Exhibit 10.3
EXECUTION COPY
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment (this "Amendment") to the Credit Agreement
referenced below is entered into as of November 2, 2004, among Quiksilver, Inc.,
a Delaware corporation (the "Company"), the other borrowers signatory hereto
(collectively with the Company, the "Borrowers"), Quiksilver Australia Pty Ltd.,
a corporation organized under the laws of the State of Victoria, Australia
("QAPL"), Quiksilver Europa, S.L. ("Quiksilver Europa"), QS Holdings, S.a r.l.,
a Luxembourg company ("QS Holdings"), the lenders signatory hereto (the
"Lenders"), and JPMorgan Chase Bank, as administrative agent for the Lenders (in
such capacity, the "Agent").
R E C I T A L S:
WHEREAS, the Borrowers, the Lenders and the Agent are parties to the
Credit Agreement, dated as of June 27, 2003, as amended by the First Amendment
to the Credit Agreement, dated as of May 3, 2004 (as so amended, the "Credit
Agreement"), providing for the extension of credit to the Borrowers in the form
of revolving credit loans and letters of credit in an aggregate principal amount
not to exceed $200,000,000; and
WHEREAS, the Borrowers have requested that certain provisions of the
Credit Agreement be amended, and the Lenders have agreed to such an amendment,
on the terms and subject to the conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendments to Credit Agreement
(a) Title Page. The title page of the Credit Agreement is hereby
amended and restated to add QUIKSILVER AMERICAS, INC. and QS WHOLESALE, INC. to
the list of Borrowers thereon.
(b) Preamble. The preamble on the first page of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"THIS CREDIT AGREEMENT, dated as of June 27, 2003, is by and among
(1) QUIKSILVER, INC., a Delaware corporation ("Quiksilver"), NA
PALI, S.A.S., QUIKSILVER JAPAN K.K., UG MANUFACTURING CO. PTY LTD.,
QUIKSILVER AMERICAS, INC. and QS WHOLESALE, INC. (each,
individually, a "Borrower" and collectively, the "Borrowers"), (2)
QUIKSILVER AUSTRALIA PTY LTD., QUIKSILVER EUROPA, S.L. and QS
HOLDINGS, S.A R.L., solely with respect to and subject to Section
6.3 hereof, the terms of which shall be fully enforceable against
such entities, (3) the several banks and other financial
institutions from time to time parties to this Agreement (the
"Lenders"), (4) JPMORGAN CHASE BANK, as
administrative agent for the Lenders hereunder (in such capacity,
the "Agent"), (5) UNION BANK OF CALIFORNIA, N.A., as Syndication
Agent and Joint Lead Arranger, (6) BANK OF AMERICA, N.A., as
Syndication Agent, (7) U.S. BANK NATIONAL ASSOCIATION, as
Documentation Agent, and (8) J.P. MORGAN EUROPE LIMITED, as
Multicurrency Agent."
(c) Section 1.1 of the Credit Agreement.
i. The following defined terms in Section 1.1 of the Credit
Agreement are hereby amended and restated as follows:
"Collateral Documents": the Security Agreement, the QS
Holdings Equity Pledge, all control agreements executed pursuant to
the Security Agreement, all Form UCC-1 Financing Statements and
amendments thereto filed in respect of the Collateral and all other
documents encumbering the Collateral or evidencing or perfecting a
security interest therein that are executed or filed in favor of the
Agent for the benefit of the Lenders.
"Intercreditor Agreement": the Intercreditor Agreement, dated
as of October 29, 2004, between Quiksilver Americas, the Agent, on
behalf of the Lenders, and the Leasehold Improvement Lender, as it
may be amended, modified or restated from time to time.
"Permitted Borrowers": with respect to any Loan in the
Approved Currencies: (a) in the case of US Dollars: Quiksilver,
Quiksilver Americas and QS Wholesale, (b) in the case of Euros:
Quiksilver and Na Pali, (c) in the case of Japanese Yen: Quiksilver
and Quiksilver Japan K.K., (d) in the case of Pounds Sterling:
Quiksilver and Na Pali, and (e) in the case of Australian Dollars:
Quiksilver and Ug.
"Subsidiary": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of Quiksilver.
2
ii. The following defined terms are hereby added to Section 1.1 of
the Credit Agreement in their appropriate alphabetical position:
"QS Holdings": QS Holdings S.a r.l., a Luxembourg company.
"QS Holdings Equity Pledge": the Pledge of Shares of QS
Holdings, dated November 2, 2004, between Quiksilver as pledgor, the
Agent as pledge, and QS Holdings.
"QS Retail": QS Retail, Inc., a California corporation.
"QS Wholesale": QS Wholesale, Inc., a California corporation.
"Quiksilver Americas": Quiksilver Americas, Inc., a California
corporation.
"Quiksilver Global Restructuring": The corporate restructuring
of the consolidated Quiksilver group, including the formation of QS
Holdings, Quiksilver Americas, QS Wholesale and the transactions and
intragroup transfers of assets related thereto, to be completed on
or about November 2, 2004.
iii. The following defined terms in Section 1.1 of the Credit
Agreement are hereby deleted:
"QAPL Share Mortgage" and "Quiksilver Europa Equity Pledge."
(d) Section 2.17 of the Credit Agreement. Section 2.17 of the
Agreement is hereby amended and restated as follows:
"2.17 QS Holdings Equity Pledge. Simultaneously with the
effectiveness of and in connection with the Quiksilver Global
Restructuring, Quiksilver shall cause the QS Holdings Equity Pledge
to be executed and delivered to the Agent for the benefit of the
Lenders, in form and substance satisfactory to the Agent in its sole
discretion."
(e) Section 6.3 of the Credit Agreement. QS Holdings, Quiksilver
Europa and QAPL hereby agree to be bound by the provisions of Section 6.3 of the
Credit Agreement and that the provisions of Section 6.3 of the Credit Agreement
shall be enforceable against each of them (either singly or jointly) to the full
extent as if they were Borrowers under the Credit Agreement.
(f) Section 6.3(h) of the Credit Agreement. Section 6.3(h) of the
Agreement is hereby amended and restated as follows:
3
"(h) Liens in favor of (i) the Leasehold Improvement Lender
(x) securing the Leasehold Improvement Loan and (y) granted by
Quiksilver Americas in favor of the Leasehold Improvement Lender
pursuant to a security agreement, dated as of October 29, 2004,
executed by Quiksilver Americas securing its obligations under its
guaranty, dated as of October 29, 2004, of the obligations of
Quiksilver, Inc. under the Leasehold Improvement Loan Agreement, and
(ii) other leasehold improvement lenders who have become parties to
an intercreditor agreement acceptable to the Agent, to secure an
aggregate amount of up to US$ 25,000,000 of additional financing for
the build-out of retail stores expected to be opened and/or existing
stores which may be expanded, which Liens are subject to the terms
of the Intercreditor Agreement;"
(g) Section 6.4 of the Credit Agreement. Section 6.4 of the Credit
Agreement is hereby amended and restated as follows:
"6.4 Limitation on Fundamental Changes. Quiksilver shall not,
and shall not permit any of its Subsidiaries to, enter into any
merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), except
as permitted by Section 5.4, or create or acquire any Subsidiary, or
convey, sell, lease, assign, transfer or otherwise dispose of all or
substantially all of its property, business or assets, except that
Quiksilver may consummate Acquisitions permitted by Section 6.7;
provided, however, that this Section 6.4 shall not apply to the
Quiksilver Global Restructuring."
(h) Section 6.7 of the Credit Agreement. Section 6.7 of the Credit
Agreement is hereby amended by deleting the period after the number
"US5,000,000" at the end of subsection (g) thereof, replacing the period with a
semicolon, and inserting thereafter the phrase "provided, however, that this
Section 6.7 shall not apply to the Quiksilver Global Restructuring."
(i) Section 6.8 of the Credit Agreement. Section 6.8 of the Credit
Agreement is hereby amended and restated as follows:
"6.8 Transactions with Affiliates. Quiksilver shall not, and shall
not permit any of its Subsidiaries to, enter into any transaction,
including any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate or with any Subsidiary
that has not executed a Guarantee and Guarantor Collateral
Documents, unless such transaction is in the ordinary course of
Quiksilver's or such Subsidiary's business and is upon terms no less
favorable to Quiksilver or such Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a
Person not an Affiliate or a Subsidiary; provided, however, that
4
this Section 6.8 shall not apply to the DC Shoes Acquisition or the
Quiksilver Global Restructuring."
(j) Schedule 3.19 to the Credit Agreement. Schedule 3.19 to the
Credit Agreement is hereby amended to add Quiksilver Americas, QS Wholesale and
QS Retail as Material Domestic Subsidiaries and QS Holdings as a Material
Foreign Subsidiary.
2. Defined Terms. All capitalized terms used herein, unless otherwise
defined herein, have the same meanings provided herein or in the Credit
Agreement.
3. Modification of Credit Agreement. This Amendment is limited precisely
as written and shall not be deemed to (a) be a consent to a waiver or
modification of any other term or condition of the Credit Agreement, the other
Loan Documents or any of the documents referred to therein or executed in
connection therewith except as provided in Section 1 hereof or (b) prejudice any
right or rights the Lenders may now have or may have in the future under or in
connection with the Credit Agreement, the other Loan Documents or any documents
referred to therein or executed in connection therewith.
4. Construction. This Amendment is a document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered or applied in accordance with the terms and provisions
thereof. Whenever the Credit Agreement is referred to in the Credit Agreement or
any of the instruments, agreements or other documents or papers executed and
delivered in connection therewith, it shall be deemed to mean the Credit
Agreement, as modified by this Amendment.
5. Counterparts. This Amendment may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. The parties may
execute facsimile copies of this Amendment and the facsimile signature of any
such party shall be deemed an original and fully binding on said party.
6. Governing Law. This Amendment shall be governed and construed in
accordance with the applicable terms and provisions of Section 9.11 (Governing
Law) of the Credit Agreement, which terms and provisions are incorporated herein
by reference.
7. Amendment Not a Novation. Except as hereby amended, no other term,
condition or provision of the Credit Agreement shall be deemed modified or
amended, and this Amendment shall not be considered a novation.
8. Authorization. The Lenders hereby direct and instruct the Agent to
execute this Amendment.
9. Successors and Assigns. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
5
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to the Credit Agreement to be duly executed by their respective authorized
officers as of the day and year first written above.
BORROWERS
QUIKSILVER, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
NA PALI, S.A.S.
By: ___________________________________
Name: _________________________________
Title: ________________________________
QUIKSILVER JAPAN K.K.
By: ___________________________________
Name: _________________________________
Title: ________________________________
UG MANUFACTURING CO. PTY LTD.
By: ___________________________________
Name: _________________________________
Title: ________________________________
QUIKSILVER AMERICAS, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
[Signature Pages to Second Amendment to Credit Agreement]
QS WHOLESALE, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
[Signature Pages to Second Amendment to Credit Agreement]
OTHER QUIKSILVER ENTITIES
QS HOLDINGS, S.A R.L.,
solely with respect to (i) Section
1(e) of the Second Amendment to the
Credit Agreement and (ii) Section 6.3
of the Credit Agreement (as such
agreement may be amended, supplemented
and otherwise modified from time to
time)
By: ____________________________________
Name: __________________________________
Title: _________________________________
QUIKSILVER AUSTRALIA PTY LTD.,
solely with respect to (i) Section
1(e) of the Second Amendment to the
Credit Agreement and (ii) Section 6.3
of the Credit Agreement (as such
agreement may be amended, supplemented
and otherwise modified from time to
time)
By: ____________________________________
Name: __________________________________
Title: _________________________________
QUIKSILVER EUROPA, S.L.,
solely with respect to (i) Section
1(e) of the Second Amendment to the
Credit Agreement and (ii) Section 6.3
of the Credit Agreement (as such
agreement may be amended, supplemented
and otherwise modified from time to
time)
By: ____________________________________
Name: __________________________________
Title: _________________________________
[Signature Pages to Second Amendment to Credit Agreement]
ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK, as Agent for
the Lenders
By: ____________________________________
Name: __________________________________
Title: _________________________________
[Signature Pages to Second Amendment to Credit Agreement]
LENDERS
JPMORGAN CHASE BANK, as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $25,000,000
Address for Notices
(a) For Credit
1411 Broadway, 5th Floor
New York, New York 10018
Attention: Paul J. O'Neill
Telephone: (212) 391-7157
Facsimile: (212) 391-7118
(b) For Operations (Other Than Letters
of Credit)
1411 Broadway, 5th Floor
New York, New York 10018
Attention: Millie Nogueras
Telephone: (212) 391-6079
Facsimile: (212) 391-7283
(c) For Letters of Credit
Global Trade Services
10420 Highland Manor Drive
Building No. 2, 4th Floor
Tampa, Florida 33610
Attention: Mildred Bowens
Telephone: (813) 432-6347
Facsimile: (813) 432-5162
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 1411 Broadway, 5th Floor
New York, New York 10018
[Signature Pages to Second Amendment to Credit Agreement]
Applicable Lending Office for LIBOR
Loans:
1411 Broadway, 5th Floor
New York, New York 10018
Applicable Lending Office for
Participations in Letters of Credit:
Global Trade Services
10420 Highland Manor Drive
Building No. 2, 4th Floor
Tampa, Florida 33610
[Signature Pages to Second Amendment to Credit Agreement]
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $40,000,000
Address for Notices
(a) For Credit
18300 Von Karman Avenue, Suite 310
Irvine, California 92612
Attention: Margaret Furbank
Telephone: (949) 553-6853
Facsimile: (949) 553-7122
(b) For Operations
601 Potrero Grande Drive
Monterey Park, California 91754
Attention: Shirley Davis
Telephone: (323) 720-2870
Facsimile: (323) 724-6198
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans:
18300 Von Karman Avenue, Suite 310
Irvine, California 92612
Applicable Lending Office for LIBOR
Loans:
18300 Von Karman Avenue, Suite 310
Irvine, California 92612
Applicable Lending Office for
Participations in Letters of Credit:
1980 Saturn Street
Monterey Park, California 91755
[Signature Pages to Second Amendment to Credit Agreement]
FLEET NATIONAL BANK, as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $20,000,000
Address for Notices
(a) For Credit
40 Broad Street
Boston, Massachusetts 02115
Attention: Stephen J. Garvin
Telephone: (617) 434-9399
Facsimile: (617) 434-6685
(b) For Operations
100 Federal Street
Boston, Massachusetts 02110
Attention: Michelle Mogan
Telephone: (617) 434-4187
Facsimile: (617) 434-9933
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 100 Federal Street
Boston, Massachusetts 02110
Applicable Lending Office for LIBOR
Loans:
100 Federal Street
Boston, Massachusetts 02110
Applicable Lending Office for
Participations in Letters of Credit:
100 Federal Street
Boston, Massachusetts 02110
[Signature Pages to Second Amendment to Credit Agreement]
BANK OF AMERICA, N.A., as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $20,000,000
Address for Notices
(a) For Credit
675 Anton Boulevard, 2nd Floor
Costa Mesa, California 92626
Attention: Cynthia K. Goodfellow
Telephone: (714) 850-6547
Facsimile: (714) 850-6586
(b) For Operations
333 Beaudry Street; Suite 1100
Los Angeles, California 90017
Attention: Maria Castro
Telephone: (714) 850-6504
Facsimile: (714) 850-6586
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 675 Anton Boulevard, 2nd Floor
Costa Mesa, California 92626
Applicable Lending Office for LIBOR
Loans:
1455 Market Street, 5th Floor
San Francisco, California 94103
Applicable Lending Office for
Participations in Letters of Credit:
675 Anton Boulevard, 2nd Floor
Costa Mesa, California 92626
[Signature Pages to Second Amendment to Credit Agreement]
U.S. BANK, as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $25,000,000
Address for Notices
(a) For Credit
4100 Newport Place, Suite 120
Newport Beach, California 92660
Attention: Marni Lombardo
Telephone: (949) 863-2365
Facsimile: (949) 863-2335
(b) For Operations
4100 Newport Place
Newport Beach, California 92660
Attention: Patti Brant
Telephone: (949) 863-2470
Facsimile: (949) 863-2335
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 4100 Newport Place, Suite 120
Newport Beach, California 92660
Applicable Lending Office for LIBOR
Loans:
4100 Newport Place, Suite 120
Newport Beach, California 92660
Applicable Lending Office for
Participations in Letters of Credit:
4100 Newport Place, Suite 120
Newport Beach, California 92660
[Signature Pages to Second Amendment to Credit Agreement]
COMERICA BANK, as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $10,000,000
Address for Notices
(a) For Credit
201 North Figueroa Street, Suite 1425
Los Angeles, California 90012
Attention: Deborah Jenkins
Telephone: (213) 484-3729
Facsimile: (213) 484-3775
(b) For Operations
201 North Figueroa Street, Suite 1425
Los Angeles, California 90012
Attention: Margarita Quiteno
Telephone: (213) 484-3722
Facsimile: (213) 484-3775
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 333 West Santa Clara Street
San Jose, California 95113
Applicable Lending Office for LIBOR
Loans:
333 West Santa Clara Street
San Jose, California 95113
Applicable Lending Office for
Participations in Letters of Credit:
333 West Santa Clara Street
San Jose, California 95113
[Signature Pages to Second Amendment to Credit Agreement]
HSBC BANK USA, as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $20,000,000
Address for Notices
(a) For Credit
452 Fifth Avenue, 4th Floor
New York, New York 10018
Attention: Michael Behuniak/George
Ahlmeyer
Telephone: (212) 525-6589
Facsimile: (212) 525-6905
(b) For Operations
1 HSBC Center, 26th Floor
Buffalo, New York 14203
Attention: Donna L. Riley
Telephone: (716) 841-4178
Facsimile: (716) 841-0269
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 452 Fifth Avenue, 4th Floor
New York, New York 10018
Applicable Lending Office for LIBOR
Loans:
452 Fifth Avenue, 4th Floor
New York, New York 10018
Applicable Lending Office for
Participations in Letters of Credit:
452 Fifth Avenue, 4th Floor
New York, New York 10018
[Signature Pages to Second Amendment to Credit Agreement]
BANK ONE, N.A., as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $15,000,000
Address for Notices
(a) For Credit
131 South Dearborn Street
Chicago, Illinois 60603
Attention: Marion Church
Telephone: (312) 325-3234
Facsimile: (312) 325-3050
(b) For Operations
1 Bank One Plaza, Suite IL 1-0088
Chicago, Illinois 60670
Attention: Saul Gierstikas
Telephone: (312) 732-1794
Facsimile: (312) 732-4303
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: Bank One Plaza, Suite IL 1-0086
Chicago, Illinois 60670
Applicable Lending Office for LIBOR Loans:
Bank One Plaza, Suite IL 1-0086
Chicago, Illinois 60670
Applicable Lending Office for
Participations in Letters of Credit:
Bank One Plaza, Suite IL 1-0086
Chicago, Illinois 60670
[Signature Pages to Second Amendment to Credit Agreement]
BANK LEUMI USA, as a Lender
By: ____________________________________
Name: Jacques V. Delvoye
Title: Vice President
Loan Commitment: $10,000,000
Address for Notices
(a) For Credit
Bank Leumi USA
8383 Wilshire Boulevard, #400
Beverly Hills, California 90211
Attention: Jacques Delvoye
Telephone: (323) 966-4727
Facsimile: (323) 966-4248
(b) For Operations
Bank Leumi USA
8383 Wilshire Boulevard, #400
Beverly Hills, California 90211
Attention: Jacques Delvoye
Telephone: (323) 966-4727
Facsimile: (323) 966-4248
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans:
Bank Leumi USA
8383 Wilshire Boulevard, #400
Beverly Hills, California 90211
Applicable Lending Office for LIBOR Loans:
Bank Leumi USA
8383 Wilshire Boulevard, #400
Beverly Hills, California 90211
Applicable Lending Office for
Participations in Letters of Credit:
Bank Leumi USA
8383 Wilshire Boulevard, #400
Beverly Hills, California 90211
[Signature Pages to Second Amendment to Credit Agreement]
ISRAEL DISCOUNT BANK OF NEW YORK,
as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Loan Commitment: $15,000,000
Address for Notices
(a) For Credit
511 Fifth Avenue
New York, New York 10017
Attention: Alan Lefkowitz
Telephone: (212) 551-8288
Facsimile: (212) 551-8720
(b) For Operations
511 Fifth Avenue
New York, New York 10017
Attention: Alan Lefkowitz
Telephone: (212) 551-8288
Facsimile: (212) 551-8720
Approved Lending Offices
Applicable Lending Office for Base Rate
Loans: 511 Fifth Avenue
New York, New York 10017
Applicable Lending Office for LIBOR
Loans:
511 Fifth Avenue
New York, New York 10017
Applicable Lending Office for
Participations in Letters of Credit:
511 Fifth Avenue
New York, New York 10017
[Signature Pages to Second Amendment to Credit Agreement]