EXHIBIT 10.3
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[JPMORGAN LOGO]
QUIKSILVER, INC.,
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$350,000,000
CREDIT AGREEMENT
dated as of April 12, 2005
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
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J.P. MORGAN SECURITIES INC.,
as Sole Bookrunner and Sole Lead Arranger
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS................................................................................... 2
1.1 Defined Terms............................................................................ 2
1.2 Other Definitional Provisions............................................................ 30
SECTION 2 AMOUNT AND TERMS OF LOANS..................................................................... 31
2.1 Loans.................................................................................... 31
2.2 Procedure for Borrowing.................................................................. 32
2.3 Maturity and Exchange Notes.............................................................. 32
2.4 Repayment of Loans....................................................................... 32
2.5 Optional and Mandatory Prepayments....................................................... 32
2.6 Interest Rates and Payment Dates......................................................... 34
2.7 Inability to Determine Interest Rates.................................................... 35
2.8 Computation of Interest and Fees......................................................... 35
2.9 Pro Rata Treatment and Payments.......................................................... 35
2.10 Requirements of Law..................................................................... 37
2.11 Illegality.............................................................................. 38
2.12 Taxes................................................................................... 39
2.13 Indemnity............................................................................... 40
2.14 Change of Lending Office................................................................ 41
2.15 Replacement Lenders..................................................................... 41
SECTION 3 REPRESENTATIONS AND WARRANTIES................................................................ 41
3.1 Organization and Good Standing........................................................... 41
3.2 Power and Authority...................................................................... 41
3.3 Validity and Legal Effect................................................................ 42
3.4 No Violation of Laws, Agreements or the Transaction...................................... 42
3.5 Taxes and Assessments.................................................................... 42
3.6 Title to Assets; Existing Encumbrances................................................... 42
3.7 Litigation and Legal Proceedings......................................................... 42
3.8 Accuracy of Financial Information........................................................ 42
3.9 Accuracy of Other Information............................................................ 43
3.10 Compliance with Laws Generally.......................................................... 44
3.11 ERISA Compliance........................................................................ 44
3.12 Environmental Compliance................................................................ 44
3.13 Intellectual Property................................................................... 45
3.14 Federal Regulations..................................................................... 45
3.15 Fees and Commissions.................................................................... 45
3.16 Solvency................................................................................ 45
3.17 Investment Company Act.................................................................. 46
3.18 Nature of Business...................................................................... 46
3.19 Ranking of Loans........................................................................ 46
3.20 Insurance............................................................................... 46
3.21 Subsidiaries............................................................................ 46
3.22 Security Interest in Collateral......................................................... 46
3.23 Approvals............................................................................... 46
3.24 Use of Proceeds......................................................................... 46
3.25 Representations and Warranties Contained in the Transaction Documents................... 46
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SECTION 4 CONDITIONS PRECEDENT.......................................................................... 47
4.1 Initial Loans on the Initial Closing Date................................................ 47
4.2 Initial Loans on the Tender Offer Closing Date........................................... 50
4.3 Initial Loans on the Final Drawdown Date................................................. 53
SECTION 5 AFFIRMATIVE COVENANTS......................................................................... 56
5.1 Financial Statements..................................................................... 56
5.2 Certificates; Other Information.......................................................... 57
5.3 Payment of Obligations................................................................... 58
5.4 Conduct of Business; Maintenance of Existence and Licenses; Contractual Obligations...... 58
5.5 Maintenance of Property.................................................................. 58
5.6 Insurance................................................................................ 58
5.7 Inspection of Property; Books and Records; Communications with Accountants............... 58
5.8 Environmental Laws....................................................................... 59
5.9 Use of Proceeds.......................................................................... 59
5.10 Compliance with Laws, Etc............................................................... 59
5.11 Guarantees, Etc......................................................................... 59
5.12 Notices................................................................................. 60
5.13 Take-Out Financing...................................................................... 61
5.14 Exchange Notes.......................................................................... 61
5.15 Use of Proceeds of the Take-Out Debt.................................................... 62
5.16 Initiation of Buy Out................................................................... 62
5.17 Prepayment of Loans with Released Amount................................................ 62
5.18 Further Assurances...................................................................... 62
SECTION 6 NEGATIVE COVENANTS............................................................................ 62
6.1 Limitation on Indebtedness............................................................... 63
6.2 Limitation on Restricted Payments........................................................ 66
6.3 Limitation on Restrictions on Distributions from Restricted Subsidiaries................. 69
6.4 Limitation on Sales of Assets and Subsidiary Stock....................................... 70
6.5 Limitation on Liens...................................................................... 71
6.6 Limitation on Affiliate Transactions..................................................... 71
6.7 Change of Control........................................................................ 72
6.8 Limitation on Voting Stock of Restricted Subsidiaries.................................... 73
6.9 Merger, Consolidation, etc............................................................... 73
6.10 Limitation on Sale/Leaseback Transactions............................................... 75
6.11 Limitation on Lines of Business......................................................... 75
6.12 Fiscal Year............................................................................. 75
6.13 Amendments to Acquisition Documents and Offer Documents................................. 75
6.14 Amendments to Revolving Credit Documents................................................ 75
SECTION 7 EVENTS OF DEFAULT............................................................................. 76
SECTION 8 THE ADMINISTRATIVE AGENT...................................................................... 78
8.1 Appointment.............................................................................. 78
8.2 Delegation of Duties..................................................................... 78
8.3 Exculpatory Provisions................................................................... 78
8.4 Reliance by Administrative Agent......................................................... 79
8.5 Notice of Default........................................................................ 79
8.6 Non-Reliance on Administrative Agent and Other Lenders................................... 79
8.7 Indemnification.......................................................................... 80
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8.8 Administrative Agent in Its Individual Capacity.......................................... 80
8.9 Successor Administrative Agent........................................................... 80
SECTION 9 MISCELLANEOUS................................................................................. 81
9.1 Amendments and Waivers................................................................... 81
9.2 Notices.................................................................................. 81
9.3 No Waiver; Cumulative Remedies........................................................... 82
9.4 Survival of Representations and Warranties............................................... 82
9.5 Payment of Expenses and Taxes............................................................ 83
9.6 Successors and Assigns; Participations and Assignments................................... 83
9.7 Adjustments; Set-off..................................................................... 86
9.8 Counterparts............................................................................. 87
9.9 Severability............................................................................. 87
9.10 Integration............................................................................. 87
9.11 GOVERNING LAW........................................................................... 87
9.12 Submission To Jurisdiction; Waivers..................................................... 87
9.13 Acknowledgements........................................................................ 88
9.14 WAIVERS OF JURY TRIAL................................................................... 88
9.15 Confidentiality......................................................................... 88
9.16 Judgment Currency....................................................................... 88
9.17 USA Patriot Act......................................................................... 89
SCHEDULES:
SCHEDULE 1.1A Commitments
SCHEDULE 1.1B Permitted Investment Agreements
SCHEDULE 3.1 Jurisdictions of Organization or Qualification to Conduct Business
SCHEDULE 3.5 Taxes and Assessments
SCHEDULE 3.6 Title to Assets; Existing Encumbrances
SCHEDULE 3.7 Litigation
SCHEDULE 3.12 Environmental Compliance
SCHEDULE 3.20 Insurance
SCHEDULE 3.21 Subsidiaries
SCHEDULE 6.2 Transaction Payments
SCHEDULE 6.3 Encumbrances
SCHEDULE 6.6 Affiliate Transactions
EXHIBITS:
EXHIBIT A Form of Guarantee
EXHIBIT B Form of Assignment and Acceptance
EXHIBIT C-1 Form of Initial Loan Note
EXHIBIT C-2 Form of Term Note
EXHIBIT D Form of No Default/Representation Certificate
EXHIBIT E-1 Form of Opinion of Hewitt & O'Neil LLP
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EXHIBIT E-2 Form of Legal Opinion of De Pardieu, Brocas, Maffei, special French
counsel to the Administrative Agent
EXHIBIT F Form of Exemption Certificate
EXHIBIT G Form of Secretary's Certificate
EXHIBIT H Terms of Exchange Notes
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CREDIT AGREEMENT dated as of April 12, 2005 (as amended, supplemented or
otherwise modified from time to time, this "Agreement"), among QUIKSILVER, INC.,
a Delaware corporation (the "Company"), as borrower, the several lenders from
time to time parties hereto (collectively, the "Lenders"; individually, a
"Lender"), and JPMORGAN CHASE BANK, N.A., a national banking association
organized under the laws of the United States of America, as administrative
agent for the Lenders hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Company intends to directly or indirectly acquire (the
"Transaction") up to 100% of the outstanding capital stock (the "Target Stock")
of Skis Rossignol S.A. (the "Target");
WHEREAS, certain existing stockholders of the Target (such stockholders,
the "Sellers") own approximately 44.46% of the outstanding capital stock of the
Target, consisting of (i) approximately 38.44% held by a holding company (the
"Holding Company") controlled by the Sellers and (ii) approximately 6.02% of the
Target held directly by the Sellers (the "Direct Interest");
WHEREAS, upon the consummation of the Transaction, the Company intends to
(i) have purchased, indirectly through the Holding Company, 75% of the Target
Stock currently held by the Sellers, with total consideration of approximately
$108,000,000, payable in a combination of 70% cash and 30% newly issued shares
of common stock of the Company and (ii) have consummated the Tender Offer and,
if applicable, the Buy Out and Squeeze Out (each as defined below);
WHEREAS, the Company has entered into an Acquisition Agreement (the
"Acquisition Agreement") pursuant to which the Company will effect the
Transaction in two stages;
WHEREAS, in the first stage of the Transaction, the Company has agreed to
(i) indirectly become the managing general partner ("commandite") of the Holding
Company on the date of execution of the Acquisition Agreement, (ii) make a
direct cash payment to the Sellers in an amount of approximately $8,800,000,
(iii) deposit approximately $52,700,000 (the "Escrowed Amount"), which will be
escrowed into an account held at Societe Generale (the "Escrow Account") and
(iv) indirectly purchase, or pay a redemption price for, commandite shares from
or of the Sellers in the amount of (euro)50,000 (collectively, the "Initial
Purchase");
WHEREAS, in connection with the Initial Purchase, the Company has informed
the Lenders that it will concurrently terminate the Existing Credit Agreement
(as hereinafter defined);
WHEREAS, the second stage of the Transaction will commence upon completion
of the transactions to be completed on the date of execution of the Acquisition
Agreement and will involve, among other things, (i) the transfer of the Escrowed
Amount to the Sellers, (ii) a direct cash payment by the Company to the Sellers
in the amount of approximately $14,600,000, (iii) a non-cash payment by the
Company to the Sellers in the form of newly issued shares of the Company valued
at approximately $31,900,000, (iv) the purchase of the remaining shares of
Target Stock to be acquired by the Company pursuant to a tender offer under
French law (offre publique d'achat) (the "Tender Offer"), followed, if
applicable, by a offre publique de retrait (the "Buy Out") and a retrait
obligatoire (the "Squeeze Out") and (v) the refinancing of certain indebtedness
of the Target;
WHEREAS, to finance the Transaction, the Company has requested the Lenders
to make available the credit facility set forth herein; and
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WHEREAS, the Lenders are willing to make such credit facility available
upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR Loan": a Loan bearing interest at a rate determined by reference to
the Alternate Base Rate in accordance with the provisions of Section 2.
"Accepting Holder": as defined in Section 2.5(d).
"Accountants": Deloitte & Touche, LLP, or such other firm of independent
certified public accountants of recognized national standing as shall be
selected by the Company and satisfactory to the Administrative Agent.
"Acquired Indebtedness": the Indebtedness (i) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
(ii) assumed in connection with the acquisition of assets from such Person, in
each case whether or not Incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such acquisition. Acquired Indebtedness shall be deemed to have been
Incurred, with respect to clause (i) of the preceding sentence, on the date such
Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the
preceding sentence, on the date of consummation of such acquisition of assets.
"Acquisition Agreement": as defined in the recitals to this Agreement.
"Acquisition Documents": collectively, the Acquisition Agreement and all
schedules, exhibits and annexes thereto (including any documentation related to
the Escrow Account) and all side letters and agreements contemplated thereby or
affecting the terms thereof.
"Adjusted LIBO Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
Eurodollar Base Rate
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1.00 - Eurocurrency Reserve Requirements
"Adjusted Margin": with respect to any Loan, 0% during the three-month
period commencing on the Initial Maturity Date and, for each subsequent
three-month period thereafter, 0.50% higher than the Adjusted Margin for the
immediately preceding three-month period.
"Adjusted Rate": the rate equal to the greater of (i) the interest rate
borne by the Loans on the day immediately preceding the Initial Maturity Date
plus 0.50% and (ii) the Treasury Rate on the Initial Maturity Date plus 5.0%.
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"Administrative Agent": JPMorgan Chase Bank, N.A., together with its
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.
"Affiliate": of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Affiliate Transaction": as defined in Section 6.6.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"Agreement Currency": as defined in Section 9.16.
"Alternate 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 Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City; and
"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 that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent 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 Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"AMF": as defined in Section 4.2(e)(ii).
"Applicable Margin": with respect to any Loan, 0% during the three-month
period commencing on the Initial Closing Date and, for each subsequent
three-month period thereafter until the Initial Maturity Date, 0.50% higher than
the Applicable Margin for the immediately preceding three-month period.
"Asset Disposition": any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition (or series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan) of shares of Capital
Stock of a Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction),
other than (i) a
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disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the Company's and/or its Restricted Subsidiaries'
business and that is disposed of in the ordinary course of business; (ii) a
disposition of inventory in the ordinary course of business; (iii) the sale of
Cash Equivalents in the ordinary course of business; (iv) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a
Restricted Subsidiary to another Restricted Subsidiary, the Company directly or
indirectly owns an equal or greater percentage of the Capital Stock of the
transferee than of the transferor; (v) for purposes of Section 6.4 only, the
making of a Permitted Investment or a disposition subject to Section 6.2; (vi)
transactions permitted under Section 6.9; (vii) an issuance of Capital Stock by
a Restricted Subsidiary of the Company to the Company or to a Wholly Owned
Subsidiary; (viii) dispositions of assets in a single transaction or series of
related transactions with an aggregate fair market value since the Initial
Closing Date of less than $2,500,000; (ix) dispositions in connection with
Permitted Liens; (x) the licensing or sublicensing of Intellectual Property
Rights or other general intangibles and licenses, leases or subleases of other
property in the ordinary course of business which do not materially interfere
with the business of the Company and its Restricted Subsidiaries; (xi)
dispositions of receivables in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in bankruptcy or
similar proceedings and exclusive of factoring or similar arrangements; (xii)
foreclosure on assets; and (xiii) any release of claims or rights in the
ordinary course of business in connection with the loss or settlement of a bona
fide lawsuit, dispute or controversy.
"Assignee": as defined in Section 9.6(b).
"Assignment and Assumption": an assignment and assumption, substantially
in the form of Exhibit B hereto.
"Attributable Indebtedness": in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in such transaction determined in accordance with GAAP)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Availability Period": the period from and including the Tender Offer
Closing Date to and including the Final Drawdown Date.
"Average Life": as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Benefitted Lender": as defined in Section 9.7(a).
"Board of Directors": as to any Person, the board of directors of such
Person or any committee thereof duly authorized to act on behalf of such board.
"Board of Governors": the Board of Governors of the Federal Reserve System
(or any successor thereto).
"Borrowing": a Loan of any Type made, converted or continued on the same
date and, in the case of Eurodollar Loans, as to which a single Interest Period
is in effect.
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"Borrowing Base": as of the date of determination, an amount equal to the
sum, without duplication of (1) 85% of the net book value of the Company's and
its Restricted Subsidiaries' accounts receivable at such date and (2) 70% of the
net book value of the Company's and its Restricted Subsidiaries' inventories at
such date. Net book value shall be determined in accordance with GAAP and shall
be that reflected on the most recent available balance sheet (it being
understood that the accounts receivable and inventories of an acquired business
or Person may be included if such acquisition has been completed on or prior to
the date of determination).
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in the State of New York are authorized or required by law to
close and which, in the case of a Eurodollar Loan, is a Eurodollar Business Day.
"Buy Out": as defined in the preamble to this Agreement.
"Buy Out Transactions": as defined in Section 4.3(b)(iii).
"Buy Out Undertakings": as defined in Section 4.3(i).
"Callable Exchange Note": any Exchange Note which is subject to redemption
at the option of the Company pursuant to the Indenture.
"Capital Stock": of a Person, any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of, or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company membership interests,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations": an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation at the time
any determination thereof is to be made as determined in accordance with GAAP;
and the Stated Maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date such lease may be
terminated without penalty.
"Cash Equivalents": means (i) securities issued or directly and fully
guaranteed or insured by the United States government, or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof), having maturities of not more than one
year from the date of acquisition; (ii) marketable general obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof (provided that the full faith and credit of the
United States is pledged in support thereof) and, at the time of acquisition
thereof, having a credit rating of "A" or better from either S&P or Moody's;
(iii) certificates of deposit, time deposits, eurodollar time deposits,
overnight bank deposits or bankers' acceptances having maturities of not more
than one year from the date of acquisition thereof issued by any commercial bank
the long-term debt of which is rated at the time of acquisition thereof at least
"A" or the equivalent thereof by S&P, or "A" or the equivalent thereof by
Moody's, and having combined capital and surplus in excess of $250,000,000; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i), (ii) and (iii) entered into
with any bank meeting the qualifications specified in clause (iii) above; (v)
commercial paper rated at the time of acquisition thereof at least "A-2" or the
equivalent thereof by S&P or "P-2" or the equivalent thereof by Moody's, or
carrying an equivalent rating by a nationally recognized rating agency, if both
of the two named rating agencies cease publishing ratings of investments, and in
either case maturing within one year after the date of acquisition thereof; and
(vi) interests in any
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investment company which invests solely in instruments of the type specified in
clauses (i) through (v) above.
"Change of Control": the occurrence of any of the following events:
(i) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have "beneficial
ownership" of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company (or a successor to the
relevant entity by merger, consolidation or purchase of all or
substantially all of its assets) (for the purposes of this clause, such
person or group shall be deemed to beneficially own any Voting Stock of
the Company held by a parent entity, if such person or group "beneficially
owns" (as defined above), directly or indirectly, more than 35% of the
voting power of the Voting Stock of such parent entity); or
(ii) the first day on which a majority of the members of the Board
of Directors (excluding any committee thereof) of the Company are not
Continuing Directors; or
(iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act); or
(iv) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company; or
(v) a "change of control" as defined in the Revolving Credit
Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all property of the Obligor, now owned or hereafter
acquired, upon which a Lien is purported to be created by the Escrow Security
Agreement.
"Commitment": as to any Lender, its (i) Dollar Loan Commitment and (ii)
Euro Loan Commitment.
"Commitment Letter": the Commitment Letter dated as of March 20, 2005,
among Quiksilver Americas, the Company, JPMSI and the Administrative Agent, as
amended from time to time.
"Commitment Percentage": as to any Lender at any time, the percentage of
the aggregate Loans (based, in the case of Euro-Denominated Loans, on the Dollar
Equivalent thereof as determined by the Administrative Agent) then constituted
by such Lender's Loans (or, prior to the Final Drawdown Date, the percentage of
the sum of (i) the aggregate Initial Loans (based, in the case of
Euro-Denominated Loans, on the Dollar Equivalent thereof as determined by the
Administrative Agent) then constituted by such Lender's Initial Loans and (ii)
the undrawn Commitment of such Lender).
"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
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group which includes such Person and which is treated as a single employer under
Section 414 of the Code.
"Company": as defined in the preamble to this Agreement.
"Consolidated Coverage Ratio": as of any date of determination, with
respect to any Person, the ratio of (i) the aggregate amount of Consolidated
EBITDA of such Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which financial
statements are in existence to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary (x) has Incurred any Indebtedness since the beginning of such period
that remains outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, or both, Consolidated EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period (except that in making such computation, the
amount of Indebtedness under any revolving credit facility outstanding on the
date of such calculation shall be computed based on (A) the average daily
balance of such Indebtedness during such four fiscal quarters or such shorter
period for which such facility was outstanding or (B) if such facility was
created after the end of such four fiscal quarters, the average daily balance of
such Indebtedness during the period from the date of creation of such facility
to the date of such calculation) and the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of such
period or (y) has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no longer outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness
(in each case other than Indebtedness Incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid and the related
commitment terminated), Consolidated EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro forma basis to
such discharge of such Indebtedness, including with the proceeds of such new
Indebtedness, as if such discharge had occurred on the first day of such period,
(2) if since the beginning of such period, the Company or any Restricted
Subsidiary shall have made any Asset Disposition or disposed of any company,
division, operating unit, segment, business, group of related assets or line of
business or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, (x) the Consolidated EBITDA
for such period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such period
and (y) Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary
or is merged with or into the Company) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
any company, division, operating unit, segment, business, group of related
assets or line of business, Consolidated EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such
8
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have Incurred any Indebtedness or discharged any
Indebtedness, made any disposition or Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(2) or (3) above if made by the Company or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Incurrence,
discharge, disposition, Asset Disposition, Investment or asset acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to any calculation under this
definition, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting officer of the Company (including any pro
forma expense and cost reductions and related adjustments calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months). If any Indebtedness that is being given pro forma effect bears an
interest rate at the option of the Company, the interest rate shall be
calculated by applying such optional rate chosen by the Company.
"Consolidated EBITDA": for any period, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
Expense, (ii) Consolidated Income Taxes, (iii) consolidated depreciation
expense, (iv) consolidated amortization expense or impairment charges recorded
in connection with the application of Financial Accounting Standard No. 142
"Goodwill and Other Intangibles," and (v) other non-cash items reducing
Consolidated Net Income (excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period not
included in the calculation). Notwithstanding the preceding sentence, clauses
(ii) through (v) relating to amounts of a Restricted Subsidiary of a Person will
be added to Consolidated Net Income to compute Consolidated EBITDA of such
Person only to the extent (and in the same proportion) that the net income
(loss) of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and, to the extent the amounts set forth
in clauses (ii) through (v) are in excess of those necessary to offset a net
loss of such Restricted Subsidiary or if such Restricted Subsidiary has net
income for such period included in Consolidated Net Income, only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Income Taxes": with respect to any Person for any period,
taxes imposed upon such Person or other payments required to be made by such
Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.
"Consolidated Interest Expense": for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, whether
paid or accrued, plus, to the extent not included in such interest expense, (i)
interest expense attributable to Capitalized Lease Obligations and the interest
portion of rent expense associated with Attributable Indebtedness in respect of
the relevant lease giving rise thereto, determined as if such lease were a
capitalized lease in accordance with GAAP, and the interest component of any
deferred payment obligations, (ii) amortization of debt discount and debt
issuance cost,
9
(provided that any amortization of bond premium will be credited to reduce
Consolidated Interest Expense unless, pursuant to GAAP, such amortization of
bond premium has otherwise reduced Consolidated Interest Expense), (iii)
non-cash interest expense, (iv) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (v) the interest expense on Indebtedness of another Person under a
Guarantee Obligation of the Company or a Restricted Subsidiary of the Company or
secured by a Lien on assets of the Company or one of its Restricted Subsidiaries
if such Person is not current in the payment of principal, interest or premium
on such Indebtedness, (vi) net costs associated with Hedging Obligations
(including amortization of fees), provided, however, that if Hedging Obligations
result in net benefits rather than costs, such benefits shall be credited to
reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits
are otherwise reflected in Consolidated Net Income, (vii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, (viii) the product of (a) all dividends paid or
payable in cash, Cash Equivalents or Indebtedness or accrued during such period
on any series of Disqualified Stock of such Person or on Preferred Stock of its
Restricted Subsidiaries payable to a party other than the Company or a Wholly
Owned Subsidiary times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state,
provincial and local statutory tax rate of such Person expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP, (ix)
Receivable Fees, and (x) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company or any
Restricted Subsidiary of the Company) in connection with Indebtedness Incurred
by such plan or trust; provided, however, that there shall be excluded therefrom
any such interest expense of any Unrestricted Subsidiary to the extent the
related Indebtedness is not a Guarantee Obligation of or paid by the Company or
any Restricted Subsidiary. For purposes of the foregoing, gross interest expense
shall be determined (i) after giving effect to any net payments made or received
by the Company and its Subsidiaries with respect to Interest Rate Agreements and
(ii) exclusive of amounts classified as other comprehensive income in the
balance sheet of the Company. Notwithstanding anything to the contrary contained
herein, commissions, discounts, yield and other fees and charges Incurred in
connection with any transaction pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer or grant a
security interest in any accounts receivable or related assets shall be included
in Consolidated Interest Expense.
"Consolidated Net Income": for any period, the net income (loss) of the
Company and its consolidated Restricted Subsidiaries determined in accordance
with GAAP; provided, however, that there shall not be included in such
Consolidated Net Income: (i) any net income (loss) of any Person if such Person
is not a Restricted Subsidiary, except that (A) subject to the limitations
contained in clauses (iii), (iv) and (v) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(ii) below) and (B) the Company's equity in a net loss of any such Person (other
than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income to the extent such loss has been funded
with cash from the Company or a Restricted Subsidiary; (ii) any net income (but
not loss) of any Restricted Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the limitations contained in (iii), (iv) and
(v) below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend (subject, in the case of a dividend to another
Restricted Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted
10
Subsidiary for such period shall be included in determining such Consolidated
Net Income; (iii) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Capital Stock of any
Person; (iv) any extraordinary gain or loss, and (v) the cumulative effect of a
change in accounting principles.
"Consolidated Net Worth": the total of the amounts shown on the balance
sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Consolidated Tangible Assets": of any Person as of any date means the
total amount of assets of such Person and its Subsidiaries (less applicable
reserves) on a consolidated basis at the end of the fiscal quarter immediately
preceding such date, as determined in accordance with GAAP, less (i) Intangible
Assets and (ii) appropriate adjustments on account of minority interests of
other Persons holding equity investments in Restricted Subsidiaries.
"Continuing Directors": as of any date of determination, any member of the
Board of Directors of the Company who (1) was a member of such Board of
Directors on the date of this Agreement; or (2) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement or other undertaking to which such
Person is a party or by which it or any of its property is bound.
"Copyrights": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (i) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (ii) all renewals of any of the
foregoing; (iii) all income, royalties, damages, and payments now or hereafter
due and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(iv) the right to sue for past, present, and future infringements of any of the
foregoing; and (v) all rights corresponding to any of the foregoing throughout
the world.
"Credit Facility": with respect to the Company or any Guarantor, one or
more debt facilities (including, without limitation, the Revolving Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables), bankers
acceptances or letters of credit or similar instruments, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time (and whether or not with the original
administrative agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Revolving Credit Agreement
or any other credit or other agreement or indenture).
11
"Currency Agreement": in respect of a Person any foreign exchange
contract, currency swap agreement, futures contract, option contract or other
similar agreement as to which such Person is a party or a beneficiary.
"Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Direct Interest": as defined in the recitals to this Agreement.
"Disqualified Stock": with respect to any Person, any Capital Stock of
such Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Capital Stock that is convertible or exchangeable
solely at the option of the Company or a Restricted Subsidiary) or (iii) is
redeemable at the option of the holder thereof, in whole or in part, in each
case, on or prior to the date that is 91 days after the Final Maturity Date
provided, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such date shall be deemed to be
Disqualified Stock; provided, further, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or asset disposition (each defined in a substantially
identical manner to the corresponding definitions in this Agreement) shall not
constitute Disqualified Stock if the terms of such Capital Stock (and all such
securities into which it is convertible or for which it is ratable or
exchangeable) provide that the Company may not repurchase or redeem any such
Capital Stock (and all such securities into which it is convertible or for which
it is ratable or exchangeable) pursuant to such provision prior to compliance by
the Company with the provisions of this Agreement.
"Dollar-Denominated Exchange Notes": Exchange Notes denominated in
Dollars.
"Dollar-Denominated Loans": Loans denominated in Dollars.
"Dollar Equivalent": with respect to Euros, on the date of determination
thereof, the amount of Dollars which could be purchased with the amount of Euros
involved in such computation at the spot rate at which Euros may be exchanged
into Dollars as set forth on such date on (i) the Telerate Service pages, or
(ii) if such rate does not appear on such Telerate Service pages, at the spot
exchange rate therefor as determined by the Administrative Agent, in each case
as of 11:00 A.M. London time on such date of determination thereof.
"Dollar Loan Commitment": as to any Lender, its obligation to make a
Dollar-Denominated Loan to the Company on the Initial Closing Date in an
aggregate amount not to exceed the amount set forth opposite such Lender's name
in Schedule 1.1A under the heading "Dollar Loan Commitment"; collectively, as to
all such Lenders, the "Dollar Loan Commitments".
"Dollar Loan Facility": the Dollar Loan Commitments and the
Dollar-Denominated Loans made hereunder.
"Dollar Loan Lender": each Lender with a Dollar Loan Commitment.
"Dollar Loan Percentage": as to any Lender at any time, the percentage of
the aggregate Dollar Loan Commitments then constituted by such Lender's Dollar
Loan Commitment (or, after the Initial
12
Closing Date, the percentage of the aggregate Dollar-Denominated Loans then
constituted by such Lender's Dollar-Denominated Loans).
"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.
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of the United States or
any other nation, or any state, local, municipal or other governmental
authority, regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health, or employee health
and safety, as has been, is now, or may at any time hereafter be, in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": as to any Person, each trade or business including such
Person, whether or not incorporated, which together with such Person would be
treated as a single employer under Section 4001(a)(14) of ERISA.
"Escrow Account": as defined in the preamble to this Agreement.
"Escrowed Amount": as defined in the preamble to this Agreement.
"Escrow Security Agreement": the Pledge of Claims dated as of April 12,
2005, by the Company in favor of the Administrative Agent.
"Euro" and "(euro)": the single currency of the European Union as
constituted by the Treaty on European Union and as referred to in EMU
Legislation.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves) under any regulations of the Board of Governors dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D) maintained by a member bank of such
system.
"Euro-Denominated Exchange Notes": Exchange Notes denominated in Euros.
"Euro-Denominated Loans": Loans denominated in Euros.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined by the
Administrative Agent to be the offered rate for deposits in Dollars or Euros, as
applicable, with a term comparable to such Interest Period that appears on the
Telerate Page as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear
on the Telerate Page, the "Eurodollar Base Rate" shall be determined by
reference to such other comparable publicly available service for displaying
Eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the average of
the rates at which deposits in the relevant currency, approximately equal in
principal
13
amount to $5,000,000, and for a maturity comparable to such Interest Period, are
offered by the principal London office of the Administrative Agent for
immediately available funds in the London interbank market at approximately
11:00 A.M., London time, two Business Days prior to the commencement of such
Interest Period. In the event that the Eurodollar Base Rate is unable to be
determined pursuant to any of the foregoing mechanisms, the "Eurodollar Base
Rate" shall instead be the interest rate per annum reasonably determined by the
Administrative Agent.
"Eurodollar Business Day": a day (other than a Saturday or a Sunday) on
which banks are open for general business in London and New York; and if, on
that day, a payment in or a purchase of Euro is to be made, the day is also a
TARGET Operating Day.
"Eurodollar Loan": a Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of Section
2.
"Euro Equivalent": on any date of determination thereof, the amount of
Euros which could be purchased with the amount of Dollars involved in such
computation at the spot rate at which Euros may be exchanged into Dollars as set
forth on such date on (i) the applicable Telerate Service pages or (ii) if such
rate does not appear on such Telerate Service pages, at the spot exchange rate
therefor as determined by the Administrative Agent, in each case as of 11:00
a.m. London time on such date of determination thereof.
"Euro Loan Commitment": as to any Lender, its obligation to make a
Euro-Denominated Loan to the Company (i) on the Initial Closing Date and (ii)
during the Availability Period in an aggregate amount the Dollar Equivalent of
which (as determined by the Administrative Agent on April 8, 2005) shall not
exceed the amount set forth opposite such Lender's name in Schedule 1.1A under
the heading "Euro Loan Commitment"; collectively, as to all such Lenders, the
"Euro Loan Commitments".
"Euro Loan Facility": the Euro Loan Commitments and the Euro-Denominated
Loans made hereunder.
"Euro Loan Lender": each Lender with a Euro Loan Commitment.
"Euro Loan Percentage": as to any Lender at any time, the percentage of
the aggregate Euro Loan Commitments then constituted by such Lender's Euro Loan
Commitment (or, prior to the Final Drawdown Date, the percentage of the sum of
(a) the aggregate Euro-Denominated Loans and (b) the aggregate undrawn Euro Loan
Commitments (based on the Euro Equivalent thereof as determined by the
Administrative Agent) then constituted by such Lender's (i) Euro-Denominated
Loans and (ii) undrawn Euro Loan Commitment (based on the Euro Equivalent
thereof as determined by the Administrative Agent)).
"Event of Default": any of the events specified in Section 7, provided
that all requirements for the giving of notice, the lapse of time, or both, and
any other conditions, have been satisfied.
"Exchange Act": the Securities Exchange Act of 1934, as amended.
"Exchange Note": each note issued under the Indenture delivered pursuant
to Section 2.3 and 5.14; collectively, the "Exchange Notes".
"Exchange Request": as defined in Section 5.14(b).
14
"Existing Credit Agreement": the Credit Agreement, dated as of June 27,
2003, as amended, among the Company, Quiksilver Americas, Inc., Quiksilver
Wholesale, Inc., NA Pali, S.A.S., Quiksilver Japan K.K., Ug Manufacturing Co.
Pty Ltd, the lenders party thereto, JPMorgan Chase Bank, N.A. as agent, and
others.
"Facility": each of (i) the Dollar Loan Facility and (ii) the Euro Loan
Facility.
"Fee Letter": the Fee Letter dated as of March 20, 2005, among the
Company, Quiksilver Americas, JPMSI and the Administrative Agent, as amended
from time to time.
"Final Drawdown Date": the earlier of (i) September 15, 2005 and (ii) the
date of completion of the Squeeze Out.
"Final Maturity Date": the seventh anniversary of the Initial Closing
Date.
"Foreign Subsidiary": each Subsidiary other than a Domestic Subsidiary.
"Funding Office": with respect to any Facility, the office of the
Administrative Agent specified in Section 9.2 or such other office as may be
specified from time to time by the Administrative Agent as its funding office by
written notice to the Company and the relevant Lenders.
"GAAP": generally accepted accounting principles in the United States of
America in effect on the date of this Agreement, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such entity as are approved by a significant segment of the
accounting profession.
"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.
"Group Members": the collective reference to the Company and its
Subsidiaries.
"Guarantee": each guarantee made by a Guarantor in favor of the
Administrative Agent for the benefit of the Lenders, in the form of Exhibit A
hereto, as the same may be amended, modified or restated from time to time in
accordance with the terms hereof.
"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
15
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
Company in good faith in a manner and with a result reasonably satisfactory to
the Administrative Agent.
"Guarantor": each Subsidiary which executes a Guarantee in favor of the
Administrative Agent. As of the Initial Closing Date, the Guarantors shall be
Quiksilver Americas, each other Material Domestic Subsidiary, Hawk Designs,
Inc., Mervin Manufacturing, Inc. and Fidra, Inc.
"Guarantor Subordinated Obligation": with respect to a Guarantor, any
Indebtedness of such Guarantor (whether outstanding on the date of this
Agreement or thereafter Incurred) which is expressly subordinate in right of
payment to the obligations of such Guarantor under its Guarantee pursuant to a
written agreement.
"Hedging Obligations": of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder": the Person in whose name an Exchange Note or a Loan (and any
corresponding Note(s)) is registered.
"Holding Company": as defined in the recitals to this Agreement.
"Incur": issue, create, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness": with respect to any Person on any date of determination
(without duplication):
(i) the principal of and premium, if any, in respect of indebtedness
of such Person for borrowed money,
(ii) the principal of and premium, if any, in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments,
(iii) the principal component of all obligations of such Person in
respect of letters of credit, bankers' acceptances or other similar
instruments (including reimbursement obligations with respect thereto
except to the extent such reimbursement obligation relates to a trade
payable and such obligation is satisfied within 30 days of Incurrence),
(iv) the principal component of all obligations of such Person to
pay the deferred and unpaid purchase price of property (except trade
payables), which purchase price is due more than six months after the date
of placing such property in service or taking delivery and title thereto,
16
(v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person,
(vi) the principal component or liquidation preference of all
obligations of such Person with respect to the redemption, repayment or
other repurchase of Disqualified Stock or, with respect to any Subsidiary
that is not a Guarantor, any Preferred Stock (but excluding, in each case,
any accrued dividends),
(vii) the principal component of all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, however, that the amount
of Indebtedness of such Person shall be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the amount of
such Indebtedness of such other Persons,
(viii) the principal component of all Indebtedness of other Persons
to the extent subject to a Guarantee Obligation by such Person,
(ix) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and Interest Rate
Agreements (the amount of any such obligations to be equal at any time of
determination to the termination value of such agreement or arrangement
giving rise to such obligation that would be payable by such Person at
such time), and
(x) to the extent not otherwise included in this definition, the
amount then outstanding (i.e., advanced, and received by, and available
for use by such Person) under any receivables financing (as set forth in
the books and records of such Person and confirmed by the agent, trustee
or other representative of the institution or group providing such
receivables financing).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability at such date, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations described above at such
date.
In addition, "Indebtedness" of any Person shall include Indebtedness described
in the preceding paragraph that would not appear as a liability on the balance
sheet of such Person if:
(i) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary (a "Joint Venture");
(ii) such Person or a Restricted Subsidiary of such Person is a general
partner of the Joint Venture (a "General Partner"); and
(iii) there is recourse, by contract or operation of law, with respect to
the payment of such Indebtedness to property or assets of such
Person or a Restricted Subsidiary of such Person; and then such
Indebtedness shall be included in an amount not to exceed:
(a) the lesser of (1) the net assets of the General Partner and
(2) the amount of such obligations to the extent that there is
recourse, by contract or
17
operation of law, to the property or assets of such Person or
a Restricted Subsidiary of such Person; or
(b) if less than the amount determined pursuant to clause (a)
immediately above, the actual amount of such Indebtedness that
is recourse to such Person or a Restricted Subsidiary of such
Person, if the Indebtedness is evidenced by a writing and is
for a determinable amount and the related interest expense
shall be included in Consolidated Interest Expense to the
extent actually paid by the Company or its Restricted
Subsidiaries.
"Indenture": the Indenture, in form and substance customary for bridge
exchange notes with such changes therein as the Company may request and the
Administrative Agent may approve, such approval not to be unreasonably withheld,
if and when executed and delivered by the Company and the Trustee thereunder, as
amended, waived, supplemented or otherwise modified from time to time; provided,
however, that the negative covenants contained in the Indenture shall be no more
restrictive on the Company and its Subsidiaries (as determined by the
Administrative Agent in its reasonable discretion) than those negative covenants
applicable to the Initial Loans contained herein.
"Initial Closing Date": the date on which the conditions precedent set
forth in Section 4.1 shall be satisfied or waived.
"Initial Loan": as defined in Section 2.1(a).
"Initial Loan Rate": the rate equal to the greater of (i) the Adjusted
LIBO Rate plus 4.25% or, in the circumstances set forth in Section 2.7, the
Alternate Base Rate plus 3.25%, and (ii) the Treasury Rate plus 3.0%.
"Initial Maturity Date": April 12, 2006.
"Initial Note": as defined in Section 9.6(e).
"Initial Purchase": as defined in the recitals to this Agreement.
"Initial Transactions": as defined in Section 4.1(b)(vii).
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intangible Assets": all unamortized debt discount and expense,
unamortized deferred charges, goodwill, Patents, Trademarks, Copyrights,
write-ups of assets over their carrying value at the date of issuance of the
Loans or the date of acquisition, if acquired subsequent thereto, and all other
items which would be treated as intangibles on the consolidated balance sheet of
such Person prepared in accordance with GAAP.
"Intellectual Property Rights": with respect to any Person, all of such
Person's Patents, Copyrights, Trademarks, and Licenses, all other rights under
any of the foregoing, all extensions, renewals, reissues, divisions,
continuations and continuations-in-part of any of the foregoing, and all rights
to sue for past, present, and future infringement of any of the foregoing.
18
"Intercreditor Agreement": the Intercreditor Agreement dated as of April
12, 2005, among Quiksilver Americas, JPMorgan Chase Bank, N.A., as
administrative agent for the lenders party to the Revolving Credit Agreement,
and the Leasehold Improvement Lender, as the same may be amended, modified or
restated from time to time.
"Interest Payment Date": with respect to any Loan, the last day of the
Interest Period applicable to the Loan, and in addition, the date of any
prepayment of such Loan.
"Interest Period": (a) prior to the Initial Maturity Date, as to any
Initial Loan, (i) initially, the period commencing on the Initial Closing Date
and, subject to clause (y) of the proviso below, ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is three months thereafter and (ii) thereafter,
each period commencing on the last day of the next preceding Interest Period and
ending on the earlier of (A) the numerically corresponding day (or, if there is
no numerically corresponding day, on the last day) in the calendar month that is
three months thereafter and (B) the Initial Maturity Date and (b) following the
Initial Maturity Date, as to any Term Loan, (i) initially, the period commencing
on the Initial Maturity Date and ending on the last day of the fiscal quarter of
the Company following the Initial Maturity Date and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period and ending on
the earlier of (A) the last day of the fiscal quarter of the Company following
such date, and (B) the Final Maturity Date; provided, however, that (x) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Loan only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (y) notwithstanding anything herein to the contrary,
the initial Interest Period for Euro-Denominated Loans borrowed on the Initial
Closing Date shall be one week, and each Interest Period thereafter for such
Euro-Denominated Loans shall be for a period of three months as set forth in
clause (a) above. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Agreement": with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment": with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of any direct or indirect
advance, loan (other than advances or extensions of credit to customers in the
ordinary course of business) or other extension of credit (including by way of a
Guarantee Obligation or similar arrangement, but excluding any debt or extension
of credit represented by a bank deposit other than a time deposit) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that none of the following will be deemed to be an Investment: (a)
Hedging Obligations entered into in the ordinary course of business and in
compliance with this Agreement; (b) endorsements of negotiable instruments and
documents in the ordinary course of business; and (c) an acquisition of assets,
Capital Stock or other securities by the Company or a Subsidiary for
consideration to the extent such consideration consists of common equity
securities of the Company. For purposes of Section 6.2, (i) "Investment" shall
include the portion (proportionate to the Company's equity interest in a
Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Restricted Subsidiary of the Company
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to
19
have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
(as conclusively determined by the Board of Directors of the Company in good
faith) of such Subsidiary at the time that such Subsidiary is so redesignated a
Restricted Subsidiary; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors of the Company. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Voting Stock of any Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such entity is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value (as conclusively determined in good
faith by the Board of Directors of the Company) of the Capital Stock of such
Subsidiary not sold or disposed of.
"Investment Bank": one or more investment banks reasonably satisfactory to
the Administrative Agent which may be engaged by the Company to publicly sell or
privately place the Take-Out Debt in accordance with Section 5.13.
"Investment Company Act": the Investment Company Act of 1940, as amended.
"JPMSI": J.P. Morgan Securities Inc., a Delaware corporation.
"Judgment Currency": as defined in Section 9.16.
"Leasehold Improvement Lender": Union Bank of California, N.A., in its
individual capacity, as lender of the Leasehold Improvement Loan, and any
successor or assignee thereof.
"Leasehold Improvement Loan": the term loan in the original principal
amount of $12,300,000 made by the Leasehold Improvement Lender to the Company
and referred to in the Intercreditor Agreement.
"Lenders": as defined in the preamble to this Agreement.
"License": with respect to any Person, all of such Person's right, title,
and interest in and to (i) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (ii) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (iii) all rights to sue for past,
present, and future breaches thereof.
"Lien": any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Loans": as defined in Section 2.1.
"Loan Documents": this Agreement, the Loan Notes, the Guarantees and the
Escrow Security Agreement.
"Loan Notes": the collective reference to the Term Notes and the Initial
Notes.
"Major Default": as defined in Section 4.2(h).
20
"Major Representations": as defined in Section 4.2(g).
"Margin Stock": as defined in Regulation U.
"Material Adverse Effect": a material adverse effect on (a) the
Transaction, (b) the business, operations, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole,
(c) the ability of the Company, any Material Domestic Subsidiary or any Material
Foreign Subsidiary to perform their respective obligations under the Loan
Documents or (d) the validity or enforceability of the Revolving Credit
Agreement or the Loan Documents or the rights or remedies of the Administrative
Agent and the Lenders hereunder or thereunder.
"Material Domestic Subsidiary": as of any date, a Domestic Subsidiary that
(a) has a net worth (excluding in the determination thereof any Indebtedness of
such Domestic Subsidiary to the Company or another Subsidiary) of at least 5% of
the Company's consolidated net worth as of the last day of the most recently
ended fiscal quarter of the Company, (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 Company's consolidated revenue for the 12-month
period ended as of the most recently ended fiscal quarter of the Company 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 Company's
consolidated net income for the 12-month period ended as of the most recently
ended fiscal quarter of the Company.
"Material Foreign Subsidiary": a Foreign Subsidiary having at any time a
net worth equal to 10% or more of the Company's consolidated net worth as of the
last day of the most recently ended fiscal quarter of the Company.
"Materials of Environmental Concern": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, molds, pollutants,
contaminants, radioactivity, and any other substances of any kind, regulated
pursuant to or that could give rise to liability under any Environmental Law.
"Monthly Reports": as defined in Section 4.1(f).
"Moody's": Moody's Investors Service, Inc., and its successors.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Available Cash": with respect to an Asset Disposition, cash payments
received by the Company or any Restricted Subsidiary (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise and net proceeds from the sale or other
disposition of any securities received as consideration, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available tax credits or
deductions and any tax sharing agreements) as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness that is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or that must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
21
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts (as determined or reasonably estimated by the seller
thereof) to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition.
"Net Cash Proceeds": with respect to any issuance or sale of Capital Stock
or Indebtedness, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually Incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).
"Non-Excluded Taxes": as defined in Section 2.12(a).
"Non Recourse Debt": Indebtedness (i) as to which neither the Company nor
any of its Restricted Subsidiaries (a) provides any Guarantee Obligation or
credit support of any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or (b) is directly
or indirectly liable as a guarantor or otherwise; (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness of the Company or any
of its Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) the explicit terms of which provide that there is no
recourse against any of the assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Lender": as defined in Section 2.12(d).
"Notes": the Loan Notes and the Exchange Notes, as originally executed or
as subsequently amended from time to time pursuant to the applicable provisions
hereof.
"Obligor": the Company, each Guarantor and any other Person (other than a
Lender) obligated under any Loan Document.
"Offer Account": as defined in Section 4.2(f).
"Offer Documents": as defined in Section 4.2(e).
"OPRO Account": as defined in Section 4.3(f).
"OPRO Documents": as defined in Section 4.3(e).
"OPRO Major Default": as defined in Section 4.3(e).
"Organic Documents": relative to any entity, its certificate of
incorporation, articles of incorporation, certificate of formation, certificate
of organization or partnership agreement, and its by-laws, operating agreement
or limited liability company agreement, or the equivalent documents of any
entity.
"Original Initial Note": as defined in Section 9.6(e).
22
"Original Term Note": as defined in Section 9.6(e).
"Other Taxes": any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 9.6(c).
"Patents": with respect to any Person, all of such Person's right, title,
and interest in and to: (i) any and all patents and patent applications; (ii)
all inventions and improvements described and claimed therein; (iii) all
reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (iv) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (v) all rights to sue for past, present, and future
infringements thereof; and (vi) all rights corresponding to any of the foregoing
throughout the world.
"Patriot Act": as defined in Section 9.17.
"Payment Sharing Notice": a written notice from the Company or any Lender
informing the Administrative Agent that an Event of Default has occurred and is
continuing and directing the Administrative Agent to allocate payments
thereafter received from or on behalf of the Company in accordance with the
provisions of Section 2.9.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor thereto).
"Permitted Investment": an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary, provided, however,
that the primary business of such Restricted Subsidiary is a Related Business,
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary,
provided, however, that such Person's primary business is a Related Business,
(iii) cash and Cash Equivalents, (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances, (v) payroll, travel, moving and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business, (vi) to the extent permitted by law, loans or advances to employees
(other than executive officers) made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary,
(vii) Capital Stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor, (viii) Investments made as a result of the receipt of non-cash
consideration from an Asset Disposition that was made pursuant to and in
compliance with Section 6.4, (ix) Investments in existence on the Initial
Closing Date, (x) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 6.1, (xi) Investments by the Company or any of its
Restricted Subsidiaries, together with all other Investments pursuant to this
clause (xi), in an aggregate amount at the time of such Investment not to exceed
$10,000,000 outstanding at any one time (with the fair market value of such
Investment being measured at the time made and without giving effect to
subsequent changes in value),
23
(xii) Guarantee Obligations issued in accordance with Section 6.1, (xiii)
Investments constituting prepayments or credits made to customers or suppliers
in the ordinary course of business and consistent with past practice and (xiv)
Investments made pursuant to the agreements set forth on Schedule 1.1B.
"Permitted Liens": with respect to any Person, (i) Liens securing
Indebtedness and other obligations of the Company under a Credit Facility,
including the Revolving Credit Agreement, Interest Rate Agreements, Currency
Agreements and Banking Services Obligations (as defined in the Revolving Credit
Agreement) and Liens on assets of any Guarantors securing Guarantee Obligations
with respect to Indebtedness and other obligations of the Company under a Credit
Facility, including under the Revolving Credit Agreement, Interest Rate
Agreements, Currency Agreements and such Banking Services Obligations, in each
case permitted to be Incurred pursuant to Section 6.1(b)(i) of this Agreement;
(ii) Liens securing Indebtedness and related Hedging Obligations of Foreign
Subsidiaries permitted to be Incurred under clause (xi) of Section 6.1(b)(i) of
this Agreement; (iii) pledges or deposits by such Person under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
United States government bonds to secure surety or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import or
customs duties or for the payment of rent, in each case Incurred in the ordinary
course of business; (iv) Liens imposed by law, including carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made in respect thereof; (v) Liens for taxes, assessments or other governmental
charges not yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided appropriate reserves
required pursuant to GAAP have been made in respect thereof; (vi) Liens in favor
of issuers of surety or performance bonds or letters of credit or bankers'
acceptances issued pursuant to the request of and for the account of such Person
in the ordinary course of its business; provided, however, that such letters of
credit do not constitute Indebtedness; (vii) encumbrances, ground leases,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning, building codes, or other restrictions (including, without
limitation, minor defects or irregularities in title and similar encumbrances)
as to the use of real properties or liens incidental to the conduct of the
business of such Person or to the ownership of its properties which do not in
the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;
(viii) Liens securing Hedging Obligations so long as the related Indebtedness
is, and is permitted to be under this Agreement, secured by a Lien on the same
property securing such Hedging Obligation; (ix) leases, licenses, and subleases
and sublicenses of assets (including, without limitation, real property and
Intellectual Property Rights), which do not materially interfere with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (x) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment have not been
finally terminated or the period within which such proceedings may be initiated
has not expired; (xi) Liens for the purpose of securing the payment (or the
refinancing of the payment) of all or a part of the purchase price of, or
Capitalized Lease Obligations, purchase money obligations or other payments
Incurred to finance the acquisition, improvement or construction of, assets or
property acquired or constructed in the ordinary course of business; provided
that (A) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under this Agreement and does not exceed the
cost of the assets or property acquired or constructed and (B) such Liens are
created within 180 days of construction or acquisition of such assets or
property and do not encumber any other assets or property of the Company or any
Restricted Subsidiary other than such assets or property and assets affixed or
appurtenant thereto; (xii) Liens arising solely by virtue of any statutory or
common law provision relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts
24
or other funds maintained with a depositary institution; provided that (A) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Company in excess of those set forth by
regulations promulgated by the Federal Reserve Board, and (B) such deposit
account is not intended by the Company or any Restricted Subsidiary to provide
collateral to the depository institution; (xiii) Liens arising from Uniform
Commercial Code financing statement filings regarding operating leases entered
into by the Company and its Restricted Subsidiaries in the ordinary course of
business; (xiv) Liens existing on the Initial Closing Date; (xv) Liens on
property or shares of stock of a Person at the time such Person becomes a
Restricted Subsidiary; provided, that (A) such Liens are not created, Incurred
or assumed in connection with, or in contemplation of, such other Person
becoming a Restricted Subsidiary and (B) any such Lien may not extend to any
other property owned by the Company or any other Restricted Subsidiary; (xvi)
Liens on property at the time the Company or a Restricted Subsidiary acquired
the property, including any acquisition by means of a merger or consolidation
with or into the Company or any other Restricted Subsidiary; provided, that (A)
such Liens are not created, Incurred or assumed in connection with, or in
contemplation of, such acquisition and (B) such Liens may not extend to any
other property owned by the Company or any other Restricted Subsidiary; (xvii)
Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Company or another Restricted Subsidiary; (xviii) Liens securing
the Loans and the Exchange Notes and Guarantees; (xix) Liens securing
Refinancing Indebtedness Incurred to refinance Indebtedness that was previously
so secured; provided, that any such Lien is limited to all or part of the same
property or assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the Indebtedness
being refinanced or is in respect of property that is the security for a
Permitted Lien hereunder; (xx) Liens in favor of customs and revenue authorities
to secure payment of customs duties in connection with the importation of goods;
(xxi) Liens securing Indebtedness (other than Subordinated Obligations and
Guarantor Subordinated Obligations) in an aggregate principal amount outstanding
at any one time not to exceed $10,000,000; (xxii) any interest or title of a
lessor under any Capitalized Lease Obligation or operating lease; (xxiii) Liens
on the assets of Foreign Subsidiaries to the extent such Liens secure
Indebtedness that is permitted by this Agreement; (xxiv) Liens on QIPL's
Trademark rights to the Company's name and logo and related Intellectual
Property Rights in the territories of Australia and New Zealand, in favor of the
former shareholders of QIPL, to secure the obligation of QAPL to pay the final
installment of the purchase price for the acquisition of shares of QIPL by QAPL;
and (xxv) Liens under the Escrow Security Agreement.
"Person": any individual, firm, partnership, joint venture, corporation,
association, limited liability company, business enterprise trust,
unincorporated organization, government or department or agency thereof or other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan": as to any Person, any employee benefit plan subject to ERISA
maintained for employees of such Person or any ERISA Affiliate of such Person
(and any such plan no longer maintained by such Person or any of such Person's
ERISA Affiliates to which such Person or any of such Person's ERISA Affiliates
has made or was required to make any contributions within any of the five
preceding years).
"Preferred Stock": as applied to the Capital Stock of any corporation,
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"Prohibited Transaction": with respect to any Plan, a prohibited
transaction (as defined in Section 406 of ERISA) with respect to such Plan.
"Projected Pro Forma Balance Sheet": as defined in Section 3.8(c).
25
"Properties": the collective reference to the real and personal property
owned, leased, used, occupied or operated by the Company and its Subsidiaries.
"Quiksilver Americas": Quiksilver Americas, Inc., a California
corporation.
"QAPL": Quiksilver Australia Pty Ltd, a corporation organized under the
laws of the State of Victoria, Australia.
"QIPL": Quiksilver International Pty Ltd, a corporation organized under
the laws of the State of Victoria, Australia.
"Receivable": a right to receive payment arising from a sale or lease of
goods or the performance of services by a Person pursuant to an arrangement with
another Person pursuant to which such other Person is obligated to pay for goods
or services under terms that permit the purchase of such goods and services on
credit and shall include, in any event, any items of property that would be
classified as an "account," "chattel paper," "payment intangible" or
"instrument" under the Uniform Commercial Code as in effect in the State of New
York and any "supporting obligations" as so defined.
"Receivables Fees": any fees or interest paid to purchasers or lenders
providing the financing in connection with a factoring agreement or other
similar agreement, including any such amounts paid by discounting the face
amount of Receivables or participations therein transferred in connection with a
factoring agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.
"Refinancing Indebtedness": Indebtedness that is Incurred to refund,
refinance, replace, exchange, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Agreement or Incurred in compliance with this Agreement (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that (i)(x) if the
Stated Maturity of the Indebtedness being refinanced is earlier than the Final
Maturity Date, the Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being refinanced or (y) if the
Stated Maturity of the Indebtedness being refinanced is later than the Final
Maturity Date, the Refinancing Indebtedness has a Stated Maturity at least 91
days later than the Final Maturity Date, (ii) the Refinancing Indebtedness has
an Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the Average Life of the Indebtedness being refinanced,
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding of
the Indebtedness being refinanced (plus, without duplication, any additional
Indebtedness Incurred to pay interest or premiums required by the instruments
governing such existing Indebtedness and fees Incurred in connection therewith)
and (iv) if the Indebtedness being extended, refinanced, replaced, defeased or
refunded is subordinated in right of payment to the Loans or a Guarantee, such
Refinancing Indebtedness is subordinated in right of payment to the Loans or
such Guarantee on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Registration Rights Agreement": a registration rights agreement, in form
and substance customary for bridge exchange notes with such changes therein as
the Company may request and the Administrative Agent may approve, such approval
not to be unreasonably withheld, if and when executed
26
and delivered by the Company and the Trustee thereunder, as amended, waived,
supplemented or otherwise modified from time to time.
"Register": as defined in Section 9.6(b).
"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 S-X": Regulation S-X of the Securities Act, 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 T": Regulation T 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.
"Regulations": regulations 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 regulations
thereto.
"Related Business": any business that is the same as or related, ancillary
or complementary to any of the businesses of the Company and its Restricted
Subsidiaries or Target and its subsidiaries, in each case, on the date hereof.
"Released Amount": as defined in Section 2.5(b)(iii).
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.
"Required Lenders": at any time, Lenders holding more than 50% in
principal amount of outstanding Loans (based, in the case of Euro-Denominated
Loans, on the Dollar Equivalent of such Loans as determined by the
Administrative Agent) (or, prior to the Final Drawdown Date, more than 50% of
(x) the Initial Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent of such Initial Loans as determined by the Administrative
Agent) and (y) any undrawn Commitments).
"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
27
executive vice president, any senior vice president or, with respect to
financial matters, the chief financial officer, the vice president of finance or
the treasurer.
"Restricted Investment": any Investment other than a Permitted Investment.
"Restricted Payment": as defined in Section 6.2(a).
"Restricted Subsidiary": any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Revolving Credit Agreement": the Credit Agreement dated as of the date
hereof, among the Company, Quiksilver Americas, Inc., as Borrower, the lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as the
same may be amended, supplemented or otherwise modified from time to time.
"Revolving Credit Documents": the collective reference to the Revolving
Credit Agreement, the security agreements and guarantees entered into in
connection therewith by the relevant grantors party thereto, the notes issued in
connection therewith and all documentation entered into in connection therewith,
as such Revolving Credit Documents may be amended, supplemented or otherwise
modified from time to time.
"Sale/Leaseback Transaction": an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or such Restricted Subsidiary transfers such property to a Person
and the Company or such Restricted Subsidiary leases it from such Person.
"SEC": the Securities and Exchange Commission or any Governmental
Authority which succeeds to the powers and functions thereof.
"Second Step Transactions": as defined in Section 4.2(b)(iii).
"Securities Act": the Securities Act of 1933, as amended.
"Securities Demand": as defined in Section 5.13(a).
"Sellers": collectively, certain existing stockholders of Target as
defined in the Acquisition Agreement.
"Senior Credit Engagement Letter": the Senior Credit Engagement Letter
dated as of February 28, 2005, between the Company and JPMSI, as amended from
time to time.
"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:
(a) the present fair salable value of such Person's assets is in
excess of the total amount of the probable liability on such Person's
liabilities;
(b) such Person is able to pay its debts as they become due; and
28
(c) such Person does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all businesses in which
such Person is about to engage.
"S&P": Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., and its successors.
"Squeeze Out": as defined in the preamble to this Agreement.
"Stated Maturity": with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision, but shall not include any contingent obligations to repay, redeem or
repurchase any such principal prior to the date originally scheduled for the
payment thereof.
"Subordinated Obligation": any Indebtedness of the Company (whether
outstanding on the date of this Agreement or thereafter Incurred) which is
subordinate or junior in right of payment to the Loans pursuant to a written
agreement.
"Subsequent Initial Note": as defined in Section 9.6(e).
"Subsequent Term Note": as defined in Section 9.6(e).
"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 Company.
"Successor Company": as defined in Section 6.9(b)(i).
"Super-Majority Lenders": at any time, Lenders holding more than 66 2/3%
in principal amount of outstanding Loans (based, in the case of Euro-Denominated
Loans, on the Dollar Equivalent of such Loans as determined by the
Administrative Agent) (or, prior to the Final Drawdown Date, more than 66 2/3%
of (x) the Initial Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent of such Initial Loans as determined by the Administrative
Agent) and (y) any undrawn Commitments).
"Take-Out Debt": any notes or debentures (which may include cash pay or
non-cash pay securities, senior, subordinate or senior subordinated securities,
discount issue securities or a combination of any of the foregoing) of the
Company that may be issued by the Company after the Initial Closing Date to
refinance the Loans or Exchange Notes.
"Target": as defined in the recitals to this Agreement.
"TARGET Operating Day": any day that is not (a) a Saturday or Sunday, (b)
Christmas Day or New Year's Day or (c) any other day on which the Trans-European
Real-time Gross Settlement Operating System (or any successor settlement system)
is not operating (as determined by the Administrative Agent).
"Target Stock": as defined in the recitals to this Agreement.
29
"Telerate Page": the display designated as Page 3750 on the Telerate
System Incorporated Service (or such other page as may replace such page on such
service for the purpose of displaying the rates at which Dollar deposits are
offered by leading banks in the London interbank deposit market).
"Tender Offer": as defined in the preamble to this Agreement.
"Tender Offer Closing Date": the date on which the conditions precedent
set forth in Section 4.2 shall be satisfied or waived.
"Tender Offer Undertakings": as defined in Section 4.2(i).
"Term Loan": as defined in Section 2.1(b).
"Term Note": as defined in Section 9.6(e).
"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.
"Trademarks": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (i) all trademarks, service marks,
logos, trade names, trade dress, trade styles, domain names and other sources of
business identifiers and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (ii) all
licenses of the foregoing, whether as licensee or licensor; (iii) all renewals
of the foregoing; (iv) all income, royalties, damages, and payments now or
hereafter due or payable with respect thereto, including, without limitation,
damages, claims, and payments for past and future infringements thereof; (v) all
rights to sue for past, present, and future infringements of the foregoing,
including the right to settle suits involving claims and demands for royalties
owing; and (vi) all rights corresponding to any of the foregoing throughout the
world.
"Transaction Documents": the collective reference to the Acquisition
Documents, the Loan Documents, the Revolving Credit Documents, the Indenture,
the Registration Rights Agreement, the Exchange Notes, the Offer Documents and
the OPRO Documents.
"Transaction": as defined in the recitals to this Agreement.
"Transferee": any Assignee or Participant.
"Treasury Rate": with respect to each day during each Interest Period, the
rate per annum determined by the Administrative Agent two days prior to the
beginning of such Interest Period as (x) the rate borne by direct obligations of
the United States maturing on the seventh anniversary of the Initial Closing
Date or (y) if there are no such obligations, the rate determined by linear
interpolation between the rates borne by the two direct obligations of the
United States maturing closest to, but straddling, the seventh anniversary of
the Initial Closing Date, in each case as most recently published by the Board
of Governors on or prior to such date of determination.
"Treasury Rate Loan": a Loan bearing interest at a rate determined by
reference to the Treasury Rate in accordance with the provisions of Section 2.
"Trustee": as defined in Section 5.14(a).
30
"Type": when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof, the
term "Rate" shall include the Adjusted LIBO Rate, the Treasury Rate and the
Alternate Base Rate.
"Unrestricted Subsidiary": (i) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of the Company in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary or a Person becoming a Subsidiary through merger or
consolidation or Investment therein) to be an Unrestricted Subsidiary only if:
(a) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; (b)
all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date
of designation, and will at all times thereafter, consist of Non Recourse Debt;
(c) such designation and the Investment of the Company in such Subsidiary
complies with Section 6.2; (d) such Subsidiary, either alone or in the aggregate
with all other Unrestricted Subsidiaries, does not operate, directly or
indirectly, all or substantially all of the business of the Company and its
Subsidiaries; (iii) such Subsidiary is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation: (a) to subscribe for additional Capital Stock of such Person; or (b)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (iv) on the
date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary
is not a party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary with terms substantially less favorable to
the Company than those that might have been obtained from Persons who are not
Affiliates of the Company. Any such designation by the Board of Directors of the
Company shall be evidenced to the Administrative Agent by filing with the
Administrative Agent a resolution of the Board of Directors of the Company
giving effect to such designation and an Officer's Certificate certifying that
such designation complies with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be Incurred as of such date. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof and the Company could Incur
at least $1.00 of additional Indebtedness under Section 6.1(a) on a pro forma
basis taking into account such designation.
"United States": the United States of America (including the states,
commonwealths and territories thereof and the District of Columbia).
"Voting Stock": of any Person as of any date, the Capital Stock of such
Person that is as of such time entitled to vote in the election of the Board of
Directors of such Person.
"Wholly Owned Subsidiary": a Restricted Subsidiary of the Company all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes, any other Loan Document or any certificate or other document made or
delivered pursuant hereto.
31
(b) As used herein and in any Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries 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,
Schedule, Annex and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2
AMOUNT AND TERMS OF LOANS
2.1 Loans. (a) Subject to the terms and conditions hereof, (i) each Dollar
Loan Lender severally agrees to make a Dollar-Denominated Loan on the Initial
Closing Date in an amount equal to such Lender's Dollar Loan Commitment and (ii)
each Euro Loan Lender severally agrees to make Euro-Denominated Loans (together
with the Dollar-Denominated Loans, the "Initial Loans") in an aggregate
principal amount the Euro Equivalent of which (as determined by the
Administrative Agent on April 8, 2005) shall not exceed such Lender's Euro Loan
Commitment, with such Euro-Denominated Loans to be available to the Company in
up to three drawings on or prior to the Final Drawdown Date with (x) the first
drawing to be made on the Initial Closing Date, (y) the second drawing to be
made on the Tender Offer Closing Date and (z) the final drawing to be made on
the Final Drawdown Date; provided that, the maximum principal amount of
Euro-Denominated Loans made on the Initial Closing Date shall not exceed
(euro)49,000,000; and provided, further, that the Escrowed Amount shall be
deposited into the Escrow Account on the Initial Closing Date. Any Dollar Loan
Commitments not drawn on the Initial Closing Date shall terminate and any Euro
Loan Commitments not drawn on or prior to the Final Drawdown Date shall
terminate.
(b) Subject to the terms and conditions hereof, each Lender
severally agrees, if the Initial Loans have not been repaid or exchanged for
Exchange Notes on the Initial Maturity Date, to convert the then outstanding
principal amount of its Initial Loans into a loan (individually, a "Term Loan"
and collectively, the "Term Loans"; the Initial Loans and the Term Loans,
collectively, the "Loans") to the Company, on the Initial Maturity Date, in an
aggregate principal amount equal to then outstanding principal amount of the
Initial Loans held by such Lender. Upon the making by such Lender of such Term
Loan, each Lender shall cancel on its records the principal amount of the
Initial Loans held by such Lender corresponding to the principal amount of Term
Loans made by such Lender, which corresponding principal amount of the Initial
Loans shall be satisfied by the conversion thereof into Term Loans.
(c) Prior to the Initial Maturity Date, the Initial Loans shall be
comprised of (i) Eurodollar Loans, in the case of Euro-Denominated Loans, and
(ii) Eurodollar Loans, Treasury Rate Loans or ABR Loans, in the case of
Dollar-Denominated Loans. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Company to repay such Loan in accordance with the terms of
this Agreement.
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(d) The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make the Loans required.
2.2 Procedure for Borrowing. To request a Borrowing, the Company shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time (or, in the
case of Borrowings of Euro-Denominated Loans, 11:00 A.M., London time), three
Business Days prior to the date of the proposed Borrowing) specifying (a) the
Facility under which such Loans are to be borrowed and (b) the amount to be
borrowed. Upon receipt of such notice the Administrative Agent shall promptly
notify each Lender thereof. Not later than 12:00 Noon, New York City time (or,
in the case of Borrowings of Euro-Denominated Loans, 11:00 A.M., London time),
on the date of the proposed Borrowing, each Lender shall make available to the
Administrative Agent at the relevant Funding Office an amount in immediately
available funds equal to the Loans to be made by such Lender. The Administrative
Agent shall credit the account of the Company on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders in immediately available funds; provided
that, the Escrowed Amount shall be deposited into the Escrow Account.
2.3 Maturity and Exchange Notes. (a) All the Initial Loans will mature on
the Initial Maturity Date.
(b) All the Term Loans will mature on the Final Maturity Date.
(c) Each Lender will have the option on or after the Initial
Maturity Date at any time or from time to time to receive Exchange Notes in
exchange for the Term Loans or, on the Initial Maturity Date, the Initial Loans,
of such Lender then outstanding in accordance with Section 5.14 of this
Agreement; provided, that a Lender may not elect to exchange only a portion of
its outstanding Initial Loans for Exchange Notes unless such Lender intends at
the time of such partial exchange of Initial Loans promptly to sell the Exchange
Notes received in such exchange. The principal amount of the Exchange Notes will
equal 100.0% of the aggregate principal amount of, and be denominated in the
currency of, the Loans for which they are exchanged. If a Default (but not an
Event of Default) shall have occurred and be continuing on the date of such
exchange, any notices given or cure periods commenced while the Loan was
outstanding shall be deemed given or commenced (as of the actual dates thereof)
for all purposes with respect to the Exchange Note (with the same effect as if
the Exchange Note had been outstanding as of the actual dates thereof). All
accrued and unpaid interest on the date of conversion of any Loans into Exchange
Notes shall be payable on the applicable interest payment date under the
Indenture to the Holders of such Exchange Notes.
2.4 Repayment of Loans. The Company hereby unconditionally promises to pay
to the Administrative Agent at the relevant Funding Office for the account of
each Lender the then unpaid principal amount of each Loan in Dollars or Euros,
as applicable, in accordance with the terms hereof and of the Loan Notes. The
Company hereby further agrees to pay to the Administrative Agent for the account
of each Lender interest on the unpaid principal amount of the Loans in Dollars
or Euros, as applicable, from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.6.
2.5 Optional and Mandatory Prepayments. (a) The Company may at any time
and from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto, which notice shall specify the date and
amount of prepayment; provided, that if a Loan is prepaid on any day other than
the last day of the Interest Period applicable thereto, the Company shall also
pay any amounts owing pursuant to Section
33
2.13 and provided, further, that on or after the Initial Maturity Date, any
prepayment shall be applied pro rata among the Loans and Exchange Notes as
provided in Section 2.5(d) below. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial prepayments of Loans and the Exchange Notes
shall be in an aggregate principal amount equal to the lesser of (A) $1,000,000
or (euro)1,000,000, as the case may be, or a whole multiple thereof and (B) the
aggregate unpaid principal amount of the Loans and Exchange Notes, as the case
may be.
(b) (i) If, subsequent to the Initial Closing Date, the Company or
any of its Subsidiaries shall issue the Take-Out Debt or any Indebtedness (other
than Indebtedness Incurred pursuant to Section 6.1(b)) or Capital Stock (other
than shares of Capital Stock of (i) a Subsidiary issued to the Company or any
Wholly Owned Subsidiary of the Company or (ii) the Company issued pursuant to
exercises of stock options or purchases under an employee stock purchase plan)),
an amount equal to 100% of the Net Cash Proceeds thereof shall be promptly
applied toward the prepayment of the Loans and the Exchange Notes as provided in
Section 2.5(d) below; provided that such Net Cash Proceeds (excluding Net Cash
Proceeds received by the Company or any of its Subsidiaries from the issuance of
the Take-Out Debt) need not be applied to the prepayment of the Loans and the
Exchange Notes to the extent that such Net Cash Proceeds (excluding Net Cash
Proceeds received by the Company or any of its Subsidiaries from the issuance of
the Take-Out Debt) are required to be and are applied pursuant to the Revolving
Credit Agreement, in satisfaction of the obligations thereunder.
(ii) If, subsequent to the Initial Closing Date, the Company or
any of its Subsidiaries shall be required to apply any Net Available Cash
pursuant to Section 6.4, an amount equal to such Net Available Cash shall be
promptly applied toward the prepayment of the Loans and the Exchange Notes as
provided in Section 2.5(d) below; provided that such Net Available Cash need not
be applied to the prepayment of the Loans and the Exchange Notes to the extent
that such Net Available Cash is required to be and is applied pursuant to the
Revolving Credit Agreement in satisfaction of the obligations thereunder.
(iii) If, subsequent to the Initial Closing Date, the Escrowed
Amount or any portion thereof is released from the Escrow Account (such amount,
the "Released Amount") to the Company or any of its Subsidiaries, an amount
equal to such Released Amount shall be applied toward the prepayment of the
Loans and the Exchange Notes as provided in Section 2.5(d) below on the date on
which such funds are released.
(iv) The Company shall give the Administrative Agent (which shall
promptly notify each Lender) at least three (3) Business Days' prior notice or,
telephone notice promptly confirmed in writing of each prepayment in whole or in
part pursuant to this Agreement setting forth the date and amount thereof.
(c) Accrued and unpaid interest on the amount of any principal of
the Loans prepaid under this Section 2.5 shall be paid to and on the date of
such prepayment.
(d) As promptly as practicable after the Administrative Agent
receives notice of a prepayment pursuant to Section 2.5(b)(iii), the
Administrative Agent, in cooperation with the Trustee, shall give notice to each
holder of an Exchange Note of the pro rata amount that would be payable to such
holder in respect of such holder's Exchange Note and the expected date of such
prepayment. Any holder of Exchange Notes (other than Callable Exchange Notes)
that wishes to accept such prepayment (each, an "Accepting Holder") shall
promptly notify the Trustee and the Administrative Agent in writing. Payments
and offers to prepay the Loans and Exchange Notes shall be made ratably among
the Loans and
34
Exchange Notes. After the Administrative Agent receives the prepayment amount,
such prepayment amount shall be distributed by the Administrative Agent, in
cooperation with the Trustee, subject to Section 2.9(b), in the following order,
with appropriate adjustments being made to account for the receipt by the
Trustee of any prepayment in respect of the Exchange Notes: First, to the
payment of all amounts described in clauses "First" and "Second" of Section
2.9(b)(i); Second, to the payment of interest then due and payable on the Loans,
Exchange Notes of Accepting Holders and Callable Exchange Notes, ratably among
the Lenders, the Accepting Holders and Holders of Callable Exchange Notes in
accordance with the aggregate amount of interest owed to each such Lender,
Accepting Holder and Holder; and Third, to the payment of the principal amount
of, and premium, if any, due on, the Loans, the Exchange Notes of Accepting
Holders and the Callable Exchange Notes that is then due and payable, ratably
among the Lenders, the Accepting Holders and Holders of Callable Exchange Notes
in accordance with the aggregate principal amount and premium, if any, owed to
each such Lender, Accepting Holder and Holder. Amounts offered to and rejected
by any Exchange Note holder shall be ratably applied to prepay the Loans, the
Exchange Notes held by Accepting Holders and Callable Exchange Notes. Any offers
to prepay non-Callable Exchange Notes shall be made in accordance with the
provisions relating thereto in the Indenture, and with applicable law, and the
distribution of the relevant prepayment amount hereunder shall be made promptly
after the expiration of such offer.
(e) All optional and mandatory prepayments pursuant to this Section
2.5 shall be applied ratably to outstanding Dollar-Denominated Loans and
Euro-Denominated Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent thereof as determined by the Administrative Agent). For
purposes of this Section 2.5, to the extent that there are any undrawn Euro Loan
Commitments on the date of any prepayment pursuant to this Section, such Euro
Loan Commitments shall be deemed to be drawn at the time of such prepayment such
that, after giving effect thereto, (i) any undrawn Euro Loan Commitments shall
be reduced pro rata by any such prepayment as if such Euro Loan Commitments had
been drawn on such date and (ii) the reduction of the Euro Loan Commitments
pursuant to foregoing clause (i) shall reduce the amount of any mandatory
prepayment otherwise required by this Section.
2.6 Interest Rates and Payment Dates. (a) Initial Loans shall bear
interest for the period from and including the Initial Closing Date to, but
excluding, the Initial Maturity Date on the unpaid principal thereof at a rate
per annum equal to the Initial Loan Rate for the Interest Period in effect for
such Initial Loan plus the Applicable Margin, and shall be payable in the
currency in which such Initial Loans are denominated.
(b) Term Loans shall bear interest for the period from and including
the Initial Maturity Date to, but excluding, the Final Maturity Date or date of
exchange for an Exchange Note on the unpaid principal thereof at a rate per
annum equal to the Adjusted Rate plus the Adjusted Margin, and shall be payable
in the currency in which such Term Loans are denominated.
(c) Notwithstanding Sections 2.6(a) and (b), the interest rate borne
by the Loans pursuant to such Sections shall not exceed 10.5% per annum;
provided that the interest rate shall not be less than (a) 7.25% per annum for
Initial Loans and (b) 9.25% for Term Loans.
(d) If all or a portion of (i) the principal amount of any of the
Loans, (ii) any interest payable thereon, or (iii) any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise, but taking into account any applicable
grace period under 7(a)), such Loan and any such overdue amount shall, without
limiting the rights of the Lenders under Section 7, bear interest at a rate per
annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of overdue interest, commitment fees or other
amounts due and payable
35
hereunder, the applicable rate hereunder for any Loan in the relevant currency
(but without giving effect to the foregoing clause (x)) plus 2%.
(e) Interest shall be payable in arrears on each Interest Payment
Date and upon the maturity date of the Loan in respect of which any such
interest is accruing, provided that interest accruing pursuant to Section 2.6(d)
shall be payable from time to time on demand.
2.7 Inability to Determine Interest Rates. In the event, and on each
occasion, that on the day prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company absent manifest
error) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders acting in good faith that the Adjusted LIBO Rate determined or
to be determined for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (as conclusively certified by such Lenders) of making
or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the relevant Lenders as soon as practicable thereafter. If such
notice is given (i) in respect of Eurodollar Loans that are Dollar-Denominated
Loans, then (x) any such Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans and (y) any such outstanding
Eurodollar Loans shall be converted, on the last day of the then-current
Interest Period, to ABR Loans and (ii) in respect of Eurodollar Loans that are
Euro-Denominated Loans, then (x) any such Eurodollar Loans requested to be made
on the first day of such Interest Period shall not be made and (y) any such
outstanding Eurodollar Loans shall be due and payable on the first day of such
Interest Period or, at the option of the Company, converted into
Dollar-Denominated Loans at an exchange rate determined by the Administrative
Agent. Until such relevant notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans denominated in Euros shall be made or
continued as such.
2.8 Computation of Interest and Fees. (a) Interest, fees and commissions
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Company and the relevant Lenders of each determination of
an Adjusted LIBO Rate. Any change in the interest rate on a Loan resulting from
a change in the Alternate Base Rate or the Adjusted LIBO Rate shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Company and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company, deliver to the
Company a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Sections 2.6(a) and (b).
2.9 Pro Rata Treatment and Payments. (a) Except to the extent otherwise
provided herein, any Borrowing and any reduction of the Commitments of the
Lenders hereunder shall be made pro rata under
36
the relevant Facility according to the respective Dollar Loan Commitment
Percentages and Euro Loan Commitment Percentages of the Lenders with respect to
the Loans borrowed or the Commitments to be reduced.
(b) Whenever any payment received by the Administrative Agent under
this Agreement or any Note or any Loan Document is insufficient to pay in full
all amounts then due and payable to the Administrative Agent and the Lenders
under this Agreement:
(i) if the Administrative Agent has not received a Payment
Sharing Notice (or, if the Administrative Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment Sharing
Notice has been cured or waived in accordance with the provisions of this
Agreement), such payment shall be distributed by the Administrative Agent
and applied by the Administrative Agent, in cooperation with the Trustee,
and the Lenders in the following order, with appropriate adjustment being
made to account for any payment received by the Trustee in respect of the
Exchange Notes: First, to the payment of reasonable fees and expenses due
and payable to the Administrative Agent under and in connection with this
Agreement or any Guarantee or due and payable to the Trustee under the
Indenture; Second, to the payment of all reasonable expenses due and
payable under Section 9.5 and any equivalent section of the Indenture,
ratably among the Lenders and the Exchange Note Holders in accordance with
the aggregate amount of such payments owed to each such Lender or Holder;
Third, to the payment of accrued and unpaid interest then due and payable
on the Loans and the Exchange Notes ratably among the Lenders and the
Exchange Note Holders in accordance with the aggregate amount of interest
owed to each Lender and Exchange Note Holder; and Fourth, to the payment
of the principal amount of, and premium, if any, due on, the Loans and the
Exchange Notes that is then due and payable, ratably among the Lenders and
the Exchange Note Holders in accordance with the aggregate principal
amount or premium, if any, owed to each such Lender and Exchange Note
Holder; or
(ii) if the Administrative Agent has received a Payment Sharing
Notice that remains in effect, all payments received by the Administrative
Agent under this Agreement or any Note shall be distributed by the
Administrative Agent and applied by the Administrative Agent, in
cooperation with the Trustee, and the Lenders in the following order, with
appropriate adjustment being made to account for any payment received by
the Trustee in respect of the Exchange Notes: First, to the payment of all
amounts described in clauses "First" and "Second" of the foregoing clause
(i), in the order set forth therein; Second, to the payment of the
interest accrued and unpaid on all Loans and Exchange Notes, regardless of
whether any such amount is then due and payable, ratably among the Lenders
and the Exchange Note Holders in accordance with the aggregate accrued
interest plus the aggregate principal amount and premium, if any, owed to
such Lender and the Exchange Note Holders; and Third, to the payment of
the principal amount of, and premium, if any, due on, all Loans and
Exchange Notes, regardless of whether any such amount is then due and
payable, ratably among the Lenders and the Exchange Note Holders in
accordance with the aggregate principal amount and premium, if any, owed
to each Lender and Exchange Note Holder.
(c) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without setoff or
counterclaim and shall be made prior to 12:00 Noon, New York City time (or, in
the case of Euro-Denominated Loans, 11:00 A.M., London time), on the due date
thereof to the Administrative Agent, for the account of the Lenders at the
relevant Funding Office, in Dollars or Euros, as the case may be, and in
immediately available funds. The Administrative Agent shall promptly distribute
such payments in accordance with the provisions of Section 2.9(b) upon receipt
in like funds as received. If any payment hereunder (other than payments on the
Eurodollar
37
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day 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 Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two sentences, interest thereon shall be payable at
the then applicable rate during such extension. Without limiting any other
provision hereof, the Administrative Agent shall have the right, where
appropriate, to determine the Dollar Equivalent or Euro Equivalent of amounts
denominated in other currencies in connection with payments made pursuant to
this Agreement.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the date of any proposed Borrowing that such
Lender will not make the amount that would constitute its share of such
Borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Company a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the date of such
proposed Borrowing, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily average
Federal Funds Effective Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section 2.9(d) shall be conclusive in the absence of manifest error.
If such Lender's share of such Borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of the proposed
Borrowing, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans (or,
in the case of Euro-Denominated Loans, the rate otherwise applicable to such
Loans), on demand, from the Company.
2.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law but, if not having the force of law, generally applicable to and complied
with by banks and financial institutions of the same general type as such Lender
in the relevant jurisdiction) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement or any other Loan Document or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.12 below and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement 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 such Lender which is not otherwise included in the determination
of the Adjusted LIBO Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
continuing, or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in either case, the Company shall promptly
pay such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim
38
any additional amounts pursuant to Section 2.10(a), it shall promptly notify the
Company (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have reasonably determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount reasonably deemed by such Lender to be
material, then from time to time, after submission by such Lender to the Company
(with a copy to the Administrative Agent) of a prompt written request therefor,
the Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.10 submitted by any Lender to the Company (with a copy to the
Administrative Agent) shall be prima facie evidence of such amounts. The
obligations of the Company pursuant to this Section 2.10 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.11 Illegality. Notwithstanding any other provision of this Agreement,
if, after the date hereof, (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by a Lender with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement, shall
make it unlawful for such Lender to make or maintain any Euro-Denominated Loan
or to give effect to its obligations as contemplated hereby with respect to any
Euro-Denominated Loan, or (ii) there shall have occurred any change in national
or international financial, political or economic conditions (including the
imposition of or any change in exchange controls, but excluding conditions
otherwise covered by this Section 2.11) or currency exchange rates which would
make it infeasible for the Lender to make or maintain Euro-Denominated Loans to,
or for the account of, the Company, then, by written notice to the Company and
to the Administrative Agent:
(a) such Lender may declare that Euro-Denominated Loans will not
thereafter (for the duration of such unlawfulness) be made by the Lender
hereunder (or be continued for additional Interest Periods), whereupon any
request for a Euro-Denominated Loan or to continue a Euro-Denominated Loan for
an additional Interest Period, as the case may be, shall, as to such Lender
only, be of no force and effect, unless such declaration shall be subsequently
withdrawn; and
(b) such Lender may require that all outstanding Euro-Denominated
Loans be repaid on the last day of the then current Interest Period with respect
thereto or, if earlier, the date on which the applicable notice becomes
effective unless the Company shall have elected to convert such Euro-Denominated
Loans into Dollar-Denominated Loans at an exchange rate determined by the
Administrative Agent.
For purposes of this Section 2.11, a notice to the Company by the Lender shall
be effective as to each Euro-Denominated Loan made by such Lender, if lawful, on
the last day of the Interest Period currently applicable to such
Euro-Denominated Loan; in all other cases such notice shall be effective on the
date of receipt thereof by the Company.
39
2.12 Taxes. (a) All payments made by the Company under this Agreement
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, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Company shall not be required to increase
any such amounts payable to any Lender with respect to any Non-Excluded Taxes
(i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Company with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Company, as promptly as possible thereafter the Company shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Company showing payment thereof. If the Company fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Company shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any such
failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Company and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either United States Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Company under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Company at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Company (or any other form of certification adopted
by the U.S. taxing authorities for such purpose). Notwithstanding any other
40
provision of this paragraph, a Non-U.S. Lender shall not be required to deliver
any form pursuant to this paragraph that such Non-U.S. Lender is not legally
able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Company
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Company (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Company, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender determines, in its
reasonable discretion, that it has received a refund of any Non-Excluded Taxes
or Other Taxes as to which it has been indemnified by the Company or with
respect to which the Company has paid additional amounts pursuant to this
Section 2.12, it shall pay over such refund to the Company (but only to the
extent of indemnity payments made, or additional amounts paid, by the Company
under this Section 2.12 with respect to the Non-Excluded Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Company, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Company (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Company or any other Person.
(g) The agreements in this Section 2.12 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.13 Indemnity. The Company agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Company in payment when due of the
principal amount of or interest on any Eurodollar Loan, (b) default by the
Company in making a borrowing of Eurodollar Loans after the Company has given a
notice requesting the same in accordance with the provisions of this Agreement,
(c) default by the Company in making any prepayment of any Eurodollar Loan after
the Company has given a notice thereof in accordance with the provisions of this
Agreement or (d) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so paid or prepaid, or
not so borrowed, for the period from the date of such prepayment or of such
failure to borrow to the last day of such Interest Period (or, in the case of a
failure to borrow, the Interest Period that would have commenced on the date of
such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 2.13
submitted to the Company by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
41
2.14 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.10 or 2.12(a)
with respect to such Lender, it will, if requested by the Company, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.14 shall
affect or postpone any of the obligations of any Company or the rights of any
Lender pursuant to Section 2.10 or 2.12(a).
2.15 Replacement Lenders. The Company shall be permitted to replace with a
replacement financial institution any Lender which (a) requests reimbursement
for amounts owing pursuant to Section 2.10 or 2.12(a), (b) defaults in its
obligation to make Loans hereunder or (c) has refused to consent to any waiver
or amendment with respect to any Loan Document that has been consented to by the
Super-Majority Lenders; provided that (i) such replacement does not conflict
with any Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.14 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.10 or 2.12(a),
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Company shall be liable to such replaced Lender under
Section 2.13 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution shall be reasonably satisfactory to
the Administrative Agent, (vii) the replaced Lender shall be obligated to make
such replacement in accordance with the provisions of Section 9.6 (provided that
the Company shall be obligated to pay the registration and processing fee
referred to therein), (viii) until such time as such replacement shall be
consummated, the Company shall pay all additional amounts (if any) required
pursuant to Section 2.10 or 2.12(a), as the case may be, and (ix) any such
replacement shall not be deemed to be a waiver of any rights which the Company,
the Administrative Agent or any other Lender shall have against the replaced
Lender.
SECTION 3
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Company hereby represents and warrants to
the Administrative Agent and each Lender that:
3.1 Organization and Good Standing. The Company and each Subsidiary (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has all requisite power and authority
(corporate, partnership, limited liability company and otherwise) to own its
properties and to conduct its business as now conducted and as currently
proposed to be conducted and (c) except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is duly qualified to conduct business in, and is currently in
good standing in, every jurisdiction where such qualification is required. Each
jurisdiction in which the Company and each Subsidiary is organized or is
qualified to conduct business is listed on Schedule 3.1.
3.2 Power and Authority. The Company has all requisite power and authority
under applicable Requirements of Law to borrow hereunder. The Company and each
Subsidiary 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 Company to execute, deliver and perform the
Loan Documents to which it is a party have been taken and/or received.
42
3.3 Validity and Legal Effect. This Agreement constitutes, and the other
Loan Documents to which the Company or any Subsidiary is a party constitute (or
will constitute when executed and delivered), the legal, valid and binding
obligations of the Company, 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, Agreements or the Transaction. The execution,
delivery and performance of the Loan Documents and the consummation of the
Transaction by the Company and, to the knowledge of the Company, the other
parties thereto (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 Company or any
Subsidiary or any of their respective Properties may be bound, and (c) will not
result in or require the creation of any Lien (other than pursuant to the Loan
Documents) upon or with respect to any Properties of the Company or any
Subsidiary, whether such Properties are now owned or hereafter acquired. To the
knowledge of the Company, the execution, delivery and performance of the Loan
Documents and the consummation of the Transaction will not result in any
material breach or violation of, or constitute a material default or change of
control under, or cause the acceleration of, any existing indebtedness of
Target.
3.5 Taxes and Assessments. Except as otherwise identified on Schedule 3.5,
each of the Company and its Subsidiaries have timely filed all required tax
returns and reports (federal, state, local and foreign) or have properly filed
for extensions of the time for the filing thereof. Except as otherwise
identified on Schedule 3.5, the Company has no knowledge of any deficiency,
penalty or additional assessment due or appropriate in connection with any such
taxes. All taxes (federal, state, local and foreign) imposed upon the Company or
any Subsidiary or any of their respective properties, operations or income have
been paid and discharged prior to the date when any interest or penalty would
accrue for the nonpayment thereof, except for (a) those taxes being contested in
good faith by appropriate proceedings diligently prosecuted and with adequate
reserves reflected on the financial statements in accordance with GAAP or (b) to
the extent that the failure to do so could not reasonably be expected to result
in a Material Adverse Effect. There are no taxes imposed on the Company 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 Company, the
Administrative Agent, or the Lenders of this Agreement or any other Loan
Document to which the Company is party, or on any payment to be made by the
Company pursuant hereto or thereto.
3.6 Title to Assets; Existing Encumbrances. Each Obligor has good and
marketable title to all Properties purported to be owned thereby, free and clear
of any Liens, except (i) the Liens granted to JPMorgan Chase Bank, N.A., as
administrative agent for the lenders party to the Revolving Credit Agreement,
(ii) the other Liens against the assets of the Company and each Subsidiary set
forth on Schedule 3.6 and (iii) the Liens granted to the Administrative Agent
pursuant to the Escrow Security Agreement. The property and assets of the
Company and its Subsidiaries are in good order and repair (ordinary wear and
tear excepted) and are fully covered by the insurance required under the Loan
Documents.
3.7 Litigation and Legal Proceedings. Except as disclosed on Schedule 3.7,
there is no litigation, claim, investigation, administrative proceeding, labor
controversy or similar action that is pending or, to the best of the Company's
knowledge, threatened (i) with respect to any Loan Document or the transactions
contemplated thereby, (ii) the Transaction or (iii) against the Company or any
Subsidiary that, if adversely resolved, could reasonably be expected to have a
Material Adverse Effect.
3.8 Accuracy of Financial Information. (a) (i) The audited consolidated
financial statements of the Company as of October 31, 2002, October 31, 2003 and
October 31, 2004 for the fiscal years then
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ended and (ii) the unaudited consolidated financial statements of the Company as
of January 31, 2004 and January 31, 2005 for the quarterly periods then ended
(subject to normal year-end audit adjustments and the absence of footnotes),
copies of which have heretofore been furnished to each Lender on or before the
Initial Closing Date, (A) have been prepared in accordance with GAAP
consistently applied (provided that, the unaudited financial statements do not
include all of the information and notes required in accordance with GAAP and
are subject to normal year-end adjustments), (B) are true, accurate and complete
in all material respects, (C) present fairly in all material respects 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 Company and its Subsidiaries. The Monthly
Reports have been prepared based on the books and records of the Company and its
Subsidiaries for use by senior and financial management of the Company and its
Subsidiaries and fairly present in all material respects the financial condition
of the organizations covered thereby as of the dates and for the periods covered
thereby.
(b) (i) To the Company's knowledge, the audited consolidated
financial statements of Target as of March 31, 2002, March 31, 2003 and March
31, 2004 for the fiscal years then ended and (ii) the unaudited consolidated
financial statements of Target as of September 30, 2003 and September 30, 2004
for the semi-annual periods then ended (subject to normal year-end audit
adjustments and the absence of footnotes), copies of which have heretofore been
furnished to each Lender on or before the Initial Closing Date, (A) have been
prepared in accordance with French GAAP consistently applied (provided that, the
unaudited financial statements do not include all of the information and notes
required in accordance with GAAP and are subject to normal year-end
adjustments), (B) are true, accurate and complete in all material respects, (C)
present fairly in all material respects 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
Target and its subsidiaries.
(c) (i) The unaudited projected pro forma balance sheet (the
"Projected Pro Forma Balance Sheet") of the Company and its consolidated
Subsidiaries as at January 31, 2005 with respect to the Company and its
Subsidiaries (other than Target and its subsidiaries) and September 30, 2004,
with respect to Target and its subsidiaries (including, in each case, the notes
thereto), a copy of which has heretofore been furnished to each Lender on or
before the Initial Closing Date, is adjusted to give effect to the consummation
of the Transaction and the payment of estimated fees, expenses, financing costs
and estimated tax payments related to the transactions contemplated hereby and
thereby, as if such events had occurred on such date. The Projected Pro Forma
Balance Sheet (i) has been prepared based on the best information available to
the Company as of the date of delivery thereof and (ii) to the knowledge of the
Company, presents fairly in all material respects on a pro forma basis the
estimated financial position of the Company and its Subsidiaries (including, as
applicable, Target and its subsidiaries) as at such date, assuming that the
Transaction had been consummated on such date.
(d) Since October 31, 2004, 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 Administrative Agent or any Lender by the Company or any other Person on
behalf of the Company in connection with the Loan Documents is (or, in the case
of information concerning Target or any of its subsidiaries, is to the best
knowledge of the Company) 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 Administrative Agent or any Lender
by the Company or any other Person on behalf of the Company 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
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projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Company to be
reasonable at the time made and as of the Initial 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 Company 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 Company, each Subsidiary and each Plan, is
in compliance in all material respects with all applicable provisions of ERISA
and the Code, and all rules, regulations and orders implementing ERISA and the
Code.
(b) None of the Company, its Subsidiaries or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which the Company or any ERISA Affiliate thereof could
have any withdrawal liability.
(c) None of the Company, its Subsidiaries or any ERISA Affiliate
thereof sponsors, maintains, or contributes to any Plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived.
(d) The liability for accrued benefits under each Plan that will be
sponsored, maintained, or contributed to by the Company, 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. The aggregate liability of
the Company, each Subsidiary and each ERISA Affiliate thereof arising out of or
relating to a failure of any Plan to comply with provisions of ERISA or the Code
will not have a Material Adverse Effect.
(e) 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 Company, any Subsidiary or any ERISA
Affiliate thereof under any Plan, program or arrangement providing
post-retirement, life or health benefits.
(f) No Reportable Event and no Prohibited Transaction (as defined in
ERISA) has occurred or is occurring with respect to any Plan with which the
Company or any Subsidiary is associated.
(g) To the extent that the Company is subject to the pension law of
any jurisdiction other than the United States, each of the representations
contained in Sections 3.11(a) through (f) would be true and correct if (i) a
reference to the corresponding provisions of such foreign pension law were
substituted for any reference to "ERISA" and the "Code" therein or in the
definition of any defined term used therein; (ii) any reference to an "ERISA
Affiliate" were deemed to be a reference to any person or entity with respect to
which the Company or any Subsidiary would have secondary or joint and several
liability under such foreign pension law; and (iii) to the extent the foreign
jurisdiction has a pension benefit insurance agency comparable to the PBGC, a
reference to such agency were substituted for each reference to the PBGC
therein.
3.12 Environmental Compliance. (a) Each of the Company and each Subsidiary
has received all permits and made all filings and notifications necessary under,
and is otherwise in compliance in all material respects with, all applicable
Environmental Laws.
45
(b) Neither the Company nor any Subsidiary has given any written or
oral notice to any Governmental Authority with regard to any actual or
imminently threatened removal, storage, transportation, spill, release or
discharge of any Materials of Environmental Concern either (i) on Properties now
or formerly owned, operated or leased by the Company or any Subsidiary or (ii)
otherwise in connection with the conduct of its business and operations, and
there is no basis for giving any such notice.
(c) Neither the Company nor any Subsidiary has received any written
request for information, or been notified that it is potentially responsible for
costs of clean-up of any actual or imminently threatened spill, release or
discharge of any Materials of Environmental Concern or with respect to any
Environmental Laws, and there is no basis for any such request or notice.
(d) No judicial proceeding or governmental or administrative action
is pending, or, to the knowledge of the Company, threatened, under or relating
to any Environmental Laws to which the Company or any Subsidiary is named as a
party, nor are there any consent decrees or ether decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Laws with respect to the
Company, any Subsidiary or the Properties.
(e) To the knowledge of the Company, except as set forth on Schedule
3.12, neither the Company nor any Subsidiary has assumed or retained, by
contract or operation of law, any liabilities of any kind, fixed or contingent,
known or unknown, under any Environmental Law or with respect to any Materials
of Environmental Concern that could reasonably be expected to result in a
material liability to any of them.
3.13 Intellectual Property. Each of the Company and its Subsidiaries owns,
or is licensed to use, all Intellectual Property Rights necessary for the
conduct of its business as currently conducted in all material respects. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property Rights of the Company or any of
its Subsidiaries or the validity or effectiveness of any such Intellectual
Property Rights, nor does the Company know of any valid basis for any such
claim. To the knowledge of the Company, the use of Intellectual Property Rights
by the Company and each of its Subsidiaries does not infringe on the rights of
any Person in any material respect.
3.14 Federal Regulations. No part of the proceeds of any Loans are
intended to be or will be used, directly or indirectly, for any purpose which
violates the provisions of the Regulations T, U or X. If requested by any Lender
or the Administrative Agent, the Company will furnish to the Administrative
Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of Form U-1 referred to in Regulation U.
3.15 Fees and Commissions. Except as set forth in Section 4.1(b)(iv),
neither the Company nor any Subsidiary owes or will owe any fees or commissions
of any kind in connection with this Agreement or the Transaction, and the
Company does not know of any claim (or any basis for any claim) for any fees or
commissions in connection with this Agreement or the Transaction.
3.16 Solvency. Immediately prior to, upon and immediately following the
execution of this Agreement and the funding of the Loans on the Initial Closing
Date and on the date of any Borrowing, the Company, both individually and
together with its Subsidiaries, was, is and will be Solvent.
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3.17 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act.
3.18 Nature of Business. Neither the Company nor any Subsidiary is engaged
in any business other than the ownership and operation of retail apparel stores,
the design, sourcing, manufacture and distribution of consumer products and
services, primarily apparel and accessories, and the marketing, advertising and
promotion of those products and services, and the lifestyle associated with such
products and services.
3.19 Ranking of Loans. This Agreement and the other Loan Documents to
which the Company is a party, when executed, and the Loans, when borrowed, are
and will be the direct and general obligations of the Company. The Company's
obligations hereunder and thereunder rank and will rank at least pari passu in
priority of payment to all other senior Indebtedness of the Company.
3.20 Insurance. Schedule 3.20 lists in all material respects all insurance
policies of any nature maintained, as of the Initial Closing Date, by the
Company and each Subsidiary, as well as a summary of the terms of each such
policy.
3.21 Subsidiaries. The Company has no Subsidiaries other than those listed
on Schedule 3.1. As of the date of this Agreement, the Company has the
Restricted Subsidiaries, Unrestricted Subsidiaries, Material Domestic
Subsidiaries and Material Foreign Subsidiaries listed on Schedule 3.21.
3.22 Security Interest in Collateral. The provisions of this Agreement and
the Escrow Security Agreement create legal and valid first-priority Liens on the
Collateral in favor of the Administrative Agent, for the benefit of the Lenders,
and such Liens constitute perfected and continuing Liens on the Collateral,
enforceable against the Company and all third parties.
3.23 Approvals. All governmental and third party approvals (including, if
applicable, any approvals of French national or other competition authorities)
necessary in connection with the Initial Transactions, the continuing operations
of the Company and its Subsidiaries and the transactions contemplated hereby
have been obtained and are in full force and effect, and all applicable waiting
periods have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Initial Transactions or the financing contemplated hereby.
3.24 Use of Proceeds. The proceeds of the Initial Loans drawn on the
Initial Closing Date shall be used to finance the Initial Transactions. The
proceeds of the Initial Loans drawn during the Availability Period shall be used
to finance the Second Step Transactions and the Buy Out Transactions.
Notwithstanding anything herein to the contrary, no Loan shall be used for the
purchasing or carrying of any Margin Stock.
3.25 Representations and Warranties Contained in the Transaction
Documents. Each of the Transaction Documents (other than the Offer Documents,
the OPRO Documents, the Exchange Notes, the Indenture and the Registration
Rights Agreement) have been duly executed and delivered by the Company and each
Subsidiary party thereto and, to the best knowledge of the Company, have been
duly executed and are in full effect. The representations and warranties of the
Company, and the representations and warranties of the Subsidiaries party
thereto, are accurate and correct in all material respects with respect to each
of the Transaction Documents.
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SECTION 4
CONDITIONS PRECEDENT
4.1 Initial Loans on the Initial Closing Date. The agreement of each
Lender to make the Initial Loan requested to be made by it is subject to the
satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Company with a counterpart for each Lender, (ii) for the account of each Lender
requesting the same, a Loan Note conforming to the requirements hereof and
executed by a duly authorized officer of the Company, (iii) each Guarantee to be
entered into on the Initial Closing Date, executed and delivered by a duly
authorized officer of the relevant Guarantor and (iv) the Escrow Security
Agreement, executed and delivered by a duly authorized officer of each of the
parties thereto.
(b) Initial Transactions. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to the
Administrative Agent:
(i) the Company shall have consummated the Initial Purchase, and
the other transactions described in the Acquisition Documents pertaining to the
Initial Purchase shall have been consummated in accordance with the terms of the
Acquisition Documents;
(ii) the Administrative Agent shall have received a complete and
correct copy of the Revolving Credit Documents, in form and substance
satisfactory to the Administrative Agent, such documents shall be in full force
and effect and none of the provisions thereof shall have been amended, waived,
supplemented, or otherwise modified without the prior written consent of the
Administrative Agent;
(iii) all conditions precedent for the funding of the Revolving
Credit Agreement shall have been satisfied or waived contemporaneously with the
satisfaction of the conditions hereunder and such funding shall occur
contemporaneously with the funding of the Initial Loans, in each case on terms
and conditions satisfactory to the Administrative Agent;
(iv) the Administrative Agent shall have received satisfactory
evidence that the fees and expenses to be incurred in connection with the
Initial Purchase and the financing thereof do not exceed $15,000,000.
(v) the Administrative Agent shall have received satisfactory
evidence that the Existing Credit Agreement shall have been terminated and all
amounts thereunder shall have been paid in full;
(vi) the Administrative Agent shall have received satisfactory
evidence that Quiksilver Americas shall have entered into an amendment to the
Leasehold Improvement Loan documentation in form and substance reasonably
satisfactory to it;
(vii) all other transactions in connection with foregoing clauses
(i) through (vi) and the financing of the Initial Purchase (collectively, the
"Initial Transactions") shall have been consummated pursuant to the Transaction
Documents in form and substance consistent with the terms previously disclosed
to the Administrative Agent in writing and on other terms reasonably
satisfactory to the Administrative Agent, and none of the material terms and
conditions of the Transaction Documents
48
shall have been amended, waived, supplemented or otherwise modified in any
manner materially adverse to the interests of the Lenders without the consent of
the Administrative Agent.
(c) Corporate Proceedings. The Administrative Agent shall have
received a copy of the resolutions of the Board of Directors of each of the
Company and the Guarantors, authorizing (i) the execution, delivery and
performance of the Loan Documents and the Transaction Documents to which such
Obligor is or will be a party and (ii) in the case of the Company, any Borrowing
hereunder, in each case certified by the Secretary or an Assistant Secretary of
each the Company and the Guarantors, as applicable, as of the Initial 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.
(d) Organic Documents. The Administrative Agent shall have received
copies of the Organic Documents of each of the Company and the Guarantors,
certified as of the Initial Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of each of the Company and the
Guarantors, as applicable.
(e) Secretary`s Certificates. The Administrative Agent shall have
received certificates dated as of the Initial Closing Date of the Secretary or
an Assistant Secretary of each Obligor, in each case attaching (i) a copy of the
resolutions of the Board of Directors of such Obligor, authorizing (A) the
execution, delivery and performance of the Loan Documents to which such Obligor
is or will be a party and (B) in the case of the Company, any Borrowing
hereunder, (ii) copies of the Organic Documents of such Obligor and (iii) a
certificate, dated as of a recent date, of the Secretary of State of the state
of formation of such Obligor and each other jurisdiction where such Obligor is
required to be qualified to do business under such jurisdiction's law,
certifying as to the existence and good standing of, and the payment of taxes
by, each Obligor in such state, substantially in the form of Exhibit G.
(f) Financial Statements. The Administrative Agent shall have
received (i) the financial statements and the Projected Pro Forma Balance Sheet
referred to in Section 3.8 and (ii) to the extent available to management,
monthly financial data generated by the Company's internal accounting systems
for use by senior and financial management or any monthly financial data of
Target available to the Company (collectively, the "Monthly Reports") for each
month ended after the latest fiscal period referred to in Section 3.8(a)(ii) and
Section 3.8(b)(ii), and such financial statements and Monthly Reports shall not
reflect any material adverse change in the consolidated financial condition of
the Company and its Subsidiaries or Target and its subsidiaries from what was
reflected in the financial statements furnished to the Lenders prior to the date
hereof.
(g) Projections. The Administrative Agent shall have received
satisfactory projections of the Company and its Subsidiaries for fiscal year
2005 through fiscal year 2010 and monthly projections for fiscal year 2005.
(h) Delivery of the Transaction Documents. The Administrative Agent
shall have received a certified copy of each of the Transaction Documents
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any, but excluding the Offer Documents, the OPRO
Documents, the Exchange Notes, the Indenture and the Registration Rights
Agreement) and all amendments thereto, waivers relating thereto and other side
letters or agreements contemplated thereby or affecting the terms thereof in any
material respect, and such documents shall be in form and substance reasonably
satisfactory to the Administrative Agent. The Administrative Agent shall also
have received the most recent drafts of each of the Offer Documents, and such
drafts shall be in form and substance reasonably satisfactory to the
Administrative Agent.
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(i) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Initial Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Initial Transactions or the financing
contemplated hereby.
(j) Regulatory Matters. All legal (including tax implications) and
regulatory matters, including, but not limited to compliance with applicable
requirements of Regulations T, U and X shall be reasonably satisfactory to the
Administrative Agent and the Lenders.
(k) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Initial
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Initial Closing
Date. All such amounts will be paid with the proceeds of the Initial Loans (or
loans under the Revolving Credit Agreement) made on the Initial Closing Date and
will be reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Initial Closing Date.
(l) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Hewitt & O'Neil LLP, counsel to the
Company and its Subsidiaries, substantially in the form of Exhibit E-1
hereto;
(ii) the legal opinion of De Pardieu, Brocas, Maffei, special
French counsel to the Administrative Agent, substantially in the form of
Exhibit E-2; and
(iii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Acquisition
Agreement, accompanied by a reliance letter in favor of the Lenders.
Each such legal opinion shall cover matters customary for transactions of this
type and such other matters incident to the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to the Administrative
Agent.
(m) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in the jurisdiction where the Collateral is
located, and such search shall not reveal any Lien on the Collateral.
(n) Filings, Registrations and Recordings. Each document required by
the Escrow Security Agreement or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral, prior and superior in right to any other Person, shall
be in proper form for filing, registration or recordation.
(o) Solvency Certificate. The Administrative Agent shall have
received a satisfactory solvency certificate from the Chief Financial Officer of
the Company, prepared to give effect to the Transaction.
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(p) Take-Out Debt. The Company shall have engaged the Investment
Bank for the purpose of selling the Take-Out Debt.
(q) No Default/Representations. No Default shall have occurred and
be continuing on the Initial Closing Date or would occur after giving effect to
the Loans requested to be made on the Initial Closing Date, and the
representations and warranties contained in this Agreement and each other Loan
Document and certificate or other writing delivered to the Lenders prior to or
on the Initial Closing Date shall be correct in all material respects on and as
of the Initial Closing Date, and the Administrative Agent shall have received a
certificate of the Company to such effect in the form of Exhibit D, dated as of
the Initial Closing Date and executed by a Responsible Officer of the Company.
The making of the Initial Loans on the Initial Closing Date by the Lenders
hereunder shall conclusively be deemed to constitute an acknowledgement by the
Administrative Agent and each Lender that each of the conditions precedent set
forth in this Section 4.1 shall have been satisfied in accordance with its
respective terms or shall have been irrevocably waived by such Person.
4.2 Initial Loans on the Tender Offer Closing Date. The agreement of each
Lender to make the Initial Loan requested to be made by it on the Tender Offer
Closing Date (limited to Initial Loans drawn on such date to fund the
consideration to be paid for shares of Target Stock acquired pursuant to the
Tender Offer) is subject to the satisfaction of the following conditions
precedent:
(a) Initial Closing Date. The Initial Closing Date shall have
occurred in accordance with the terms of Section 4.1.
(b) Second Step Transactions. The following transactions shall have
been consummated on terms and conditions reasonably satisfactory to the
Administrative Agent:
(i) the Company shall have consummated in all material respects
the Initial Purchase and the other transactions described in the Acquisition
Documents pertaining to the Initial Purchase shall have been consummated in all
material respects in accordance with the terms of the Acquisition Documents;
(ii) the Company shall have commenced the Tender Offer in all
material respects in accordance with the terms of the Acquisition Documents, the
Offer Documents, the French commercial code and all other applicable codes,
rules and laws relating thereto; and
(iii) all other transactions in connection with foregoing clauses
(i) and (ii) and the financing of the Initial Purchase (collectively, the
"Second Step Transactions") shall have been consummated pursuant to, or
commenced in accordance with, the Transaction Documents in form and substance
consistent with the terms previously disclosed to the Administrative Agent in
writing and on other terms reasonably satisfactory to the Administrative Agent,
and none of the material terms and conditions of the Transaction Documents shall
have been amended, waived, supplemented or otherwise modified in any manner
materially adverse to the interests of the Lenders without the consent of the
Administrative Agent.
(c) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Second Step
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Tender Offer
Closing Date. All such amounts will be paid with the proceeds of the Initial
Loans made on the Tender Offer Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the
Tender Offer Closing Date.
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(d) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Second Step Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Second Step Transactions or the
financing contemplated hereby.
(e) Offer Documents. The Administrative Agent shall have received a
copy (certified by the Company) of the following documents (collectively, the
"Offer Documents"), and such Offer Documents shall be in form and substance
reasonably satisfactory to the Administrative Agent:
(i) the mandate letter of the Company appointing Calyon to act as
the presenting bank for the Tender Offer and, if applicable, the Buy Out
and the Squeeze Out;
(ii) the communique de depot to be published in connection with
the Tender Offer pursuant to article 231-17 of the Autorites des marches
financiers (the "AMF") General Regulation;
(iii) the lettre de depot relating to the Tender Offer to be
filed with the AMF pursuant to article 231-14 of the AMF General
Regulation;
(iv) the resolutions of the supervisory board of Target regarding
the launch of the Tender Offer and recommending the Tender Offer;
(v) the joint note d'information in relation to the Tender Offer
issued by the Company and Target;
(vi) the AMF decision de recevabilite (approval decision) of the
Tender Offer and the AMF visa (approval) of the joint note d'information;
(vii) a certificate of the Company stating the number of shares
of Target Stock that have been tendered pursuant to the Tender Offer
according to the avis de resultat published by the AMF; and
(viii) a certificate of the Company stating that the Initial
Loans drawn on the Tender Offer Closing Date will be used in a manner
consistent with Section 3.24.
(f) Offer Account. The Company shall have established an account
(the "Offer Account") in which (i) cash to fund the Tender Offer will be
deposited and (ii) a security interest will be granted in favor of the
Administrative Agent for the benefit of the Lenders (taking the form of a
nantissement).
(g) Major Representations. The representations of the Company and
each of its Subsidiaries (other than Target and its subsidiaries) contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.8, 3.9 and 3.23 (the "Major Representations")
shall be correct in all material respects on and as of the Tender Offer Closing
Date and after giving effect to the Initial Loans requested to be made on the
Tender Offer Closing Date. Any Borrowing of Initial Loans by the Company on the
Tender Offer Closing Date shall be deemed to be a representation by the Company
that the Major Representations are correct in all material respects on and as of
such date and after giving effect to the Initial Loans requested to be made on
such date.
52
(h) No Major Default. No Major Default shall have occurred and be
continuing on the date of any Borrowing or would occur after giving effect to
such Borrowing. Any Borrowing of Initial Loans by the Company on the Tender
Offer Closing Date shall be deemed to be a representation by the Company that no
Major Default has occurred and is continuing on such date or would occur after
giving effect to such Borrowing. As used herein, a "Major Default" shall mean
any of the following events:
(i) any of the events in Section 7(a), (b), (c), (e), (f), (g) or
(j) shall have occurred and be continuing, provided that, for purposes of
this clause (i), (x) 7(e) and 7(j) shall be deemed to apply to any
Transaction Document and (y) all requirements for the giving of notice,
the lapse of time, or both, and any other conditions, are hereby expressly
waived by the Company and each of its Subsidiaries;
(ii) the maximum price per share of Target Stock payable by the
Company pursuant to the Tender Offer shall be, or may required to be,
greater than (euro)19 per share (unless such increase is (x) imposed by
the AMF or a court of competent jurisdiction and (y) fully funded by
additional cash equity of the Company for this purpose, provided that, in
no event shall any increase pursuant to foregoing clauses (x) and (y)
cause the maximum price per share to exceed (euro)21 per share);
(iii) the Company shall have increased (or agreed to increase)
the price payable per share of Target Stock pursuant to the Tender Offer
in excess of (euro)19 per share and such increase is not, prior to such
increase being made, fully funded by additional cash equity of the Company
for this purpose, provided that, in no event shall any increase pursuant
to this clause (iii) cause the maximum price per share to exceed (euro)21
per share;
(iv) the consideration to be paid by the Company for the shares
of Target Stock acquired pursuant to the Tender Offer shall be in a form
other than cash;
(v) the Tender Offer shall not have been conducted in accordance
with the Acquisition Documents, the Offer Documents, the French commercial
code, the AMF General Regulation and all other applicable codes, rules and
laws relating thereto;
(vi) the Company or any Subsidiary shall have defaulted in the
observance or performance of its obligations under Section 5.4; or
(vii) a Change of Control shall have occurred.
(i) The following actions shall have been taken, or such events
shall have occurred, with respect to the Tender Offer (collectively, the "Tender
Offer Undertakings"):
(i) the Company shall have delivered to the Administrative Agent
all relevant documents (including the Offer Documents) relating to the
Tender Offer filed with, or approved by, the AMF;
(ii) there shall have been no modification of, or amendment to,
the terms or conditions of the Tender Offer without the prior written
consent of the Administrative Agent;
(iii) no press release shall have been issued, and no statement
or announcement shall have been made, which refers to this Agreement or to
any or all of the Lenders without the prior consent of the Administrative
Agent (such consent not be unreasonably withheld), except as
53
required by the note d'information filed with the AMF in connection with
the Tender Offer or other applicable law;
(iv) on or prior to (or promptly following) the Initial Closing
Date, the Company shall have initiated discussions with the AMF regarding
the Tender Offer; and
(v) the Company shall have promptly and adequately informed the
Administrative Agent of the progress of the Tender Offer.
(j) Consummation of Tender Offer . The Administrative Agent shall
have received satisfactory evidence that the Tender Offer will be consummated on
or prior to July 31, 2005.
(k) Enforcement of Rights. The Administrative Agent shall have
received satisfactory evidence that the Company shall have used its commercially
reasonable best efforts to enforce any claims or remedies available to it under
the Acquisition Documents, the Tender Offer and the Offer Documents.
4.3 Initial Loans on the Final Drawdown Date. The agreement of each Lender
to make the Initial Loan requested to be made by it on the Final Drawdown Date
(limited to Initial Loans drawn on such date to fund the consideration to be
paid for shares of Target Stock acquired pursuant to the Buy Out and the Squeeze
Out) is subject to the satisfaction of the following conditions precedent:
(a) Tender Offer Closing Date. The Tender Offer Closing Date shall
have occurred in accordance with the terms of Section 4.2.
(b) Buy Out Transactions. The following transactions shall have been
consummated on terms and conditions reasonably satisfactory to the
Administrative Agent:
(i) the Company shall have consummated in all material respects
the Second Step Transactions and the other transactions described in the
Acquisition Documents pertaining to the Second Step Transactions shall have been
consummated in all material respects in accordance with the terms of the
Acquisition Documents;
(ii) the Company shall have commenced the Buy Out in all material
respects in accordance with the terms of the Acquisition Documents, the OPRO
Documents, the French commercial code and all other applicable codes, rules and
laws relating thereto; and
(iii) all other transactions in connection with foregoing clauses
(i) and (ii) and the financing of the Buy Out Transactions (collectively, the
"Buy Out Transactions") shall have been consummated pursuant to, or commenced in
accordance with, the Transaction Documents in form and substance consistent with
the terms previously disclosed to the Administrative Agent in writing and on
other terms reasonably satisfactory to the Administrative Agent, and none of the
material terms and conditions of the Transaction Documents shall have been
amended, waived, supplemented or otherwise modified in any manner materially
adverse to the interests of the Lenders without the consent of the
Administrative Agent.
(c) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Buy Out
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Final Drawdown
Date. All such amounts will be paid with the proceeds of the Initial Loans made
on the Final Drawdown Date and will be reflected in the funding instructions
given by the Borrower to the Administrative Agent on or before the Final
Drawdown Date.
54
(d) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Buy Out Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Buy Out Transactions or the financing
contemplated hereby.
(e) OPRO Documents. The Administrative Agent shall have received a
copy (certified by the Company) of the following documents (collectively, the
"OPRO Documents"), and such OPRO Documents shall be in form and substance
reasonably satisfactory to the Administrative Agent:
(i) the mandate letter of the Company appointing Calyon to act as
the presenting bank for the Buy Out and the Squeeze Out;
(ii) the communique de depot to be published in connection with
the Buy Out pursuant to article 231-17 of the AMF General Regulation;
(iii) the lettre de depot relating to the Buy Out and the Squeeze
Out to be filed with the AMF pursuant to article 231-14 of the AMF General
Regulation;
(iv) the joint note d'information in relation to the Buy Out and
the Squeeze Out issued by the Company and Target;
(v) the AMF decision de recevabilite (approval decision) of the
Buy Out and the Squeeze Out and the AMF visa (approval) of the joint note
d'information;
(vi) a certificate of the Company stating the number of shares of
Target Stock that have been tendered pursuant to the Buy Out and the
Squeeze Out according to the avis de resultat published by the AMF; and
(vii) a certificate of the Company stating that the Initial Loans
drawn on the Final Drawdown Date will be used in a manner consistent with
Section 3.24.
(f) OPRO Account. The Company shall have established an account (the
"OPRO Account") in which (i) cash to fund the Buy Out and the Squeeze Out will
be deposited and (ii) a security interest will be granted in favor of the
Administrative Agent for the benefit of the Lenders (taking the form of a
nantissement).
(g) Major Representations. The Major Representations of the Company
and each of its Subsidiaries (other than Target and its subsidiaries) shall be
correct in all material respects on and as of the Final Drawdown Date and after
giving effect to the Initial Loans requested to be made on the Final Drawdown
Date. Any Borrowing of Initial Loans by the Company on the Final Drawdown Date
shall be deemed to be a representation by the Company that the Major
Representations are correct in all material respects on and as of such date and
after giving effect to the Initial Loans requested to be made on such date.
(h) No OPRO Major Default. No OPRO Major Default shall have occurred
and be continuing on the date of any Borrowing or would occur after giving
effect to such Borrowing. As used herein, an "OPRO Major Default" shall mean any
of the following events:
55
(i) any of the events in Section 7(a), (b), (c), (e), (f), (g) or
(j) shall have occurred and be continuing, provided that, for purposes of
this clause (i), (x) 7(e) and 7(j) shall be deemed to apply to any
Transaction Document and (y) all requirements for the giving of notice,
the lapse of time, or both, and any other conditions, are hereby expressly
waived by the Company and each of its Subsidiaries;
(ii) the consideration to be paid by the Company for the shares
of Target Stock acquired pursuant to the Buy Out and the Squeeze Out shall
be in a form other than cash;
(iii) the Buy Out and the Squeeze Out shall not have been
conducted in accordance with the Acquisition Documents, the OPRO
Documents, the French commercial code, the AMF General Regulation and all
other applicable codes, rules and laws relating thereto;
(iv) the Company or any Subsidiary shall have defaulted in the
observance or performance of its obligations under Section 5.4; or
(v) a Change of Control shall have occurred.
(i) The following actions shall have been taken, or such events
shall have occurred, with respect to the Buy Out and the Squeeze Out
(collectively, the "Buy Out Undertakings"):
(i) the Company shall have delivered to the Administrative Agent
all relevant documents (including the OPRO Documents) relating to the Buy
Out and the Squeeze Out filed with, or approved by, the AMF;
(ii) there shall have been no modification of, or amendment to,
the terms or conditions of the Buy Out and the Squeeze Out without the
prior written consent of the Administrative Agent;
(iii) no press release shall have been issued, and no statement
or announcement shall have been made, which refers to this Agreement or to
any or all of the Lenders without the prior consent of the Administrative
Agent (such consent not be unreasonably withheld), except as required by
the note d'information filed with the AMF in connection with the Buy Out
and the Squeeze Out or other applicable law;
(iv) promptly upon acquiring (directly or indirectly and together
with the Sellers) at least 95% of Target Stock, the Company shall have
initiated the Buy Out and, immediately thereafter, the Squeeze Out, which,
when consummated, will result in the automatic delisting of Target from
Eurolist by Euronext; and
(v) the Company shall have promptly and adequately informed the
Administrative Agent of the progress of the Buy Out and the Squeeze Out.
(j) Consummation of Buy Out and Squeeze Out. The Administrative
Agent shall have received satisfactory evidence that the Buy Out and the Squeeze
Out shall be consummated on or prior to September 15, 2005.
(k) Enforcement of Rights. The Administrative Agent shall have
received satisfactory evidence that the Company shall have used its commercially
reasonable best efforts to enforce any claims or remedies available to it under
the Acquisition Documents, the Buy Out, the Squeeze Out and the OPRO Documents.
56
SECTION 5
AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan or Loan Note remains outstanding and unpaid, or any other
amount is owing to any Lender or the Administrative Agent hereunder or under any
of the other Loan Documents, the Company shall, and, in the case of the
agreements contained in Sections 5.3 through 5.8 and 5.10, shall cause each of
its Subsidiaries to:
5.1 Financial Statements. (a) Within 105 days after the end of each fiscal
year (or, if earlier, the date on which such financial statements are filed by
the Company with the SEC), the Company shall deliver to the Lenders a complete
set of audited annual consolidated financial statements of the Company, and
unaudited consolidating financial statements with respect to the Company, each
current or future Domestic Subsidiary (to the extent included in the Company's
consolidating financial statements immediately before the date hereof), each
current or future Material Domestic Subsidiary and each other current or future
Material Foreign Subsidiary, including a balance sheet, an income statement and
a cash flow statement (with accompanying notes and schedules) and a capital
expenditure schedule for such fiscal year segmented by domestic and foreign
operations; provided that, in the event that the Company is unable to deliver
unaudited consolidating financial statements with respect to one or more
Material Foreign Subsidiaries, it shall provide such other financial statements
with respect thereto in form and substance reasonably satisfactory to the
Administrative Agent. Such financial statements (i) must be prepared in
accordance with GAAP consistently applied and (ii) must be certified without
qualification or exception by the Accountants. Together with the audited
financial statements, the Administrative Agent must also receive (A) a copy of
the opinion of the Accountants (without a "going concern" or like qualification
or exception, and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
the financial condition and results of operations of the Company and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (B) a certificate executed by the Chief Financial
Officer of the Company certifying that the financial statements fairly present
the financial condition of the Company 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.
(b) Within 60 days after the end of each of the Company's first
three fiscal quarters (or, if earlier, the date on which such financial
statements are filed by the Company with the SEC), the Company shall deliver to
the Lenders the unaudited quarterly consolidated financial statements of the
Company and unaudited consolidating financial statements with respect to the
Company, each current or future Domestic Subsidiary (to the extent included in
the Company's consolidating financial statements immediately before the date
hereof), each current or future Material Domestic Subsidiary and each other
current or future Material Foreign Subsidiary, including a balance sheet, an
income statement and a cash flow statement (with accompanying notes and
schedules); provided that, in the event that the Company is unable to deliver
unaudited consolidating financial statements with respect to one or more
Material Foreign Subsidiaries, it shall provide such other financial statements
with respect thereto in form and substance reasonably satisfactory to the
Administrative Agent. Such financial statements shall be prepared in accordance
with GAAP consistently applied (it being understood that such financial
statements are subject to normal year-end audit adjustments and do not include
all of the footnotes required under GAAP for annual financial statements).
Together with the quarterly financial statements, the Lenders must also receive
a certificate executed by the Chief Financial Officer of the Company (A) stating
that the financial statements fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and for the period covered
thereby and (B) certifying that as of the date
57
of such certificate such officer has obtained no knowledge of any Default except
as specified in such certificate.
(c) Within 105 days after the end of each fiscal year, the Company
shall deliver to the Lenders its projections with respect to the financial
performance of the Company and its Subsidiaries for the fiscal year commencing
on the immediately preceding November 1. Such projections shall include
quarterly cash-flow forecasts, quarterly consolidating balance sheets and
quarterly consolidating income statements and shall set forth in reasonable
detail all material assumptions made in connection with such projections and
shall otherwise be in form and scope reasonably satisfactory to the
Administrative Agent; provided that, in the event that the Company is unable to
deliver quarterly consolidating balance sheets with respect to any Foreign
Subsidiaries, it shall be permitted to deliver quarterly consolidated balance
sheets with respect thereto.
5.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, for distribution to the Lenders:
(a) within 10 days after the same are filed, copies of all financial
statements and reports which the Company or any Subsidiary may make to, or file
with, the SEC;
(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 Company or any Subsidiary by the Accountants in connection with
any annual or interim audit of the books thereof;
(c) (A) as soon as possible and in any event within 30 days after
the Company 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 Company
describing such Termination Event and the action, if any, which the Company
proposes to take with respect thereto, (B) promptly and in any event within ten
days after receipt thereof by the Company or any ERISA Affiliate of the Company
from the PBGC, copies of each notice received by the Company 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 Employee Benefits Security Administration,
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 Company 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, (D) promptly and in any event within ten days after receipt thereof by
the Company or any ERISA Affiliate of the Company from a sponsor of a
Multiemployer Plan or from the PBGC, a copy of each notice received by the
Company or such ERISA Affiliate concerning the imposition or amount of
withdrawal liability under Section 4202 of ERISA or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of ERISA,
and (E) the information that would be required under clauses (A) through (D) if
the corresponding provisions of the pension law of any foreign jurisdiction
under which the Company or any Subsidiary may have liability were substituted
for each reference to ERISA and the Code therein and in the definition of any
defined term used therein;
(d) promptly after the commencement thereof, but in any event not
later than 10 days after service of process with respect thereto on, or the
obtaining of knowledge by, the Company or any Subsidiary, notice of (i) each
material action, suit or proceeding before any Governmental Authority and (ii)
any material claim under any Environmental Control Statute;
(e) promptly upon any Subsidiary's becoming a Material Domestic
Subsidiary or a Material Foreign Subsidiary, or upon the Company's direct or
indirect creation or acquisition of a Material Domestic Subsidiary or a Material
Foreign Subsidiary, notice of the same; and
58
(f) promptly, such additional financial information as any Lender,
through the Administrative Agent, may from time to time reasonably request.
5.3 Payment of Obligations. The Company 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 Company or
such Subsidiaries, as the case may be.
5.4 Conduct of Business; Maintenance of Existence and Licenses;
Contractual Obligations. The Company shall, and shall cause each of its
Subsidiaries to, (a) continue to engage in business of the same general type as
conducted by the Company and such Subsidiaries as of the date hereof, (b)
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, (c) maintain all rights, registrations, licenses, privileges and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to so maintain would not have a Material Adverse
Effect, and (iv) comply with all Contractual Obligations except to the extent
that failure to comply therewith would not have a Material Adverse Effect.
5.5 Maintenance of Property. The Company shall, and shall cause each of
its Subsidiaries to, do all things necessary to (i) maintain, preserve, protect
and keep its Properties in good repair, working order and condition (normal wear
and tear excepted), and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times and (ii) obtain and maintain in effect at all
times all material franchises, governmental authorizations, Intellectual
Property Rights, Licenses and permits, which are necessary for it to own its
Properties or conduct its business as conducted on the Initial Closing Date.
5.6 Insurance. The Company shall, and shall cause each of its Subsidiaries
to, at all times maintain, with financially sound and reputable carriers having
a "Financial Strength" rating of at least A- by A.M. Best Company, insurance
against: (i) loss or damage by fire and loss in transit; (ii) theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; (iii) business
interruption; (iv) general liability and (v) and such other hazards, as is
customary in the business of the Company or such Subsidiary. All such insurance
shall be in amounts, cover such assets and be under policies acceptable to the
Administrative Agent in its reasonable discretion. The amount of all insurance
required by this Section 5.6 shall at a minimum comply with applicable law,
including the Flood Disaster Protection Act of 1973, as amended. All premiums on
such insurance shall be paid when due by the Company or the relevant Subsidiary
and, upon request, copies of the policies delivered to the Administrative Agent.
If the Company or any Subsidiary fails to obtain any insurance as required by
this Section 5.6, the Administrative Agent may obtain such insurance at the
Company's or such Subsidiary's expense. By purchasing such insurance, the
Administrative Agent shall not be deemed to have waived any Default or Event of
Default arising from the Company's or any Subsidiary's failure to maintain such
insurance or pay any premiums therefor. The Company shall, and shall cause each
of its Subsidiaries to, use its Properties in compliance with applicable law and
not to use such Properties in any manner which might render inapplicable any
insurance coverage.
5.7 Inspection of Property; Books and Records; Communications with
Accountants. The Company shall, and shall cause each of its Subsidiaries to,
permit the Administrative Agent and the Lenders, by their respective employees,
representatives and agents, from time to time upon two Business
59
Days' prior notice as frequently as the Administrative Agent reasonably
determines to be appropriate, to (a) inspect any of the Properties and the books
and financial records of such Obligor, (b) examine, audit and make extracts or
copies of the books of accounts and other financial records of such Obligor and
(c) have access to its Properties, facilities and its advisors, officers,
directors and employees to discuss the affairs, finances and accounts of any
Obligor. If a Default or an Event of Default has occurred and is continuing, the
Company shall, and shall cause each of its Subsidiaries to, provide such access
to the Administrative Agent and to each Lender at all times and without advance
notice. The Company shall, and shall cause each of its Subsidiaries to, promptly
make available to the Administrative Agent and its counsel originals or copies
of all books and records that the Administrative Agent may reasonably request.
Upon reasonable notice and at such reasonable times during usual business hours,
the Company shall, and shall cause each of its Subsidiaries to, permit
representatives of the Administrative Agent (on behalf of the Lenders) to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries with its Accountants;
provided that the Administrative Agent shall give notice of any such
communication to the Company and allow the Company the opportunity to be present
during such communication
5.8 Environmental Laws. The Company shall, and shall cause each of its
Subsidiaries to:
(a) comply in all material respects with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply in all material respects with any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws;
(b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(c) generate, use, treat, store, release, dispose of, and otherwise
manage Materials of Environmental Concern in a manner that would not reasonably
be expected to result in a material liability to the Company or any of its
Subsidiaries or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating,
using, treating, storing, releasing, disposing of, or otherwise managing
Materials of Environmental Concern in a manner that could reasonably be expected
to result in a material liability to, or materially affect any real property
owned or operated by, the Company or any of its Subsidiaries.
5.9 Use of Proceeds. The Company shall use the proceeds of the Initial
Loans in accordance with the terms of Section 3.24.
5.10 Compliance with Laws, Etc. The Company shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all applicable
Requirements of Law.
5.11 Guarantees, Etc. The Company shall not permit any current or future
Domestic Subsidiary to Incur a Guarantee Obligation with respect to the payment
of any Indebtedness of the Company or any other Restricted Subsidiary or
otherwise become an obligor, including as a co-borrower, under a Credit
Facility, unless (i) such Domestic Subsidiary simultaneously executes and
delivers an assumption agreement supplemental hereto providing for a Guarantee
of such Domestic Subsidiary pursuant to which such Domestic Subsidiary will
unconditionally guarantee, on a joint and several basis, all of the
60
obligations of the Company and the other Guarantors under this Agreement,
including the full and prompt payment of the principal of, premium, if any and
interest on the Loans and the Exchange Notes on a senior basis and all other
obligations under this Agreement; provided that if such Indebtedness is by its
express terms subordinated in right of payment to the Loans or the Guarantees,
as the case may be, any such Guarantee Obligation of such Domestic Subsidiary
with respect to such Indebtedness shall be subordinated in right of payment to
such Domestic Subsidiary's Guarantee with respect to the Loans and the Exchange
Notes substantially to the same extent as such Indebtedness is subordinated to
the Loans; (ii) such Domestic Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights or
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Domestic
Subsidiary under its Guarantee of the Loans and Exchange Notes so long as any of
the Loans or Exchange Notes remain outstanding; and (iii) such Domestic
Subsidiary shall deliver to the Administrative Agent an opinion of counsel to
the effect that (A) such Guarantee has been duly executed and authorized and (B)
such Guarantee constitutes a valid, binding and enforceable obligation of such
Domestic Subsidiary, except insofar as enforcement thereof may be limited by
bankruptcy, insolvency or similar laws (including, without limitation, all laws
relating to fraudulent transfers) and except insofar as enforcement thereof is
subject to general principles of equity. In addition, the Company shall cause
such Domestic Subsidiary to deliver to the Administrative Agent (a) such other
agreements, instruments, approvals or other documents as any Lender through the
Administrative Agent may reasonably request and (b) copies of the organizational
documents, resolutions and incumbency certificates of such Domestic Subsidiary,
promptly upon request thereby. Notwithstanding the foregoing, in the event a
Guarantor is released and discharged from all of its obligations (other than
contingent indemnification obligations) (1) under its Guarantee Obligations with
respect to Indebtedness and other obligations under a Credit Facility and all
other Indebtedness of the Company and its Restricted Subsidiaries, and (2) as an
obligor, including as a co-borrower, under a Credit Facility, then the Guarantee
of such Guarantor shall be automatically and unconditionally released and
discharged. Each Guarantee will be limited to an amount not to exceed the
maximum amount that can be guaranteed by that Subsidiary without rendering the
Guarantee, as it relates to such Subsidiary, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
5.12 Notices. The Company shall give prompt notice in writing to the
Administrative Agent and the Lenders of:
(a) the occurrence of any Default or Event of Default;
(b) any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect;
(c) receipt of any written notice (i) that the Company or any
Subsidiary is subject to any investigation by any governmental entity with
respect to any potential or alleged material violation of any material
applicable Environmental Laws, (ii) that any Governmental Authority may deny or
refuse to renew any material permit, license, approval, registration, exemption
or other authorization required under any Environmental Law, or (iii) of
imposition of any Lien against any Property of the Company or any Subsidiary for
any liability with respect to damages arising from, or costs resulting from, any
violation of any Environmental Laws;
(d) receipt of any notice of litigation commenced or threatened against
the Company or any Subsidiary that (i) seeks damages in excess of $10,000,000,
(ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan,
its fiduciaries or its assets, (iv) alleges criminal misconduct by the Company
or any Subsidiary, (v) alleges the material violation of any law regarding, or
seeks remedies in connection with, any Environmental Control Statutes; or (vi)
involves any product recall;
61
(e) commencement of any proceedings involving the Company or any
Subsidiary contesting any tax, fee, assessment, or other governmental charge in
excess of $10,000,000;
(f) any Lien or claim made or asserted against the Collateral; or
(g) any other matter as the Administrative Agent may reasonably
request.
5.13 Take-Out Financing. The Company shall take any and every action
reasonably necessary or desirable so that the Investment Bank can, as soon as
practicable after the date hereof, publicly sell or privately place, in one or
more offerings or placements, the Take-Out Debt. The Investment Bank, in its
reasonable discretion after consultation with the Company, shall determine
whether, and in which amounts, the Take-Out Debt shall be issued by the Company
and the amount of each series of Take-Out Debt to be issued if the Take-Out Debt
is to be issued in a series of offerings and/or placements. Upon notice by the
Investment Bank (a "Securities Demand"), at any time and from time to time if
all Loans shall not have been repaid in full or the commitments in respect
thereof shall not have been terminated, the Company will cause the issuance and
sale of Take-Out Debt upon such terms and conditions as specified in the
Securities Demand; provided that (i) the interest rate (whether floating or
fixed) shall be determined by the Investment Bank in light of the then
prevailing market conditions for comparable securities but in no event shall the
weighted average effective yield on the Take-Out Debt exceed 10.5% per annum;
(ii) the Investment Bank, in its reasonable discretion after consultation with
the Company, shall determine whether the Take-Out Debt shall be issued through a
public offering or a private placement; (iii) the maturity of any Take-Out Debt
shall not be earlier than six months after the final maturity of the last
facility to mature under the Revolving Credit Agreement; (iv) the Take-Out Debt
will be issued pursuant to an indenture or indentures, which shall contain such
terms, conditions and covenants as are typical and customary for similar
financings and as are reasonably satisfactory in all respects to the Investment
Bank, the Company and the Administrative Agent; and (v) all other arrangements
with respect to the Take-Out Debt shall be reasonably satisfactory in all
respects to the Investment Bank in light of the then prevailing market
conditions.
(b) The Company shall give the Administrative Agent prior notice of its
intention to file the registration statement or to effect a private placement of
the Take-Out Debt. The Company will notify the Administrative Agent promptly
upon the receipt of any comments from the SEC in connection with the
registration statement, will furnish the Administrative Agent with a copy of any
written comments from the SEC, will respond in a reasonably prompt manner and
appropriately to any such comments and will furnish a copy to the Administrative
Agent of any such response to the SEC.
(c) The Company shall use its commercially reasonable best efforts to
deliver to the Investment Bank, within 30 days from the execution of the
Acquisition Agreement, a substantially complete initial draft of a registration
statement or an offering memorandum under Rule 144A of the Securities Act
relating to the Take-Out Debt (including audited financial statements of the
Company for the three preceding years, audited financial statements of Target,
as required by Regulation S-X, unaudited interim financial statements of the
Company and Target, as required by Regulation S-X, pro forma financial
statements and information and such other financial information as may be
required by applicable law or as may be customarily included therein).
5.14 Exchange Notes. The Company shall, as promptly as practicable after
the six-month anniversary of the Initial Closing Date and in any event prior to
the Initial Maturity Date, enter into the Indenture with a bank or trust company
acting as indenture trustee thereunder (the "Trustee"), which shall be a
corporation organized and doing business under the laws of the United States or
any state thereof, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to
62
supervision or examination by Federal or state authority and which has a
combined capital and surplus of not less than $50,000,000.
(b) The Company shall, on or prior to the third Business Day following
the written request (the "Exchange Request") of any Lender, execute, and cause
the Trustee to authenticate, and deliver to such Lender in accordance with the
Indenture an Exchange Note bearing interest as set forth therein in exchange for
such Lender's Loan dated the date of the issuance of such Exchange Note,
registered in the name specified by such Lender, in the principal amount equal
to 100% of the aggregate principal amount of the Loans for which they are
exchanged. Each Exchange Request shall specify the principal amount of the Loans
to be exchanged pursuant to this Section 5.14, which shall be at least
$1,000,000 or (euro)1,000,000, as the case may be, and in integral multiples of
$100,000 or (euro)100,000, as the case may be, in excess thereof and, if such
Lender holds Loan Notes, be accompanied by the Loan Notes to be exchanged for
Exchange Notes. No Exchange Request shall be made more than thirty (30) days
prior to the Initial Maturity Date. Any Loan Notes delivered to Company under
this Section 5.14 in exchange for Exchange Notes shall be canceled by the
Company and the corresponding amount of the Lender's Loan deemed repaid and the
Exchange Notes shall be governed by and construed in accordance with the terms
of the Indenture, which terms shall include those set forth in Exhibit H.
(c) The Company shall, as promptly as practicable after the six-month
anniversary of the Initial Closing Date and in any event prior to the Initial
Maturity Date, enter into the Registration Rights Agreement with the Trustee for
the benefit of the Holders. If Exchange Notes are issued pursuant to the terms
hereof, the holders of such Exchange Notes shall have the registration rights
set forth in the Registration Rights Agreement, and the Company hereby agrees to
be bound by the provisions thereof applicable to the Company.
5.15 Use of Proceeds of the Take-Out Debt. The Company shall use the net
proceeds received by it from the sale of the Take-Out Debt to repay the Loans
and the Exchange Notes pursuant to Section 2.5(d).
5.16 Initiation of Buy Out. The Company shall, promptly upon acquiring
(directly or indirectly) at least 95% of Target Stock pursuant to the Tender
Offer, initiate the Buy Out and, immediately thereafter, the Squeeze Out,
resulting in the automatic delisting of Target from Eurolist by Euronext.
5.17 Prepayment of Loans with Released Amount. The Company shall, upon
receipt by the Company or any of its Subsidiaries of the Released Amount, apply
an amount equal to the Released Amount toward the prepayment of the Loans and
the Exchange Notes in accordance with Section 2.5(b)(iii).
5.18 Further Assurances. Upon reasonable request of the Administrative
Agent, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Agreement.
SECTION 6
NEGATIVE COVENANTS
So long as any Loan or Loan Note remains outstanding and unpaid, or
any other amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document or the Fee Letter:
63
6.1 Limitation on Indebtedness. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including
Acquired Indebtedness); provided, however, that from and after the Initial
Maturity Date the Company and any Guarantor may Incur Indebtedness if on the
date thereof (A) the Consolidated Coverage Ratio for the Company and its
Restricted Subsidiaries is at least 2.0 to 1.0 and (B) no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence of
Incurring such Indebtedness or the transactions relating to such Incurrence.
(b) Section 6.1(a) will not prohibit the Incurrence of the following
Indebtedness:
(i) Indebtedness of the Company or any Guarantor Incurred pursuant
to a Credit Facility in an aggregate amount up to the greater of (a) the
Borrowing Base, less the aggregate principal amount of Indebtedness
outstanding at any one time under clause (xi), and (b) $300,000,000 less
the aggregate principal amount of all scheduled principal repayments and
all mandatory prepayments of principal thereof permanently reducing the
commitments thereunder, repayments with the proceeds from Asset
Dispositions that are required under Section 6.4 hereof to reduce
permanently the revolving commitments under a Credit Facility and
Guarantee Obligations of Restricted Subsidiaries in respect of the
Indebtedness Incurred pursuant to a Credit Facility under this clause (i);
(ii) Guarantee Obligations of the Company or any Guarantor of
Indebtedness Incurred in accordance with the provisions of this Agreement;
provided that in the event such Indebtedness that is subject to a
Guarantee Obligation is a Subordinated Obligation or a Guarantor
Subordinated Obligation, then the related Guarantee Obligation shall be
subordinated in right of payment to the Loans or the Guarantee Obligation,
as the case may be;
(iii) Indebtedness of the Company owing to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to
and held by the Company or any other Restricted Subsidiary; provided,
however, (A) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all obligations with respect to the Loans, (B) if a Guarantor is
the obligor on such Indebtedness and the Company or a Guarantor is not the
obligee, such Indebtedness constitutes a Guarantor Subordinated Obligation
and (C)(1) any subsequent issuance or transfer of Capital Stock or any
other event which results in any such Indebtedness being beneficially held
by a Person other than the Company or a Restricted Subsidiary of the
Company and (2) any sale or other transfer of any such Indebtedness to a
Person other than the Company or a Restricted Subsidiary of the Company
shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be;
(iv) Indebtedness represented by (w) the Loans and the related
Guarantees and the Exchange Notes and the related Guarantees, (x) the
Take-Out Debt, (y) any Indebtedness (other than the Indebtedness described
in clauses (i), (ii), (iii), (vi), (vii), (viii), (ix) and (xi) of this
Section 6.1(b)) outstanding on the Initial Closing Date and (z) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iv) or clause (v) or Incurred pursuant to Section 6.1(a);
(v) Indebtedness of a Guarantor Incurred and outstanding on the date
on which such Guarantor was acquired by the Company or a Restricted
Subsidiary and Indebtedness of a Foreign Subsidiary Incurred and
outstanding on the date on which such Foreign Subsidiary was acquired by
the Company or a Restricted Subsidiary (other than Indebtedness Incurred
(a) to provide all or any portion of the funds utilized to consummate the
transaction or series of related
64
transactions pursuant to which such Guarantor or Foreign Subsidiary, as
the case may be, became a Guarantor or Foreign Subsidiary, as the case may
be, or was otherwise acquired by the Company or (b) otherwise in
connection with, or in contemplation of, such acquisition), provided,
however, that at the time such Guarantor is acquired by the Company or
such Restricted Subsidiary, the Company would have been able to Incur
$1.00 of additional Indebtedness pursuant to Section 6.1(a) after giving
effect to the Incurrence of such Indebtedness pursuant to this clause (v)
or, in the case of an acquisition of a Foreign Subsidiary, such Foreign
Subsidiary would have been able to Incur $1.00 of additional Indebtedness
pursuant to clause (xi), provided that, prior to the Initial Maturity
Date, such Indebtedness (other than Indebtedness existing at the time of
the Transaction of the Holding Company, the Target or Subsidiaries of the
Target) of such Foreign Subsidiary shall not exceed $35,000,000;
(vi) Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements,
such Currency Agreements are related to business transactions of the
Company or its Restricted Subsidiaries entered into in the ordinary course
of business or in the case of Currency Agreements and Interest Rate
Agreements, such Currency Agreements and Interest Rate Agreements are
entered into for bona fide hedging purposes of the Company or its
Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of the Company) and substantially
correspond in terms of notional amount, duration, currencies and interest
rates, as applicable, to Indebtedness of the Company or its Restricted
Subsidiaries Incurred without violation of this Agreement;
(vii) Indebtedness Incurred in respect of workers' compensation
claims, self-insurance obligations, performance, surety and similar bonds
and completion guarantees provided by the Company or a Restricted
Subsidiary in the ordinary course of business;
(viii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, Incurred or assumed
in connection with the acquisition or disposition of any business, assets
or Capital Stock of a Restricted Subsidiary in accordance with the terms
of this Agreement, other than Guarantee Obligations by the Company or any
Restricted Subsidiary of Indebtedness Incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary of the Company for
the purpose of financing such acquisition, provided that, in the case of a
disposition, the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds (including all
cash and non-cash proceeds) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, provided, however, that such Indebtedness is
extinguished within five Business Days of Incurrence;
(x) the Incurrence by the Company or any Guarantor of Indebtedness
represented by Capitalized Lease Obligations, the Leasehold Improvement
Loan, mortgage financings or purchase money obligations with respect to
assets other than Capital Stock or other Investments, in each case
Incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvements of property used in the
business of the Company or such Guarantor, in an aggregate principal
amount not to exceed $20,000,000 at any time outstanding;
(xi) Indebtedness of Foreign Subsidiaries in an amount at any one
time outstanding up to the greater of (a) 75% of such Foreign
Subsidiaries' Consolidated Tangible Assets or (b)
65
$300,000,000, in each case, less the aggregate principal amount of
Indebtedness of a Foreign Subsidiary Incurred pursuant to clause (v) of
this Section 6.1(b);
(xii) Guarantee Obligations of the Company of Indebtedness in
respect of letters of credit issued on behalf of Foreign Subsidiaries to
vendors in an aggregate amount not to exceed $20,000,000 at any one time
outstanding; and
(xiii) Indebtedness (other than Indebtedness described in clauses
(i)-(xii) above) of the Company or any Guarantor in a principal amount
which, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this Section 6.1(b)(xiii) and then
outstanding, will not exceed (A) $5,000,000 prior to the Initial Maturity
Date or (B) $20,000,000 from and after the Initial Maturity Date.
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness under Section 6.1(b) if the proceeds thereof are used, directly or
indirectly, to refinance any Subordinated Obligations of the Company unless such
Indebtedness shall be subordinated to the Loans to at least the same extent as
such Subordinated Obligations. No Guarantor shall Incur any Indebtedness under
Section 6.1(b) if the proceeds thereof are used, directly or indirectly, to
refinance any Guarantor Subordinated Obligations of such Guarantor unless such
Indebtedness shall be subordinated to the obligations of such Guarantor under
its Guarantee to at least the same extent as such Guarantor Subordinated
Obligations. No Restricted Subsidiary may Incur Indebtedness if the proceeds are
used to refinance Indebtedness of the Company or any Guarantor. The Company
shall not, directly or indirectly, Incur, or permit any Guarantor to Incur, any
Indebtedness which by its terms (or by the terms of any agreement governing such
Indebtedness) is expressly subordinated in right of payment to any other
Indebtedness of the Company or such Guarantor, as the case may be, unless such
Indebtedness is also by its terms (or the by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Loans, in the
case of the Company, or the Guarantees, in the case of a Guarantor, to the same
extent and the same manner as such Indebtedness is subordinated to other
Indebtedness of the Company or such Guarantor. For purposes of the foregoing, no
Indebtedness will be deemed to be subordinated in right of payment to any other
Indebtedness solely by virtue of such Indebtedness being unsecured or by virtue
of the fact that the holders of such Indebtedness have entered into one or more
intercreditor agreements giving one or more of such holders priority over the
other holders in the collateral held by them.
(d) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant:
(i) in the event that Indebtedness meets the criteria of more than
one of the types of Indebtedness described in Section 6.1, the Company, in
its sole discretion, will classify such item of Indebtedness on the date
of Incurrence and only be required to include the amount and type of such
Indebtedness in one of such clauses;
(ii) all Indebtedness outstanding on the date of this Agreement
under the Revolving Credit Agreement shall be deemed initially Incurred on
the Initial Closing Date under Section 6.1(b)(i) and not under Section
6.1(a) or 6.1(b)(iv);
(iii) if obligations in respect of letters of credit are Incurred
pursuant to a Credit Facility and are being treated as Incurred pursuant
to Section 6.1(b)(i) and the letters of credit relate to other
Indebtedness, then such other Indebtedness shall not be included;
(iv) the principal amount of any Disqualified Stock of the Company
or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary
that is not a Guarantor, will be equal to
66
the greater of the maximum mandatory redemption or repurchase price (not
including, in either case, any redemption or repurchase premium) or the
liquidation preference thereof;
(v) Guarantee Obligations with respect to, or obligations in respect
of letters of credit relating to, Indebtedness which is otherwise included
in the determination of a particular amount of Indebtedness shall not be
included;
(vi) Indebtedness permitted by this covenant need not be permitted
solely by reference to one provision permitting such Indebtedness but may
be permitted in part by one such provision and in part by one or more
other provisions of this covenant permitting such Indebtedness; and
(vii) the amount of Indebtedness issued at a price that is less than
the principal amount thereof will be equal to the amount of the liability
in respect thereof determined in accordance with GAAP.
Accrual of interest, accrual of dividends, the accretion of accreted
value, the payment of interest in the form of additional Indebtedness and the
payment of dividends in the form of additional shares of Preferred Stock or
Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for
purposes of this covenant. The amount of any Indebtedness outstanding as of any
date shall be (i) the accreted value of the Indebtedness in the case of any
Indebtedness issued with original issue discount and (ii) the principal amount
or liquidation preference thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness. For purposes
of determining compliance with any U.S. dollar-denominated restriction on the
Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided that if such Indebtedness is Incurred to
refinance other Indebtedness denominated in a foreign currency, and such
refinancing would cause the applicable U.S. dollar-dominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such refinancing, such U.S. dollar-dominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. Notwithstanding any other provision of this Section 6.1, the maximum
amount of Indebtedness that the Company or a Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rate of currencies. The principal amount of any
Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.
(e) In addition, the Company will not permit any of its Unrestricted
Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non Recourse Debt. If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be Incurred as of such date under
this Section 6.1, the Company shall be in Default of this Section 6.1).
6.2 Limitation on Restricted Payments. Prior to the Initial Maturity Date,
the Company shall not, and shall not permit any Restricted Subsidiary, directly
or indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries)
67
except (x) dividends or distributions payable solely in the Capital Stock of the
Company (other than Disqualified Stock) or in options, warrants or other rights
to purchase such Capital Stock of the Company and (y) dividends or distributions
payable to the Company or any Restricted Subsidiary (and if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to its other holders of Capital
Stock on a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company or any direct or indirect parent of
the Company held by Persons other than the Company or a Restricted Subsidiary of
the Company (other than in exchange for Capital Stock of the Company (other than
Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase, redemption,
defeasance or other acquisition or retirement of Subordinated Obligations or
Guarantor Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase, redemption, defeasance
or other acquisition or retirement) or (iv) make any Restricted Investment in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Restricted Investment referred to
in clauses (i) through (iv) being herein referred to as a "Restricted Payment").
(b) From and after the Initial Maturity Date, the Company shall not,
and shall not permit any of its Restricted Subsidiaries, directly or indirectly,
to make any Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and
be continuing (or would result therefrom); or (2) the Company is not able to
Incur an additional $1.00 of Indebtedness pursuant to Section 6.1(a) after
giving effect on a pro forma basis to such Restricted Payment; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared or made subsequent to the Initial Maturity Date would exceed 25% of the
Consolidated Net Income for the period (treated as one accounting period) from
the Initial Maturity Date to the end of the most recent fiscal quarter ending
prior to the date of such Restricted Payment as to which financial statements
are in existence (or, in case such Consolidated Net Income shall be a deficit,
minus 100% of such deficit).
(c) The provisions of Section 6.2(a) (in the case of clauses (iv), (v),
(vi), (vii) and (viii) below only) and Section 6.2(b) shall not prohibit:
(i) any purchase, retirement, payment, defeasance, redemption or
other acquisition of Capital Stock, Disqualified Stock or Subordinated
Obligations of the Company or Guarantor Subordinated Obligations of any
Guarantor made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or similar trust to the
extent such sale to an employee stock ownership plan or similar trust is
financed by loans from or is subject to a Guarantee Obligation by the
Company or any Restricted Subsidiary unless such loans have been repaid
with cash on or prior to the date of determination)); provided, however,
that such purchase, retirement, payment, defeasance, redemption or other
acquisition shall be excluded in subsequent calculations of the amount of
Restricted Payments;
(ii) any purchase, retirement, payment, defeasance, redemption or
other acquisition of Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Subordinated Obligations of the Company or any purchase, retirement,
payment, defeasance, redemption or other acquisition of Guarantor
Subordinated Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Guarantor Subordinated Obligations
that, in each case, is permitted to be Incurred pursuant to Section 6.1
and that, in each case, constitutes Refinancing Indebtedness; provided,
however, that
68
such purchase, retirement, payment, defeasance, redemption or other
acquisition shall be excluded in subsequent calculations of the amount of
Restricted Payments;
(iii) dividends paid within sixty (60) days after the date of
declaration if at such date of declaration such dividends would have
complied with this provision; provided, however, that such dividend shall
be included in subsequent calculations of the amount of Restricted
Payments;
(iv) so long as no Default or Event of Default has occurred and is
continuing, (A) the purchase, redemption or other acquisition,
cancellation or retirement for value of Capital Stock, or options,
warrants, equity appreciation rights or other rights to purchase or
acquire Capital Stock of the Company or any Restricted Subsidiary of the
Company or any parent of the Company held by any existing or former
employees or management of the Company or any Subsidiary of the Company or
their assigns, estates or heirs, in each case in connection with the
repurchase provisions under employee stock option or stock purchase
agreements or other agreements to compensate management employees;
provided that such redemptions or repurchases pursuant to this clause will
not exceed $5,000,000 in the aggregate during any calendar year and
$20,000,000 in the aggregate for all such redemptions and repurchases;
provided, however, that the amount of any such repurchase or redemption
will be included in subsequent calculations of the amount of Restricted
Payments, and (B) to the extent permitted by law, loans or advances to
employees of the Company or any Subsidiary of the Company the proceeds of
which are used to purchase Capital Stock of the Company, in an aggregate
amount not in excess of $5,000,000 at any one time outstanding; provided,
however, that the amount of such loans and advances will be included in
subsequent calculations of the amount of Restricted Payments;
(v) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of the Company issued in accordance
with the terms of this Agreement to the extent such dividends are included
in the definition of "Consolidated Interest Expense"; provided that the
payment of such dividends will be excluded from the calculation of
Restricted Payments;
(vi) repurchases of Capital Stock deemed to occur upon exercise of
stock options, warrants or other convertible securities if such Capital
Stock represents a portion of the exercise price thereof; provided,
however, that such repurchases will be excluded from subsequent
calculations of the amount of Restricted Payments;
(vii) any payments made in connection with the Transaction pursuant
to or contemplated by the Acquisition Agreement and pursuant to any other
agreements or documents related to the Transaction and set forth on
Schedule 6.2 hereto in effect on the closing date of the Transaction
(without giving effect to subsequent amendments, waivers or other
modifications to such agreements or documents); provided, however, that
such amounts will be excluded in the calculation of the amount of
Restricted Payments; or
(viii) (A) prior to the Initial Maturity Date, Restricted Payments
in an amount not to exceed $5,000,000 and (B) from and after the Initial
Maturity Date, Restricted Payments in an amount not to exceed $10,000,000;
provided that, in each case, the amount of such Restricted Payments will
be included in the subsequent calculation of the amount of Restricted
Payments.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The
69
fair market value of any cash Restricted Payment shall be its face amount and
the fair market value of any non-cash Restricted Payment shall be determined
conclusively by the Board of Directors of the Company acting in good faith whose
resolution with respect thereto shall be delivered to the Administrative Agent,
such determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value is estimated in good faith by the Board of Directors of the
Company to exceed $15,000,000. Not later than the date of making any Restricted
Payment in excess of $5,000,000, the Company shall deliver to the Administrative
Agent a certificate signed by a Responsible Officer stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 6.2 were computed, together with any fairness opinion
or appraisal required hereby.
6.3 Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligation owed to the
Company or any Restricted Subsidiary (it being understood that the priority of
any Preferred Stock in receiving dividends or liquidating distributions prior to
dividends or liquidating distributions being paid on common Capital Stock shall
not be deemed a restriction on the ability to make distributions on Capital
Stock), (ii) make any loans or advances to the Company or any Restricted
Subsidiary (it being understood that the subordination of loans or advances made
to the Company or any Restricted Subsidiary to other Indebtedness Incurred by
the Company or any Restricted Subsidiary shall not be deemed a restriction on
the ability to make loans or advances) or (iii) transfer any of its property or
assets to the Company or any Restricted Subsidiary; except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Initial Closing Date and identified
on Schedule 6.3 hereto, including, without limitation, this
Agreement and the Revolving Credit Agreement, or pursuant to the
Indenture;
(2) any encumbrance or restriction with respect to a Foreign
Subsidiary pursuant to any agreement relating to Indebtedness
Incurred by such Foreign Subsidiary under clause (xi) of Section
6.1(b) hereto;
(3) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Capital Stock or Indebtedness Incurred by such Restricted Subsidiary
on or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Capital Stock or Indebtedness
Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary of the Company or was
acquired by the Company or in contemplation of the transaction) and
outstanding on such date, provided, that any such encumbrance or
restriction shall not extend to any assets or property of the
Company or any other Restricted Subsidiary other than the assets and
property so acquired;
(4) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement effecting a
refunding, replacement or refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clauses (1), (2) or (3) or
this clause (4) or contained in any amendment to an agreement
referred to in clauses (1),(2) or (3) or this clause (4); provided,
however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such agreement or
70
amendment are no less favorable in any material respect to the
Lenders than the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such agreements referred to in
clauses (1), (2) and (3) on the Initial Closing Date or the date
such Restricted Subsidiary became a Restricted Subsidiary, whichever
is applicable;
(5) in the case of clause (iii) above, any encumbrance or
restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or the assignment or transfer of
any such lease, license or other contract, (2) contained in
mortgages, pledges or other security agreements permitted under this
Agreement securing Indebtedness of the Company or a Restricted
Subsidiary to the extent such encumbrances or restrictions restrict
the transfer of the property subject to such mortgages, pledges or
other security agreements or (3) pursuant to customary provisions
restricting dispositions of real property interests set forth in any
reciprocal easement agreements of the Company or any Restricted
Subsidiary;
(6) (A) purchase money obligations for property acquired in
the ordinary course of business and (B) Capitalized Lease
Obligations permitted under this Agreement, in each case, that
impose encumbrances or restrictions of the nature described in
clause (iii) above on the property so acquired;
(7) any restriction with respect to a Restricted Subsidiary
(or any of its property or assets) imposed pursuant to an agreement
entered into for the direct or indirect sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted
Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition;
(8) any customary provisions in joint venture agreements that
are not Restricted Subsidiaries and other similar agreements entered
into in the ordinary course of business;
(9) net worth provisions in leases and other agreements
entered into by the Company or any Restricted Subsidiary in the
ordinary course of business;
(10) encumbrances or restrictions arising or existing by
reason of applicable law, or any applicable rule, regulation or
order; and
(11) customary restrictions imposed on the transfer of, or in
Licenses related to, Copyrights, Patents, Trademarks or other
Intellectual Property Rights and contained in agreements entered
into in the ordinary course of business.
6.4 Limitation on Sales of Assets and Subsidiary Stock. The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless: (i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Disposition at least
equal to the fair market value (such fair market value to be determined on the
date of contractually agreeing to such Asset Disposition), as determined in good
faith by the Company's Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition; (ii) prior to the Initial Maturity Date, at least 85% and, from and
after the Initial Maturity Date, at least 75% of the consideration thereof
received by the Company or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents; and (iii) to the extent required by
Section 2.5(b)(ii), an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company or such Restricted Subsidiary, as
the case may be, to prepay or redeem the Loans
71
and Exchange Notes at par, plus accrued and unpaid interest, if any, thereon in
the manner set forth in Section 2.5(d).
Notwithstanding the foregoing provisions, the Company and its
Restricted Subsidiaries shall not be required to apply any Net Available Cash in
accordance herewith except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
covenant exceeds $10,000,000.
(b) For the purposes of this Section 6.4, the following will be deemed
to be cash: (x) the assumption by the transferee of Indebtedness (other than
Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness
of a Wholly Owned Subsidiary (other than Guarantor Subordinated Obligations or
Disqualified Stock of any Wholly Owned Subsidiary that is a Subsidiary
Guarantor) and the release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset Disposition (in
which case the Company shall, without further action, be deemed to have applied
such assumed Indebtedness in accordance with clause (A) of Section 6.4(a)) and
(y) securities, notes or other obligations received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
6.5 Limitation on Liens(a) . The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock), whether owned on the date of this Agreement or
thereafter acquired, securing any Indebtedness, unless contemporaneously
therewith effective provision is made to secure the Loans or, in respect of
Liens on any such Restricted Subsidiary's property or assets, any Guarantee by
such Restricted Subsidiary, equally and ratably with (or prior to in the case of
Liens with respect to Subordinated Obligations or Guarantor Subordinated
Obligations, as the case may be) such Indebtedness for so long as such
Indebtedness is so secured.
6.6 Limitation on Affiliate Transactions. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those that could be obtained in a comparable
transaction at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate; (ii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $5,000,000, the terms of
such transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the members of such Board having
no personal stake in such transaction, if any (and such majority or majorities,
as the case may be, determines that such Affiliate Transaction satisfies the
criteria in clause (i) above); and (iii) in the event such Affiliate Transaction
involves an aggregate amount in excess of $10,000,000, the Company has received
a written opinion from an independent investment banking, accounting or
appraisal firm of nationally recognized standing that such Affiliate Transaction
is not materially less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arms-length basis from a
Person that is not an Affiliate.
(b) The foregoing provisions of Section 6.6(a) shall not apply to (i)
any Restricted Payment (other than a Restricted Investment) permitted to be made
pursuant to Section 6.2, (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans and fees,
compensation, benefits and indemnities paid or entered into by the Company or
its Restricted Subsidiaries in the ordinary course of business to or with
officers, directors or employees of the Company and its
72
Restricted Subsidiaries approved by the Board of Directors, (iii) to the extent
permitted by law, loans or advances to employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries but in any event
not to exceed $5,000,000 in the aggregate outstanding at any one time with
respect to all loans or advances made since the date of this Agreement, (iv) any
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries, (v) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors or employees of the
Company or any Restricted Subsidiary of the Company in connection with providing
services to the Company or any Restricted Subsidiary, (vi) the performance of
obligations of the Company or any of its Restricted Subsidiaries under the terms
of any agreement to which the Company or any of its Restricted Subsidiaries is a
party on the Initial Closing Date and identified on Schedule 6.6 hereto, as
these agreements may be amended, modified, supplemented, extended or renewed
from time to time; and provided, however, that any future amendment,
modification, supplement, extension or renewal entered into after the Initial
Closing Date will be permitted to the extent that its terms are not more
disadvantageous to the Lenders than the terms of the agreements in effect on the
Initial Closing Date, and (vii) any transaction with a customer or supplier of
the Company or a Restricted Subsidiary so long as such transaction is in the
ordinary course of business and the terms of such transaction are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained in a comparable transaction at the time of such
transaction in arm's length dealings with a Person who is not an Affiliate;
provided that, if such transaction or a series of related transactions exceeds
$5,000,000, the terms of such transaction must be approved by a majority of the
members of the Board of Directors of the Company and by a majority of the
members of such Board having no personal stake in such transaction.
6.7 Change of Control. (a) Upon a Change of Control, each Holder shall
have the right to require that the Company repurchase all or any part of such
Holder's Loans at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), such repurchase to
be made in accordance with Section 6.7(b).
(b) Within 30 days following any such Change of Control, the Company
shall mail a notice to each Holder with a copy to the Administrative Agent
stating:
(i) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Loans at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on a record date to receive interest on the
relevant interest payment date);
(ii) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(iii) the procedures determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Loans purchased.
(c) Holders electing to have a Loan purchased will be required to give
notice in writing to the Company at the address specified in Section 9.2 at
least three Business Days prior to the purchase date. Each Holder will be
entitled to withdraw its election if the Company receives, not later than one
Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter from such Holder setting forth the name of such Holder,
the principal amount of the Loan which was to be purchased and a statement that
such Holder is withdrawing its election to have such Loan purchased.
73
(d) On the purchase date, the Company shall pay the purchase price for
the Loans to be purchased, to the Holders entitled thereto upon, in the case of
Loans evidenced by Loan Notes, surrender of such Loan Notes.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Loans pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
6.8 Limitation on Voting Stock of Restricted Subsidiaries. The Company
shall not, and shall not permit any Restricted Subsidiary of the Company to,
transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any
Restricted Subsidiary or to issue any Voting Stock of any Restricted Subsidiary
(other than, if necessary, shares of its Voting Stock constituting directors'
qualifying shares) to any Person except (i) to the Company or a Wholly Owned
Subsidiary; or (ii) in compliance with Section 6.4 and immediately after giving
effect to such issuance or sale, such Restricted Subsidiary continues to be a
Restricted Subsidiary. Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may sell all the Voting Stock of a Restricted Subsidiary
as long as the Company complies with the terms of Section 6.4.
6.9 Merger, Consolidation, etc. (a) Prior to the Initial Maturity Date,
neither the Company nor any of its Subsidiaries may merge with or consolidate
with any other Person, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets or liquidate, wind up or dissolve itself except that, if at the time
thereof and immediately after giving effect thereto no Default or Event of
Default shall have occurred and be continuing or would result therefrom, (i) any
Wholly Owned Subsidiary may merge into or consolidate with the Company in a
transaction in which the Company is the surviving corporation or sell or
transfer all or substantially all of its assets to the Company (upon voluntary
liquidation or otherwise) and (ii) any Wholly Owned Subsidiary may merge into or
consolidate with or sell all or substantially all of its assets to, any other
Wholly Owned Subsidiary in a transaction in which the surviving entity or
transferee is a Wholly Owned Subsidiary and no Person other than the Company or
a Wholly Owned Subsidiary receives any consideration. Notwithstanding the
foregoing, a Wholly Owned Subsidiary may merge or consolidate with a Person
that, immediately following such merger or consolidation, becomes a Wholly Owned
Subsidiary; provided that such merger or consolidation is otherwise permitted in
all respects by the terms of this Agreement.
(b) From and after the Initial Maturity Date, the Company may
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, if:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly
assume, by an assumption agreement supplemental hereto, executed by the
Successor Company and delivered to the Administrative Agent, in form and
substance satisfactory to the Administrative Agent, all the obligations of
the Company under the Notes, the Loans and this Agreement;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or
74
such Subsidiary at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company or the Successor Company, as the
case may be, is not less than that of the Company immediately prior to the
transaction;
(iv) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 6.1(a);
(v) each Guarantor (unless it is the other party to the transactions
above, in which case clause (i) shall apply) shall have by an assumption
agreement supplemental hereto confirmed that its Guarantee shall apply to
such Person's obligations in respect of this Agreement and the Loans; and
(vi) the Company shall have delivered to the Administrative Agent a
certificate of a Responsible Officer and an opinion of counsel to Company,
each stating that such consolidation, merger, transfer or lease and such
assumption agreement (if any) comply with this Agreement.
For purposes of this Section 6.9, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement, but in the
case of a lease of all or substantially all its assets, the predecessor Company
shall not be released from the obligation to pay the principal of and interest
on the Loans and the Notes.
Notwithstanding clauses (iii) and (iv) of the first sentence of this
Section 6.9(b): (1) any Restricted Subsidiary of the Company may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company; and (2) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to realize
tax or other benefits; provided that, in the case of a Restricted Subsidiary
that merges into the Company, the Company will not be required to comply with
the preceding clause (vi).
(c) From and after the Initial Maturity Date, the Company will not
permit any Guarantor to consolidate with or merge with or into any person (other
than another Guarantor) and will not permit the conveyance, transfer or lease of
substantially all of the assets of any Guarantor unless (1) (a) the resulting,
surviving or transferee Person will be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the United
States of America, any State of the United States or the District of Columbia
and such Person (if not such Guarantor) will expressly assume, by an assumption
agreement supplemental hereto, executed and delivered to the Administrative
Agent, all the obligations of such Guarantor under its Guarantee; (b)
immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the resulting, surviving or
transferee Person or any Restricted Subsidiary of such Person as a result of
such transaction as having been Incurred by such Person or such Restricted
Subsidiary at the time of such transaction), no Default of Event of Default
shall have occurred and be continuing; and (c) the Company will have delivered
to the Administrative Agent a certificate of a Responsible Officer and an
opinion of counsel to the Company, each stating that
75
such consolidation, merger or transfer and such assumption agreement (if any)
comply with this Agreement; or (2) the transaction is made in compliance with
Section 6.4 hereto.
6.10 Limitation on Sale/Leaseback Transactions. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, enter into any
Sale/Leaseback Transaction unless (i) the Company or such Restricted Subsidiary,
as the case may be, receives consideration at the time of such Sale/Leaseback
Transaction at least equal to the fair market value (as evidenced by a
resolution of the Board of Directors of the Company) of the property subject to
such transaction, (ii) the Company or such Restricted Subsidiary could have
Incurred Indebtedness in an amount equal to the Attributable Indebtedness in
respect of such Sale/Leaseback Transaction pursuant to Section 6.1, (iii) the
Company or such Restricted Subsidiary would be permitted to create a Lien on the
property subject to such Sale/Leaseback Transaction without securing the Loans
pursuant to Section 6.5 and (iv) the Sale/Leaseback Transaction is treated as an
Asset Disposition and all of the conditions of this Agreement under Section 6.4
(including the provisions concerning the application of Net Available Cash) are
satisfied with respect to such Sale/Leaseback Transaction, treating all of the
consideration received in such Sale/Leaseback Transaction as Net Available Cash
for purposes of such covenant.
6.11 Limitation on Lines of Business. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than a Related
Business.
6.12 Fiscal Year. The Company shall not permit its fiscal year or the
fiscal year of any of its Subsidiaries (other than Foreign Subsidiaries) to end
on a day other than October 31.
6.13 Amendments to Acquisition Documents and Offer Documents. (a) The
Company shall not, and shall not permit any of its Subsidiaries to, enter into
definitive Offer Documents or OPRO Documents, unless such Offer Documents or
OPRO Documents, as the case may be, are in form and substance reasonably
satisfactory to the Administrative Agent.
(b) The Company shall not, and shall not permit any of its Subsidiaries
to, amend, supplement or otherwise modify the terms and conditions of the
Acquisition Documents, the Offer Documents, the OPRO Documents or any such other
documents except for (i) with respect to any such amendment, supplement or
modification which becomes effective on or prior to the consummation of the
Transaction (including, without limitation, the Tender Offer), to the extent
consented to by the Administrative Agent and (ii) with respect to any such
amendment, supplement or modification which becomes effective following the
consummation of the Transaction, to the extent not materially adverse to the
interests of the Lenders.
6.14 Amendments to Revolving Credit Documents. The Company shall not, and
shall not permit any of its Subsidiaries to, amend, supplement or otherwise
modify (pursuant to a waiver or otherwise) the terms and conditions of any of
the Revolving Credit Documents in such a manner that is materially adverse to
the interests of the Lenders.
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SECTION 7
EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Company shall fail to pay any principal on any Loan when due,
or fail to redeem, prepay or purchase Loans when required pursuant to this
Agreement or any Note, or the Company shall fail to pay any interest on any
Loan, any fee referred to in this Agreement, or any other amount payable
hereunder within three days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Obligor
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 Company shall default in the observance or performance of any
agreement contained in Section 5.9, Section 5.12(a), 5.12(f), Section 5.17 or in
any provision of Article 6; or
(d) any Obligor shall default in the observance or performance of (i)
any other material agreement contained in this Agreement or in the other Loan
Documents (other than as provided in paragraphs (a) through (c) of this Section
7), and such default shall continue unremedied for a period of 30 days after the
earlier of (x) notice thereof from the Administrative Agent to the Company and
(y) actual knowledge thereof by a Responsible Officer of such Obligor or (ii)
its obligations under the Fee Letter; or
(e) any material provision of any Loan Document shall at any time for
any reason be declared null and void, or the validity or enforceability of any
Loan Document shall at any time be contested by any Obligor, or a proceeding
shall be commenced by any Obligor, or by any Governmental Authority or other
Person having jurisdiction over any Obligor, seeking to establish the invalidity
or unenforceability thereof, or any Obligor shall deny that it has any liability
or obligation purported to be created under any Loan Document; or
(f) (i) the Company 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 any Obligor shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Company 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 Company or any Subsidiary any
case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof, or (iv) the Company 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) any the Company or any Subsidiary shall generally not, or
77
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
(g) the Company or any Subsidiary shall (i) default in any payment of
principal or interest, due in respect of any (A) Indebtedness (other than the
Notes), issued under the same indenture or other agreement, if the original
principal amount of Indebtedness covered by such indenture or agreement is
$10,000,000 or greater or (B) Guarantee Obligation with respect to an amount of
$10,000,000 or greater, in either case beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created, whether or not such default has been waived by
the holders of such Indebtedness or Guarantee Obligation; or (ii) default in the
observance or performance of any other material agreement or condition relating
to any such Indebtedness or Guarantee Obligation or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable or
such Indebtedness to be required to be defeased or purchased; provided, however,
that any default by the Company or any Subsidiary under a Guarantee Obligation
with respect to a real property lease shall not constitute a Default under this
7(g) if the Company or such Subsidiary is contesting the validity of such
default in good faith by appropriate proceedings, the Company or such Subsidiary
is maintaining reserves in conformity with GAAP with respect thereto and such
default could not reasonably be expected to have a Material Adverse Effect; or
(h) (i) any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee would reasonably be
expected to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA (other than a standard termination), (v) the Company or any Commonly
Controlled Entity would reasonably be expected to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, (vi) any other similar event or condition shall occur or
exist with respect to a Plan, or (vii) any of clauses (i) through (vi) would be
true if a reference under the laws of any foreign jurisdiction having a pension
law similar to ERISA if a reference to the corresponding provisions of such law
were substituted for each reference to ERISA and the Code therein and in the
definition of any defined term used therein, and in each case regarding clauses
(i) through (vii) herein, such event or condition, together with all other such
events or conditions, if any, would reasonably be expected to subject any the
Company or any Commonly Controlled Entity to any tax, penalty or other
liabilities in the aggregate to exceed $1,000,000; or
(i) one or more judgments or decrees shall be entered against the
Company or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of $10,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof or in any event five days before the date
of any sale pursuant to such judgment or decree; or any non-monetary judgment or
order shall be entered against the Company or any Subsidiary that is reasonably
likely to have a Material Adverse Effect and either (i) enforcement proceedings
shall have been commenced by any Person upon such judgment which have not been
stayed pending appeal or (ii) there shall be any period of ten 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
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(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 in the Collateral or the property purported to be covered
thereby;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) of this Section with respect to the Company, the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other Event of
Default, with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Company declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 8
THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Obligor or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Obligor a party thereto to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the
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agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Obligor.
8.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
may deem and treat the payee of any Loans as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (or, if so specified by this Agreement, all
Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided, that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of any Obligor or
any Affiliate of any Obligor, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Obligors and their Affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the
80
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Obligor or any Affiliate of any Obligor which may come
into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this Section 8.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Obligor as though the Administrative
Agent were not the Administrative Agent hereunder. With respect to the Loans
made or renewed by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders and the Company. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
subject to the approval of the Company (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
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SECTION 9
MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any Loan Note, nor
any Guarantee, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this Section. The
Administrative Agent and each Obligor party to the relevant Loan Document may,
from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Administrative Agent may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement, or
modification shall (i) (A) reduce the amount or extend the scheduled date of
maturity of any Loan or of any mandatory prepayment thereof, (B) reduce the
stated rate of any interest thereon or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the aggregate amount or extend
the expiration date of any Lender's Commitment or (C) restrict the right of each
Lender to exchange Term Loans, or Initial Loans on the Initial Maturity Date,
for Exchange Notes or amend the rate of such exchange, in each case without the
written consent of each Lender directly affected thereby, (ii) (A) amend,
modify, or waive any provision of this Section 9.1, (B) reduce the percentage
specified in the definition of Required Lenders, (C) consent to the assignment
or transfer by the Company of any of its rights and obligations under the Loan
Documents except as expressly permitted hereby, (D) amend, modify or waive any
provision in the Exchange Notes that requires (or would, if any Exchange Notes
were outstanding, require) the approval of all holders of Exchange Notes, (E)
release any Guarantor from its obligations under its Guarantee other than in
accordance with the terms thereof or (F) or release the Collateral, in each
case, without the consent of all Lenders or (iii) amend, modify or waive any
provision of Section 8 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Company and
the other Loan Parties, the Lenders, the Administrative Agent, and all future
holders of the Loans. In the case of any waiver, the Company and the other Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands 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, or three Business Days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Company and the Administrative Agent,
and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Company: Quiksilver, Inc.
15202 Graham Street
Huntington Beach, California 92649
Attention: Bill Bussiere/Erik Johnson
Telecopy: (714) 889-4467/2766
with a copy to: Quiksilver, Inc.
15202 Graham Street
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Huntington Beach, California 92649
Attention: Thomas Webster
Telecopy: (714) 893-5566
Administrative Agent: JPMorgan Loan and Agency
1111 Fannin, 10th Floor
Houston, Texas 77002
Attention: Denise Ramon, Account Manager
Telecopy: (713) 750-2938
with a copy to: JPMorgan Chase Bank, N.A.
One Chase Square, 25th Floor
Rochester, New York 14643
Attention: Credit Executive
Telecopy: (585) 258-7440
with a copy to: JPMorgan Chase Bank, N.A
277 Park Avenue, 22nd Floor
New York, NY 10172
Attention: Louis Mastrianni
Telecopy: (646) 534-0693
for Euro-Denominated Loans: J.P. Morgan Europe Limited
125 London Wall
London EC2Y 5AJ
Attention: Ching Loh
Telecopy: 44 207 777 2360
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Company may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by
it; provided that approval of such procedures may be limited to particular
notices or communications.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents 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.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant
83
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder.
9.5 Payment of Expenses and Taxes. The Company agrees (a) except as
otherwise agreed, to pay or reimburse the Administrative Agent for all its
reasonable out-of-pocket costs and 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 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 Administrative Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted
to the Company prior to the Initial Closing Date (in the case of amounts to be
paid on the Initial Closing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Administrative Agent shall
deem appropriate, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless 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, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Group Member
and the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Obligor under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Company shall have no obligation hereunder to
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Company agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Control Statutes that any of them might have by statute
or otherwise against any Indemnitee. All amounts due under this Section 9.5
shall be payable not later than 10 days after written demand therefor.
Statements payable by the Company pursuant to this Section 9.5 shall be
submitted to Bill Bussiere/Erik Johnson (Telecopy No. (714) 889-4467/2766), at
the address of the Company set forth in Section 9.2, or to such other Person or
address as may be hereafter designated by the Company in a written notice to the
Administrative Agent. The agreements in this Section 9.5 shall survive repayment
of the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective
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successors and assigns permitted hereby, except that (i) the Company may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Company without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees (each, an "Assignee") all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of
(A) the Company, provided that no consent of the Company shall be
required for an assignment (x) of any Loan or (y) to a Lender, an affiliate of a
Lender, an Approved Fund (as defined below) or, if an Event of Default has
occurred and is continuing, any other Person; and
(B) the Administrative Agent.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender, an affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender's Commitments or Loans under any Facility, the amount of
the Commitments or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 or (euro)5,000,000, as applicable, unless the Administrative Agent
otherwise consents, provided that such amounts shall be aggregated in respect of
each Lender and its affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and
(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire.
For the purposes of this Section 9.6, the terms "Approved Fund" has the
following meaning:
"Approved Fund" means, with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an affiliate of such
investment advisor.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.10, 2.12, 2.13 and 9.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply
85
with this Section 9.6 shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent
of the Company, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and the
Company, the Administrative Agent, the Issuing Lender and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Company
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of the Company or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Company, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 9.1 and (2) directly
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Company agrees that each Participant shall be entitled to the benefits of
Sections 2.10, 2.12 and 2.13 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.7(b) as though it were a Lender, provided such Participant
shall be subject to Section 9.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.10 or 2.12 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. Any Participant that is a Non-U.S. Lender shall
not be entitled to the benefits of Section 2.12 unless such Participant complies
with Section 2.12(d).
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or
86
Assignee for such Lender as a party hereto. The Company, upon receipt of written
notice from the relevant Lender, agrees to issue Notes to any Lender requiring
Notes to facilitate transactions of the type described in this paragraph (d).
(e) (i) To the extent requested by any Lender, the Company shall
execute and deliver to such Lender an Initial Note dated the date on which such
Initial Loan was made substantially in the form of Exhibit C-1 hereto to
evidence the portion of the Initial Loan made by such Lender and with
appropriate insertions ("Original Initial Notes").
(ii) Unless converted to an Exchange Note and, to the extent
requested by any Lender, the Company shall execute and deliver to such Lender a
Term Note dated the Initial Maturity Date substantially in the form of Exhibit
C-2 hereto to evidence the Term Loan made on such date, in the principal amount
of the Initial Notes held by such Lender on such date and with other appropriate
insertions (collectively, the "Original Term Notes").
(iii) On or prior to the effective date of any Assignment and
Assumption, the assigning Lender shall surrender any outstanding Loan Notes held
by it all or a portion of which are being assigned, and the Company, at its own
expense, shall, upon a request to the Administrative Agent by the assigning
Lender or the Assignee, as applicable, execute and deliver to the Administrative
Agent (in exchange for outstanding Loan Notes of the assigning Lender, if any) a
new Loan Note to the order of such Assignee in an amount equal to the amount of
such Assignee's Loans after giving effect to such Assignment and Acceptance and,
if the assigning Lender has retained a Loan hereunder, a new Loan Note, to the
order of the assigning Lender in an amount equal to the amount of such Lender's
Loans after giving effect to such Assignment and Acceptance. Any such new Loan
Notes shall be dated the date on which such Loan was made by the assigning
Lender and shall otherwise be in the form of the Loan Note replaced thereby. Any
Loan Notes surrendered by the assigning Lender shall be returned by the
Administrative Agent to the Company marked "cancelled."
9.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in 7(f), or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, exercisable upon the occurrence and
during the continuance of an Event of Default, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Company hereunder to set-off and appropriate and apply against such amount any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Company. Each Lender agrees
promptly to notify the Company and the
87
Administrative Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
9.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Company and the Administrative Agent.
9.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.10 Integration. This Agreement (and with respect to the Company and the
Administrative Agent only, the Commitment Letter, the Fee Letter and the Senior
Credit Engagement Letter) and the other Loan Documents represent the entire
agreement of the Company, the Administrative Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The Company hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court or forum and agrees not to plead
or claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Company, at the
address specified in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
88
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
9.13 Acknowledgements. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Company arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Company, on the other
hand, in connection herewith or therewith is solely that of creditor and debtor;
and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Company and the Lenders.
9.14 WAIVERS OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
9.15 Confidentiality. The Administrative Agent and the Lenders shall take
normal and reasonable precautions to maintain the confidentiality of all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company, but may, in any event, make
disclosures (i) reasonably required by any bona fide transferee, assignee or
participant in connection with the contemplated transfer or assignment of any
Loans 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 any Lender, or (vi) to any and all
persons, without limitation of any kind, of the tax treatment and tax structure
of the transaction and all materials of any kind (including opinions and other
tax analyses, if any) that are provided to the taxpayer relating to such tax
treatment and tax structure, provided that (a) such transferee, assignee or
participant agrees to comply with the provisions of this Section 9.15 unless
specifically prohibited by applicable law or court order and (b) in no event
shall any Lender be obligated or required to return any materials furnished by
the Company or any Subsidiary.
9.16 Judgment Currency. (a) If for the purpose of obtaining judgment in
any court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of the Company in respect of any sum due from it to
any Lender hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the
89
amount of Agreement Currency so purchased is less than the sum originally due to
such Lender in the Agreement Currency, the Company agrees notwithstanding any
such judgment to indemnify such Lender against such loss, and if the amount of
the Agreement Currency so purchased exceeds the sum originally due to any
Lender, such Lender agrees to remit to the Company such excess.
9.17 USA Patriot Act. Each Lender hereby notifies the Company that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Patriot Act"), it is required to
obtain, verify and record information that identifies the Company, which
information includes the name and address of the Company and other information
that will allow such Lender to identify the Company in accordance with the
Patriot Act.
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.
UIKSILVER, INC.
By: _________________________________
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as a Lender
By: _________________________________
Name:
Title:
Bridge Credit Agreement
JPMORGAN CHASE BANK, N.A., LONDON BRANCH
By: _________________________________
Name:
Title:
Bridge Credit Agreement
SCHEDULE 1.1A TO
CREDIT AGREEMENT
COMMITMENTS
Lender Dollar Loan Commitment Euro Loan Commitment
- --------------------------------------- ---------------------- --------------------
JPMorgan Chase Bank, N.A. $ 73,700,000
J.P. Morgan Europe Limited $ 276,300,000
--------------- -----------------
TOTAL $ 73,700,000 $ 276,300,000
EXHIBIT A
FORM OF GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of April __, 2005, (this "Guarantee
Agreement") by each of the signatories hereto (each, a "Guarantor" and
collectively, the "Guarantors") in respect of Quiksilver, Inc., a Delaware
corporation (the "Company").
Reference is made to the Credit Agreement dated as of April __, 2005 (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among the Company, the lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., a New York banking corporation, as administrative
agent (the "Administrative Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Loan
Agreement.
Each Guarantor is a Subsidiary of the Company and acknowledges that it
derives substantial benefit from the Loans made pursuant to the Loan Agreement
and/or the Exchange Note issued pursuant to the Indenture.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor fully, unconditionally and
irrevocably, guarantees to the Administrative Agent, the Trustee and the Holders
of the Loans, the Loan Notes and the Exchange Notes, as primary obligor and not
merely as surety, jointly and severally with the other Guarantors, the full and
punctual payment when due, whether at maturity, by acceleration, by redemption
or otherwise, of the principal of, premium, if any, and interest on the Loans
and the Loan Notes and the Exchange Notes issued under the Indenture (all the
foregoing being hereinafter collectively called the "Obligations"). Each
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Guarantor, and that
each Guarantor will remain bound hereunder notwithstanding any extension or
renewal of any Obligation.
Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Obligations. The Obligations of the Guarantors shall not be affected by (a) the
failure of any Holder of any Loan or any Note, the Administrative Agent or the
Trustee to assert any claim or demand or to enforce any right or remedy against
the Company or any other Person under the Loan Agreement, the Indenture, the
Notes or any other agreement or otherwise; (b) any extension or renewal of any
Obligation; (c) any rescission, waiver, amendment, modification or supplement of
any of the terms or provisions of the Loan Agreement, the Indenture, the Notes
or any other agreement; (d) the failure of the Administrative Agent, the
Trustee, the Trustee or any Holder to exercise any right or remedy against any
other guarantor of the Obligations; or (e) any change in the ownership of the
Company.
Each Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment when due (and not a guarantee of collection) and waives any
right to require that any resort be had by any Holder, the Administrative Agent
or the Trustee to any security held for payment of the Obligations.
The obligations of the Guarantors hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense, setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantors shall not be discharged or impaired or otherwise
affected by the failure of any Holder, the Administrative Agent or the Trustee
to assert any claim or demand or to enforce any remedy under the Loan Agreement,
the Indenture, the Notes or any other agreement, by any waiver or modification
of any thereof, by any
2
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law or equity.
Each Guarantor further agrees that its Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Holder, the Administrative Agent or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder, the Administrative Agent or the Trustee has at law or in
equity against the Guarantors by virtue hereof, upon the failure of the Company
to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Obligation, each Guarantor hereby promises to and will, upon
receipt of written demand by the Agent or the Trustee, forthwith pay, or cause
to be paid, in cash, to the Holders or the Administrative Agent or the Trustee,
as their interests may appear an amount equal to the sum of (i) the unpaid
principal amount of, and principal, if any, on such Obligations, (ii) accrued
and unpaid interest on such Obligations and (iii) all other monetary Obligations
of the Company to the Holders, the Administrative Agent or the Trustee.
Each Guarantor further agrees that, as between each such Guarantor, on
the one hand, and the Holders, the Administrative Agent and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in the Loan Agreement and the Indenture for the purposes
of the Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any such declaration of acceleration
of such Obligations such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purposes of this
Guarantee Agreement.
Each Guarantor also agrees to pay any and all reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the Administrative
Agent, the Trustee or any Holder in enforcing any rights under this Guarantee
Agreement.
SECTION 2. Limitation on Liability; Termination, Release and Discharge.
The obligations of each Guarantor hereunder will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees
under the Revolving Credit Agreement) and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Guarantee Agreement or pursuant
to its contribution obligations as set forth below, result in the Obligations of
such Guarantor hereunder not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law.
Upon the sale or disposition of a Guarantor (whether by merger,
consolidation, the sale of its Capital Stock or the sale of all or substantially
all of its assets) to a Person which is not the Company or a Subsidiary of the
Company, such Guarantor shall be released from all its obligations under this
Guarantee Agreement if (i) such sale or disposition is otherwise in compliance
with the Loan Agreement and the Indenture and (ii) all Obligations of such
Guarantor under all of its Guarantee Obligations with respect to, and under all
of its pledges of assets or other security interests which secure, any other
Indebtedness of the Company shall also terminate upon such release, sale or
transfer.
SECTION 3. No Subrogation/Right of Contribution. (a) Notwithstanding any
payment or payments made by any Guarantor hereunder, it shall not be entitled to
be subrogated to any of the rights
3
of the Administrative Agent, the Trustee or any Holder against the Company or
guarantee or right of offset held by the Administrative Agent, the Trustee or
any Holders for the payment of the Obligations, nor shall any Guarantor seek or
be entitled to seek any contribution or reimbursement from the Company in
respect of payments made by such Guarantor, until all amounts owing to the
Administrative Agent, the Trustee and the Holders by the Company on account of
the Obligations are paid in full. If any amount shall be paid to a Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by such Guarantor in trust
for the Administrative Agent and the Trustee, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
the Administrative Agent and the Trustee, as their interests may appear, in the
exact form received by the Guarantor (duly indorsed by the Guarantor, if
required), to be applied against the Obligations.
(b) Each Guarantor hereby agrees that to the extent that it shall have
paid more than its proportionate share of any payment made on the Obligations,
such Guarantor shall be entitled to seek and receive contribution from and
against the Company or any other Guarantor who has not paid its proportionate
share of such payment. The provisions of this Section shall in no respect limit
the obligations and liabilities of any of the Guarantors to the Administrative
Agent, the Trustee or the Holders, and each Guarantor shall remain liable to the
Administrative Agent, the Trustee and the Holders, for the full amount
guaranteed by such Guarantor hereunder.
SECTION 4. [Intentionally Omitted]
SECTION 5. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Trustee or any Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial,
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Trustee and the Holders under the Loan Agreement,
the Indenture and the Notes are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Guarantee Agreement or consent to any departure by a Guarantor therefrom shall
in any event be effective unless the same shall be permitted by Section 5(b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on a Guarantor
in any case shall entitle such Guarantor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Guarantee Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Guarantor with respect to which such waiver, amendment or
modification relates and the Administrative Agent and the Trustee (if any
Exchange Notes are outstanding), in each case as authorized by the Required
Lenders and a majority of the Holders, as applicable.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the notice provisions of the Loan Agreement.
All communications and notices hereunder to the Guarantor shall be given to it
at its address set forth on the signature pages hereto.
SECTION 8. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made in writing by each of the
Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Guarantee Agreement, the Loan
Agreement, or the Indenture shall be considered to have been relied upon by the
Administrative
4
Agent, the Trustee and the Holders and shall survive the making by the Holders
of the Loans and the acceptance by the Holders of the Notes, regardless of any
investigation made by the Holders or on their behalf, and shall continue in full
force and effect as long as any Obligation is outstanding and unpaid.
(b) In the event any one or more of the provisions contained in this
Guarantee Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not affect the validity of such provision in any
other jurisdiction).
SECTION 9. Registration of Guarantees. If Exchange Notes are issued
pursuant to the terms of the Loan Agreement, the holders of such Exchange Notes
shall have the registration rights set forth in the Indenture, and each
Guarantor hereby agrees to be bound by the provisions thereof applicable to such
Guarantor.
SECTION 10. Counterparts. This Guarantee Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. Delivery of an executed
signature page to this Guarantee Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Guarantee
Agreement.
SECTION 11. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any New York State court or Federal
court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Guarantee Agreement or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guarantee Agreement shall affect any right that the
Administrative Agent, the Trustee or any other Holder may otherwise have to
bring any action or proceeding relating to this Guarantee Agreement against any
Guarantor or any of its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guarantee Agreement in any New York State or
Federal court. Each Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each Guarantor irrevocably consents to service of process in the
manner provided for notices in Section 7. Nothing herein will affect the right
of any Person to serve process in any other manner permitted by law.
SECTION 12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT, THE LOAN AGREEMENT, THE
INDENTURE OR ANY NOTE. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
5
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.
[signatures on following page]
IN WITNESS WHEREOF, each Guarantor has duly executed this Guarantee
Agreement as of the day and year first above written.
[GUARANTOR]
By: ______________________________
Name:
Title:
Address for Notice:
c/o Quiksilver, Inc.
15202 Graham Street
Huntington Beach, California 92649
Attention: Steven L. Brink
Telecopy: (714) 889-2322
Guarantee Agreement
Bridge Credit Agreement
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of April 12, 2005
(as amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among Quiksilver, Inc., a Delaware corporation (the "Company"), the
several banks and other financial institutions from time to time parties
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (in
such capacity, the "Administrative Agent"). Unless otherwise defined herein,
terms defined in the Loan Agreement and used herein shall have the meanings
assigned to them in the Loan Agreement.
The Assignor identified on Schedule l hereto (the "Assignor") and the
Assignee identified on Schedule l hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Transfer Effective Date (as defined below), the interest described in Schedule 1
hereto (the "Assigned Interest") in and to the Assignor's rights and obligations
under the Loan Agreement with respect to those credit facilities contained in
the Loan Agreement as set forth on Schedule 1 hereto (the "Assigned Facility")
in a principal amount as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement, any Loan Note or Guarantee of any Loan Note or any other
instrument or document furnished pursuant thereto, other than that the Assignor
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries, any
Person Guaranteeing any Loan Note or any other obligor or the performance or
observance by the Company, any Person Guaranteeing any Loan Note or any other
obligor of any of their respective obligations under the Loan Agreement or any
Loan Note or Guarantee of any Loan Note or any other instrument or document
furnished pursuant hereto or thereto; (c) attaches any Loan Notes held by it
evidencing the Assigned Facility and requests that the Administrative Agent
exchange the attached Loan Notes for a new Loan Note or Loan Notes payable to
the Assignee and (if the Assignor has retained any interest in the Assigned
Facility) a new Loan Note or Loan Notes payable to the Assignor (if requested by
the Assignor) in the respective amounts which reflect the assignment being made
hereby (and after giving effect to any other assignments which have become
effective on the Transfer Effective Date); and (d) represents and warrants that
it is legally authorized to enter into this Assignment and Acceptance.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Loan Agreement, together with copies of the Company's
most recent annual audited and interim unaudited consolidated financial
statements delivered pursuant to the Loan Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Administrative Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Agreement, the Loan Notes or Guarantee of any
Loan Notes or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Agreement, the
2
Loan Notes or Guarantee of any Loan Note or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental thereto;
and (e) agrees that it will be bound by the provisions of the Loan Agreement and
will perform in accordance with its terms all the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender including,
if it is organized under the laws of a jurisdiction outside the United States,
its obligations pursuant to Section 2.12 of the Loan Agreement.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "Transfer
Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 9.6(b)(iv) of the Loan
Agreement, effective as of the Transfer Effective Date (which shall not, unless
otherwise agreed to by the Administrative Agent, be earlier than five Business
Days after the date of such acceptance and recording by the Administrative
Agent).
5. The Assignor agrees that it shall pay the following fees to the
Assignee on the date on which the Assignor (i) shall have received the
applicable fees set forth below from the Company and (ii) shall be under no
obligation to refund all or a portion of any such fee to the Company at any
point thereafter:
(a) a commitment fee in an amount equal to 0.50% of the Commitment of
the Assignee (after giving effect to this assignment), which
commitment fee is scheduled to be paid on the date of the
consummation of the Tender Offer;
(b) a take-down fee in an amount equal to 1.00% of the Dollar
Equivalent of the principal amount of Initial Loans held by the
Assignee during the term of the Loan Agreement, which take-down fee
is scheduled to be paid on the date which is 120 days after the
Initial Closing Date (such date, the "Take-Down Date") or, with
respect to Initial Loans made by the Assignee after the Take-Down
Date, the take-down fee with respect to such Initial Loans is
scheduled to be paid on the date of such borrowing; provided, that
with respect to Initial Loans held by the Assignee that were
borrowed prior to the Take-Down Date, if all or any portion of such
Initial Loans held by the Assignee is repaid on or prior to the
Take-Down Date (the "Senior Bridge Facility Repayment"), the
take-down fee with respect to such Initial Loans shall be reduced
by 100% of the portion of such take-down fee applicable to the
aggregate principal amount of the Senior Bridge Facility Repayment;
and
(c) a rollover fee equal to the product of (i) 2.75% and (ii) the
aggregate principal amount of Initial Loans held by the Assignee on
the Initial Maturity Date, which rollover fee, if any, shall be
paid on the earlier of (x) the date which is 211 days following the
Initial Maturity Date and (y) the date of the issuance of the
Take-Out Debt (to the extent the issuance of the Take-Out Debt
occurs on or after the Initial Maturity Date); provided that, such
rollover fee shall be subject to reduction at the percentage rate
specified in Column B below if the principal amount of the Initial
Loans held by the Assignee on the Initial Maturity Date are
prepaid, repaid or otherwise refinanced during the period specified
in Column A below following the Initial Maturity Date:
3
Column A Column B
- -------- --------
90 days 75%
150 days 50%
210 days 25%
211 days and thereafter 0%
6. Upon such acceptance and recording, from and after the Transfer
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee and Assignor as their interest appear on Schedule 1
attached hereto.
7. From and after the Transfer Effective Date, (a) the Assignee shall
be a party to the Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and under
the Loan Notes and all Guarantees of the Loan Notes and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Agreement.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
[remainder of page intentionally left blank]
Schedule 1
to Assignment and Acceptance
Name of Assignor: ______________________________________________________________
Name of Assignee: ______________________________________________________________
Effective Date of Assignment: __________________________________________________
Principal
Assigned Facility Amount Assigned
---------------
$_______
[Name of Assignee] [Name of Assignor]
By: ________________________________ By: _______________________
Title: Title:
Accepted:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: _______________________________
Title:
Assignment and Acceptance
Bridge Credit Agreement
EXHIBIT C-1
New York, New York
________ ___, 200_
FORM OF INITIAL NOTE
FOR VALUE RECEIVED, the undersigned, Quiksilver, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order of
_________________, or registered assigns (the "Lender"), at the office of
JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ____________________________ [DOLLARS] [EUROS] ([$][(euro)]
), or, if less, the aggregate unpaid principal amount of all Initial Loans made
by the Lender pursuant to Section 2.1 of the Loan Agreement referred to below
(in either case, to be paid together with any accrued interest not required to
be paid currently in cash), which sum shall be due and payable in such amounts
and on such dates as are set forth in the Credit Agreement, dated as of April
12, 2005, among the Company, the Lender and certain other entities from time to
time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent
(the "Loan Agreement"; terms defined therein being used herein as so defined).
The undersigned further agrees to pay interest at said office, in like money,
from the date hereof on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.6 of the Loan
Agreement. The holder of this Initial Note (the "Holder") is authorized to
record the date and amount of the Initial Loan made by the Lender pursuant to
the Loan Agreement, the date and amount of interest added to the principal
hereof and the date and amount of each payment or prepayment of principal hereof
on Schedule A annexed hereto and made a part hereof and any such recordation
shall constitute prima facie evidence of the information so recorded; provided
that the failure of the Lender or the Holder to make such recordation (or any
error in such recordation) shall not affect the obligations of the Company
hereunder or under the Loan Agreement. Unless this Initial Loan is repaid with
the proceeds of the Take-Out Debt prior to April 12, 2006, the Holder shall then
have the option at any time or from time to time to receive one or more Term
Notes or Exchange Notes in place of this Initial Note to the extent set forth in
Section 2.1 of the Loan Agreement.
All parties now and hereafter liable with respect to this Initial Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever. The
nonexercise by the Holder of this Initial Note of any of its rights hereunder in
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Initial Note is one of the Loan Notes referred to in the Loan
Agreement, which Loan Agreement, among other things, contains provisions of the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
This Initial Note shall be construed in accordance with and governed by
the laws of the State of New York and any applicable laws of the United States
of America.
THIS INITIAL NOTE AND THE INITIAL LOANS REPRESENTED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS
OF THIS INITIAL NOTE AND THE INITIAL LOANS REPRESENTED HEREBY MUST BE RECORDED
IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF
THE LOAN AGREEMENT.
QUIKSILVER, INC.
by: _______________________
Name:
Title:
INITIAL NOTE
SCHEDULE A
TO
INITIAL NOTE
INITIAL LOANS AND REPAYMENTS OF INITIAL LOANS
UNPAID PRINCIPAL
PRINCIPAL AMOUNT AMOUNT OF AMOUNT OF INTEREST BALANCE OF
DATE OF INITIAL LOANS PRINCIPAL REPAID ADDED TO PRINCIPAL INITIAL LOANS NOTATION MADE BY
- ----------------- ---------------- ---------------- ------------------ ---------------- ----------------
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
_________________ ________________ ________________ __________________ ________________ ________________
Initial Note
EXHIBIT C-2
New York, New York
________ ___,____
FORM OF TERM NOTE
FOR VALUE RECEIVED, the undersigned, Quiksilver, Inc, a Delaware
corporation (the "Company"), hereby promises to pay to the order of
____________________, or registered assigns (the "Lender"), at the office of
JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ________ [DOLLARS] [EUROS] ([$][(euro)]______), or, if less,
the aggregate unpaid principal amount of all Term Loans made by the Lender
pursuant to Section 2.1 of the Loan Agreement referred to below (in either case,
to be paid together with any accrued interest not required to be paid currently
in cash), which sum shall be due and payable in such amounts and on such dates
as are set forth in the Credit Agreement, dated as of April 12, 2005, among the
Company, the Lender and certain other entities from time to time parties
thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the "Loan
Agreement"; terms defined therein being used herein as so defined). The
undersigned further agrees to pay interest at said office, in like money, from
the date hereof on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.6 of the Loan
Agreement. The holder of this Term Note (the "Holder") is authorized to record
the date and amount of the Term Loan made by the Lender pursuant to the Loan
Agreement, the date and amount of interest added to the principal hereof and the
date and amount of each payment or prepayment of principal hereof on Schedule A
annexed hereto and made a part hereof and any such recordation shall constitute
prima facie evidence of the information so recorded; provided that the failure
of the Lender or Holder to make such recordation (or any error in such
recordation) shall not affect the obligations of the Company hereunder or under
the Loan Agreement. The Holder shall then have the option at any time or from
time to time to receive one or more Exchange Notes in exchange for this Term
Note to the extent set forth in Section 2.3(c) of the Loan Agreement.
All parties now and hereafter liable with respect to this Term Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever. The
nonexercise by the Holder of this Term Note of any of its rights hereunder in
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Term Note is one of the Loan Notes referred to in the Loan
Agreement, which Loan Agreement, among other things, contains provisions of the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
This Term Note shall be construed in accordance with and governed by
the laws of the State of New York and any applicable laws of the United States
of America.
THIS TERM NOTE AND THE TERM LOANS REPRESENTED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS
OF THIS TERM NOTE AND THE TERM LOANS REPRESENTED HEREBY MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
LOAN AGREEMENT.
QUIKSILVER, INC.
By: _______________________
Name:
Title:
Term Note
SCHEDULE A
TO
TERM NOTE
TERM LOANS AND REPAYMENTS OF TERM LOANS
UNPAID PRINCIPAL
PRINCIPAL AMOUNT AMOUNT OF AMOUNT OF INTEREST BALANCE OF
DATE OF TERM LOANS PRINCIPAL REPAID ADDED TO PRINCIPAL TERM LOANS NOTATION MADE BY
- ---------------- ---------------- ---------------- ------------------ ---------------- ----------------
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
________________ ________________ ________________ __________________ ________________ ________________
Term Note
EXHIBIT D
NO DEFAULT / REPRESENTATION CERTIFICATE
APRIL __, 2005
QUIKSILVER, INC., a Delaware corporation (the "Company"), hereby certifies
in connection with the Credit Agreement dated as of April 12, 2005 among the
Company, the several banks and other financial institutions parties thereto (the
"Lenders"), and JPMorgan Chase Bank, N.A. as administrative agent for the
Lenders (such Credit Agreement, as it may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein and not defined shall have the meanings assigned to them in the
Credit Agreement), as of the date set forth below, that:
1. the representations and warranties contained in the Credit Agreement
and in each other Loan Document and each certificate or other writing delivered
to the Lenders in satisfaction of the conditions set forth in Section 4.1 of the
Credit Agreement prior to or on the Initial Closing Date are correct in all
material respects on and as of the Initial Closing Date as though made on and as
of such date; and
2. no Default has occurred or is continuing on the Initial Closing Date
or would occur after giving effect to the Loans requested to be made on the
Initial Closing Date.
[signature page follows]
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be duly
executed and delivered by its proper and duly authorized officer as of the date
set forth above.
QUIKSILVER, INC.
By: _______________________
Name:
Title:
No Default / Representation Certificate
Bridge Credit Agreement
EXHIBIT E-1
FORM OF OPINION OF
HEWITT & O'NEIL LLP
EXHIBIT E-2
FORM OF OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
EXHIBIT F
FORM OF EXEMPTION CERTIFICATE
Reference is hereby made to the Credit Agreement dated as of April 12,
2005, among QUIKSILVER, INC., a Delaware corporation (the "Company"), as
borrower, the several lenders from time to time parties hereto (collectively,
the "Lenders"; individually, a "Lender"), and JPMORGAN CHASE BANK, N.A., a New
York banking corporation, as administrative agent for the Lenders hereunder (in
such capacity, the "Administrative Agent") (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement. ______________________ (the
"Non-U.S. Lender") is providing this certificate pursuant to Section 2.12(d) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner of the
Loans in respect of which it is providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes of
any tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.
3. The Non-U.S. Lender is not a ten percent shareholder of the Company
within the meaning of Section 881(c)(3)(B) of the Code.
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[NAME OF NON-U.S. LENDER]
By: _______________________
Name:
Title:
Date: _____________________
EXHIBIT G
FORM OF
SECRETARY'S CERTIFICATE
April __, 2005
Reference is hereby made to the Credit Agreement dated as of April 12,
2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among QUIKSILVER, INC., a Delaware corporation (the
"Company"), as borrower, the several lenders from time to time parties hereto
(collectively, the "Lenders"; individually, a "Lender"), and JPMORGAN CHASE
BANK, N.A., a New York banking corporation, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
The undersigned Chief Financial Officer of the Company (the "Certifying
Loan Party") hereby certifies as follows:
1. The representations and warranties of the Certifying Loan Party set
forth in each of the Loan Documents to which it is a party or which are
contained in any certificate furnished by or on behalf of the Certifying Loan
Party pursuant to any of the Loan Documents to which it is a party are true and
correct in all material respects on and as of the date hereof with the same
effect as if made on the date hereof, except for representations and warranties
expressly stated to relate to a specific earlier date, in which case such
representations and warranties were true and correct in all material respects as
of such earlier date.
2. ___________________ is the duly elected and qualified Corporate
Secretary of the Certifying Loan Party and the signature set forth for such
officer below is such officer's true and genuine signature.
3. No Default or Event of Default has occurred and is continuing as of the
date hereof or after giving effect to the Loans to be made on the date hereof
and the use of proceeds thereof.
4. The conditions precedent set forth in Section 4.1 of the Credit
Agreement were satisfied as of the Initial Closing Date.
The undersigned Corporate Secretary of the Certifying Loan Party certifies
as follows:
1. There are no liquidation or dissolution proceedings pending or to my
knowledge threatened against the Certifying Loan Party, nor has any other event
occurred adversely affecting or threatening the continued corporate existence of
the Certifying Loan Party.
2. The Certifying Loan Party is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
3. Attached hereto as Annex 1 is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Certifying Loan Party on
_________________; such resolutions have not in any way been amended, modified,
revoked or rescinded, have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect and are the
only corporate proceedings of the Certifying Loan Party now in force relating to
or affecting the matters referred to therein.
4. Attached hereto as Annex 2 is a true and complete copy of the By-Laws
of the Certifying Loan Party as in effect on the date hereof.
5. Attached hereto as Annex 3 is a true and complete copy of the
Certificate of Incorporation of the Certifying Loan Party as in effect on the
date hereof.
6. The following persons are now duly elected and qualified officers of
the Certifying Loan Party holding the offices indicated next to their respective
names below, and the signatures appearing opposite their respective names below
are the true and genuine signatures of such officers, and each of such officers
is duly authorized to execute and deliver on behalf of the Certifying Loan Party
each of the Loan Documents to which it is a party and any certificate or other
document to be delivered by the Certifying Loan Party pursuant to the Loan
Documents to which it is a party:
Name Office Signature
---- ------ ---------
Robert B. McKnight Chief Executive Officer ___________________________
Bernard Mariette President ___________________________
Steven L. Brink Chief Financial Officer and ___________________________
Treasurer
[remainder of page intentionally left blank]
Closing Certificate
Bridge Credit Agreement
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the
date set forth above.
____________________________________________ __________________________
Name: Steve Brink Name: [________________]
Title: Chief Financial Officer and Treasurer Title: Corporate Secretary
Closing Certificate
Bridge Credit Agreement
Annex 1
Board Resolutions
Annex 2
By-Laws
Annex 3
Certificate of Incorporation
EXHIBIT H
Summary of Terms and Conditions
of Exchange Notes
Capitalized terms used but not defined herein have the meanings
given in the Credit Agreement.
Issuer: The Company will issue Exchange Notes under the Indenture. The Company
in its capacity as issuer of the Exchange Notes is referred to as the
"Issuer."
Guarantors: The Company and each of the Company's direct and indirect, existing and
future, material domestic subsidiaries (collectively, the "Guarantors";
the Borrower and the Guarantors, collectively, the "Loan Parties").
Principal Amount: The Exchange Notes will be available only in exchange for the Loans on
or after the Initial Maturity Date. The principal amount of any
Exchange Note will equal 100% of the aggregate principal amount
(including any accrued interest not required to be paid in cash) of the
Loan for which it is exchanged. In the case of the initial exchange by
the Lenders, the minimum amount of Loans to be exchanged for Exchange
Notes shall equal 10% of the outstanding principal amount of the Loans
on the date of such exchange.
Maturity: The Exchange Notes will mature on the seventh anniversary of the
Initial Closing Date.
Interest Rate: The Exchange Notes will bear interest at a rate equal to the Initial
Rate (as defined below) plus the Exchange Spread (as defined below).
Notwithstanding the foregoing, the interest rate in effect at any time
shall not exceed 10.5% per annum nor be less than 9.25% per annum.
"Exchange Spread" shall equal 0 basis points during the three month
period commencing on the Initial Maturity Date and shall increase by
50 basis points at the beginning of each subsequent three month period.
"Initial Rate" shall be determined on the Initial Maturity Date and
shall equal the greater of (a) the interest rate borne by the Loans on
the day immediately preceding the Initial Maturity Date plus 50 basis
points and (b) the Treasury Rate, on the Initial Maturity Date, plus
500 basis points.
"Treasury Rate" means (a) the rate borne by direct obligations of the
United States maturing on the seventh anniversary of the Initial
Closing Date and (b) if there are no such obligations, the rate
determined by linear interpolation between the rates borne by the two
direct obligations of the United States maturing closest to, but
straddling, the seventh anniversary of the Initial Closing Date,
in each case as published by the Board of Governors of the Federal
Reserve System.
Interest will be payable in arrears at the end of each semi-annual
fiscal period.
Mandatory Redemption: The Issuer will be required to make an offer to redeem the Exchange
Notes (and, if outstanding, prepay the Loans) on a pro rata basis, at
par plus accrued and unpaid interest (or, in the case of Fixed Rate
Exchange Notes (as defined below), at par plus accrued and unpaid
interest plus any applicable premiums), from the net proceeds of (a)
the sale of any assets outside the ordinary course of business, after
deduction of, among other things, amounts required to repay the Senior
Secured Facilities, (b) the incurrence of any debt ranking pari passu
or junior to the Exchange Notes and which provides no greater
collateral security than the Exchange Notes, (c) the incurrence of any
debt other than set forth in clause (b) above, after deduction of,
among other things, amounts required to repay the Revolving Credit
Agreement and (d) the issuance of any equity (in each case, subject to
exceptions and baskets to be agreed, including, but not limited to,
exceptions and baskets comparable to those applicable to the Revolving
Credit Agreement). In addition, the Issuer will be required to offer
to redeem the Exchange Notes upon the occurrence of a change of control
(which offer shall be at 101% of the principal amount of such Exchange
Notes, plus accrued and unpaid interest).
Optional Redemption: Subject to the following sentence, the Exchange Notes will be
redeemable at the option of the Issuer, in whole or in part, at any
time at par plus accrued and unpaid interest to the redemption date.
If any Exchange Note is sold by a Lender to a third party purchaser,
such Lender shall have the right to fix the interest rate on such
Exchange Note (a "Fixed Rate Exchange Note") at a rate equal to the
greater of (a) the then applicable rate of interest and (b) upon the
representation of such transferring Lender that a higher rate (such
higher rate, the "Transfer Rate") is necessary in order to permit such
Lender to transfer such Exchange Note to a third party and receive
consideration equal to the principal amount thereof plus all accrued
and unpaid interest to the date of such transfer, the Transfer Rate;
provided, that such Transfer Rate shall not exceed the maximum interest
rates applicable to the Exchange Notes. If such Lender exercises such
right, such Exchange Note will be (a) non-callable for the first three
years from the Initial Maturity Date and (b) thereafter, callable at
par plus accrued and unpaid interest plus a premium equal to (i) 50% of
the applicable rate of interest in effect on the date of sale of such
Exchange Note to a third party purchaser or (ii) if the Transfer Rate
was used, 50% of the Transfer Rate, which premium in either case shall
decline ratably on each yearly anniversary of the date of such sale
to zero one year prior to the maturity of the Exchange Notes,
provided that, such call protection shall not apply to any call for
redemption issued prior to the sale to such third party purchaser.
Registration Rights: The Issuer will file within 30 days after the Initial Maturity Date,
and will use its commercially reasonable efforts to cause to become
effective as soon thereafter as practicable, a shelf registration
statement with respect to the Exchange Notes (a "Shelf Registration
Statement") and/or a registration statement relating to a Registered
Exchange Offer (as described below). If a Shelf Registration Statement
is filed, the Issuer will keep such registration statement effective
and available (subject to customary exceptions) until it is no longer
needed to permit unrestricted resales of Exchange Notes but in no event
longer than two years from the Initial Maturity Date. If within
120 days from the Initial Maturity Date, a Shelf Registration Statement
for the Exchange Notes has not been declared effective or the Issuer
has not effected an exchange offer (a "Registered Exchange Offer")
whereby the Issuer has offered registered notes having terms identical
to the Exchange Notes (the "Substitute Notes") in exchange for all
outstanding Exchange Notes and Loans (it being understood that a Shelf
Registration Statement is required to be made available in respect of
Exchange Notes the holders of which could not receive Substitute Notes
through the Registered Exchange Offer that, in the opinion of counsel,
would be freely saleable by such holders without registration or
requirement for delivery of a current prospectus under the Securities
Act of 1933, as amended (other than a prospectus delivery requirement
imposed on a broker-dealer who is exchanging Exchange Notes acquired
for its own account as a result of a market making or other trading
activities)), then the Issuer will pay additional interest of
$0.192 per week per $1,000 principal amount of Exchange Notes and Loans
outstanding to holders thereof who are, or would be, unable freely to
transfer Exchange Notes from and including the 121st day after the date
of the first issuance of Exchange Notes to but excluding the earlier of
the effective date of such Shelf Registration Statement or the date of
consummation of such Registered Exchange Offer (such damages may be
payable, at the option of the Borrower, in the form of additional Loans
or Exchange Notes, as applicable, if the then interest rate thereon
exceeds the applicable cash interest rate cap). The Issuer will also
pay such additional interest for any period of time (subject to
customary exceptions) following the effectiveness of a Shelf
Registration Statement that such Shelf Registration Statement is not
available for resales thereunder. In addition, unless and until the
Issuer has consummated the Registered Exchange Offer and, if required,
caused the Shelf Registration Statement to become effective, the
holders of the Exchange Notes will have the right to "piggy-back" the
Exchange Notes in the
registration of any debt securities (subject to customary
scale-back provisions) that are registered by the Issuer
(other than on a Form S-4) unless all the Exchange Notes
and Loans will be redeemed or repaid from the proceeds of
such securities.
Right to Transfer
Exchange Notes: The holders of the Exchange Notes shall have the absolute and
unconditional right to transfer such Exchange Notes in
compliance with applicable law to any third parties.
Covenants: Similar to those in an indenture governing a high-yield senior
unsecured note issue, but modified to include additional
restrictions customary in interim facilities.
Events of Default: Similar to those in an indenture governing a high-yield
senior unsecured note issue, but modified to include additional
events of default customary in interim facilities.
Governing Law and Forum: New York.