<PAGE> 1
EXHIBIT 10.3
July 18, 2000
TO THE LENDERS PARTIES TO THE REVOLVING
CREDIT AGREEMENT REFERRED TO BELOW
Re: First Amendment to Revolving Credit Agreement
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement dated as of April 25, 2000
(the "Credit Agreement") among Quiksilver, Inc. (the "Borrower"), the lenders
referred to therein (the "Lenders"), The Chase Manhattan Bank, as syndication
agent and co-lead arranger, and Union Bank of California, N.A., as
administrative agent for the Lenders (in such capacity, the "Agent") and co-lead
arranger. Terms defined in the Credit Agreement and not otherwise defined herein
have the same respective meanings when used herein.
1. Effective as of the date of this letter amendment but subject to the
terms and conditions hereof, the Credit Agreement is hereby amended as set forth
below.
(a) The definition of "Borrowing Base" in Section 1.1 of the
Credit Agreement is amended in full to read as follows:
"`Borrowing Base': as at any date, an amount determined by the
Agent by reference to the most recent Borrowing Base Certificate, which
is equal to the sum of the following, without duplication:
(a) 80% of Eligible Accounts Receivable; plus
(b) 40% of Eligible Inventory (provided that such
percentage shall be increased to 50% with respect to any
calculation of the Borrowing Base during the months of (i)
January through April of any year or (ii) May through
September of 2000); plus
(c) 40% of outstanding and undrawn commercial Letters
of Credit issued hereunder for the account of the Borrower
(provided that such percentage shall be increased to 50% with
respect to any calculation of the Borrowing Base during the
months of (i) January through April of any year or (ii) May
through September of 2000)."
<PAGE> 2
July 18, 2000
Page 2
(b) The Lenders' signature pages to the Credit Agreement are
amended by (i) deleting the amount "$40,000,000" set forth below the signature
block of Union Bank of California, N.A. ("UBOC") and substituting "$44,444,445",
(ii) deleting the amount "$22,500,000" set forth below the signature block of
The Chase Manhattan Bank ("Chase") and substituting "$25,000,000", (iii)
deleting the amount "$20,000,000" set forth below the signature block of Fleet
National Bank ("Fleet") and substituting "$22,222,222" and (iv) deleting the
amount "$7,500,000" set forth below the signature block of Pacific Century Bank,
N.A. ("PCB") and substituting "$8,333,333"; provided, however, that, as of the
close of business in Los Angeles on October 31, 2000, such amounts shall
automatically revert to $40,000,000 for UBOC, $22,500,000 for Chase, $20,000,000
for Fleet and $7,500,000 for PCB, in each case without any further action by any
party.
(c) Section 5.8 of the Credit Agreement is amended in full to
read as follows:
"5.8 Use of Proceeds. The Borrower will use the proceeds of
the Loans solely to provide funds for (a) working capital, capital
expenditures and acquisitions permitted by Section 6.7(d) or (g), (b)
the repayment of amounts outstanding under the Existing Line and (c)
general corporate purposes of the Borrower and its Domestic
Subsidiaries; provided, however, that (i) any Loans whose proceeds are
used to provide funds for the acquisition permitted by Section 6.7(g)
shall be limited to $25,000,000, shall be used only to pay the portion
of the purchase price for such acquisition payable on the date of
closing of such acquisition and shall be repaid by the Borrower in full
not later than October 31, 2000, (ii) no proceeds of any Loans may be
used by the Borrower after October 31, 2000 to provide funds for the
payment of any portion of the purchase price for such acquisition and
(iii) not later than October 31, 2000, the Borrower shall provide
evidence satisfactory to the Lenders that the Borrower has refinanced
the Loans referred to in (i) above. Notwithstanding anything herein to
the contrary, no Loan or Letter of Credit shall be used for the
purchasing or carrying of any Margin Stock."
(d) Section 6.6 of the Credit Agreement is amended by deleting
the amount "$20,000,000" therein and substituting "$10,000,000."
(e) Section 6.7 of the Credit Agreement is amended by deleting
the word "and" at the end of Section 6.7(e), deleting the period at the end of
Section 6.7(f) and replacing it with "; and" and adding the following new
Section 6.7(g):
"(g) acquisition of all of the shares of capital stock of
Quiksilver International Pty Ltd, a corporation organized under the
laws of the State of
<PAGE> 3
July 18, 2000
Page 3
Victoria, Australia, by a newly formed, directly and wholly owned
Subsidiary of the Borrower, Quiksilver Australia Pty Ltd, a corporation
organized under the laws of the State of Victoria, Australia."
2. The Borrower hereby represents and warrants for the benefit of the
Lenders and the Agent that (a) the representations and warranties contained in
the Loan Documents are correct in all material respects on and as of the date of
this letter amendment, before and after giving effect to the same, as if made on
and as of such date and (b) no event has occurred and is continuing, or would
result from the effectiveness of this letter amendment, that constitutes a
Default.
3. If you agree to the terms and conditions set forth herein, please
evidence your agreement by executing and returning six counterparts of this
letter amendment to the Agent. This letter amendment shall become effective as
of the date first set forth above when and if (a) the Borrower and the Lenders
execute counterparts of this letter amendment and deliver them to the Agent, (b)
the Borrower pays a fee of $10,000 to the Agent, for the account of the Lenders
in such amounts as agreed between the Agent and each of the Lenders, (c) the
Borrower executes and delivers to the Agent new Revolving Notes, appropriately
completed for each of the Lenders, (d) the Borrower delivers to the Agent
certified copies of the forms of the purchase agreements by which the Borrower's
wholly owned Subsidiary, Quiksilver Australia Pty Ltd, a corporation organized
under the laws of the State of Victoria, Australia ("QAPL"), is to acquire all
of the capital stock of Quiksilver International Pty Ltd, a corporation
organized under the laws of the State of Victoria, Australia ("QIPL"), together
with such related documents as the Agent may reasonably request, and (e) the
Borrower delivers to the Agent a Covenant Compliance Certificate showing pro
forma calculations assuming that the acquisition of all of the capital stock of
QIPL by QAPL has been consummated; provided, however, that it shall be a
condition subsequent to the effectiveness of this letter amendment that the
Borrower deliver to the Agent not later than August 31, 2000 a pledge agreement,
duly executed by the Borrower and QAPL (if required), by which the Borrower
pledges 65% of the capital stock of QAPL as Collateral, together with other
documents, including a legal opinion of Australian counsel to QAPL,
substantially the same as those required to be provided pursuant to Section 4.3
of the Credit Agreement in connection with the Borrower's pledge of stock of Na
Pali.
4. On and after the effective date of this letter amendment, each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to "the Credit Agreement," "thereunder,"
"thereof," "therein" or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as amended by this letter
amendment. The Credit Agreement, as amended by this letter amendment, is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.
<PAGE> 4
July 18, 2000
Page 4
5. This letter amendment may be executed in any number of counterparts
and by any combination of the parties hereto in separate counterparts, each of
which counterparts shall be an original and all of which taken together shall
constitute one and the same letter amendment.
6. THIS LETTER AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.
Very truly yours,
QUIKSILVER, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Agreed as of the date first written above:
UNION BANK OF CALIFORNIA, N.A.,
as Agent and a Lender
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE CHASE MANHATTAN BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 5
July 18, 2000
Page 5
FLEET NATIONAL BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PACIFIC CENTURY BANK, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
