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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 Repayment. 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
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interest in or otherwise encumbered any of
its assets or properties except in
favor of Bank or as otherwise permitted by
Bank in writing.
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 liability, flood,
property da
