EXHIBIT 10.1
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[LOGO OF BANK OF AMERICA]
BANK OF AMERICA BUSINESS LOAN AGREEMENT
National Trust and Savings Association
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This Agreement dated as of May 7, 1996, is between Bank of America National
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Trust and Savings Association (the "Bank") and Cost Plus, Inc. (the "Borrower").
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 to the Borrower. The amount of the line of credit (the
"Commitment") is equal to the amount indicated for each period specified
below:
Period Amount
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From January 1 through
June 30 of each year $20,000,000
From July 1 through
December 31 of each year $35,000,000
(b) This is a revolving line of credit with a within line facility for letters
of credit. 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 the
line of credit plus the outstanding amounts of any letters of credit,
including amounts drawn on letters of credit and not yet reimbursed, to
exceed the Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date of
this Agreement and May 31, 1998 (the "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 May 31, 1996, 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
Expiration Date.
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(c) Any amount bearing interest at an optional interest rate (as described
below) may be repaid at the end of the applicable interest period, which
shall be no later than the Expiration Date.
1.5 OPTIONAL INTEREST RATES. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect to have all or portions of the line of
credit (during the availability period) bear interest at the rate(s) described
below during an interest period agreed to by the Bank and the Borrower. Each
interest rate is a rate per year. Interest will be paid on the last day of each
interest period, and on the last day of each month 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.
1.6 LIBOR RATE. The Borrower may elect to have all or portions of the
principal balance bear interest at the LIBOR Rate plus 2.0 percentage points.
Designation of a LIBOR Rate portion is subject to the following requirements:
(a) The interest period during which the LIBOR Rate will be in effect will be
one, two, or three 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 Five Hundred
Thousand Dollars ($500,000).
(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 (rounded
upward to the nearest 1/16th of one percent) 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
9:00 a.m. San Francisco time on the LIBOR Banking Day preceding the day on
which the London Rate will be set, as specified above.
(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) Any portion of the principal balance already bearing interest at the LIBOR
Rate will not be converted to a different rate during its interest period.
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(g) 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 London inter-bank
market 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).
(h) 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.
Otherwise, the Bank will not arbitrarily reject an election for a LIBOR
Rate portion if, at the time of such election, the Borrower is in
compliance with all the terms and conditions of this Agreement and there
is no default hereunder.
1.7 LETTERS OF CREDIT. This line of credit may be used for financing
commercial letters of credit with a maximum maturity of 9O days. Each commercial
letter of credit will require drafts payable at sight.
The Borrower agrees:
(a) 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.
(b) if there is a default under this Agreement, to immediately prepay and make
the Bank whole for any outstanding letters of credit.
(c) 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.
(d) to sign the Bank's form Application and Agreement for Commercial Letter of
Credit.
(e) 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.
2. FEES AND EXPENSES
2.1 FEES.
(a) LOAN FEE. The Borrower agrees to pay a Thirty-Four Thousand Three Hundred
Seventy-Five Dollar ($34,375) fee due on the date of this Agreement.
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(b) UNUSED COMMITMENT FEE. The Borrower agrees to pay a fee on any difference
between the Commitment and the amount of credit it actually uses,
determined by the weighted average loan balance maintained during the
specified period. The fee will be calculated at 0.125% per year. This fee
is due on April 30,1996, and quarterly thereafter until the expiration of
the availability period.
2.2 EXPENSES.
(a) The Borrower agrees to immediately repay the Bank for expenses that
include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees and documentation fees.
(b) 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
attorneys' fees, including any allocated costs of the Bank's in-house
counsel.
(c) If there is a default under this Agreement and the Borrower has failed to
cure the same within the cure period, if any, applicable to such default,
the Borrower agrees to reimburse the Bank for the cost of periodic audits
and appraisals of the personal property collateral securing this
Agreement, at such intervals as the Bank may reasonably require after the
occurrence of the default and the expiration of the cure period (if any).
The audits and appraisals may be performed by employees of the Bank or by
independent appraisers.
3. COLLATERAL
3.1 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) Inventory.
(b) Receivables.
4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1 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.
4.2 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.
4.3 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 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.
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(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's account number ________________________, 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 it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions. This indemnity and excuse will survive this
Agreement.
4.4 DIRECT DEBIT (LINE OF CREDIT).
(a) The Borrower agrees that the Bank may create advances under the line of
credit to pay interest and any fees that are due under this Agreement
(including, but not limited to, any fees due under Paragraphs 1.7 and 2.1
of this Agreement).
(b) The Bank will create such advances on the dates the payments become due.
If a due date does not fall on a banking day, the Bank will create the
advance on the first banking day following the due date.
(c) If the creation of an advance under the line of credit causes the total
amount of credit outstanding under the line to exceed the limitations set
forth in this Agreement, the Borrower will immediately pay the excess to
the Bank upon Bank's demand.
4.5 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. 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.
4.6 TAXES. The Borrower will not deduct any taxes from any payments it makes
to the Bank. If any government authority imposes any taxes 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. Upon request by the Bank, 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. However, the Borrower will
not pay the Bank's net income taxes.
4.7 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.
The Borrower's obligations under this paragraph shall be limited to the Bank's
costs and losses arising on or after the date that is 90 days after the date the
Bank sends written notice to the Borrower confirming the Borrower's obligations
under this paragraph and describing in reasonably sufficient detail such costs
and losses.
4.8 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.
4.9 INTEREST ON LATE PAYMENTS. At the Bank's sole option in each instance,
any amount not paid when due under this Agreement (including interest) shall
bear interest from the due date at the Bank's Reference Rate plus 1.0 percentage
point. This may result in compounding of interest.
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4.10 DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, advances under this Agreement will at the option
of the Bank bear interest at a rate per annum which is 2.0 percentage points
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any default.
5. 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:
5.1 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.
5.2 SECURITY AGREEMENTS. Signed original security agreements, assignments and
financing statements (together with collateral in which the Bank requires a
possessory security interest), which the Bank requires.
5.3 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.
5.4 INSURANCE. Evidence of insurance coverage, as required in the "Covenants"
section of this Agreement.
5.5 OTHER ITEMS. Any other items that the Bank reasonably requires.
6. 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.
6.1 ORGANIZATION OF BORROWER. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.
6.2 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.
6.3 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.
6.4 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.
6.5 NO CONFLICTS. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
6.6 FINANCIAL INFORMATION. All financial and other information that has been
or will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's financial condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
6.7 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.
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6.8 COLLATERAL. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others.
6.9 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.
6.10 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.
6.11 INCOME TAX RETURNS. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.
6.12 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.
6.13 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 the Borrower's signature on this Agreement.
7. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
7.1 USE OF PROCEEDS. To use the proceeds of the credit only for the
operations of the Borrower and for working capital and general corporate
purposes.
7.2 FINANCIAL INFORMATION. To provide the following financial information and
statements and such additional information as requested by the Bank from time to
time:
(a) Within 9O days of the Borrower's fiscal year end, the Borrower's annual
financial statements. These financial statements must be audited (with an
unqualified opinion) by one of the accounting firms commonly known as the
"Big 6".
(b) Within 30 days of the period's end, the Borrower's monthly financial
statements. These financial statements may be Borrower prepared. For the
month of January in each year, these monthly financial statements will be
prepared as part of the Borrower's annual financial statements required
under (a) above and may be provided to the Bank together with those annual
statements.
(c) Within the period provided in (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.
(d) An inventory listing within 30 days after the end of each month; the
listing must include a description of the inventory, its retail value, and
such other information as the Bank may require.
(e) Within 45 days of the Borrower's fiscal year end, the Borrower's annual
business plan/budget for the then current fiscal year in form satisfactory
to the Bank.
7.3 TANGIBLE NET WORTH. To maintain tangible net worth equal to at least
Thirty Million Dollars ($30,000,000) from the date of this Agreement through
January 31, 1997; Thirty-Two Million Dollars ($32,000,000) as of February
1, 1997; and thereafter, an amount equal to the sum of the following:
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(a) Thirty Million Dollars ($30,000,000); plus
(b) the sum of 90% of net income after income taxes (without subtracting
losses) earned in the fiscal year ending February 1, 1997.
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like intangibles) plus
debt 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.
Compliance with this financial covenant will be measured as of the end of each
fiscal quarter.
7.4 TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. To maintain a ratio of
total liabilities not subordinated to tangible net worth not exceeding the
amounts indicated as of the end of each fiscal quarter specified below:
Period Ratio
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1st fiscal quarter of each fiscal year 2.0:1.0
2nd fiscal quarter of each fiscal year 2.5:1.0
3rd fiscal quarter of each fiscal year 3.0:1.0
4th fiscal quarter of fiscal year ending
February 1, 1997 1.75:1.0
4th fiscal quarter of fiscal year ending
January 31, 1998 1.50:1.0
"Total liabilities not subordinated" means the sum of current liabilities plus
long term liabilities, excluding debt subordinated to the Borrower's obligations
to the Bank in a manner acceptable to the Bank, using the Bank's standard form.
7.5 COVERAGE RATIO. To maintain a Coverage Ratio of at least 1.1:1.0.
"Coverage Ratio" means the ratio of net income after taxes and before
extraordinary items plus interest expense plus capitalized lease interest
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expense plus depreciation plus amortization to nonfinanced capital expenditures
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plus interest expense plus capitalized lease interest expense plus cash
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dividends paid plus the current portion of long-term liabilities. It is
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provided, however, that the first Two Million Five Hundred Thousand Dollars
($2,500,000) in capital expenditures in the fiscal year ending February 1, 1997,
and the first Three Million Five Hundred Thousand Dollars ($3,500,000) in
capital expenditures in the fiscal year ending January 31, 1998, will be
excluded from the Coverage Ratio calculation. This ratio will be calculated at
the end of each fiscal year. Any non-cash impact on the Borrower's net income
resulting from changes in generally accepted accounting principles; changes in
financial accounting standards promulgated by the Financial Accounting Standards
Board; changes in regulations of the Internal Revenue Service; changes in
accounting rules by the Securities and Exchange Commission; or other non-cash
items outside the control of the Borrower will be excluded from calculation of
this covenant.
7.6 INVENTORY TURN. To maintain an Inventory Turn of at least 2.75:1.0 during
the fiscal year ending February 1, 1997, and at least 2.90:1.0 during the fiscal
year ending January 31, 1998, and thereafter.
"Inventory Turn" means the ratio of cost of goods sold to the average book value
of the Borrower's inventory. This ratio will be calculated at the end of each
month, with the "average book value" equal to the average of the book values of
the Borrower's inventory at the end of that month and each of the 12 immediately
preceding
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months and using the Borrower's cost of goods sold for that month and each of
the 11 immediately preceding months.
7.7 MINIMUM NET INCOME. To earn net income after taxes and extraordinary
items of at least Two Million Dollars ($2,000,000). Compliance with this
financial covenant will be measured at the end of each month, using the results
of that month and each of the 11 immediately preceding months.
7.8 OTHER DEBTS. Not to have outstanding or incur any direct or contingent
debts or capital lease obligations (other than those to the Bank), or become
liable for the debts 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) Debts, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank prior to closing and acceptable
to the Bank.
(e) Additional debts and capital lease obligations for the acquisition of
fixed or capital assets, to the extent permitted under Paragraph 7.10 of
this Agreement. Such debts and obligations may include Purchase Money
Indebtedness. "Purchase Money Indebtedness" means (i) indebtedness for the
payment of all or any part of the purchase price of any fixed or capital
assets, (ii) indebtedness incurred at the time of or within ten (10) days
prior to or after the acquisition of any fixed or capital assets for the
purpose of financing all or any part of the purchase price thereof and
(iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
(f) Additional debts arising from the refinance of existing real property
owned by the Borrower.
(g) Obligations under capital leases of the Borrower's stores and warehouses
entered into in conjunction with the acquisition of fixed or capital
assets permitted under Paragraph 7.10 of this Agreement.
(h) Other unsecured indebtedness incurred in the ordinary course of business.
(i) Indebtedness of any subsidiary of the Borrower to the Borrower incurred in
the ordinary course of business.
7.9 OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower 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 prior to closing and acceptable to the Bank.
(d) Additional purchase money security interests or purchase money liens in
personal or real property acquired after the date of this Agreement which
secure Purchase Money Indebtedness permitted by subparagraph (e) of the
preceding paragraph.
(e) Liens on the refinanced real property which secure indebtedness permitted
by subparagraph (f) of the preceding paragraph.
(f) Liens arising in the ordinary course of the Borrower's business by
operation of law or regulation, but only if payment in respect of such
lien is not yet due.
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(g) Judgment liens in existence less than thirty (30) days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies.
(h) Liens in favor of customs and revenues authorities which secure payment of
customs duties in connection with the importation of goods.
(i) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums arising by the issuer of such policies accepting
installments of premium instead of lump sum payments with respect thereto.
(j) Such minor defects, irregularities, encumbrances, easements, rights of
way, and clouds on title as normally exist with respect to similar
properties and which do not, individually or in the aggregate, materially
impair the property affected thereby or limit its use to the purpose for
which it was acquired.
(k) Landlord's liens arising under lease contracts or by operation of law in
the ordinary course of business which are not delinquent or remain payable
without penalty.
7.10 CAPITAL EXPENDITURES. Not to spend or incur obligations (including the
total amount of capital leases of equipment but excluding capital leases of the
Borrower's stores and warehouses) for more than Ten Million Dollars
($10,000,000) in the fiscal year ending February 1, 1997, and Thirteen Million
Dollars ($13,000,000) in the fiscal year ending January 31, 1998, to acquire
fixed or capital assets. It is provided, however, that in either such fiscal
year the total amount of capital expenditures attributable to indebtedness
(including obligations under capital leases of equipment) incurred by the
Borrower (i.e., the financed capital expenditures) may not exceed 50% of the
total amount of capital expenditures made during such fiscal year.
7.11 MAXIMUM OUTSTANDINGS. Not to permit the principal balance of advances
outstanding under this Agreement to exceed Five Million Dollars ($5,000,000) for
a period of at least 45 consecutive days between December 1 of each year and
March 31 of the next year. For the purposes of this paragraph, "advances" does
not include undrawn amounts of outstanding letters of credit.
7.12 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over One Million Dollars ($1,000,000) against the Borrower.
(b) any substantial dispute between the Borrower and any government
authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's financial condition or
operations.
(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.
7.13 BOOKS AND RECORDS. To maintain adequate books and records.
7.14 AUDITS. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's 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.
7.15 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.
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BUSLA (7/93) -10- T2-0710.doc
7.16 PRESERVATION OF RIGHTS. To maintain and preserve all rights, privileges,
and franchises the Borrower now has.
7.17 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or replacements
to keep the Borrower's properties in good working condition.
7.18 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.
7.19 Cooperation. To take any action requested by the Bank to carry out the
intent of this Agreement.
7.20 INSURANCE.
(a) INSURANCE COVERING COLLATERAL. To maintain all risk property damage
insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to the
Bank. The insurance must be issued by an insurance company acceptable to
the Bank and must include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(b) 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.
(c) 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.
7.21 ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written
consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture, syndicate, or
other combination.
(d) lease, or dispose of all or a substantial part of the Borrower's business
or the Borrower's assets.
(e) acquire or purchase a business or its assets.
(f) sell or otherwise dispose of any assets for less than fair market value,
or enter into any sale and leaseback agreement covering any of its fixed
or capital assets, except for sale and leaseback agreements covering the
Borrower's existing real property located in San Francisco and Modesto.
8. DEFAULT
If any of the following events occur, 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.
8.1 FAILURE TO PAY. The Borrower fails to make a payment under this Agreement
when due.
8.2 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 loan. 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 fifteen (15)
days after the earlier of (a) the date the Borrower knew or should have known of
such breach or (b) the date on which the Bank gives written notice of such
breach to the
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BUSLA (7/93) -11- T2-0710.doc
Borrower; provided, however, that the Bank will not be obligated to extend any
additional credit to the Borrower during that period.
8.3 FALSE INFORMATION. The Borrower knowingly has given the Bank false or
misleading information or representations.
8.4 BANKRUPTCY. The Borrower files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower, or the Borrower makes a general
assignment for the benefit of creditors.
8.5 RECEIVERS. A receiver or similar official is appointed for the Borrower's
business, or the business is terminated.
8.6 LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower in an aggregate amount of Five Million
Dollars ($5,000,000) or more in excess of any insurance coverage.
8.7 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower, or the Borrower enters into any settlement agreements with respect to
any litigation or arbitration, in an aggregate amount of Five Million Dollars
($5,000,000) or more in excess of any insurance coverage.
8.8 GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's financial condition or
ability to repay.
8.9 MATERIAL ADVERSE CHANGE. A material adverse change occurs. "Material
adverse change" means (a) a material impairment of the ability of the Borrower
to perform its payment obligations under this Agreement or any document required
by this Agreement, or (b) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Borrower of this Agreement or any
document required by this Agreement.
8.10 CROSS-DEFAULT. Any default occurs under any agreement in connection with
any credit the Borrower has obtained from anyone else or which the Borrower has
guaranteed and, if there is a cure period applicable to such default, such
default continues beyond the applicable cure period.
8.11 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is no longer in effect or is violated and, if there is a cure period applicable
to such violation, such violation continues beyond the applicable cure period.
8.12 OTHER BANK AGREEMENTS. The Borrower fails to meet the conditions of, or
fails to perform any obligation under any other agreement the Borrower has with
the Bank or any affiliate of the Bank and, if there is a cure period applicable
to such failure, such failure continues beyond the applicable cure period.
8.13 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. 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 fifteen (15) 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.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 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.
9.2 CALIFORNIA LAW. This Agreement is governed by California law.
9.3 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.
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BUSLA (7/93) -12- T2-0710.doc
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.
9.4 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.
(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 a 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.
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BUSLA (7/93) -13- T2-0710.doc
(h) This provision does not limit the right of the Borrower of 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.
9.5 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.
9.6 ADMINISTRATION COSTS. The Borrower shall pay the Bank for all reasonable
costs incurred by the Bank in connection with administering this Agreement.
9.7 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 including
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. As
used in this paragraph, "attorneys' fees" includes the allocated costs of in-
house counsel.
9.8 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; and
(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.
9.9 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.
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BUSLA (7/93) -14- T2-0710.doc
9.10 HEADINGS. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.
9.11 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.
This Agreement is executed as of the date stated at the top of the first page.
[LOGO OF BANK OF AMERICA]
BANK OF AMERICA COST PLUS, INC.
NATIONAL TRUST AND SAVINGS ASSOCIATION
X /s/ W. F. Rodgers X /s/ Alan E. Zimtbaum
---------------------------------- ----------------------------------
By: W.F. Rodgers By: Alan E. Zimtbaum
Title: Vice President Title: Executive Vice President
Chief Financial Officer
ADDRESS WHERE NOTICES TO THE BANK ADDRESS WHERE NOTICES TO THE BORROWER
ARE TO BE SENT: ARE TO BE SENT:
International Trade Banking Office #1768
201 California Street 201 Clay Street
San Francisco, CA 94111 Oakland, CA 94607
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BUSLA (7/93) -15- T2-0710.doc
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[LOGO OF BANK OF AMERICA]
BANK OF AMERICA SECURITY AGREEMENT (RECEIVABLES AND INVENTORY)
- --------------------------------------------------------------------------------
1. THE SECURITY
The undersigned Cost Plus, Inc. ("Borrower") hereby assigns and grants to Bank
of America National Trust and Savings Association ("Bank") a security interest
in the following described property ("Collateral"):
A. All of the following, whether now owned or hereafter acquired by
Borrower: accounts, contract rights, chattel paper, instruments,
deposit accounts, and general intangibles.
B. All inventory now owned or hereafter acquired by Borrower.
C. All negotiable and nonnegotiable documents of title now owned or
hereafter acquired by Borrower.
D. All rights under contracts of insurance now owned or hereafter
acquired by Borrower covering any of the above-described property.
E. All proceeds, product, rents and profits now owned or hereafter
acquired by Borrower of any of the above-described property.
F. All books and records now owned or hereafter acquired by Borrower
pertaining to any of the above-described property, including but not
limited to any computer-readable memory and any computer hardware or
software necessary to process such memory ("Books and Records").
2. THE INDEBTEDNESS.
The collateral secures and will secure all Indebtedness of Borrower to Bank. For
the purposes of this Agreement, "Indebtedness" means all loans and advances made
by Bank to Borrower and all other obligations and liabilities of Borrower to
Bank, whether now existing or hereafter incurred or created, whether voluntary
or involuntary, whether due or not due, whether absolute or contingent, or
whether incurred directly or acquired by Bank by assignment or otherwise. Unless
Borrower shall have otherwise agreed in writing, Indebtedness, for the purposes
of this Agreement, shall not include "consumer credit" subject to the disclosure
requirements of the Federal Truth in Lending Act or any regulations promulgated
thereunder.
3. BORROWER'S COVENANTS.
Borrower covenants and warrants that unless compliance is waived by Bank in
writing:
A. Borrower will properly preserve the Collateral; defend the
Collateral against any adverse claims and demands; and keep accurate
Books and Records.
B. Borrower has notified Bank in writing of, and will notify Bank in
writing prior to any change in the locations of (i) Borrower's place
of business or Borrower's chief executive office if Borrower has
more than one place of business and (ii) any Collateral, including
the Books and Records.
C. Borrower will notify Bank in writing prior to any change in
Borrowers name, identity or business structure.
D. Borrower will maintain and keep in force insurance covering
Collateral designated by Bank against fire and extended coverages.
Such insurance shall require losses to be paid on a replacement cost
basis, be issued by insurance companies acceptable to Bank and
include a loss payable endorsement in favor of Bank in a form
acceptable to Bank
E. Borrower has not granted and will not grant any security interest in
any of the Collateral except to Bank, and will keep the Collateral
free of all liens, claims, security interests and encumbrances of
any kind or nature, except the security interest of Bank.
F. Borrower will not sell, lease, agree to sell or lease, or otherwise
dispose of or remove from Borrower's place of business (i) any
inventory except in the ordinary course of business as heretofore
conducted by Borrower, or (ii) any other Collateral except with the
prior written consent of Bank.
G. Borrower will promptly notify Bank in writing of any event which
affects the value of any Collateral, the ability of Borrower or Bank
to dispose of any Collateral, or the rights and remedies of Bank in
relation thereto, including but not limited to, the levy of any
legal process against any Collateral and the adoption of any
marketing order, arrangement or procedure affecting the Collateral,
whether governmental or otherwise.
H. If any Collateral is or becomes the subject of any negotiable
document of title including any warehouse receipt or bill of lading,
Borrower shall immediately deliver such document to Bank.
I. Until Bank exercises its rights to make collection, Borrower will
diligently collect all Collateral.
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N-255 M(3-91) -1- 006445-T2007
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4. ADDITIONAL OPTIONAL REQUIREMENTS.
Borrower agrees that Bank may at its option at any time, whether or not Borrower
is in default:
A. Require Borrower to deliver to Bank (i) copies of or extracts from
the Books and Records, and (ii) information on any contracts or
other matters affecting the Collateral.
B. Examine the Collateral, including the Books and Records, and make
copies of or extracts from the Books and Records, and for such
purposes enter at any reasonable time upon the property where any
Collateral or any Books and Records are located.
C. Require Borrower to deliver to Bank any instruments or chattel
paper.
5. DEFAULTS.
Any one or more of the following shall be a default hereunder.
A. Borrower fails to pay any indebtedness when due.
B. Borrower breaches any term, provision, warranty or representation
under this Agreement or under any other obligation of Borrower to
Bank.
C. Any custodian, receiver or trustee is appointed to take possession,
custody or control of all or a substantial portion of the property
of Borrower or of any guarantor of any indebtedness.
D. Borrower or any guarantor of any indebtedness becomes insolvent, or
is generally not paying or admits in writing its inability to pay
its debts as they become due, fails in business, makes a general
assignment for the benefit of creditors, dies or commences any case,
proceeding or other action under any bankruptcy or other law for the
relief of or relating to, debtors.
E. Any case, proceeding or other action is commenced against Borrower
or any guarantor of any indebtedness under any bankruptcy or other
law for the relief of or relating to, debtors.
F. Any involuntary lien of any kind or character attaches to any
Collateral.
G. Any financial statements, certificates, schedules or other
information now or hereafter furnished by Borrower to Bank proves
false or incorrect in any material respect.
6. BANK'S REMEDIES AFTER DEFAULT.
In the event of any default Bank may do any one or more of the following:
A. Declare any indebtedness immediately due and payable, without
notice or demand.
B. Enforce the security interest given hereunder pursuant to the
Uniform Commercial Code and any other applicable law.
C. Enforce the security interest of Bank in any deposit account of
Borrower maintained with Bank by applying such account to the
Indebtedness.
D. Require Borrower to assemble the Collateral, including the Books and
Records, and make them available to Bank at a place designated by
Bank.
E. Enter upon the property where any Collateral, including any Books
and Records are located and take possession of such Collateral and
such Books and Records, and use such property (including any
buildings and facilities) and any of Borrower's equipment, if Bank
deems such use necessary or advisable in order to take possession
of, hold, preserve, process, assemble, prepare for sale or lease,
market for sale or lease, sell or lease, or otherwise dispose of any
Collateral.
F. Grant extensions and compromise or settle claims with respect to the
Collateral for less than face value, all without prior notice to
Borrower.
G. Use or transfer any of Borrower's rights and interest in any
Intellectual Property now owned or hereafter acquired by Borrower,
if Bank deems such use or transfer necessary or advisable in order
to take possession of, hold, preserve, process, assemble, prepare
for sale or lease, market for sale or lease, sell or lease, or
otherwise dispose of, any Collateral. Borrower agrees that any such
use or transfer shall be without any additional consideration to
Borrower. As used in this paragraph, "Intellectual Property"
includes, but is not limited to, all trade secrets, computer
software, service marks, trademarks, trade names, trade styles,
copyrights, patents, applications for any of the foregoing, customer
lists, working drawings, instructional manuals, and rights in
processes for technical manufacturing, packaging and labeling in
which Borrower has any right or interest, whether by ownership,
license, contract or otherwise.
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N-255 M(3-91) -2- 006445-T2007
- --------------------------------------------------------------------------------
H. Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral.
I. Take such measures as Bank may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for sale
or lease, market for sale or lease, sell or lease, or otherwise dispose
of, any Collateral, and Borrower hereby irrevocably constitutes and
appoints Bank as Borrowers attorney-in-fact to perform all acts and
execute all documents in connection therewith.
J. Require Borrower to segregate all collections and proceeds of the
Collateral so that they are capable of identification and deliver daily
such collections and proceeds to Bank in kind.
K. Require Borrower to obtain Bank's prior written consent to any sale,
lease, agreement to sell or lease, or other disposition of any inventory.
L. Notify any account debtors, any buyers of the Collateral, or any other
persons of Bank's interest in the Collateral.
M. Require Borrower to direct all account debtors to forward all payments
and proceeds of the Collateral to a post office box under Bank's exclusive
control.
N. Demand and collect any payments and proceeds of the Collateral. In
connection therewith Borrower irrevocably authorizes Bank to endorse or
sign Borrower's name on all checks, drafts, collections, receipts and
other documents, and to take possession of and open the mail addressed to
Borrower and remove therefrom any payments and proceeds of the Collateral.
7. MISCELLANEOUS.
A. Any waiver, expressed or implied, of any provision hereunder and
any delay or failure by Bank to enforce any provision shall not
preclude Bank from enforcing any such provision thereafter.
B. Borrower shall, at the request of Bank, execute such other
agreements, documents, instruments, or financing statements in
connection with this Agreement as Bank may reasonably deem
necessary.
C. All notes, security agreements, subordination agreements and other
documents executed by Borrower or furnished to Bank in connection
with this Agreement must be in form and substance satisfactory to
Bank.
D. This Agreement shall be governed by and construed according to the
laws of the State of California, to the jurisdiction of which the
parties hereto submit.
E. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law. Any
single or partial exercise of any right or remedy shall not preclude
the further exercise thereof or the exercise of any other right or
remedy.
F. All terms not defined herein are used as set forth in the Uniform
Commercial Code.
G. In the event of any action by Bank to enforce this Agreement or to
protect the security interest of Bank in the Collateral, or to take
possession of, hold, preserve, process, assemble, insure, prepare
for sale or lease, market for sale or lease, sell or lease, or
otherwise dispose of, any Collateral, Borrower agrees to pay
immediately the costs and expenses thereof, together with reasonable
attorney's fees and allocated costs for in-house legal services.
Dated: 5/7/96
------
BANK OF AMERICA Borrower
National Trust and Savings Association Cost Plus, Inc.
X /s/ W.F. Rodgers X /s/ Alan E. Zimtbaum
---------------------------------- ----------------------------------
By: W.F. Rodgers, Vice President By: Alan E. Zimtbaum,
Executive Vice President/
Chief Financial Officer
X
----------------------------------
By:
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N-255 M(3-91) -3- 006445-T2007
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[LOGO OF BANK OF AMERICA]
BANK OF AMERICA CORPORATE RESOLUTIONS TO OBTAIN CREDIT
- --------------------------------------------------------------------------------
RESOLVED, that this corporation, Cost Plus, Inc., may:
1. borrow money from BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION ("Bank");
2. obtain for the account of this corporation commercial and standby
letters of credit issued by Bank;
3. obtain for the account of this corporation Bank's acceptance of
drafts and other instruments; and
4. discount with or sell to Bank notes, acceptances, drafts,
receivables and other evidences of indebtedness, and assign or
otherwise transfer to Bank any security interest or lien for such
obligations;
from time to time, in such amount or amounts as in the judgment of the
Authorized Officers (as hereinafter defined) this corporation may require (the
credit facilities described in the first part of this resolution are
collectively referred to herein as the "Credit Facilities"); provided, however,
that the aggregate principal amount outstanding at any one time under the Credit
Facilities authorized by this resolution shall not exceed the sum of Thirty Five
Million Dollars ($35,000,000), which sum shall be in addition to such other
amount or amounts as otherwise may be authorized.
RESOLVED FURTHER, that the Authorized Officers are hereby authorized and
directed, as security for any obligation or obligations of this corporation to
Bank whether arising pursuant to these Resolutions or otherwise, to grant in
favor of Bank a security interest in or lien on any real or personal property
belonging to or under the control of this corporation.
RESOLVED FURTHER, that
1. If only one signature is obtained, any one of the following:
a. Alan E. Zimtbaum, Executive Vice President/Chief
Financial Officer
b. Malcolm Carden, Director of Finance
c. Patricia Saucy, Vice President/Controller
d.
e.
f.
2. If two signatures are obtained, any one of the following:
a.
b.
c.
d.
e.
f.
together with any one of the following:
g.
h.
i.
j.
k.
l.
of this corporation, acting individually or in any combination as may be set
forth above (the "Authorized Officers"), are hereby authorized and directed, in
the name of this corporation, to execute and deliver to Bank, and Bank is
requested to accept:
a. the notes, credit agreements, advance account agreements, acceptance
agreements, letter of credit applications and agreements, purchase agreements or
other instruments, agreements and documents which evidence the obligations of
this corporation under the Credit Facilities obtained or to be obtained pursuant
to these resolutions;
b. any and all security agreements, deeds of trust, mortgages, financing
statements, fixture filings or other instruments, agreements and documents with
respect to any security interest or lien authorized to be given pursuant to
these resolutions; and
c. any other instruments, agreements and documents as Bank may require
and the Authorized Officers may approve.
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N-243 11-87 (Reprint 12-87) -1- 006444-T2007
- --------------------------------------------------------------------------------
RESOLVED FURTHER, that the Authorized Officers are hereby authorized and
directed, in the name of this corporation, to endorse, assign to Bank, and
deliver to Bank, any and all notes, acceptances, drafts, receivables and other
evidences of indebtedness discounted with or sold to Bank, together with any
security interest or lien for such obligations, and to guarantee the payment of
the same to Bank.
RESOLVED FURTHER, that any and all of the instruments, agreements and
documents referred to above may contain such recitals, covenants, agreements and
other provisions as Bank may require and the Authorized Officers may approve,
and the execution of such instruments, agreements and documents by the
Authorized Officers shall be conclusive evidence of such approval, and that the
Authorized Officers are authorized from time to time to execute renewals or
extensions of any and all such instruments, agreements and documents.
RESOLVED FURTHER, that Bank is authorized to act upon the foregoing
resolutions until written notice of revocation is received by Bank, and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the Authorized Officers.
CORPORATE SECRETARY'S CERTIFICATE
I, Alan E. Zimtbaum, Secretary of Cost Plus, Inc., a corporation organized
and existing under the laws of the State of California (the "Corporation"),
hereby certify that the foregoing is a full, true and correct copy of
resolutions of the Board of Directors of the Corporation, duly and regularly
adopted by the Board of Directors of the Corporation in all respects as required
by law and the by-laws of the Corporation on April 26, 1996 at a meeting at
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which a quorum of the Board of Directors of the Corporation was present and the
requisite number of such directors voted in favor of said resolutions, or by the
unanimous consent in writing of all members of the Board of Directors of the
Corporation to the adoption of said resolutions.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked, and that the specimen signatures appearing
below are the signatures of the officers authorized to sign for the Corporation
by virtue of such resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of the
Corporation, and affixed the corporate seal of the Corporation, on May 7, 1996.
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AUTHORIZED SIGNATURES:
X /s/ Alan E. Zimtbaum X /s/ Alan E. Zimtbaum
- ------------------------------------ ------------------------------------
Alan E. Zimtbaum, Executive Vice Alan E. Zimtbaum, Secretary of
President/Chief FinanciaI Officer Cost Plus, Inc.
a California corporation
X /s/ Malcolm Carden
- ------------------------------------
Malcolm Carden, Director of Finance
Affix Corporate Seal Here:
X /s/ Patricia Saucy
- ------------------------------------
Patricia Saucy, Vice President/
Controller
X
- ------------------------------------
X
- ------------------------------------
X
- ------------------------------------
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N-243 11-87 (Reprint 12-87) -2- 006444-T2007