EXH. 10.5.9
BUSINESS LOAN AGREEMENT
This Agreement dated as of October 29, 1999, is between Bank of America, N.A.
(the "Bank") and The Wet Seal, Inc. (the "Borrower").
1. FACILITY NO. 1 : 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. 1") to the Borrower. The amount of the line
of credit (the "Facility No. 1 Commitment") is Fifty Million and 00/100
Dollars ($50,000,000.00).
(b) This is a revolving line of credit providing for cash advances, letters
of credit, acceptances, shipside bonds and air releases. During the
availability period, the Borrower may repay principal amounts and reborrow
them.
(c) Each advance must be for at least Five Hundred Thousand and 00/100
Dollars ($500,000.00), or for the amount of the remaining available line
of credit, if less.
(d) The Borrower agrees not to permit the sum of (i) the outstanding
principal balance of advances under the line of credit, (ii) the
outstanding amounts of any letters of credit, including amounts drawn on
letters of credit and not yet reimbursed and including any outstanding
deferred payment obligation of the Bank under any letter of credit that
is not yet reimbursed (collectively, "L/C Outstandings"), and (iii) the
amount of all outstanding acceptances, shipside bonds and air releases, to
exceed the Facility No. 1 Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date
of this Agreement and July 1, 2001 (the "Facility No. 1 Expiration Date")
unless the Borrower is in default.
1.3 INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described below,
the interest rate is the Bank's Reference Rate.
(b) The Reference Rate is the rate of interest publicly announced from time
to time by the Bank in San Francisco, California, as its Reference Rate.
The Reference 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 Reference Rate.
Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in
the Bank's Reference Rate.
1.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on September 1, 1999, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) Subject to the provisions of Paragraph 12.12, 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. 1 Expiration
Date. Any interest period for an optional interest rate (as described
below) shall expire no later than the Facility No. 1 Expiration Date.
1.5 OPTIONAL INTEREST RATES. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect the optional interest rates
listed below during interest periods agreed to by the Bank and the Borrower.
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 rates are available:
(a) the LIBOR Rate plus 1.5 percentage points.
1.6 LETTERS OF CREDIT.
(a) This line of credit may be used for financing:
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(i) commercial letters of credit in the name of the Borrower, WSCC
Buying Group, Inc. ("WSCC") or Wet Seal Catalog, Inc. ("WSCI")
with a maximum maturity of 180 days. Each commercial letter of
credit will require drafts payable at sight or up to 90 days
after sight, or which may be deferred payment letters of credit,
with payment thereunder due up to 90 days after presentation of
conforming documents; provided, however, that (A) no commercial
letter of credit may expire, and no deferred payment obligation
of the Bank under any such letter of credit may mature, later
than 120 days after the Facility No. 1 Expiration Date, and (B)
the combined tenor of each commercial letter of credit and any
payment obligation of the Bank thereunder may not exceed 270 days.
(ii) standby letters of credit with a maximum maturity of 360
days but not to extend more than 120 days beyond the Facility No. 1
Expiration Date. The standby letters of credit may include a
provision providing that the maturity date will be automatically
extended each year for an additional year unless the Bank gives
written notice to the contrary; provided, however, that each letter
of credit shall include a final maturity date which shall not be
subject to automatic extension.
(iii) The Borrower agrees not to permit the aggregate amount of all
acceptances, shipside bonds, air releases and L/C Outstandings with
respect to commercial letters of credit to exceed at any one time
the sum of Fifty Million and 00/100 Dollars ($50,000,000.00).
(iv) The Borrower agrees not permit the aggregate amount of L/C
Outstandings with respect to standby letters of credit to exceed
Twenty Million and 00/100 Dollars ($20,000,000.00).
(v) All letters of credit outstanding from the Bank for the account of
the Borrower, WSCC or WSCI as of the date of this Agreement shall
be deemed to the outstanding under this Agreement, and shall not 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 there is a default 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. Without limiting the foregoing,
no letter of credit may be issued to support the Borrower's
obligations under workers' compensation laws or regulation.
(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 issuance and/or other 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 one of the following
percentages of the outstanding undrawn amount of each standby letter
of credit, as applicable: 1.5% per annum if the face amount of the
letter of credit is less than One Million and 00/100 Dollars
($1,000,000.00); 1.25% per annum if the face amount of the letter of
credit is equal to or greater than One Million and 00/100 Dollars
($1,000,000.00) but less than Ten Million and 00/100 Dollars
($10,000,000.00); and .875% per annum if the face amount of the
letter of credit is equal to or greater than Ten Million and 00/100
Dollars ($10,000,000.00). Each fee will be payable annually in
advance, calculated on the basis of the face amount outstanding on
the day the fee is calculated, provided, that in no event shall the
fee payable with respect to any standby letter of credit be less
than $400 per annum. If there is a default under this Agreement,
at the Bank's option, the amount of the fee shall be increased to
2% per annum over the fee that would otherwise be applicable,
effective starting on the day the Bank provides notice of the
increase to the Borrower.
1.7 ACCEPTANCES. This line of credit may be used for financing acceptance
transactions in the name of the Borrower, WSCC or WSCI, subject to Paragraph
1.6(a)(iii) and the following conditions:
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(i) Acceptances shall have a maximum tenor of 90 days but not to extend
more than 90 days beyond the Facility No.1 Expiration Date.
(ii) The combined tenor of each commercial letter of credit and any
acceptance created thereunder may not exceed 270 days.
The Borrower agrees:
(a) any sum owed to the Bank under an acceptance 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 there is a default under this Agreement, to immediately prepay and
make the Bank whole for any outstanding acceptances.
(c) the issuance of any acceptance 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 standard form of agreement for acceptances, and to
pay any issuance and/or other fees that the Bank notifies the Borrower
will be charged for issuing and processing acceptances for the Borrower.
(e) to allow the bank to automatically charge its checking amount for
applicable fees, discounts, and other charges.
1.8 SHIPSIDE BONDS AND AIR RELEASES. Subject to Paragraph 1.6(a)(iii) of
the Agreement, this line of credit up to a maximum face value outstanding of
Fifty Million and 00/100 Dollars ($50,000,000.00) may be used for financing
shipside bonds and air releases in the name of the Borrower, WSCC or WSCI.
The Borrower agrees:
(a) any sum owed to the Bank under a shipside bond or an air release 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 there is a default under this Agreement, to immediately prepay and
make the Bank whole for any outstanding shipside bonds and air releases.
(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/or air releases, and to pay any issuance
and/or other fees that the Bank notifies the Borrower will be charged
for issuing and processing shipside bonds or air releases for the
Borrower.
(e) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
2. FACILITY NO. 2 : TERM LOAN AMOUNT AND TERMS
2.1 OUTSTANDING TERM LOAN. There is outstanding from the Bank to the
Borrower a term loan in the original principal amount of Ten Million and
00/100 Dollars ($10,000,000.00). This term loan is currently subject to the
terms and conditions of Facility No. 2 of the Business Loan Agreement dated
March 9, 1998. As of the date of this Agreement, the term loan shall be
deemed to be outstanding as Facility No. 2 under this Agreement, and shall be
subject to all the terms and conditions stated in this Agreement.
2.2 INTEREST RATE. Unless the Borrower elects an optional interest rate as
described below, the interest rate is the Bank's Reference Rate.
2.3 REPAYMENT TERMS.
(a) The Borrower will pay all accrued but unpaid interest on the last day of
each calendar month and upon payment in full of the principal of the
loan.
(b) Subject to the provisions of Paragraph 12.12, the Borrower will
repay principal in successive quarterly installments of Five Hundred
Thousand and 00/100 Dollars ($500,000.00) on the last day of each
January, April, July, and October of each year commencing October 31,
1999. On October 31, 2000, the Borrower will repay the remaining
principal balance plus any interest then due.
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(c) Subject to the provisions of Article 3 of this Agreement, the
Borrower may repay the loan in full or in part at any time in an
amount not less than Five Hundred Thousand and 00/100 Dollars
($500,000.00). The repayment will be applied to the most remote
payment of principal due Facility No. 2.
2.4 OPTIONAL INTEREST RATES. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect the optional interest rates
listed below during interest periods agreed to by the Bank and the Borrower.
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 rates are available.
(a) the LIBOR Rate plus 1.5 percentage points.
3. OPTIONAL INTEREST RATES
3.1 OPTIONAL RATES. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and on (i) the
first day of each month for Facility No. 1; and (ii) the last day of each
month for Facility No. 2 during the interest period. At the end of any
interest period, the interest rate will revert to the rate based on the
Reference 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 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.
3.2 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, four, five, or six 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 the
following:
(i) for interest periods of four months or longer, Five Hundred Thousand
Dollars ($500,000).
(ii) for interest periods of one, two or three months, One Million
Dollars ($1,000,000).
(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 (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
12:00 noon San Francisco 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.
(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
application interest period.
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(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.
4. FEES AND EXPENSES
4.1 FEES
(a) UNUSED COMMITMENT FEE. The Borrower agrees to pay a fee on any unused
portion of Facility No. 1 Commitment less than or equal to Twenty Million
Dollars ($20,000,000), determined by the weighted average credit
outstanding during the specified period. The fee will be calculated at
.20% per year. The calculation of credit outstanding shall include the
undrawn amount of letters of credit. This fee is due on September 30, 1999
and thereafter quarterly in arrears.
(b) WAIVER FEE. If the Bank, at its discretion, agrees to waive or amend
any terms of this Agreement, the Borrower will, at the Bank's option,
pay the Bank a fee for each waiver or amendment in an amount advised by
the Bank at the time the Borrower requests the waiver or amendment.
Nothing in this paragraph shall imply that the Bank is obligated to agree
to any waiver or amendment requested by the Borrower. The Bank may impose
additional requirements as a condition to any waiver or amendment.
4.2 EXPENSES. The Borrower agrees to immediately repay the Bank for
reasonable expenses that include, but are not limited to, filing, recording
and search fees, appraisal fees, title report fees and documentation fees.
4.3 REIMBURSEMENT COSTS.
(a) The Borrower agrees to reimburse the Bank for any 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
attorney's fees, including any allocated costs of the Bank's in-house
counsel.
(b) The Borrower agrees to reimburse the Bank for the cost of periodic
audits of the collateral securing this Agreement, at such intervals as the
Bank may reasonably require. The audits may be performed by employees of
the Bank or by independent auditors.
5. COLLATERAL
5.1 PERSONAL PROPERTY. The Borrower's obligations to the Bank under this
Agreement will be secured by personal property the Borrower now owns or will
own in the future as listed below. The collateral is further defined in
security agreement(s) executed by the Borrower. In addition, all personal
property collateral securing this Agreement shall also secure all other
present and future obligations of the Borrower to the Bank (excluding any
consumer credit covered by the federal Truth in Lending law, unless the
Borrower has otherwise agreed in writing). All personal property collateral
securing any other present or future obligations of the Borrower to the Bank
shall also secure this Agreement.
(a) Stock and other securities as follows: 50 shares of the capital stock of
WSCC.
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Regulation U of the Board of Governors of the Federal Reserve
System places certain restrictions on loans secured by margin stock
(as defined in the Regulation). The Bank and the Borrower shall comply
with Regulation U. If any of the collateral is margin stock, the
Borrower shall provide to the Bank a Form U-1 Purpose Statement,
confirming that none of the proceeds of the loan will be used by buy
or carry any margin stock. If the Borrower has any other loan made for
the purpose of buying or carrying margin stock (purpose loan), then
the collateral securing this loan shall not secure the purpose loan,
and the collateral securing the purpose loan shall not secure this
loan.
For regulatory reasons, the Bank will not accept as collateral
Ineligible Securities while they are being underwritten by Banc of
America Securities LLC, or for thirty days thereafter. 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 Section 24, Seventh) as amended.
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. Each disbursement by the Bank and each
payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;
(b) made for the account of the Bank's branch selected by the Bank from time
to time;
(c) made in immediately available funds, or such other type of funds selected
by the Bank;
(d) 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.
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 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 14580-50086, or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower.
(c) 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 14580-50086, 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 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 3 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.
(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.
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(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. 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 taxes are imposed on any
payments made by the Borrower (including payments under this paragraph), 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.
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 request
or requirement of a regulatory agency which is applicable to all national
banks or a class of all national banks. The costs and losses will be
allocated to the loan in a manner determined by the Bank, using any
reasonable method. 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
default under this Agreement, principal amounts outstanding under this
Agreement will at the option of the Bank bear interest at a rate which is 2
percentage point(s) higher than the rate of interest otherwise provided under
this Agreement. This will not constitute a waiver of any default.
7. CONDITIONS
The Bank must receive the following items, in form and content acceptable to
the Bank, before it is required to extend any credit to the Borrower under
this Agreement:
7.1 AUTHORIZATIONS. Evidence that the execution, delivery and performance
by the Borrower of this Agreement and any instrument or agreement required
under this Agreement have been duly authorized.
7.2 GOVERNING DOCUMENTS. A copy of the Borrower's articles of incorporation.
7.3 SECURITY AGREEMENTS. Signed original security agreements, assignments,
financing statements and fixture filings (together with collateral in which
the Bank requires a possessory security interest), which the Bank requires.
7.4 EVIDENCE OF PRIORITY. Evidence that security interests and liens in
favor of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.
7.5 INSURANCE. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
7.6 PAYMENT OF FEES. Payment of all accrued and unpaid expenses incurred by
the Bank as required by Paragraph 4.3 entitled "Reimbursement Costs."
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7.7 GUARANTIES. Guaranties signed by WSCC and WSCI, each in the amount of
Fifty Five Million Dollars ($55,000,000).
7.8 OTHER ITEMS. Any other items that the Bank reasonably requires.
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.
8.2 AUTHORIZATION. This Agreement, any 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.
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, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.
8.4 GOOD STANDING. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
8.5 NO CONFLICTS. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
8.6 FINANCIAL INFORMATION. All financial and other information that has
been or will be supplied to the Bank, including the Borrower's financial
statement dated as of July 31, 1999, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any guarantor's) financial condition, including all
material contingent liabilities.
(b) in compliance with all government regulations that apply.
Since the date of the financial statement specified above, there has been no
material adverse change in the business condition (financial or otherwise),
operations, properties or prospects of the Borrower (or any guarantor).
8.7 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been
disclosed in writing to the Bank.
8.8 COLLATERAL. All of the collateral pledged by the Borrower to the Bank
pursuant to that certain Pledge Agreement dated as of June 30, 1995 ("Pledge
Agreement") is owned by the Borrower free of any title defects or any liens
or interest of others.
8.9 PERMITS, FRANCHISES. The Borrower 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.
8.10 OTHER OBLIGATIONS. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
8.11 INCOME TAX MATTERS. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.
8.12 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.
8.13 NO EVENT OF DEFAULT. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
8.14 INSURANCE. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the "Covenants" section of this Agreement.
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8.15 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. 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. The Borrower has fulfilled its obligations, if any, under
the minimum funding standards of ERISA and the Code with respect to each
Plan, and has not incurred any liability with respect to any Plan under
Title IV of ERISA.
(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 reasonable be expected to result in a material adverse
effect.
(c) Wish 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.
(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.
(iii) No termination proceeding has been commenced with respect to a
Plan under Section 4042 of ERISA, and 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.
8.16 LOCATION OF BORROWER. 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 Borrower's signature on this Agreement.
8.17 YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive
review and assessment of the Borrower's systems and equipment applications
with respect to the "year 2000 problem" (that is, the inability of computers,
as well as embedded microchips in non-computing devices, to properly perform
date-sensitive functions with respect to certain dates prior to and after
December 31, 1999). Based on that review, the Borrower does not believe the
year 2000 problem, including costs of remediation, will result in a material
adverse change in the Borrower's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit. The
Borrower has developed adequate contingency plans to ensure uninterrupted and
unimpaired business operation in the event of a failure of its own or a third
party's systems or equipment due to the year 2000 problem, including those of
vendors, customers, and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure.
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. To use the proceeds of Facility No. 1 only for working
capital, general corporate purposes (excluding acquisition funding), issuance
of letters of credit and other trade finance products including but not
limited to deferred payment letters of credit, air releases and/or shipside
bonds, and funded or unfunded bankers acceptance.
9.2 FINANCIAL INFORMATION. To provide the following financial information
and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:
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(a) Within 100 days of the Borrower's fiscal year end, the Borrower's annual
financial statements. These financial statements must be audited (with an
opinion not qualified in any manner, including not qualified due to
possible errors generated by financial reporting and related systems due
to the year 2000 problem) by a Certified Public Accountant ("CPA")
acceptable to the Bank. The statements shall be prepared on a
consolidated basis.
(b) Within 45 days of the last day of the first three fiscal quarters, the
Borrower's quarterly financial statements. These financial statements may
be Borrower prepared. The statements shall be prepared on a consolidated
basis (may be contained in 10-Q).
(c) Copies of the Borrower's Form 10-K Annual Report and annual proxy
statement, Form 10-Q Quarterly Report and Form 8-K Current Report, and
each other report the Borrower files with the Securities and Exchange
Commission ("SEC"), within 10 days after the date of filing thereof.
(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 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) Within 80 days of the Borrower's fiscal year end, updated annual
consolidation projections in at least quarterly detail for that fiscal
year and updated annual projections for the then remaining term of
Facility No. 2, in SEC format and in any event in form and detail
acceptable to the Bank.
9.3 LIMITATION ON LOSSES. Not to incur on a consolidated basis a net loss
before taxes and extraordinary items in excess of Three Million Dollars
($3,000,000) for each first and second fiscal quarters of the Borrower.
9.4 MINIMUM NET INCOME. To earn on a consolidated basis net income before
taxes and extraordinary items of at least Three Million Dollars ($3,000,000)
for each third and fourth fiscal quarters of the Borrower.
9.5 OTHER DEBTS. Not to have outstanding or incur or permit WSCC to have
outstanding or incur, any direct or contingent liabilities (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) Operating leases related to retail store locations, whether now existing
or hereafter entered into.
(e) Operating lease obligations not described in subparagraph (9d) that do
not exceed a total amount of Five Million Dollars ($5,000,000) in any
fiscal year for the Borrower and its subsidiaries.
(f) Purchase money indebtedness in an aggregate amount not in excess of
Three Million Dollars ($3,000,000) in each fiscal year for the Borrower
and its subsidiaries.
(g) Guaranties of obligations of WSCC to vendors for merchandise purchased
for the accounts of Borrower and WSCI, so long as such guaranties are
unsupported by a lien, security interest or negative pledge in or on any
asset of Borrower of WSCC.
9.6 OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on all assets and trademarks the Borrower or
WSCC now or later owns except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing to
the Bank.
(d) Purchase money security interest in equipment securing indebtedness
permitted under Paragraph 9.5.
(e) Mechanics liens and other inchoate statutory liens incurred in connection
with the construction of tenant improvements for new retail stores
locations, which are released within 90 days following the completion of
such
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tenant improvements (but in no event later than 120 days following the
attachment thereof), provided that the consolidated obligations of the
Borrower and all of its subsidiaries secured thereby do not exceed Two
Million Dollars ($2,000,000) in the aggregate at any one time, and that no
property of the Borrower or any of its subsidiaries is at any material
risk of loss or forfeiture.
9.7 CAPITAL EXPENDITURES. Not to make capital expenditures to acquire fixed
or capital assets (on a consolidated basis) in an aggregate amount in excess
of Fifty Five Dollars ($55,000,000) for the fiscal year ending on or about
January 31, 2000, and Forty Million Dollars ($40,000,000) for the fiscal year
ending on or about January 31, 2001 and for any of fiscal year thereafter.
9.8 DIVIDENDS. Not to declare or pay any dividends on any of its shares
except dividends payable in capital stock of the Borrower, and not to
purchase, redeem or otherwise acquire for value any of its shares, or create
any sinking fund in relation thereto.
9.9 LOANS TO OFFICERS OR AFFILIATES. Not to make any loans, advances or
other extensions of credit to any of the Borrower's executives, officers,
directors, shareholders, employees or Affiliates (or any relatives of any of
the foregoing), provided that Borrower may enter into transactions (other
than loans) with its Affiliates on any arm's length basis, and may make loans
and advances to executives and officers in the ordinary course of its
business provided that the aggregate outstanding amount thereof is not in
excess of Two Hundred Fifty Thousand Dollars ($250,000) at any time.
"Affiliate" means, as to any person or entity, any other person or entity
which directly or indirectly controls, or is under common control with, or is
controlled by, such person or entity. As used in this definition, "control"
shall mean possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any person or entity that owns,
directly or indirectly, 5% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation
or partnership or other entity, will be deemed to control such corporation,
partnership or other entity.
9.10 OUT OF DEBT PERIOD. To repay any advances in full, and not to draw any
additional advances on Facility No. 1 revolving line of credit, for a period
of at least 60 consecutive days in each fiscal year. For the purposes of this
paragraph "advances" does not include undrawn amounts of outstanding letters
of credit.
9.11 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over One Million Dollars ($1,000,000) against the Borrower
(or any guarantor).
(b) any substantial dispute between the Borrower (or any guarantor) and any
government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's (or any guarantor's )
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
(e) any change in the Borrower's or WSCC's name, legal structure, place of
business, or chief executive office if the Borrower or WSCC has more than
one place of business.
9.12 BOOKS AND RECORDS. To maintain adequate books and records.
9.13 AUDITS. To allow the Bank and its agents to examine, audit, and make
copies of any physical certificates and books and records concerning the
collateral securing this Agreement at any reasonable time. If any of the
collateral, 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 examinations or audits.
9.14 COMPLIANCE WITH LAWS. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over the Borrower's business.
9.15 PRESERVATION OF RIGHTS. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.
9.16 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.
9.17 PERFECTION OF LIENS. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect
its security interests and liens.
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9.18 COOPERATION. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.
9.19 GENERAL BUSINESS INSURANCE. To maintain insurance satisfactory to the
Bank as to amount, nature and carrier covering property damage (including
loss of use and occupancy) to any of the Borrower's 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 business.
9.20 ADDITIONAL NEGATIVE COVENANTS. Not to. without the Bank's written
consent:
(a) engage in, or permit WSCC to engage in, any business activities
substantially different from the Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter, or permit WSCC to enter, into any consolidation, merger, or other
combination, or become or permit WSCC to become a partner in a
partnership, a member of a joint venture, or a member of a limited
liability company.
(d) lease, sell, or otherwise dispose of all or a substantial part of the
Borrower's business, or in any event, lease, sell, or otherwise dispose of
any of the Borrower's assets with a fair market value of more than Two
Million Dollars ($2,000,000) outside of the ordinary course of business at
any one time, provided that this clause (d) shall not prohibit the sale of
merchandise at retail on a "discount" or "sale" basis in a manner
consistent with industry practices.
(e) acquire or purchase a business or its assets for an aggregate
consideration (including assumption of debt), on a consolidated basis,
which exceeds Ten Million Dollars ($10,000,000) in any of the Borrower's
fiscal years.
(f) sell or otherwise dispose of or permit WSCC to sell or otherwise dispose
of any assets for less than fair market value or enter or permit WSCC to
enter into any sale or leaseback agreement covering any of its fixed or
capital assets.
(g) voluntarily suspend or permit WSCC to suspend its business for more than
10 days in any 365 day period.
9.21 ADDITIONAL SUBSIDIARIES
(a) To cause each Subsidiary of the Borrower, concurrently with the
formation or acquisition thereof, to enter into a continuing guaranty of
the obligations and indebtedness of the Borrower under this Agreement in
form and substance acceptable to the Bank.
(b) Concurrently with the formation or acquisition of any Subsidiary, the
Borrower shall cause the delivery of certificates representing 100% of the
equity securities thereof to be delivered to the Bank in pledge to secure
the obligations of the Borrower to the Bank.
(c) Nothing in this Section shall be construed as a consent to the formation
or acquisition of any Subsidiary. As used in this Agreement, the term
"Subsidiary" means any corporation, partnership or business entity, the
majority of the equity securities of which are owned, directly or
indirectly, by the Borrower.
9.22 ASSETS AND LIABILITIES OF SUBSIDIARIES. Not to permit WSCC or any other
present or future Subsidiary of Borrower to have assets in excess of Ten
Thousand Dollars ($10,000), in the aggregate, or liabilities in excess of Ten
Thousand Dollars ($10,000), in the aggregate, at any time, provided that WSCC
may:
(a) incur obligations to the Bank pursuant to continuing guaranties of the
obligations of the Borrower; and
(b) purchase inventory for the account of the Borrower, provided that each
such purchase transaction is immediately liquidated by means of a
corresponding sale to the Borrower for the same price paid for such inventory
by WSCC.
9.23 BANK AS PRINCIPAL DEPOSITORY. To maintain the Bank as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.
9.24 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.
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(c) The commencement of any proceeding with respect to a Plan under Section
4042 of ERISA.
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. "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 occurs, 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 a payment under this
Agreement within 5 days after the date when due.
11.2 LIEN PRIORITY. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this Agreement (or
any guaranty).
11.3 FALSE INFORMATION. The Borrower (or any guarantor) has given the Bank
information or representations that are false or misleading in any material
respect.
11.4 BANKRUPTCY. The Borrower (or any guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower (or any
guarantor) or the Borrower (or any guarantor) 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) 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.
11.5 RECEIVERS. A receiver or similar official is appointed for the
Borrower's (or any guarantor's) business, or the business is terminated.
11.6 LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower (or any guarantor) in an aggregate
amount of Two Million Dollars ($2,000,000) or more in excess of any insurance
coverage.
11.7 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor), or the Borrower (or any guarantor) enters into
any settlement agreements with respect to any litigation or arbitration, in
an aggregate amount of Two Million Dollars ($2,000,000) or more in excess of
any insurance coverage.
11.8 GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's)
financial condition or ability to repay.
11.9 MATERIAL ADVERSE CHANGE. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any guarantor's) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.
11.10 CROSS-DEFAULT. Any default occurs (subject to any appliable grace or
cure period) under any agreement in connection with any credit the Borrower
(or any guarantor) has obtained from anyone else or which the Borrower (or
any guarantor) has guaranteed such agreement or guarantee relates to
indebtedness in the amount of Five Hundred Thousand Dollars ($500,000), and
the default consists of ailing to make a payment when due or gives the other
lender the right to accelerate the obligation.
11.11 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination
agreement, deed of trust, or other document required by this Agreement is
violated or no longer in effect.
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11.12 OTHER BANK AGREEMENTS. The Borrower (or any guarantor) fails to meet
the conditions of, or fails to perform any obligation under any other
agreement the Borrower (or any guarantor) has with the Bank or any affiliate
of the Bank.
11.13 ERISA PLANS. Any one or more of the following events occurs 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:
(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.
11.14 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article. This includes any
failure or anticipated failure by the Borrower to comply with any financial
covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the
Borrower or the Bank. If, in the Bank's opinion, the breach is capable of
being remedied, the breach will not be considered an event of default under
this Agreement for a period of thirty (30) days after the date on which the
Bank gives written notice of the breach to the Borrower; 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.
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. If a
participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrower.
12.4 ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury
to persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent
of the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute
of limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute of
limitations and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
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(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
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 or controversy to arbitration.
If both parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or a panel
of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are
selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or retired judge; and
(iv) The award that results from the decision of the referee (or the
panel) 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) This provision does not limit the right of the Borrower or the Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the
Bank which is secured by real property located in California at the
time of the proposed submission to arbitration, this right is limited
according to the provision above requiring the consent of both the
Borrower and the Bank to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
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 ADMINISTRATION COSTS. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
12.7 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 presentation, 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.
12.8 ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement collectively:
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(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.
12.9 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.
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.
12.10 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 MANDATORY PREPAYMENT. Notwithstanding anything to the contrary
contained in this Agreement, if either of the credit facilities under this
Agreement are terminated for any reason (other than the prepayment of
Facility No. 2 using internally generated cash flow and repayment of loans
under Facility No. 1 (but not using the proceeds of any loans received from
other lenders)), then the entire principal balance of both of the Facilities
provided under this Agreement, together with all accrued interest thereon,
shall be due and payable on the effective date of such termination, provided
that if Facility No. 1 is terminated by reason of the Bank's failure to renew
it, and the Borrower is not then in default under this Agreement, Facility
No. 2 shall be due and payable on the earlier of its maturity date or within
ninety (90) days after the termination of Facility No. 1.
Except for prepayment of Facility No. 2 using internally generated cash flow,
the Borrower's obligations under this Paragraph 12.12 shall arise under every
circumstance in which either of the Facilities is terminated, including
without limitation:
(a) termination resulting from the failure by the Bank to renew Facility
No. 1 beyond any availability period applicable thereto:
(b) prepayment of the principal balance of Facility No. 2; and
(c) termination as otherwise provided or permitted under this Agreement.
12.13 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.
12.14 PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Business
Loan Agreement entered into as of March 9, 1998 between the Bank and the
Borrower, and any credit outstanding thereunder shall be deemed to be
outstanding under this Agreement.
12.15 PLEDGE AGREEMENT AND OTHER DOCUMENTS. The Pledge Agreement shall
remain effective in accordance with its terms, except that the Collateral (as
defined therein) shall consist only of the WSCC stock described in Paragraph
2(II) of the Pledge Agreement.
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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. The Wet Seal, Inc.
X /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ X /s/ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇
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By: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇
Address where notices to the Bank are to be sent:
So. Orange County Regional Commercial Banking X /s/ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ #▇▇▇▇▇ -----------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ By: ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Addresses for Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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