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EXHIBIT 10.12
CREDIT AGREEMENT
THIS AGREEMENT is entered
into as of August 1, 2003, by and between THE BUCKLE,
INC" a Nebraska corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION
("Bank"),
RECITALS
Borrower has requested that
Bank extend or continue credit to Borrower as
described below, and Bank has
agreed to provide such credit to Borrower on the
terms and conditions
contained herein.
NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank
and Borrower hereby agree as follows:
ARTICLE I CREDIT
TERMS
SECTION 1.1 LINE OF
CREDIT.
(a) Line of Credit. Subject
to the terms and conditions of this Agreement, Bank
hereby agrees to make
advances to Borrower from time to time up to and
including
July 31, 2006, not to exceed
at any time the aggregate principal amount of
Seventeen Million Five
Hundred Thousand Dollars ($17,500,000.00) ("Line of
Credit"), the proceeds of
which shall be used to finance Borrower's working
capital requirements.
Borrower's obligation to repay advances under the Line
of
Credit shall be evidenced by
a promissory note-substantially in the form of
Exhibit A attached hereto
("Line of Credit Note"), all terms of which are
incorporated herein by this
reference.
(b) Letter of Credit
Subfeature. As a subfeature under the Line of Credit,
Bank
agrees from time to time
during the term thereof to issue or cause an affiliate
to issue standby letters of
credit for the account of Borrower (each, a "Letter
of Credit" and collectively,
"Letters of Credit"); provided however, that the
aggregate undrawn amount of
all outstanding Letters of Credit shall not at any
time exceed Ten Million
Dollars ($10,000,000.00). The form and substance of each
Letter of Credit shall be
subject to approval by Bank, in its sole discretion.
No Letter of Credit shall
have an expiration date subsequent to the maturity
date of the Line of Credit.
The undrawn amount of all Letters of Credit shall be
reserved under the Line of
Credit and shall not be available for borrowings
thereunder. Each Letter of
Credit shall be subject to the additional terms and
conditions of the Letter of
Credit agreements, applications and any related
documents required by Bank in
connection with the issuance thereof. Each drawing
paid under a Letter of Credit
shall be deemed an advance under the Line of
Credit and shall be repaid by
Borrower in accordance with the terms and
conditions of this Agreement
applicable to such advances; provided however, that
if advances under the Line of
Credit are not available, for any reason, at the
time any drawing is paid,
then Borrower shall immediately pay to Bank the full
amount drawn, together with
interest thereon from the date such drawing is paid
to the date such amount is
fully repaid by Borrower, at the rate of interest
applicable to advances under
the Line of Credit. In such event Borrower agrees
that Bank, in its sole
discretion, may debit any account maintained by Borrower
with Bank for the amount of
any such drawing.
(c) Borrowing and Repavment.
Borrower may from time to time during the term of
the Line of Credit borrow,
partially or wholly repay its outstanding borrowings,
and reborrow, subject to all
of the limitations, terms and conditions contained
herein or in the Line of
Credit Note; provided however, that the total
outstanding borrowings under
the Line of Credit shall not at any time exceed the
maximum principal amount
available thereunder, as set forth above.
Notwithstanding the
foregoing, Borrower shall maintain a zero balance on
advances under the Line of
Credit for a period of at least sixty (60)
consecutive days during each
fiscal year.
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SECTION 1.2.
INTEREST/FEES.
(a) Interest. The outstanding
principal balance of each credit subject hereto
shall bear interest, and the
amount of each drawing paid under the Standby
Letter of Credit shall bear
interest from the date such drawing is paid to the
date such amount is fully
repaid by Borrower, at the rate of interest set forth
in each promissory note or
other instrument or document executed in connection
therewith.
(b) Computation and Payment.
Interest shall be computed on the basis of a
360-day year, actual days
elapsed. Interest shall be payable at the times and
place set forth in each
promissory note or other instrument or document required
hereby.
SECTION 1.3. COLLECTION OF
PAYMENTS. Borrower authorizes Bank to collect all
principal, interest and fees
due under each credit subject hereto by charging
Borrower's deposit account
number 8970326406 with Wells Fargo Bank Nebraska,
National Association, or any
other deposit account maintained by Borrower with
Bank or Wells Fargo Bank
Nebraska, National Association, for the full amount
thereof. Should there be
insufficient funds in any such deposit account to pay
all such sums when due, the
full amount of such deficiency shall be immediately
due and payable by
Borrower.
ARTICLE II REPRESENTATIONS
AND WARRANTIES
Borrower makes the following
representations and warranties to Bank, which
representations and
warranties shall survive the execution of this Agreement
and
shall continue in full force
and effect until the full and final payment, and
satisfaction and discharge,
of all obligations of Borrower to Bank subject to
this Agreement.
SECTION 2.1. LEGAL STATUS.
Borrower is a corporation, duly organized and
existing and in good standing
under the laws of the State of Nebraska, and is
qualified or licensed to do
business (and is in good standing as a foreign
corporation, if applicable)
in all jurisdictions in which such qualification or
licensing is required or in
which the failure to so qualify or to be so licensed
could have a material adverse
effect on Borrower.
SECTION 2.2. AUTHORIZATION
AND VALIDITY. This Agreement and each promissory
note, contract, instrument
and other document required hereby or at any time
hereafter delivered to Bank
in connection herewith (collectively, the "Loan
Documents") have been duly
authorized, and upon their execution and delivery in
accordance with the
provisions hereof will constitute legal, valid and
binding
agreements and obligations of
Borrower or the party which executes the same,
enforceable in accordance
with their respective terms.
SECTION 2.3. NO VIOLATION.
The execution, delivery and performance by Borrower
of each of the Loan Documents
do not violate any provision of any law or
regulation, or contravene any
provision of the Articles of Incorporation or
By-Laws of Borrower, or
result in any breach of or default under any contract,
obligation, indenture or
other instrument to which Borrower is a party or by
which Borrower may be
bound.
SECTION 2.4. LITIGATION.
There are no pending, or to the best of Borrower's
knowledge threatened,
actions, claims, investigations, suits or proceedings by
or before any governmental
authority, arbitrator, court or administrative agency
which could have a material
adverse effect on the financial condition or
operation of Borrower other
than those disclosed by Borrower to Bank in writing
prior to the date
hereof.
SECTION 2.5. CORRECTNESS OF
FINANCIAL STATEMENT. The financial statement of
Borrower dated February 1,
2003, a true copy of which has been delivered by
Borrower to Bank prior to the
date hereof, (a) is complete and correct and
presents fairly the financial
condition of Borrower, (b) discloses all
liabilities of Borrower that
are required to be reflected or reserved against
under generally accepted
accounting principles, whether liquidated or
unliquidated, fixed or
contingent, and (c) has been prepared in accordance with
generally accepted accounting
principles consistently applied. Since the date of
such financial statement
there has been no material adverse change in the
financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a
security interest in or
otherwise encumbered any of its assets or properties
except in favor of Bank or as
otherwise permitted by Bank in writing.
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SECTION 2.6. INCOME TAX
RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of
its income tax payable with respect to any year.
SECTION 2.7. NO
SUBORDINATION. There is no agreement, indenture, contract
or
instrument to which Borrower
is a party or by which Borrower may be bound that
requires the subordination in
right of payment of any of Borrower's obligations
subject to this Agreement to
any other obligation of Borrower.
SECTION 2.8. PERMITS,
FRANCHISES. Borrower possesses, and will hereafter
possess, all permits,
consents, approvals, franchises and licenses required
and
rights to all trademarks,
trade names, patents, and fictitious names, if any,
necessary to enable it to
conduct the business in which it is now engaged in
compliance with applicable
law.
SECTION 2.9. ERISA. Borrower
is in compliance in all material respects with all
applicable provisions of the
Employee Retirement Income Security Act of 1974, as
amended or recodified from
time to time ("ERISA"); Borrower has not violated any
provision of any defined
employee pension benefit plan (as defined in ERISA)
maintained or contributed to
by Borrower (each, a "Plan"); no Reportable Event
as defined in ERISA has
occurred and is continuing with respect to any Plan
initiated by Borrower;
Borrower has met its minimum funding requirements under
ERISA with respect to each
Plan; and each Plan will be able to fulfill its
benefit obligations as they
come due in accordance with the Plan documents and
under generally accepted
accounting principles.
SECTION 2.10. OTHER
OBLIGATIONS. Borrower is not in default on any
obligation
for borrowed money, any
purchase money obligation or any other material lease,
commitment, contract,
instrument or obligation.
SECTION 2.11. ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date
hereof, Borrower is in compliance in all material
respects with all applicable
federal or state environmental, hazardous waste,
health and safety statutes,
and any rules or regulations adopted pursuant
thereto, which govern or
affect any of Borrower's operations and/or properties,
including without limitation,
the Comprehensive Environmental Response,
Compensation and Liability
Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986,
the Federal Resource Conservation and Recovery Act
of 1976, and the Federal
Toxic Substances Control Act, as any of the same may be
amended, modified or
supplemented from time to time. None of the operations
of
Borrower is the subject of
any federal or state investigation evaluating whether
any remedial action involving
a material expenditure is needed to respond to a
release of any toxic or
hazardous waste or substance into the environment.
Borrower has no material
contingent liability in connection with any release of
any toxic or hazardous waste
or substance into the environment.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF
INITIAL EXTENSION OF CREDIT. The obligation of Bank
to extend any credit
contemplated by this Agreement is subject to the
fulfillment to Bank's
satisfaction of all of the following conditions:
(a) Approval of Bank Counsel.
All legal matters incidental to the extension of
credit by Bank shall be
satisfactory to Bank's counsel.
(b) Documentation. Bank shall
have received, in form and substance satisfactory
to Bank, each of the
following, duly executed:
(i) This Agreement and each
promissory note or other instrument or document
required hereby.
(ii) Corporate Resolution:
Borrowing.
(iii) Certificate of
Incumbency.
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(iv) Such other documents as
Bank may require under any other Section of this
Agreement.
(c) Financial Condition.
There shall have been no material adverse change, as
determined by Bank, in the
financial condition or business of Borrower, nor any
material decline, as
determined by Bank, in the market value of any
collateral
required hereunder or a
substantial or material portion of the assets of
Borrower.
SECTION 3.2. CONDITIONS OF
EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit
requested by Borrower hereunder shall be subject
to the fulfillment to Bank's
satisfaction of each of the following conditions:
(a)
Compliance. The
representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of
the
date of the signing of this Agreement and on the date of
each
extension of credit by Bank pursuant hereto, with the same effect
as
though such representations and warranties had been made on and
as
of each such date, and on each such date, no Event of Default
as
defined herein, and no condition, event or act which with the
giving
of notice or the passage of time or both would constitute such
an
Event of Default, shall have occurred and be continuing or
shall
exist.
(b)
Documentation.
Bank shall have received all additional documents
which may
be required in connection with such extension of credit.
ARTICLE IV AFFIRMATIVE
COVENANTS
Borrower covenants that so
long as Bank remains committed to extend credit to
Borrower pursuant hereto, or
any liabilities (whether direct or contingent,
liquidated or unliquidated)
of Borrower to Bank under any of the Loan Documents
remain outstanding, and until
payment in full of all obligations of Borrower
subject hereto, Borrower
shall, unless Bank otherwise consents in writing:
SECTION 4.1. PUNCTUAL
PAYMENTS. Punctually pay all principal, interest, fees
or
other liabilities due under
any of the Loan Documents at the times and place and
in the manner specified
therein.
SECTION 4.2. ACCOUNTING
RECORDS. Maintain adequate books and records in
accordance with generally
accepted accounting principles consistently applied,
and permit any representative
of Bank, at any reasonable time, to inspect, audit
and examine such books and
records, to make copies of the same, and to inspect
the properties of
Borrower.
SECTION 4.3. FINANCIAL
STATEMENTS. Provide to Bank all of the following, in
form
and detail satisfactory to
Bank:
(a) not later than 90 days
after and as of the end of each fiscal year, an
audited and unqualified
financial statement of Borrower, prepared by a certified
public accountant acceptable
to bank, to include balance sheet, income statement
and all supporting
schedules;
(b) not later than 60 days
after and as of the end of each quarter, a 100 report
filed with the Securities
Exchange Commission, to include income statement;
(c) from time to time such
other information as Bank may reasonably request.
SECTION 4.4. COMPLIANCE.
Preserve and maintain all licenses, permits,
governmental approvals,
rights, privileges and franchises necessary for the
conduct of its business; and
comply with the provisions of all documents
pursuant to which Borrower is
organized and/or which govern Borrower's continued
existence and with the
requirements of all laws, rules, regulations and orders
of any governmental authority
applicable to Borrower and/or its business.
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SECTION 4.5. INSURANCE.
Maintain and keep in force insurance of the types and in
amounts customarily carried
in lines of business similar to that of Borrower,
including but not limited to
fire, extended coverage, public liabil
