Document:

Revolving Line of Credit dated 9/01/02

  
 EXHIBIT 10.25 
  
 REVOLVING LINE OF CREDIT NOTE 
 
 
 
	 $20,000,000.00
 	 	 Oakland, California
 

 
 September 1, 2002 
  
 FOR VALUE RECEIVED, the undersigned SHOE PAVILION CORPORATION (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at East Bay
RCBO, One Kaiser Plaza Suite 850, Oakland, CA, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in twenty million dollars ($20,000,000.00) or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. 
  
 DEFINITIONS: 
  
 As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth at the place defined: 
  
 (a)  “Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in California are authorized or required by law to close. 
  
 (b)  “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1, 2, 3, 6, 9 or 12 months, as
designated by Borrower, during which all or a portion of the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that no Fixed Rate Term may be selected for a principal amount less than five
hundred thousand dollars ($500,000.00) and provided further, that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day. 
  
 (c)  “LIBOR” means the rate per annum (rounded
upward, if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following formula: 
  
  
 
	 LIBOR =
 	 	 Base LIBOR
 

	  	 	 100% - LIBOR Reserve Percentage
 

 
  
 (i)  “Base LIBOR” means the
rate per annum for United States dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making reference
thereto, on the first day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the principal amount to which such Fixed
Rate Term applies. Borrower understands and agrees that Bank may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market. 
  
 (ii)  “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such reserve percentage during the applicable Fixed Rate Term. 
  
 (d)  “Prime Rate” means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is
one of Bank’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or
publications as Bank may designate. 
  
 Interest: 

 
 1 

  
 (a)  Interest.    The outstanding principal
balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate per annum equal to the Prime Rate in effect from time to time, or (ii) at a fixed rate per annum determined by
Bank to be one and three tenths percent (1.3000%) above LIBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in relation to the Prime Rate, each change in the rate of interest hereunder shall become
effective on the date each Prime Rate change is announced within Bank. With respect to each LIBOR selection hereunder, Bank is hereby authorized to note the date, principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted. 

 
 (b)  Selection of Interest Rate Options.    At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower at the end of the Fixed Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation to the Prime Rate or to LIBOR for a new Fixed Rate
Term designated by Borrower. At any time any portion of this Note bears interest determined in relation to the Prime Rate. Borrower may convert all or a portion thereof so that it bears interest determined in relation to LIBOR for a Fixed Rate Term
designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to select a LIBOR option for all or a portion of the outstanding principal balance hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank
notice specifying: (i) the interest rate option selected by Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone (or such
other electronic method as Bank may permit) so long as, with respect to each LIBOR selection, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not later than three (3) Business Days after such notice is given, and (B)
such notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business Day if Bank, at it’s sole option but without obligation to do so, accepts Borrower’s notice and quotes a fixed
rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be subject to a redetermination by Bank of the applicable fixed rate. If no
specific designation of interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied. 
  
 (c)  Taxes and Regulatory Costs.    Borrower
shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any manner to LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority
and related in any manner to LIBOR to the extent they are not included in the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank
among its operations shall be conclusive and binding upon Borrower. 
  
 (d)    Payment of
Interest.    Interest accrued on this Note to and including the last Saturday of each of Borrower’s 4 or 5 week accounting periods shall be payable on each Monday following each such last Saturday, provided that (i) all
interest accrued from the last such Saturday during the term of this Note to and including the maturity date of this Note shall be due and payable in full on the maturity date of this Note, and (ii) Borrower shall not change the method of
determining its accounting periods during the term of this Note. 
  
 (e)  Default
Interest.    From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear
interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note. 
  
 BORROWING AND REPAYMENT: 
  
 (a)  Borrowing and Repayment.    Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and 

 
 2 

  
 conditions of this Note and of any document executed in connection with or governing this note; provided
however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder
hereof less the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on August 1, 2004.

  
 (b)  Advances.    Advances hereunder, to the total amount of the principal
sum stated above, may be made by the holder at the oral or written request of (i) John D. Hellmann, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of
such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any deposit account of any Borrower, which advances, when so deposited, shall be conclusively presumed
to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether
any person requesting an advance is or has been authorized by any Borrower. 
  
 (c)  Application of
Payments.    Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof. All payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest determined in relation to the Prime Rate, if any, and second, to the outstanding principal balance of this Note which bears interest determined in relation to LIBOR, with such payments
applied to the oldest Fixed Rate Term first. 
  
 PREPAYMENT: 
  
 (a)  Prime Rate.    Borrower may prepay principal on any portion of this Note which bears interest determined in relation to the Prime
Rate at any time, in any amount and without penalty. 
  
 (b)  LIBOR.    Borrower
may prepay principal on any portion of this Note which bears interest determined in relation to LIBOR at any time and in the minimum amount of five hundred thousand dollars ($500,000.00) provided however, that if the outstanding principal balance of
such portion of this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal balance thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such portion of this Note
shall become due and payable at any time prior to the last day of the Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum of the discounted monthly differences
for each month from the month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows for each such month: 
  
 (i)  Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the
last day of the Fixed Rate Term applicable thereto. 
  
 (ii)  Subtract from the
amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and
in a principal amount equal to the amount prepaid. 
  
 (iii)  if the result obtained in
(ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above. 
  
 Each Borrower
acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses and/or liabilities. Each Borrower, therefore,
agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such
prepayment fee shall thereafter bear interest until paid at a rate per annum two percent (2.00%) above the Prime Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed). Each change in the rate of interest on
any such past due prepayment fee shall become effective on the date each Prime Rate change is announced within Bank. 

 
 3 

  
 EVENTS OF DEFAULT: 
  
 This Note is made pursuant to and is subject to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of February 27, 2001, as
amended from time to time (the “Credit Agreement”). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an “Event of Default”
under this Note. 
  
 MISCELLANEOUS: 
  
 (a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be immediately
due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the obligation, if any, of the holder to extend any further credit
hereunder shall immediately cease and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorney’s fees (to include outside
counsel fees and all allocated costs of the holder’s in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under
this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise,
and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other
person or entity. 
  
 (b) Obligations Joint and Several. Should more than one person or entity sign this Note as a
Borrower, the obligations of each such Borrower shall be joint and several. 
  
 (c) Governing Law. This Note shall be
governed by and construed in accordance with the laws of the State of California. 
  
 IN WITNESS WHEREOF, the
undersigned has executed this Note as of the date first written above. 
  
 
	 
	 SHOE PAVILION CORPORATION
 
	 
	 By:
 	 	 /s/    John D. Hellmann        
 

	 
	 Title:
 	 	 Vice President        
 

 

 
 4 

  
 ADDENDUM TO PROMISSORY NOTE 
 (PRIME/LIBOR PRICING ADJUSTMENTS) 
  
 THIS ADDENDUM is
attached to and made a part of that certain promissory note executed by SHOE PAVILION CORPORATION (“Borrower”) and payable to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), or order, dated as of September 1, 2002, in the
principal amount of Twenty Million Dollars ($20,000,000.00) (the “Note”). 
  
 The following provisions are
hereby incorporated into the Note to reflect the interest rate adjustments agreed to by Bank and Borrower. 
  
 INTEREST RATE ADJUSTMENTS:

  
 (a)  Initial Interest Rates.    The initial interest rates applicable to
this Note shall be the rates set forth in the “Interest” paragraph herein. 
  
 (b)  Interest Rate Adjustments.    In addition to any interest rate adjustments resulting from changes in the Prime Rate, Bank shall adjust the Prime Rate and LIBOR margins used to determine the
rates of interest applicable to this Note on a quarterly basis, commencing with Borrower’s fiscal quarter ending September 30, 2002, if required to reflect a change in Borrower’s ratio of Funded Debt (as defined below) to EBITDA (as
defined in and determined pursuant to the Credit Agreement referred to in this Note), in accordance with the following grid: 
  
 
	 Funded Debt to
 EBITDA
 
	    	 Applicable
Prime Rate
Margin
 
	 	  	 Applicable
LIBOR
Margin
 
	 
	 at least 3.00 to 1.0 but
 less than 3.50 to 1.0
 	    	 0.00
 	 %
 	  	 1.65
 	 %
 
	 
	 at least 2.75 to 1.0 but
 less than 2.99 to 1.0
 	    	 0.00
 	 %
 	  	 1.55
 	 %
 
	 
	 less than 2.74 to 1.0
 	    	 0.00
 	 %
 	  	 1.30
 	 %
 

 
  
 The term “Funded Debt” means the aggregate outstanding principal amount of all
interest bearing obligations, including, without limitation, capitalized lease obligations, letters of credit and guaranties, determined as of the end of each fiscal quarter. Each such adjustment shall be effective on the first Business Day of
Borrower’s fiscal quarter following the quarter during which Bank receives and reviews Borrower’s most current fiscal quarter-end financial statements in accordance with any requirements established by Bank for the preparation and delivery
thereof. 

 
 5 

  
 IN WITNESS WHEREOF, this Addendum has been executed as of the same date as the
Note. 
  
 
	 
	 SHOE PAVILION CORPORATION
 
	 
	 By:
 	 	 /s/    John D. Hellmann        
 

	  	 	 John D. Hellmann
 
	 
	 Title:
 	 	 Vice President        
 

 

 
 6Fifth Amendment to Credit Agreement

   
 EXHIBIT 10.26
 FIFTH AMENDMENT TO CREDIT AGREEMENT
           THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of September 1, 2002, by and between Shoe Pavilion Corporation, a
Washington corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).
 RECITALS
           WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of February
27, 2001, as amended from time to time (“Credit Agreement”).
           WHEREAS, Bank and Borrower have agreed to certain changes in the
terms and conditions set forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said changes.
           NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:
           1.           Section 1.1 (a) is hereby amended by deleting “October 1, 2003” as the last day on which Bank
will make advances under the Line of Credit, and by substituting for said date “August 1, 2004,” with such change to be effective upon the execution and delivery to Bank of a promissory note substantially in the form of Exhibit A
attached hereto (which promissory note shall replace and be deemed the Line of Credit Note defined in and made pursuant to the Credit Agreement) and all other contracts, instruments and documents required by Bank to evidence such change.

          2.           Section 1.1 (c) is hereby amended (a) by deleting “October 1, 2003” as
the last day on which Bank will issue Letters of Credit under the subfeature therefor under the Line of Credit, and by substituting for said date “August 1, 2004”, and (b) by deleting “December 1, 2004” as the last day any such
Letter of Credit may expire, and by substituting for said date “February 1, 2005.”.
           3.          Section 4.8 (b) and (c) are hereby deleted in their entirety, and the following substituted
therefor:

	  
 	            “(b)     Net profit after taxes not less than $1.00 on an annual basis, determined as
of each fiscal year end, and net profit not less than $1.00 on a semi-annual basis, determined as of the end of the second fiscal quarter ending June.
 
	  
 	  
 
	  
 	              (c)     Total Funded Debt to EBITDA not greater than 3.5 to 1.0, determined on
a quarterly basis, with “Funded Debt” defined as the sum of all obligations for borrowed money (including subordinated debt, all obligations under the Line of Credit and issued but undrawn letters of credit), and with “EBITDA”
defined as net profit before tax plus interest expense (net of capitalized interest expense), depreciation expense and amortization expense, measured on a trailing 4 quarter basis.”
 

 -1-

            4.          Except as specifically provided herein, all terms and
conditions of the Credit Agreement remain in full force and effect, without waiver or modification.  All terms defined in the Credit Agreement shall have the same meaning when used in this Amendment.  This Amendment and the Credit
Agreement shall be read together, as one document.
           5.          Borrower hereby remakes
all representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein.  Borrower further certifies that as of the date of this Amendment there exists no Event of Default as defined in the Credit
Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default.
           IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.

	 SHOE PAVILION CORPORATION
 	  
 	 WELLS FARGO BANK,
    NATIONAL ASSOCIATION
 	  
 
	  
 	  
 	  
 	  
 
	 By:
 	 /s/  JOHN D. HELLMANN
 	  
 	 By:
 	 /s/  ALITA MARSHALL
 	  
 
	  
 	 
 	  
 	  
 	 
 	  
 
	 Title:
 	 Vice President
 	  
 	  
 	 Alita Marshall
 Vice President
 	  
 
							

  -2-

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