple Claims are asserted, some of
which are found not subject to this Section 8.12, the Parties agree to stay the
proceedings of the Claims not subject to this Section 8.12 until all other
Claims are resolved in accordance with this Section. In the event that Claims
are asserted against multiple parties, some of whom are not subject to this
Section, the Parties agree to sever the Claims subject to this Section 8.12 and
resolve them in accordance with this Section 8.12. In the event of any challenge
to the legality or enforceability of this Section 8.12, the prevailing Party
shall be entitled to recover the costs and expenses, including reasonable
attorneys' fees, incurred by it in connection therewith. Applicable State Law
shall govern the interpretation of this Section 8.12.
(h) Defined Terms. As used in this Section 8.12, the following terms shall
have the respective meanings set forth below:
"Applicable State Law": the law of the State of California; provided,
however, that if any Party seeks to (i) exercise self-help remedies, including
set-off, (ii) foreclose against or sell any Collateral, by power of sale or
otherwise or (iii) obtain or oppose provisional or ancillary remedies from a
court of competent jurisdiction before, after or during the pendency of the
Reference, the law of the state where such Collateral is located shall govern
the exercise of or opposition to such rights and remedies.
"Claim": any claim, cause of action, action, dispute or controversy between
the Parties, whether sounding in contract, tort or otherwise, which arises out
of or relates to: (i) any of the Loan Documents; (ii) 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
(iii) any alleged agreements, promises, representations or transactions in
connection therewith.
"Party": the Borrower or the Lender.
"Reference": a judicial reference conducted pursuant to this Section 8.12
in accordance with Applicable State Law, as in effect at the time the referee is
selected pursuant to Section 8.12(a).
8.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Term Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower solely by
virtue of any of the Loan Documents, and the relationship pursuant to the Loan
Documents between the Lender, on one hand, and the Borrower on the other hand,
is solely that of creditor and debtor; and
(c) no joint venture exists between the Borrower, on one hand, and the
Lender, on the other hand.
8.14 Headings. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
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8.15 Confidentiality. The Lender 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 Borrower, 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 the Term Loan or
participations therein 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 the Lender; provided that (a) such
transferee, assignee or participant agrees to comply with the provisions of this
Section 8.15 unless specifically prohibited by applicable law or court order and
(b) in no event shall the Lender be obligated or required to return any
materials furnished by the Borrower or the Subsidiary.
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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 authorized officers as of
the day and year first above written.
BORROWER
--------
QUIKSILVER, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer, Secretary and Treasurer
LENDER
------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
Address for Notices
-------------------
(a) For Credit:
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) For Operations:
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Approved Lending Office
-----------------------
Applicable Lending Office:
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
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