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EXHIBIT 10.1
BUSINESS LOAN AGREEMENT
This Agreement dated as of April 3, 2001, is between Bank of America N.A.
(the "Bank") and Pacific Sunwear of California, Inc., a California corporation
(the "Borrower").
1. FACILITY NO. ONE: LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit ("Facility No. One") to the Borrower. The amount
of the line of credit (the "Facility No. One Commitment") is Thirty Million
Dollars ($30,000,000).
(b) This is a revolving line of credit providing for cash advances,
letters of credit and shipside bonds. During the availability period, the
Borrower may repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal
balance of advances under the line of credit plus the outstanding amounts
of any letters of credit, including amounts drawn on letters of credit and
not yet reimbursed and shipside bonds, to exceed the Facility No. One
Commitment.
1.2 Availability Period. The line of credit is available between the date
of this Agreement and March 31, 2004 (the "Facility No. One Expiration Date")
unless an Event of Default (as defined in Section 11) exists.
1.3 Interest Rate.
(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Prime Rate.
(b) The Prime Rate is the per annum rate of interest publicly
announced from time to time by the Bank as its Prime Rate. The Prime Rate
is set by the Bank based on various factors, including the Bank's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans. The Bank may price loans to
its customers at, above, or below the Prime Rate. Any change in the Prime
Rate shall take effect at the opening of business on the day specified in
the public announcement of a change in the Bank's Prime Rate.
1.4 Repayment Terms.
(a) The Borrower will pay interest on April 30, 2001, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) The Borrower will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no later
than the Facility No. One Expiration Date. Any interest period for an
optional interest rate (as described below) shall expire no later than the
Facility No. One Expiration Date.
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1.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrower may elect the optional interest rates listed
below for this Facility No. One during interest periods set forth in Section 4.2
hereof. The optional interest rates shall be subject to the terms and conditions
described later in this Agreement. Any principal amount bearing interest at an
optional rate under this Agreement is referred to as a "Portion." The following
optional interest rate is available:
(a) the LIBOR Rate plus one and one-half percentage points (1.50%).
1.6 Letters of Credit.
(a) This line of credit may be used for financing:
(i) commercial letters of credit with a maximum maturity of 180
days but not to extend more than 120 days beyond the Facility No. One
Expiration Date. Each commercial letter of credit will require drafts
payable at sight.
(ii) standby letters of credit with a maximum maturity of 365
days but not to extend more than 120 days beyond the Facility No. One
Expiration Date.
(iii) The amount of the letters of credit outstanding at any one
time (including amounts drawn on letters of credit and not yet
reimbursed) may not exceed the Facility No. One Commitment.
(iv) The letters of credit set forth on Schedule 1.6 are
outstanding from the Bank for the account of the Borrower. As of the
date of this Agreement, these letters of credit shall be deemed to be
outstanding under this Agreement, and shall be subject to all the
terms and conditions stated in this Agreement.
(b) The Borrower agrees:
(i) any sum drawn under a letter of credit may, at the option of
the Bank, be added to the principal amount outstanding under this
Agreement. The amount will bear interest and be due as described
elsewhere in this Agreement.
(ii) if an Event of Default has occurred and is continuing under
this Agreement, to immediately prepay and make the Bank whole for any
outstanding letters of credit.
(iii) the issuance of any letter of credit and any amendment to a
letter of credit is subject to the Bank's written approval and must be
in form and content satisfactory to the Bank and in favor of a
beneficiary acceptable to the Bank.
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(iv) to sign the Bank's form Application and Agreement for
Commercial Letter of Credit or Application and Agreement for Standby
Letter of Credit.
(v) to pay any standard issuance and/or other standard fees that
the Bank notifies the Borrower will be charged for issuing and
processing letters of credit for the Borrower.
(vi) to allow the Bank to automatically charge its checking
account for applicable fees, discounts, and other charges.
(vii) to pay the Bank a non-refundable fee equal to the greater
of (aa) 1.50% per annum of the outstanding undrawn amount of each
standby letter of credit or (bb) Three Hundred Dollars ($300), payable
quarterly in advance, calculated on the basis of the face amount
outstanding on the day the fee is calculated. If there is an Event of
Default which has occurred and is continuing under this Agreement, at
the Bank's option upon written notice to the Borrower, the amount of
the fee shall be increased to 3.50% per annum, effective starting on
the day the Bank provides notice of the increase to the Borrower.
1.7 Shipside Bonds. This Facility No. One Commitment, up to a maximum face
value outstanding of Five Million Dollars ($5,000,000), may be used for
financing shipside bonds. The shipside bonds set forth on Schedule 1.7 are
outstanding from the Bank for the account of the Borrower. As of the date of
this Agreement, these shipside bonds shall be deemed to be outstanding under
this Agreement, and shall be subject to all the terms and conditions stated in
this Agreement. The Borrower agrees:
(a) any sum owed to the Bank under a shipside bond may, at the option
of the Bank, be added to the principal amount outstanding under this
Agreement. The amount will bear interest and be due as described elsewhere
in this Agreement.
(b) if an Event of Default has occurred and is continuing, to
immediately prepay and make the Bank whole for any outstanding shipside
bonds.
(c) the issuance of any shipside bond is subject to the Bank's express
approval and must be in form and content satisfactory to the Bank.
(d) to sign the Bank's application, security agreement and other
standard forms for shipside bonds, and to pay any issuance and/or other
fees that the Bank notifies the Borrower will be charged for issuing and
processing shipside bonds for the Borrower.
(e) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
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2. FACILITY NO. TWO: LINE OF CREDIT AMOUNT AND TERMS
2.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit ("Facility No. Two") to the Borrower. The amount
of the line of credit (the "Facility No. Two Commitment") is the lesser of
(i) Twenty-Five Million Dollars ($25,000,000) or (ii) 70% of the appraised
value of the Property (defined before) ( based upon the prospective value
of the improvements upon completion).
(b) This is a non-revolving line of credit providing for cash advances
and to be used by the Borrower to construct improvements on certain real
property located at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
(together with all improvements now or hereafter located thereon, the
"Property"). Any amount borrowed, even if repaid before the expiration date
of the line of credit, permanently reduces the remaining available line of
credit.
(c) The Borrower agrees not to permit the outstanding principal
balance of advances under the line of credit to exceed the Facility No. Two
Commitment.
2.2 Availability Period. The line of credit is available between the date
of this Agreement and September 30, 2002 (the "Facility No. Two Expiration
Date") unless an Event of Default (as defined in Section 11) exists.
2.3 Interest Rate.
Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Prime Rate.
2.4 Repayment Terms.
(a) The Borrower will pay interest on April 30, 2001, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) The Borrower will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no later
than the Facility No. One Expiration Date. Any interest period for an
optional interest rate (as described below) shall expire no later than the
Facility No. One Expiration Date.
(c) Notwithstanding the repayment terms in (b) above, the Borrower
will be required to repay the principal balance outstanding under Facility
No. Two, and the Facility No. Two Commitment shall be permanently reduced,
by an amount equal to 100% of the amount (net of all fees and expenses) of
any new equity issuances of the Borrower to third party investors.
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(d) Notwithstanding the repayment terms in (b) above, the Borrower
will be required to repay the principal balance outstanding under Facility
No. Two, together with any unpaid interest, on the date that Facility No.
One is terminated, canceled or no longer in effect for any reason.
2.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrower may elect the optional interest rates listed
below for this Facility No. Two during interest periods as set forth in Section
4.2 hereof. The optional interest rates shall be subject to the terms and
conditions described later in this Agreement. Any principal amount bearing
interest at an optional rate under this Agreement is referred to as a "Portion."
The following optional interest rate is available:
(a) the LIBOR Rate plus one and three-quarters percentage points
(1.75%).
3. FACILITY NO. THREE TERM LOAN AMOUNT AND TERMS
3.1 Term Loan Amount and Terms
(a) On the Facility No. Two Expiration Date, the Bank will provide a
term loan ("Facility No. Three") to the Borrower, unless an Event of
Default (as defined in Section 11) has occurred and is continuing. The
amount of the term loan (the "Facility No. Three Commitment") is the lesser
of (i) Twenty-Five Million Dollars ($25,000,000), (ii) the principal
balance outstanding under Facility No. Two, or (iii) 70% of the appraised
value of the Property.
(b) The proceeds of the Facility No. Three Commitment shall be used to
repay the principal balance outstanding under the Facility No. Two
Commitment.
3.2 Interest Rate. Unless the Borrower elects an optional rate as described
below, the interest rate is the Bank's Prime Rate.
3.3 Repayment Terms.
(a) The Borrower will pay interest on October 31, 2002, and then
monthly thereafter until payment in full of any principal outstanding under
this Loan.
(b) The Borrower will repay the principal in successive quarterly
installments of $416,666.67 starting December 31, 2002. On April 30, 2006,
the Borrower will repay the remaining principal balance plus any interest
then due.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote payment of principal due
under this Agreement.
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(d) Notwithstanding the repayment terms in (b) above, the Borrower
will be required to prepay the outstanding principal balance of Facility
No. Three, together with any interest then due, by an amount equal to 100%
of the amount (net of all fees and expenses) of any new equity issuances of
the Borrower to third party investors. Such prepayment will be applied to
the most remote payment of principal due under the Agreement.
(e) Notwithstanding the repayment terms of (b) above, the Borrower
will be required to repay the principal balance outstanding of Facility No.
Three, together with any unpaid interest, on the date that Facility No. One
is terminated, canceled or no longer in effect for any reason.
3.4 Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrower may elect the optional interest rates listed
below for this Facility No. Three during the interest periods agreed to by the
Bank and the Borrower. The optional interest rates shall be subject to the terms
and conditions described later this Agreement. Any principal amount bearing
interest at an optional rate under this Agreement is referred to as a "Portion".
The following optional interest rate is available:
(a) The LIBOR Rate plus one and three-quarters percentage points
(1.75%).
4. OPTIONAL INTEREST RATES
4.1 Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and, if the
interest period is longer than three months then on each three month anniversary
during the interest period. At the end of any interest period, the interest rate
will revert to the rate based on the Prime Rate, unless the Borrower has
designated another optional interest rate for the Portion. No Portion will be
converted to a different interest rate during the applicable interest period.
Upon the occurrence and continuance of an Event of Default under this Agreement,
the Bank may terminate the availability of optional interest rates for interest
periods commencing after the default occurs.
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4.2 LIBOR Rate. The election of LIBOR Rates shall be subject to the
following terms and requirements:
(a) The interest period during which the LIBOR Rate will be in effect
will be one, two, three, six, or twelve months. The first day of the
interest period must be a day, other than a Saturday or a Sunday, on which
the Bank is open for business in California, New York and London and
dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the
interest period and the actual number of days during the interest period
will be determined by the Bank using the practices of the London inter-bank
market.
(b) Each LIBOR Rate Portion will be for an amount not less than One
Million Dollars ($1,000,000). Borrower may not elect to have more than six
(6) LIBOR Rate Portions outstanding at any time.
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent. (All
amounts in the calculation will be determined by the Bank as of the first
day of the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
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(1.00 - Reserve Percentage)
Where,
(i) "London Inter-Bank Offered Rate" means the interest rate at
which the Bank's London Branch, London, Great Britain, would offer
U.S. dollar deposits for the applicable interest period to other major
banks in the London inter-bank market at approximately 11:00 a.m.
London time two (2) London Banking Days before the commencement of the
interest period. A "London Banking Day" is a day on which the Bank's
London Branch is open for business and dealing in offshore dollars.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower shall irrevocably request a LIBOR Rate Portion no
later than 11:00 a.m. Los Angeles time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made at
least three days before the LIBOR Rate takes effect.
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(e) The Borrower may not elect a LIBOR Rate with respect to any
principal amount which is scheduled to be repaid before the last day of the
applicable interest period.
(f) Each prepayment of a LIBOR Rate Portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been prepaid,
exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other appropriate
money market selected by the Bank, for a period starting on the date
on which it was prepaid and ending on the last day of the interest
period for such Portion (or the scheduled payment date for the amount
prepaid, if earlier).
(g) The Bank will have no obligation to accept an election for a LIBOR
Rate Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of a LIBOR Rate Portion are not
available in the London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a
LIBOR Rate Portion.
5. FEES AND EXPENSES
5.1 Fees.
(a) Facility No. One Unused Commitment Fee. Upon the occurrence of any
of the events specified below, the Borrower agrees to pay a fee on any
difference between the Facility No. One Commitment and the amount of credit
it actually uses, determined by the weighted average credit outstanding
during the specified period. The fee will be calculated at 0.20% per year.
The calculation of credit outstanding shall include the undrawn amount of
letters of credit and shipside bonds. The fee will be payable quarterly in
arrears until expiration of the Facility No. One availability period,
commencing upon the occurrence of any of the following events: (i) if the
initial advance under the Facility No. Two Commitment has not funded by
July 31, 2001, (ii) the Borrower repays the outstanding principal balance
of Facility No. Two with funds other than the loan proceeds drawn under
Facility No. Three, or (iii) the outstanding principal balance of Facility
No. Three is less than Five Million Dollars ($5,000,000).
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(b) Facility No. Two Fee. The Borrower agrees to pay a Facility No.
Two loan fee in an amount equal to 0.50% of the Facility No. Two
Commitment. The fee is due on or before the date of this Agreement.
(c) Facility No. Three Fee. The Borrower agrees to pay a Facility No.
Three loan fee in an amount equal to 0.50% of the Facility No. Three
Commitment. The fee is due on the date of funding of the Facility No. Three
Commitment. The Bank agrees, that in the event the Borrower engages Banc of
America Securities LLC to act as placement agent for permanent real estate
financing or to act as advisor for any sale leaseback transaction for the
Property, one-half of the Facility No. Three loan fee shall be credited
against any fees payable to Banc of America Securities LLC.
5.2 Expenses. The Borrower agrees to promptly repay the Bank for reasonable
expenses that include, but are not limited to, appraisal and search fees and
documentation fees; provided that so long as no Event of Default has occurred
and is continuing, Borrower will be required to reimburse the Bank only for the
initial appraisal obtained as a condition to this Agreement.
5.3 Reimbursement Costs. The Borrower agrees to reimburse the Bank for any
reasonable expenses it incurs in the preparation of this Agreement and any
agreement or instrument required by this Agreement. Expenses include, but are
not limited to, reasonable attorneys' fees, including any allocated costs of the
Bank's in-house counsel.
6. DISBURSEMENTS, PAYMENTS AND COSTS
6.1 Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
6.2 Disbursements and Payments.
(a) Disbursements by the Bank shall be made to Borrower's deposit
account number 14585-25065, or such other of the Borrower's accounts with
the Bank as designated in writing by the Borrower;
(b) All payments and disbursements shall be made in immediately
available funds;
(c) All payments and disbursements shall be evidenced by records kept
by the Bank. In addition, the Bank may, at its discretion, require the
Borrower to sign one or more promissory notes.
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6.3 Telephone and Telefax Authorization.
(a) The Bank may honor telephone or telefax instructions for advances
or repayments or for the designation of optional interest rates and telefax
requests for the issuance of letters of credit or shipside bonds given by
any one of the individuals authorized to sign loan agreements on behalf of
the Borrower, or any other individual designated by any one of such
authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn
from the Borrower's account number 14585-25065, or such other of the
Borrower's accounts with the Bank as designated in writing by the Borrower.
(c) The Bank will provide written confirmation to the Borrower of
transactions made based on telephone or telefax instructions. The Borrower
agrees to notify the Bank promptly of any discrepancy between the
confirmation and the telephone or telefax instructions.
(d) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions
the Bank reasonably believes are made by any individual authorized by the
Borrower to give such instructions. This indemnity and excuse will survive
this Agreement's termination.
6.4 Direct Debit (Pre-Billing).
(a) The Borrower agrees that the Bank will debit the Borrower's
deposit account number 14585-25065, or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower (the
"Designated Account") on the date each payment of principal and interest
and any fees from the Borrower becomes due (the "Due Date"). If the Due
Date is not a banking day, the Designated Account will be debited on the
next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail
to the Borrower a statement of the amounts that will be due on that Due
Date (the "Billed Amount"). The calculation will be made on the assumption
that no new extensions of credit or payments will be made between the date
of the billing statement and the Due Date, and that there will be no
changes in the applicable interest rate.
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(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount"). If
the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the
Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the
Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The Bank
will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by this
Agreement, the debit will be reversed.
6.5 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day, other than a Saturday or a Sunday, on which the Bank is open for
business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All payments
and disbursements which would be due on a day which is not a banking day will be
due on the next banking day. All payments received on a day which is not a
banking day will be applied to the credit on the next banking day.
6.6 Taxes.
(a) If any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any foreign taxes
from any payments it makes to the Bank. If any such foreign taxes are
imposed on any payments made by the Borrower, the Borrower will pay the
taxes and will also pay to the Bank, at the time interest is paid, any
additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been
imposed. The Borrower will confirm that it has paid the taxes by giving the
Bank official tax receipts (or notarized copies) within 30 days after the
due date.
(b) Payments made by the Borrower to the Bank will be made without
deduction of United States withholding or similar taxes, except to the
extent required by applicable law. If the Borrower is required to pay U.S.
withholding taxes, the Borrower will pay such taxes in addition to the
amounts due to the Bank under this Agreement, except for net income and
similar taxes of the Bank. If the Borrower fails to make such tax payments
when due, the Borrower indemnifies the Bank against any liability for such
taxes, as well as for any related interest, expenses, additions to tax, or
penalties asserted against or suffered by the Bank with respect to such
taxes.
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(c) Any assignee or successor to the Bank that is not incorporated
under the laws of the United States of America or a state thereof (each a
"Non-U.S. Lender") agrees that it will, on or before the effective date of
any assignment pursuant to which it becomes a successor or assign to the
Bank and on the request of the Borrower, (i) deliver to the Borrower two
duly completed copies of United States Internal Revenue Service Form W-8ECI
or W-8BEN or any successor form, certifying in either case that such Person
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, and (ii) deliver to
the Borrower a United States Internal Revenue Form W-8 or W-9, as the case
may be, and certify that it is entitled to an exemption from United States
backup withholding tax. Each Non-U.S. Lender further undertakes to deliver
to the Borrower (x) renewals or additional copies of such form (or any
successor form) on or before the date that such form expires or becomes
obsolete, and (y) after the occurrence of any event requiring a change in
the most recent forms so delivered by it, such additional form or
amendments thereto as may be reasonably requested by the Borrower. All
forms or amendments described in the preceding sentence shall certify that
such Person is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, unless
an event (including without limitation any change in treaty, law or
regulation) has occurred after the relevant date and prior to the date on
which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Person from duly completing
and delivering any such form or amendment with respect to it and such
Person advises the Borrower that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax.
(d) For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause (c) above
(unless such failure is due to a change after the relevant date in any
treaty, law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring subsequent
to the date on which a form originally was required to be provided), such
Non-U.S. Lender shall not be entitled to receive any payment or
indemnification under this Agreement with respect to taxes; provided that,
should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to taxes because of its
failure to deliver a form required under clause (c) above, the Borrower
shall take (at the expense of such person) such steps as such Non-U.S.
Lender shall reasonably request to assist such Non-U.S. Lender to recover
such taxes.
(e) Any Person that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement pursuant to
the law of any relevant jurisdiction or any treaty shall deliver to the
Borrower at the time or times prescribed by applicable law, 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.
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(f) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political
subdivision thereof asserts a claim that the Borrower did not properly
withhold tax from amounts paid to or for the account of any successor or
assign of the Bank (because the appropriate form was not delivered or
properly completed, because such Person failed to notify the Borrower of a
change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Person shall indemnify the
Borrower fully for all amounts paid, directly or indirectly, by the
Borrower as tax, withholding therefor, or otherwise, including penalties
and interest, and including taxes imposed by any jurisdiction on amounts
payable to the Borrower under this subsection, together with all costs and
expenses related thereto.
6.7 Additional Costs. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any
requirement of a regulatory agency, which becomes applicable to all national
banks or a class of all national banks after the date of this Agreement. The
costs and losses will be allocated to the loan in a manner determined by the
Bank, using any reasonable method, absent manifest error. The costs include the
following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
6.8 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.
6.9 Default Rate. Upon the occurrence and during the continuation of any
Event of Default under this Agreement, following written notice from the Bank,
principal amounts outstanding under this Agreement will at the option of the
Bank bear interest at a rate which is two (2) percentage point(s) higher than
the rate of interest otherwise provided under this Agreement. This will not
constitute a waiver of any default.
6.10 Interest Compounding. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at the Bank's Prime Rate plus two (2) percentage
points. This may result in compounding of interest.
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7. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend the initial advance or credit to
the Borrower under this Agreement:
7.1 Authorizations. Evidence that the execution, delivery and performance
by the Borrower and each guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.
7.2 Governing Documents. A copy of the articles of incorporation or
organization for the Borrower and each guarantor.
7.3 Master Guaranty. A master continuing and unconditional guaranty
("Master Guaranty") signed by Pacific Sunwear Stores Corp. and Xxxxxxxxxx.xxx
Corp.
7.4 Good Standing. Certificates of good standing for the Borrower and each
Guarantor from its state of formation and from any other state in which the
Borrower and each Guarantor is required to qualify to conduct its business.
7.5 Payment of Fees. Payment of all accrued and unpaid expenses incurred by
the Bank as required by the paragraph entitled "Reimbursement Costs."
7.6 Appraisal. A FIRREA appraisal of the Property performed and prepared
for the Bank at the Borrower's expense by a duly licensed or certified appraiser
designated by the Bank and possessing all qualifications required by the Bank
and applicable laws.
7.7 Lien Search. A UCC lien search showing no security interests and liens
on the assets of the Borrower except those the Bank consents to in writing or
permitted under Section 9.8 hereof.
7.8 Improvements and Other Information. True and complete copies of the
following contracts, plans, budgets, schedules and other information and
documentation pertaining to the improvements to be constructed on the Property:
(a) the plans and specifications approved by the City of Anaheim; (b) the cost
breakdown set forth in the construction contract referred to in clause (e); (c)
a soils report on the property; (d) the construction schedule set forth in the
construction contract referred to in clause (e); (e) the construction contract
dated March 16, 2001 (which construction contract shall be a fixed price
contract), the architectural contract and any other contracts specified by the
Bank; (f) the qualifications of the general contractor; (g) evidence acceptable
to the Bank that the Borrower has obtained construction insurance with limits
acceptable to the Bank; (h) an Environmental Questionnaire prepared and
certified by the Borrower, and, if required by the Bank, an environmental survey
of the Property prepared by an environmental consultant satisfactory to the
Bank; which information and reports must be satisfactory in all respect to the
Bank.
7.9 Permits and Licenses. Evidence satisfactory to the Bank that (a) the
Property, the improvements to be constructed thereon and the Borrower's business
comply with all applicable laws, covenants and conditions in all material
respects, (b) the Borrower has or will obtain all necessary permits and
approvals for the improvements and for the Borrower's intended use of the
Property, and (c) the Property has or will have all easements, licenses,
utilities and other rights and benefits necessary or desirable for the
improvements and the Borrower's intended use of the Property.
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7.10 Conditions to All Disbursements. All disbursements are subject to each
of the following:
(a) the Bank's receipt of a written or telephonic (confirmed in
writing) request for an advance, accompanied by such documentation and
information as the Bank may reasonably require.
(b) No Event of Default (as defined in Section 11) has occurred and is
continuing, or an event has occurred that with notice or the passage of
time would become such an Event of Default.
7.11 Additional Conditions to Disbursements Under Facility No. Two. All
disbursements under Facility No. Two are further subject to each of the
following:
(a) The Property shall not be materially damaged by an casualty, or
subject to any condemnation proceeding, unless the Bank has received
insurance or condemnation proceeds sufficient in the Bank's judgment to pay
for all repairs in a timely manner. The Bank must also be satisfied that
the Borrower's intended use of the Property and ability to repay its credit
facilities under this Agreement will not be materially impaired by such
casualty or condemnation.
(b) The Bank shall not have received a bonded or unbonded stop notice
with respect to any claim in excess of Five Hundred Thousand Dollars
($500,000), unless the Borrower has filed a release bond satisfactory to
the Bank.
7.12 Additional Conditions to Facility No. Three Disbursement. The
disbursement under Facility No. Three is further subject to all of the following
conditions:
(a) The improvements shall be fully completed, lien-free (except for
liens permitted hereunder), and substantially in accordance with the plans
and specifications.
(b) A valid Notice of Completion shall have been recorded, and all
applicable lien periods shall have expired.
(c) The Borrower shall have all permits and approvals necessary to
occupy the Property for Borrower's intended use.
7.13 Other Items. Any other items that the Bank reasonably requires.
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8. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewed representation:
8.1 Organization of Borrower. The Borrower is a corporation duly formed and
existing under the laws of the state where organized. Each subsidiary of the
Borrower including without limitation, the subsidiaries set forth on Exhibit A
hereto (individually a "Subsidiary" and collectively, the "Subsidiaries"), is a
corporation or a limited liability company duly formed and existing under the
laws of the state where organized. Each guarantor is a corporation or limited
liability company duly formed and existing under the laws of the state where
organized.
8.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers. The execution, delivery and
performance by each guarantor of the Master Guaranty is within its corporate
powers, has been duly authorized and does not conflict with any of its
organizational papers.
8.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder from the Borrower
or any guarantor, when executed and delivered, will be similarly legal, valid,
binding and enforceable, except as enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equitable principles.
8.4 Good Standing. In each state in which the Borrower, each guarantor and
each Subsidiary does business, it is properly licensed, in good standing, and,
where required, in compliance with fictitious name statutes, except where the
failure to do so would not have a material adverse effect on the Borrower and
its Subsidiaries taken as a whole.
8.5 No Conflicts. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower, any guarantor or any Subsidiary is bound.
8.6 Financial Information. All financial statements that have been or will
be supplied to the Bank, including the Borrower's audited consolidated financial
statement dated as of February 4, 2001, are:
(a) prepared in accordance with generally accepted accounting
principles, consistently applied, and fairly presents in all material
respects the financial condition of the Borrower and its Subsidiaries, as
of the respective date thereof, and subject, in the case of any such
unaudited financial statements, to changes resulting from audit and normal
year- end adjustments.
(b) in compliance in all material respects with all government
regulations that apply.
Since February 4, 2001, there has been no material adverse change in the
business condition (financial or otherwise), operations, properties or prospects
of the Borrower and its Subsidiaries taken as a whole.
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8.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower or any Subsidiary which, if lost, would
materially impair the Borrower's and its Subsidiaries financial condition taken
as a whole or ability to repay the loan, except as have been disclosed in
writing to the Bank.
8.8 Permits, Franchises. The Borrower and each Subsidiary possesses all
permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged,
except where the failure to own or possess any of the foregoing would not have a
material adverse effect on the financial condition or operations of the Borrower
and its Subsidiaries taken as a whole.
8.9 Other Obligations. Neither the Borrower nor any Subsidiary is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation, except
as have been disclosed in writing to the Bank.
8.10 Income Tax Matters. The Borrower has no knowledge of any materially
adverse pending assessments or adjustments of its income tax for any year,
except as have been disclosed in writing to the Bank.
8.11 No Tax Avoidance Plan. The Borrower's obtaining of credit from the
Bank under this Agreement does not have as a principal purpose the avoidance of
U.S. withholding taxes.
8.12 No Event of Default. There is no Event of Default which has occurred
and is continuing.
8.13 Insurance. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the "Covenants" section of this Agreement.
8.14 ERISA Plans.
(a) Each Plan (other than a multiemployer plan) is in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law, except to the extent that any non-compliance
would not result in a material liability of Borrower. Each Plan has
received a favorable determination letter from the IRS and to the best
knowledge of the Borrower, nothing has occurred which would cause the loss
of such qualification in any case where the failure to be qualified would
result in a material liability of Borrower. The Borrower has fulfilled its
obligations, if any, under the minimum funding standards of ERISA and the
Code with respect to each Plan, except to the extent that any failure to
fulfill such obligation would not result in a material liability of
Borrower, and has not incurred any material liability with respect to any
Plan under Title IV of ERISA.
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(b) There are no claims, lawsuits or actions (including by any
governmental authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any Plan
which has resulted or could reasonably be expected to result in a material
adverse effect.
(c) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section 4043(c) of
ERISA for which the PBGC requires 30-day notice, which would result in
a material liability of Borrower.
(ii) No action by the Borrower or any ERISA Affiliate to
terminate or withdraw from any Plan has been taken and no notice of
intent to terminate a Plan has been filed under Section 4041 of ERISA,
which termination or withdrawal would result in a material liability
of Borrower.
(iii) No termination proceeding has been commenced with respect
to a Plan under Section 4042 of ERISA, and to Borrower's knowledge, no
event has occurred or condition exists which might constitute grounds
for the commencement of such a proceeding.
(d) The following terms have the meanings indicated for purposes of
this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(ii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
(iii) "ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code.
(iv) "PBGC" means the Pension Benefit Guaranty Corporation.
(v) "Plan" means a pension, profit-sharing, or stock bonus plan
intended to qualify under Section 401(a) of the Code, maintained or
contributed to by the Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
8.15 Location of Borrower. Subject to Section 8.17(e), the Borrower's place
of business (or, if the Borrower has more than one place of business, its chief
executive office) is located at the address listed under the Borrower's
signature on this Agreement.
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8.16 Environmental Matters. Neither the Borrower nor any Subsidiary (a) is
in violation of any health, safety, or environmental law or regulation regarding
hazardous substances and (b) is the subject of any claim, proceeding, notice, or
other communication regarding hazardous substances, which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Borrower and its Subsidiaries taken as a whole. "Hazardous
substances" means any substance, material or waste that is or becomes designated
or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any federal, state or local law (whether under
common law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including without limitation petroleum or natural gas.
9. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:
9.1 Use of Proceeds.
(a) To use the proceeds of Facility No. One only for working capital,
capital expenditures, general corporate purposes and for the issuance of
letters of credit and shipside bonds.
(b) To use the proceeds of Facility No. Two only for construction of
improvements on the Property.
(c) To use the proceeds of Facility No. Three to refinance amounts
outstanding under Facility No. Two.
9.2 Use of Proceeds - Ineligible Securities. Not to use any portion of the
proceeds of the credit to purchase during the underwriting period, or for thirty
days thereafter, Ineligible Securities underwritten by Banc of America
Securities, LLC. Banc of America Securities, LLC is a wholly-owned subsidiary of
Bank of America Corporation, and is a registered broker-dealer which is
permitted to underwrite and deal in certain Ineligible Securities. "Ineligible
Securities" means securities which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(12 U.S.C. ss. 24, Seventh), as amended. The restrictions of this paragraph
shall also cover Ineligible Securities underwritten by any other present or
future subsidiary of Bank of America Corporation which underwrites Ineligible
Securities.
9.3 Financial Information. To provide the following financial information
and statements in form and content reasonably acceptable to the Bank, and such
additional information as reasonably requested by the Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the Borrower's
annual consolidated financial statements. These financial statements must
be audited (with an unqualified opinion) by Deloitte & Touche or other
Certified Public Accountant acceptable to the Bank. The statements shall be
prepared on a consolidated basis.
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(b) Copies of the Borrower's Form 10-K Annual Report, Form 10-Q
Quarterly Report and Form 8-K Current Report within 15 days after the date
of filing with the Securities and Exchange Commission.
(c) Within 120 days of the Borrower's fiscal year end, projections of
the Borrower's consolidated financial statements for the succeeding
calendar years (through the maturity of the credit facilities provided
under this Agreement) on a quarterly basis for the next fiscal year and
annually thereafter. These projections may be Borrower prepared.
(d) Within the period(s) provided in (a) and (b) above, a compliance
certificate of the Borrower signed by an authorized financial officer of
the Borrower substantially in the form of Exhibit B hereto, setting forth
(i) the information and computations (in sufficient detail) to establish
that the Borrower is in compliance with all financial covenants at the end
of the period covered by the financial statements then being furnished and
(ii) whether there existed as of the date of such financial statements and
whether there exists as of the date of the certificate, any default under
this Agreement and, if any such default exists, specifying the nature
thereof and the action the Borrower is taking and proposes to take with
respect thereto.
(e) promptly upon receipt, copies of all notices, orders, or other
communications regarding (i) any material enforcement action by any
governmental authority relating to health, safety, the environment, or any
hazardous substances with regard to the Property, activities, or operations
of the Borrower or any Subsidiary, or (ii) any claim against the Borrower
or any Subsidiary regarding hazardous substances.
9.4 Fixed Charge Coverage Ratio. Commencing on the funding of the Facility
No. Three Commitment, to maintain on a consolidated basis a Fixed Charge
Coverage Ratio of at least 1.10:1.0.
"Fixed Charge Coverage Ratio" means the sum of net income, plus income tax
expenses, plus gross interest expense, plus depreciation, plus non-cash
amortization, plus impairment of fixed assets related to the relocation of the
corporate office and distribution center in an amount not to exceed Six Million
Dollars ($6,000,000.00), and any impairment of goodwill as required by generally
accepted accounting principles, less extraordinary income/ gains, less
non-financed tangible capital expenditures, less cash income taxes paid, cash
dividends and stock repurchases; divided by the sum of gross interest expense,
plus scheduled principal payments on debt and capital leases made during the
calculation period. This ratio will be calculated at the end of each fiscal
quarter, using the results of that quarter and each of the 3 immediately
preceding quarters. For the purposes of calculating compliance with this ratio,
there will be excluded from the capital expenditures portion of the calculation
the amount of $12,000,000 for the fiscal year ended on or about January 31, 2002
or any calculation which includes any portion thereof.
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9.5 EBITDA. To maintain on a consolidated basis EBITDA equal to at least
the amounts indicated for each period specified below:
Period Amount
------ ------------
From the date hereof through the $ 80,000,000
end of the first fiscal quarter ending
on or about April 30, 2001
At the second fiscal quarter $ 87,500,000
ending on or about July 31, 2001
through the third fiscal quarter ending
on or about October 31, 2001
At the fourth fiscal quarter $100,000,000
ending on or about January 31, 2002
and thereafter
"EBITDA" means net profit before taxes, plus interest expense, depreciation,
amortization, impairment of fixed assets related to the relocation of the
corporate office and distribution center in an amount not to exceed Six Million
Dollars ($6,000,000), and any impairment of goodwill as required by generally
accepted accounting principles. This covenant will be calculated at the end of
each fiscal quarter, using the results of that quarter and each of the 3
immediately preceding quarters.
9.6 Total Liabilities to Tangible Net Worth. To maintain on a consolidated
basis a ratio of total liabilities (excluding subordinated liabilities) to
tangible net worth not exceeding 0.60:1.0. This covenant will be calculated at
the end of each fiscal quarter.
"Total liabilities" means the sum of current liabilities plus long term
liabilities. "Subordinated liabilities" means liabilities subordinated to the
Borrower's obligations to the Bank in a manner acceptable to the Bank, using the
Bank's standard form.
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, deferred receivables, and other
like intangibles, and monies due from affiliates, officers, directors,
employees, or shareholders of the Borrower), plus liabilities subordinated to
the Bank in a manner acceptable to the Bank (using the Bank's standard form)
less total liabilities, including but not limited to accrued and deferred income
taxes, and any reserves against assets.
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9.7 Other Debts. The Borrower shall not and shall not permit any Subsidiary
to have outstanding or incur any Indebtedness (other than those to the Bank), or
become liable for the liabilities of others, without the Bank's written consent.
This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Additional capital lease obligations for the acquisition of fixed
assets not to exceed Fifteen Million Dollars ($15,000,000) in the
aggregate.
(e) Indebtedness of Borrower to any of its wholly-owned Subsidiaries,
and any wholly-owned Subsidiary of Borrower may become and remain liable
with respect to Indebtedness to Borrower or other wholly-owned Subsidiaries
of Borrower.
(f) Indebtedness described in Schedule 9.7 attached hereto.
(g) Indebtedness secured by the Property and all improvements thereon:
provided that in connection with the incurrence of such indebtedness,
Facility No. Two and Facility No. Three have been paid in full and have
terminated.
For purposes hereof "Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to capital leases that is properly classified as a liability on a balance sheet
in conformity with generally accepted accounting principles, (iii) notes payable
and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation owed for all or
any part of the deferred purchase price of property or services (excluding any
such obligations incurred under ERISA), which purchase price is (a) due more
than six months from the date of incurrence of the obligation in respect thereof
or (b) evidenced by a note or similar written instrument, and (v) all
indebtedness secured by any lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person.
9.8 Other Liens. The Borrower shall not, and shall not permit any
Subsidiary to create, assume, or allow any security interest or lien (including
judicial liens) on property the Borrower or any Subsidiary now or later owns,
except: (a) deeds of trust and security agreements in favor of the Bank; (b)
liens for taxes, assessments, levies or other governmental charges not yet due
(subject to applicable grace periods) or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower or such Subsidiary, as the case may be,
in accordance with generally accepted accounting principles; (c) carriers',
warehousemen's, mechanics', landlords', vendor's, materialmen's, repairmen's,
sureties' or other like liens arising in the ordinary course of business (or
deposits to obtain the release of any such lien); (d) pledges or deposits in
connection with worker's compensation, unemployment insurance and other social
security legislation; (e) deposits to secure insurance in the ordinary course of
business, the performance of bids, tenders, contracts (other than contracts for
the payment of money), leases, licenses, franchises, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (f) easements,
rights-of-way, covenants, reservations,
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exceptions, encroachments, zoning and similar restrictions and other similar
encumbrances or title defects incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower and its
Subsidiaries taken as a whole; and (g) liens securing Indebtedness permitted
under Section 9.7(d), (f) or (g).
9.9 Capital Expenditures. Not to spend more than the amounts specified
below during any fiscal year specified below to acquire fixed assets.
Amount Fiscal Year
------------ -----------
$100,000,000 Ending on or about January 31, 2002
$ 62,500,000 Ending on or about January 31, 2003
$ 72,500,000 Ending on or about January 31, 2004
9.10 Dividends. Not to declare or pay any dividends on any of its shares,
and not to purchase, redeem or otherwise acquire for value any of its shares, or
create any sinking fund in relation thereto, except:
(a) dividends payable in its capital stock;
(b) restricted stock repurchases in accordance with any of Borrower's
stock plans, not in excess of Ten Thousand Dollars ($10,000) in any one
fiscal year.
(c) capital stock repurchases not in excess of Fifteen Million Dollars
($15,000,000) in the aggregate, provided that after giving effect to such
stock repurchase, Borrower's Fixed Charge Coverage Ratio is at least
1.10:1.0 and no Event of Default under this Agreement has occurred and is
continuing.
9.11 Loans to Officers or Affiliates. Not to make any loans, advances or
other extensions of credit (including extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services) to any of the executives, officers, directors or shareholders (or
any relatives of any of the foregoing), in excess of One Million Dollars
($1,000,000.00) in the aggregate outstanding at any time, or to any affiliated
entities of the Borrower or any Subsidiary, except for intercompany loans
permitted under Section 9.7(e).
9.12 Completion and Maintenance of Improvements. Borrower shall promptly
commence construction of the improvements on the Property, and diligently
continue construction of said improvements to completion, in a good and
workmanlike manner and in accordance with sound building practices in all
material respects. Construction of the improvements must be completed in all
material respects on or before the Facility No. Two Expiration Date. Borrower
shall maintain the Property and the improvements in good condition and repair in
all material respects, excepting ordinary wear and tear.
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9.13 Compliance with Law. Borrower shall comply with all existing and
future laws, regulations, orders, building restrictions and requirements of, and
all agreements with and commitments to, all governmental, judicial and legal
authorities having jurisdiction over the Property, the improvements and
Borrower's business and with all recorded covenants and restrictions affecting
the Property, except where the failure to comply will not have a material
adverse effect on the Borrower and its Subsidiaries taken as a whole.
9.14 Permits, Licenses and Approvals. Borrower shall properly obtain,
comply with and keep in effect all permits, licenses and approvals which are
required to be obtained from governmental bodies in order to construct, occupy,
operate, market and lease or sell the Improvements, except where the failure
will not have a material adverse effect on the Borrower and its Subsidiaries,
taken as a whole. Borrower shall promptly deliver copies of all such permits,
licenses and approvals to Bank upon Bank's request.
9.15 Site Visits.
(a) Borrower shall allow Bank access to the Property at any reasonable
time, after giving reasonable notice to Borrower, for the purposes of
performing an appraisal and observing the construction work of the
improvements. Bank will make reasonable efforts during any site visit,
observation or testing conducted pursuant to this paragraph to avoid
interfering with Borrower's use of the Property.
(b) Bank is under no duty to visit the Property, or the construction
site or supervise or observe any construction activity or examine any books
or records and Bank shall not incur any obligation or liability by reason
of not making any such inspection or inquiry. Any site visit, observation
or examination by Bank shall be solely for the purposes of preserving
Bank's rights under this Agreement. No site visit, observation or testing
or any report or findings made as a result thereof ("Environmental Report")
(i) will result in a waiver of any default of Borrower; (ii) impose any
liability on Bank; or (iii) be a representation or warranty of any kind
regarding the Property (including its condition or value or compliance with
any laws) or the Environmental Report (including its accuracy or
completeness). In the event Bank has a duty or obligation under applicable
laws, regulations or other requirements to disclose an Environmental Report
to Borrower or any other party, Borrower authorizes Bank to make such a
disclosure. Borrower further understands and agrees that any Environmental
Report or other information regarding a site visit, observation or testing
that is disclosed to Borrower by Bank or its agents and representatives is
to be evaluated (including any reporting or other disclosure obligations of
Borrower) by Borrower without advice or assistance from Bank.
9.16 Protection Against Lien Claims. Borrower shall promptly pay or
otherwise discharge all claims and liens for labor done and materials and
services furnished to the Property, subject to Borrower's right to contest in
good faith any claim or lien, provided that it does so diligently and
establishes appropriate reserves in accordance with generally accepted
accounting principles. Upon Bank's request for any claim or lien in excess of
Five Hundred Thousand Dollars ($500,000), Borrower shall promptly provide a
bond, cash deposit or other security satisfactory to Bank.
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9.17 Notices to Bank. To promptly notify the Bank in writing of Borrower's
knowledge of:
(a) any lawsuit over One Million Dollars ($1,000,000) against the
Borrower or any Subsidiary.
(b) any substantial dispute involving a claim of Five Hundred Thousand
Dollars ($500,000) or more between the Borrower or any Subsidiary and any
government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the business condition (financial
or otherwise), operations, properties or prospects of the Borrower and its
Subsidiaries taken as a whole, or in the Borrower's ability to repay the
credit.
(e) any change in the Borrower's name, legal structure, place of
business, or chief executive office if the Borrower has more than one place
of business.
(f) the receipt of any notice or communication which could reasonably
be expected to have a material adverse effect on the financial condition or
operations of the Borrower and its Subsidiaries taken as a whole, regarding
(i) any threatened or pending investigation or enforcement action by any
governmental authority or any other claim relating to health, safety, the
environment, or any hazardous substances with regard to the property,
activities, or operations of the Borrower or any Subsidiary or (ii) any
belief or suspicion of the Borrower or any Subsidiary that hazardous
substances exist on or under the real property of the Borrower or any
Subsidiary.
(g) any actual contingent liabilities of the Borrower (or any
guarantor), and any such contingent liabilities which are reasonably
foreseeable, where such liabilities are in excess of One Million Dollars
($1,000,000) in the aggregate and have not otherwise been disclosed in
writing to the Bank.
9.18 Books and Records. To maintain, and cause each of its Subsidiaries to
maintain, adequate books and records.
9.19 Audits. To allow the Bank and its agents to inspect the Borrower's and
its Subsidiaries properties and examine, audit, and make copies of books and
records at any reasonable time. Prior to the occurrence and continuance of any
Event of Default, the Bank agrees to give reasonable prior notice to Borrower of
its desire to conduct any inspection or audit. If any of the Borrower's or any
Subsidiaries properties, books or records are in the possession of a third
party, the Borrower authorizes that third party to permit the Bank or its agents
to have access to perform inspections or audits and to respond to the Bank's
requests for information concerning such properties, books and records.
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9.20 Compliance with Laws. To comply, and cause each Subsidiary to comply,
with the laws (including any fictitious name statute), regulations, and orders
of any government body with authority over the Borrower's business and the
business of each Subsidiary, except where the failure to comply will not have a
material adverse effect on the Borrower and its Subsidiaries taken as a whole.
9.21 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower and each Subsidiary now has, except
where the failure to maintain the foregoing will not have a material adverse
effect on the Borrower and its Subsidiaries taken as a whole.
9.22 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties and the properties of its
Subsidiaries in good working condition, except where the failure to do so will
not have a material adverse effect on the Borrower and its Subsidiaries taken as
a whole.
9.23 Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.
9.24 Insurance.
(a) General Business Insurance. To maintain insurance of the kind
customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses
covering property damage (including loss of use and occupancy) to any of
the Borrower's and its Subsidiaries properties, public liability insurance
including coverage for contractual liability, product liability and
workers' compensation, and any other insurance which is usual for the
Borrower's and its Subsidiaries businesses.
(b) Evidence of Insurance. Upon the request of the Bank, to deliver to
the Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
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9.25 Additional Negative Covenants. The Borrower shall not and shall not
permit any Subsidiary to, without the Bank's written consent:
(a) engage in any business activities substantially different from the
present business of the Borrower and its Subsidiaries.
(b) liquidate or dissolve the business of the Borrower or any
Subsidiary, except with or into Borrower or its wholly-owned Subsidiaries.
(c) enter into any consolidation, merger, or other combination, or
become a partner in a partnership, a member of a joint venture, or a member
of a limited liability company involving a capital contribution in excess
One Million Dollars ($1,000,000) in any fiscal year, except any Subsidiary
of the Borrower may be merged with or into the Borrower or any Subsidiary
of Borrower and in connection with any acquisitions permitted under Section
9.26.
(d) sell, assign, lease, transfer or otherwise dispose of any assets
for less than fair market value, or enter into any agreement to do so,
except as permitted in (f) below. For the purpose of this Paragraph, "fair
market value" shall mean the fair market value of such assets as reasonably
determined by the Board of Directors of Borrower, provided that at the time
of such disposition no such Event of Default shall exist or shall result
from such disposition.
(e) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the business or the assets of the Borrower and its
Subsidiaries, taken as a whole.
(f) except as permitted by (d) above, sell, assign, lease, transfer or
otherwise dispose of any assets, or enter into any agreement to do so,
except:
(i) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(ii) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;
(g) enter into any sale and leaseback agreement covering any of its
fixed assets other than a financing of the Property that would be permitted
under Section 9.7(g); and
(h) voluntarily suspend all or a substantial part of its business
operations.
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9.26 Acquisitions.
(a) The Borrower shall not, and shall not permit any Subsidiary to,
without the Bank's written consent, acquire or purchase a business or all
or substantially all of its assets for a consideration including assumption
of direct or contingent debt, and the up-front purchase price (including
stock and cash portions), in excess of Five Million Dollars ($5,000,000) in
any fiscal year.
(b) Notwithstanding anything to the contrary set forth herein,
Borrower shall not, and shall not use the proceeds of any credit facilities
under this Agreement, to purchase or otherwise acquire any shares of any
corporation or association or any interest in any other business entity (i)
if such entity is not engaged in a business similar to the businesses of
the Borrower and its Subsidiaries and (ii) if such purchase or acquisition
is opposed by such entity's board of directors or other governing body or
by a shareholder or shareholders controlling a significant portion of the
voting shares of such entity or to make such purchase or acquisition with
knowledge of facts or circumstances that such purchase or acquisition is
likely to be hostile or unfriendly.
(c) Prior to the consummation of any acquisition otherwise permitted
under this Section 9.26, Bank shall receive the following, in form and
substance satisfactory to Bank: (aa) a certificate of the Borrower stating
(i) that no Event of Default has occurred and is continuing, and (ii)
information and computations (in sufficient detail) to establish compliance
by the Borrower with all financial covenants after giving effect to such
acquisition.
9.27 ERISA Plans. With respect to a Plan subject to Title IV of ERISA, to
give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(c) of
ERISA for which the PBGC requires 30-day notice.
(b) Any action by the Borrower or any ERISA Affiliate to terminate or
withdraw from a Plan or the filing of any notice of intent to terminate
under Section 4041 of ERISA.
(c) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
9.28 Compliance with Environmental Requirements. With regard to the
property, activities, or operations of the Borrower and its Subsidiaries, to
comply and cause each Subsidiary to comply, with the recommendations of any
qualified environmental engineer or orders or directions issued by any
governmental authority relating to health, safety, the environment, or any
hazardous substances including those orders or directives requiring the
investigation, clean-up, or removal of hazardous substances, except where the
failure to comply will not have a material adverse effect on the Borrower and
its Subsidiaries taken as a whole.
9.29 Paydown Period. To reduce the amount of advances outstanding under
Facility No. One to zero for a period of at least 30 consecutive days in each
line-year. "Line-year" means the period between the date of this Agreement and
December 31, 2001, and each subsequent one-year period (if any). For purposes of
this paragraph, "advances" does not include undrawn amounts of outstanding
letters of credit or shipside bonds.
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10. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
cost of in-house counsel and staff). The indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. Notwithstanding anything to the contrary
herein, the Borrower shall not have any obligation hereunder to indemnify the
Bank for any loss or liability resulting from the gross negligence or willful
misconduct of the Bank. "Hazardous substances" means any substance, material or
waste that is or becomes designated or regulated as "toxic," "hazardous,"
"pollutant," or "contaminant" or a similar designation or regulation under any
federal, state or local law (whether under common law, statute, regulation or
otherwise) or judicial or administrative interpretation of such, including
without limitation petroleum or natural gas. This indemnity will survive
repayment of the Borrower's obligations to the Bank.
11. DEFAULT
If any of the following events ("Event of Default") occurs and is
continuing, the Bank may do one or more of the following: declare the Borrower
in default, stop making any additional credit available to the Borrower, and
require the Borrower to repay its entire debt immediately and without prior
notice. If an event of default occurs under the paragraph entitled "Bankruptcy,"
below, with respect to the Borrower, then the entire debt outstanding under this
Agreement will automatically be due immediately.
11.1 Failure to Pay. The Borrower fails to make any principal payment when
due under this Agreement or fails to make a payment of interest, any fee or
other sum under this Agreement within five (5) days of the date when due.
11.2 False Information. The Borrower or any guarantor has given the Bank
information or representations that are false or misleading in any material
respect.
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11.3 Bankruptcy. The Borrower, any guarantor or any Subsidiary files a
bankruptcy petition, a bankruptcy petition is filed against the Borrower or any
guarantor or any Subsidiary or the Borrower or any guarantor or any Subsidiary
makes a general assignment for the benefit of creditors. The default will be
deemed cured if any bankruptcy petition filed against the Borrower or any
guarantor or any Subsidiary is dismissed within a period of 30 days after the
filing; provided, however, that the Bank will not be obligated to extend any
additional credit to the Borrower during that period.
11.4 Receivers. A receiver or similar official is appointed for the
Borrower's or any guarantor's or any Subsidiary's business, or the business is
terminated, or any guarantor is liquidated or dissolved.
11.5 Judgments. Any judgments or arbitration awards are entered against the
Borrower or any guarantor or any Subsidiary, or the Borrower or any guarantor or
any Subsidiary enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of One Million Dollars
($1,000,000) or more in excess of any insurance coverage and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days.
11.6 Government Action. Any government authority takes action that
materially adversely affects the financial condition of the Borrower and its
Subsidiaries, taken as a whole, or their ability to repay the credit.
11.7 Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the business condition (financial or otherwise),
operations, properties or prospects of the Borrower and its Subsidiaries, taken
as a whole, or their ability to repay the credit.
11.8 Cross-default. Any default occurs and is continuing under any
agreement in connection with any credit the Borrower or any guarantor or any of
the Borrower's Subsidiaries has obtained from anyone else or which the Borrower
or any guarantor or any of the Borrower's Subsidiaries has guaranteed, in the
aggregate amounts of $1,000,000 or more, if the effect of such default is to
cause, or to permit the holder or holders of that indebtedness to cause, that
indebtedness to become or be declared due and payable prior to its stated
maturity (upon the giving or receiving of notice, lapse of time, both, or
otherwise).
11.9 Default under Master Guaranty. The Master Guaranty is violated or no
longer in effect.
11.10 Other Bank Agreements. The Borrower or any guarantor or any
Subsidiary fails to meet the conditions of, or fails to perform any material
obligation under any other agreement the Borrower or any guarantor or any
Subsidiary has with the Bank or any affiliate of the Bank, and such default
shall not have been remedied or waived within 30 days after receipt by the
Borrower of written notice from the Bank of such default.
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11.11 ERISA Plans. Any one or more of the following events occurs, and
continues unremedied for more than thirty (30) days, with respect to a Plan of
the Borrower subject to Title IV of ERISA, provided such event or events could
reasonably be expected, in the judgment of the Bank, to subject the Borrower to
any tax, penalty or liability (or any combination of the foregoing) which, in
the aggregate, could have a material adverse effect on the financial condition
of the Borrower and its Subsidiaries taken as a whole:
(a) A reportable event shall occur under Section 4043(c) of ERISA with
respect to a Plan.
(b) Any Plan termination (or commencement of proceedings to terminate
a Plan) or the full or partial withdrawal from a Plan by the Borrower or
any ERISA Affiliate.
11.12 Other Breach Under Agreement.
(a) Failure of Borrower to perform or comply with any term or
condition contained in Sections 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9,
9.10, 9.15, 9.25, 9.26 or 9.29 of this Agreement; or
(b) Borrower shall default on the performance of or compliance with
any term contained in this Agreement, other than any such term referred to
in any other subsection of this Section 11, and such default shall not have
been remedied or waived within 30 days after receipt by Borrower of written
notice from the Bank of such default; provided, however, that the Bank will
not be obligated to extend any additional credit to the Borrower during
that period.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
Except as otherwise stated in this Agreement, all financial information provided
to the Bank and all financial covenants will be made in accordance with
accounting principles applied consistently with those applied in the preparation
of the Borrower's financial statements dated February 4, 2001, except to the
extent changes are required in accordance with generally accepted accounting
principles.
12.2 California Law. This Agreement is governed by California law.
12.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees; provided
that such actual or potential participants or assignees shall agree to treat all
financial information exchanged as confidential. If a participation is sold or
the loan is assigned, the purchaser will have the right of set-off against the
Borrower.
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12.4 Arbitration and Waiver of Jury Trial
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, whether arising in contract, tort
or by statute, including but not limited to controversies or claims that
arise out of or relate to: (i) this Agreement (including any renewals,
extensions or modifications); or (ii) any document related to this
Agreement (collectively a "Claim").
(b) At the request of the Borrower or the Bank, any Claim shall be
resolved by arbitration in accordance with the Federal Arbitration Act
(Title 9, United States Code) (the "Act"). The Act will apply even though
this Agreement provides that it is governed by the law of a specified
state.
(c) Arbitration proceedings will be determined in accordance with the
Act, the rules and procedures for the arbitration of financial services
disputes of J.A.M.S./Endispute or any successor thereof ("J.A.M.S."), and
the terms of this paragraph. In the event of any inconsistency, the terms
of this paragraph shall control.
(d) The arbitration shall be administered by J.A.M.S. and conducted in
any state where the Bank office originating the Indebtedness of the
Borrower hereunder is located. All Claims shall be determined by one
arbitrator; however, if the Claim is in excess of Five Million U.S. Dollars
($5,000,000), upon the request of any party, the Claim shall be decided by
three arbitrators. All arbitration hearings shall commence within 90 days
of the demand for arbitration and close within 90 days of commencement, and
the award of the arbitrator(s) shall be issued within 30 days of the close
of the hearing. However, the arbitrator(s), upon a showing of good cause,
may extend the commencement of the hearing for up to an additional 60 days.
The arbitrator(s) shall provide a concise written statement of reasons for
the award. The arbitration award may be submitted to any court having
jurisdiction to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any
Claim is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis. For purposes of the application of the statute
of limitations, the service on J.A.M.S. under applicable J.A.M.S. rules of
a notice of claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable
shall be determined by the arbitrator(s). The arbitrator(s) shall have the
power to award legal fees pursuant to the terms of this Agreement.
(f) This paragraph does not limit the right of the Borrower or the
Bank to: (i) exercise self-help remedies, such as but not limited to,
setoff, (ii) initiate judicial or nonjudicial foreclosure against any real
or personal property collateral, (iii) exercise any judicial or power of
sale rights, or (iv) act in a court of law to obtain an interim remedy,
such as but not limited to, injunctive relief, writ of possession or
appointment of a receiver, or additional or supplementary remedies.
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(g) The procedure described above will not apply if the Claim, at the
time of the proposed submission to arbitration, arises from or relates to
an obligation to the Bank secured by real property located in California.
In this case, both the Borrower and the Bank must consent to submission of
the Claim to arbitration. If both parties do not consent to arbitration,
the Claim will be resolved as follows: The Borrower and the Bank will
designate a referee (or a panel of referees) selected under the auspices of
J.A.M.S. in the same manner as arbitrators are selected in J.A.M.S.
administered proceedings. The designated referee(s) will be appointed by a
court as provided in California Code of Civil Procedure Section 638 and the
following related sections. The referee (or the presiding referee of the
panel) will be an active attorney or a retired judge. The award that
results from the decision of the referee(s) will be entered as a judgment
in the court that appointed the referee, in accordance with the provisions
of California Code of Civil Procedure Sections 644 and 645.
(h) The filing of a court action is not intended to constitute a
waiver of the right of the Borrower or the Bank, including the suing party,
thereafter to require submittal of the Claim to arbitration.
(i) By agreeing to binding arbitration, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury in respect of
any claim. Furthermore, without intending in any way to limit this
agreement to arbitrate, to the extent any claim is not arbitrated, the
parties irrevocably and voluntarily waive any right they may have to a
trial by jury in respect of such claim. This provision is a material
inducement for the parties entering into this Agreement.
12.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
12.6 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house counsel.
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12.7 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the
Bank and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and
the Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete
and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
12.8 Indemnification. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, and (c) any litigation or proceeding related to or
arising out of this Agreement, any such document, or any such credit; provided
that this Section 12.8 shall not apply to loss, liability, damages, judgments
and costs of any kind resulting from the gross negligence or willful misconduct
of the Bank. This indemnity includes but is not limited to attorneys' fees
(including the allocated cost of in-house counsel). This indemnity extends to
the Bank, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys, and assigns. This indemnity will
survive repayment of the Borrower's obligations to the Bank. All sums due to the
Bank hereunder shall be obligations of the Borrower, due and payable immediately
without demand.
12.9 Confidentiality. The Bank shall hold all nonpublic information
obtained pursuant to the requirements of this Agreement from the Borrower in
accordance with such Bank's customary procedures for handling confidential
information of this nature and in accordance with safe and sound lending
practices, and shall use such nonpublic information only in connection with the
negotiation, execution, administration, enforcement, assignment and
participation of the transactions contemplated hereunder and the matters
contemplated hereby and by the other loan documents or in connection with other
business now or hereafter existing or contemplated with the Borrower or any of
its Subsidiaries, provided that the Bank in any event may make disclosure (a) if
such information was or becomes generally available to the public other than by
disclosure by the Bank, (b) was or becomes available on from a non-confidential
basis from a source other than the Borrower, (c) to any of its legal or
financial advisors or as reasonably required by a bona fide offeree, transferee
or participant in connection with any contemplated transfer or participation or
any recipient reasonably acceptable to the Borrower or as required or requested
by an governmental or regulatory agency or representative thereof or pursuant to
legal process or other requirement of law or order or as reasonably required in
any litigation to which the Bank is a party, (d) to the extent reasonably
required in connection with the enforcement of this Agreement or any other loan
document and (e) to their affiliates, so long as any such legal or financial
advisor, offeree, transferee or participant or other approved recipient shall be
made aware of the provisions of this Section 12.9 and shall undertake to comply
(and undertake to each of any of its offerees, transferees or participants or
other approved recipient to comply) with this Section 12.9.
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12.10 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Bank and the Borrower may specify from time to time in writing.
12.11 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
12.12 Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
12.13 Commitment Expiration. The Bank's commitment to extend credit under
this Agreement will expire on April 10, 2001, unless this Agreement and any
documents required by this Agreement have been signed and returned to the Bank
on or before that date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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This Agreement is executed as of the date stated at the top of the first page.
Bank of America, N.A. Pacific Sunwear of California, Inc.
By: /s/ XXXX X. XXXXXXXXX By: /s/ XXXX X. XXXXXX
----------------------------------- ----------------------------------
Name: Xxxx X. Xxxxxxxxx Name: Xxxx X. Xxxxxx
Title: Vice President Title: Chairman of the Board and
Chief Executive Officer
Address where notices to By: /s/ XXXX X. XXXXXX
the Bank are to be sent: ----------------------------------
000 Xxxxx Xxxxxxxxx, 0xx Xxxxx Name: Xxxx X. Xxxxxx
Xxxxx Xxxx, XX 00000 Title: Sr. Vice President, Chief
Executive Officer, and
Secretary
Address where notices to the Borrower
are to be sent:
0000 Xxxx Xx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx and Xxxxx Schools
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