10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 1995 __________________ / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to________ Commission file number 0-12994 Nordstrom Credit, Inc. ______________________________________________________ (Exact name of Registrant as specified in its charter) Colorado 91-1181301 ________________________________ ___________________ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 13531 East Caley, Englewood, Colorado 80111 _______________________________________________________ (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: 303-397-4700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.50 par value _______________________________ (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /X/ NO / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ On March 21, 1995 Registrant had 10,000 shares of Common stock ($.50 par value) outstanding; all such shares are owned by Registrant's parent, Nordstrom, Inc. The Registrant meets the conditions set forth in General Instruction J(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format. 1 of 17 PART I Item 1. Business. ------------------ The information required under this item is included in Note 1 to the Financial Statements on page 13 of this report, which is incorporated herein by reference. Item 2. Properties. -------------------- The Company owns an office building in Englewood, Colorado where it locates its principal offices. Item 3. Legal Proceedings. --------------------------- The Company is not a party to any material legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. ------------------------------------------------------------- Not required under reduced disclosure format. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. ------------------------------------------------------------------------------ The class of securities registered is the Company's Common Stock, $.50 par value per share. There are 100,000 shares of authorized Common Stock, of which 10,000 shares were issued and outstanding as of March 21, 1995. The Company's common stock is owned entirely by Nordstrom, Inc. The stock has not been traded and, accordingly, no market value has been established. In addition, no dividends have been paid or declared. Item 6. Selected Financial Data. --------------------------------- Not required under reduced disclosure format. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. ------------------------------------------------------------------------- Interest expense increased in 1994 due primarily to higher short-term interest rates. Certain other information required under this item is included in Note 1 to the Financial Statements on page 13 of this report, which is incorporated herein by reference. 2 of 17 Item 8. Financial Statements and Supplementary Data. ---------------------------------------------------- A) Financial Statements and Supplementary Data The financial statements listed in the Index to Financial Statements and Schedule on page 7 of this Report are incorporated herein by reference. B) Other Financial Statements and Schedule The schedule required under Regulation S-X is filed pursuant to Item 14 of this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ------------------------------------------------------------------------ None PART III Item 10. Directors and Executive Officers of the Registrant. ------------------------------------------------------------ Not required under reduced disclosure format. Item 11. Executive Compensation. -------------------------------- Not required under reduced disclosure format. Item 12. Security Ownership of Certain Beneficial Owners and Management. ------------------------------------------------------------ Not required under reduced disclosure format. Item 13. Certain Relationships and Related Transactions. -------------------------------------------------------- Not required under reduced disclosure format. 3 of 17 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. -------------------------------------------------------------------------- (a)1. Financial Statements -------------------- The following financial statements of the Company and the Independent Auditors' Report are incorporated by reference in Part II, Item 8: Independent Auditors' Report Statements of Earnings Balance Sheets Statements of Investment of Nordstrom, Inc. Statements of Cash Flows Notes to Financial Statements (a)2. Financial Statement Schedules ----------------------------- The financial statement schedule listed in the Index to Financial Statements and Schedule on page 7 of this Report is incorporated herein by reference. (a)3. Exhibits -------- (3.1) Articles of Incorporation of the Registrant are hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.1. (3.2) By-laws of the Registrant are hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.2. (4.1) Indenture between Registrant and First Interstate Bank of Denver, N.A., as successor trustee, dated November 15, 1984, the First Supplement thereto dated January 15, 1988, the Second Supplement thereto dated June 1, 1989, and the Third Supplement thereto dated October 19, 1990 are hereby incorporated by reference from Registration No. 33-3765, Exhibit 4.2; Registration No. 33-19743, Exhibit 4.2; Registration No. 33-29193, Exhibit 4.3; and Registrant's Annual Report on Form 10-K for the year ended January 31, 1991, Exhibit 4.2, respectively. (4.2) Trustee Resignation of First Interstate Bank of Washington, N.A. dated March 13, 1995 is filed herein as an Exhibit. (4.3) Trustee Acceptance of First Interstate Bank of Denver, N.A. dated March 13, 1995 is filed herein as an Exhibit. (10.1) Investment Agreement dated October 8, 1984 between Registrant and Nordstrom, Inc. is hereby incorporated by reference from the Registrant's Form 10, Exhibit 10.1. 4 of 17 (10.2) Operating Agreement dated August 30, 1991 between Registrant and Nordstrom National Credit Bank is hereby incorporated by reference from the Registrant's Form 10-Q for the quarter ended July 31, 1991, Exhibit 10.1, as amended. (10.3) Operating Agreement for VISA Accounts and Receivables dated May 1, 1994 between Registrant and Nordstrom National Credit Bank is hereby incorporated by reference from Registration No. 33-55905, Exhibit 10.1. (10.4) Credit Agreement dated June 30, 1992, as amended January 1, 1993, between Registrant and Seattle-First National Bank of Washington is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1993, Exhibit 10.5 (10.5) Second Amendment to the Credit Agreement dated June 30, 1992, as amended January 1, 1993, between Registrant and Seattle-First National Bank of Washington dated June 29, 1993 is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1994, Exhibit 10.4. (10.6) Third Amendment to the Credit Agreement dated June 30, 1992, as amended January 1, 1993 and June 29, 1993, between Registrant and Bank of America National Trust and Savings Association dated June 30, 1994 is filed herein as an Exhibit. (10.7) Fourth Amendment to the Credit Agreement dated June 30, 1992, as amended January 1, 1993, June 29, 1993 and June 30, 1994, between Registrant and Bank of America National Trust and Savings Association dated January 20, 1995 is filed herein as an Exhibit. (10.8) Loan Agreement dated November 24, 1992 between Registrant and Nordstrom, Inc. is hereby incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1993, Exhibit 10.6. (10.9) Loan Agreement dated June 25, 1994, as amended December 1, 1994, between Registrant and a group of commercial banks is filed herein as an Exhibit. (10.10) Loan Agreement dated June 10, 1985, as amended May 19, 1994, between Registrant and Morgan Guaranty Trust Company of New York is filed herein as an Exhibit. (12.1) Computation of Ratio of Earnings Available for Fixed Charges to Fixed Charges is filed herein as an Exhibit. (23.1) Independent Auditors' Consent is filed herein as an Exhibit. (27.1) Financial Data Schedule is filed herein as an Exhibit. All other exhibits are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the last quarter of the period for which this report is filed. 5 of 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. NORDSTROM CREDIT, INC. (Registrant) Date March 31, 1995 by /s/ John A. Goesling __________________ ____________________________________________ John A. Goesling Executive Vice President and Treasurer (Principal Accounting and Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/ John A. McMillan /s/ James F. Nordstrom _____________________________________ _____________________________________ John A. McMillan James F. Nordstrom Co-Chairman of the Board of Directors Co-Chairman of the Board of Directors /s/ Bruce A. Nordstrom /s/ John N. Nordstrom _____________________________________ ______________________________________ Bruce A. Nordstrom John N. Nordstrom Co-Chairman of the Board of Directors Co-Chairman of the Board of Directors /s/ John Walgamott /s/ John A. Goesling _____________________________________ ______________________________________ John Walgamott John A. Goesling President Executive Vice President and Treasurer (Principal Executive Officer) (Principal Accounting and Financial Officer) Date March 31, 1995 ______________________ 6 of 17 NORDSTROM CREDIT, INC. INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page Number ------ Independent Auditors' Report 8 Statements of Earnings 9 Balance Sheets 10 Statements of Investment of Nordstrom, Inc. 11 Statements of Cash Flows 12 Notes to Financial Statements 13 Additional financial information required to be furnished - Financial Statement Schedule: II - Valuation and Qualifying Accounts 17
All other schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the financial statements or notes thereto. 7 of 17 INDEPENDENT AUDITORS' REPORT Board of Directors Nordstrom Credit, Inc. Englewood, Colorado We have audited the accompanying balance sheets of Nordstrom Credit, Inc. as of January 31, 1995 and 1994, and the related statements of earnings, investment of Nordstrom, Inc. and cash flows for each of the three years in the period ended January 31, 1995. Our audits also included the financial statement schedule listed in Item 14(a)2. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Nordstrom Credit, Inc. as of January 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Deloitte & Touche LLP Seattle, Washington March 10, 1995 8 of 17 NORDSTROM CREDIT, INC STATEMENTS OF EARNINGS (Dollars in thousands)
Year Ended January 31, 1995 1994 1993 ---------------------- ------- ------- ------- Revenue: Service charge income $92,592 $91,026 $92,553 Rental income from Nordstrom National Credit Bank 1,044 1,044 1,044 ------- ------- ------- Total revenue 93,636 92,070 93,597 Expenses: Interest, net 31,074 29,465 33,593 Service fees paid to Nordstrom National Credit Bank 28,056 28,551 28,848 General and administrative 2,461 1,682 1,835 ------- ------- ------- Total expenses 61,591 59,698 64,276 ------- ------- ------- Earnings before income taxes 32,045 32,372 29,321 Income taxes 11,600 11,700 10,400 ------- ------- ------- Net earnings $20,445 $20,672 $18,921 ======= ======= ======= Ratio of earnings available for fixed charges to fixed charges 2.03 2.09 1.87 ======= ======= ======= See notes to financial statements.
9 of 17 NORDSTROM CREDIT, INC. BALANCE SHEETS (Dollars in thousands)
January 31, 1995 1994 ----------- -------- -------- ASSETS ------ Cash and cash equivalents $ 440 $ 1,694 Customer accounts receivable, net of holdback allowance of $22,958 and $23,145 656,263 564,495 Other accounts receivable 4,807 3,977 Property and equipment, net 5,685 5,987 Other assets 1,429 1,677 -------- -------- $668,624 $577,830 ======== ======== LIABILITIES AND INVESTMENT OF NORDSTROM, INC. --------------------------------------------- Notes payable to Nordstrom, Inc. $148,000 $112,500 Notes payable to bank 50,000 25,000 Commercial paper 37,388 15,337 Accrued interest, taxes and other 10,963 9,665 Long-term debt 252,100 265,600 -------- -------- Total liabilities 498,451 428,102 Investment of Nordstrom, Inc. 170,173 149,728 -------- -------- $668,624 $577,830 ======== ======== See notes to financial statements.
10 of 17 NORDSTROM CREDIT, INC. STATEMENTS OF INVESTMENT OF NORDSTROM, INC. (Dollars in thousands except per share amount)
Common Stock, $.50 par value, 100,000 shares authorized ------------------------- Retained Shares Amount Earnings Total ------ ------ -------- ----- Balance at February 1, 1992 10,000 $55,058 $55,077 $110,135 Net earnings - - 18,921 18,921 ------ ------- ------- -------- Balance at January 31, 1993 10,000 55,058 73,998 129,056 Net earnings - - 20,672 20,672 ------ ------- ------- -------- Balance at January 31, 1994 10,000 55,058 94,670 149,728 Net earnings - - 20,445 20,445 ------ ------- ------- -------- Balance at January 31, 1995 10,000 $55,058 $115,115 $170,173 ====== ======= ======== ======== See notes to financial statements.
11 of 17 NORDSTROM CREDIT, INC. STATEMENTS OF CASH FLOWS (Dollars in thousands)
Year Ended January 31, 1995 1994 1993 ---------------------- ------- ------- ------- OPERATING ACTIVITIES: Net earnings $20,445 $20,672 $18,921 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization 924 640 664 Change in: Customer accounts receivable, net (91,768) 18,716 981 Other accounts receivable (830) (269) 3,787 Accrued interest, taxes and other 1,298 (304) (85) ------- ------- ------- Net cash (used in) provided by operating activities (69,931) 39,455 24,268 ------- ------- ------- INVESTING ACTIVITIES: (Additions to) disposition of property and equipment, net (30) (167) 4 ------- ------- ------- FINANCING ACTIVITIES: Increase in notes payable to Nordstrom, Inc. 35,500 - 90,150 Increase (decrease) in notes payable to banks 25,000 - (25,000) Increase (decrease) in commercial paper 22,051 2,018 (71,416) Proceeds from issuance of long-term debt, net 49,656 - - Principal payments on long-term debt (63,500) (40,000) (19,400) ------- ------- ------- Net cash provided by (used in) financing activities 68,707 (37,982) (25,666) ------- ------- ------- Net (decrease) increase in cash and cash equivalents (1,254) 1,306 (1,394) Cash and cash equivalents at beginning of year 1,694 388 1,782 ------- ------- ------- Cash and cash equivalents at end of year $ 440 $ 1,694 $ 388 ======= ======= ======= See notes to financial statements.
12 of 17 NORDSTROM CREDIT, INC. NOTES TO FINANCIAL STATEMENTS (Dollars in thousands) NOTE 1 - DESCRIPTION OF BUSINESS Nordstrom Credit, Inc. (the "Company"), a wholly-owned subsidiary of Nordstrom, Inc. ("Nordstrom") was incorporated in the State of Washington in 1982 and reincorporated in the State of Colorado in 1990. The primary business of the Company is to finance customer accounts receivable generated under revolving charge accounts through sales of merchandise in Nordstrom stores ("Accounts"), and through purchases by customers using the Nordstrom National Credit Bank (the "Bank") VISA cards ("VISA Accounts"). The Accounts and the VISA Accounts are originated through the use of credit cards issued by the Bank, a national banking association organized as a wholly-owned subsidiary of Nordstrom, effective August 30, 1991. The Bank's VISA card program commenced in May 1994. The Company and the Bank are parties to an Operating Agreement dated August 30, 1991 (the "Operating Agreement") pursuant to which the Company purchases Accounts from the Bank for a price equal to the amount of Accounts originated less an allowance for amounts to be written off (the "holdback allowance"). The Company and the Bank are also parties to an Operating Agreement for VISA Accounts and Receivables (the "VISA Operating Agreement") dated May 1, 1994. Under this agreement, the Company purchases VISA Accounts from the Bank under the same terms and conditions as the Operating Agreement, with the exception of the allowance for amounts to be written off. Amounts written off will be charged to the Company, except for amounts written off with respect to sales occurring at Nordstrom stores, for which Nordstrom has agreed to indemnify the Company. Under the terms of both Operating Agreements, the Bank performs the servicing functions for the Accounts and the VISA Accounts, and the Company pays the Bank a servicing fee which may change from time to time but is currently 1.59% of the amount of such Accounts originated. The Company and Nordstrom are parties to an Investment Agreement dated October 8, 1984 (the "Investment Agreement") which, among other things, governs ownership of Company stock and the financial relationships between Nordstrom and the Company. The Investment Agreement requires that Nordstrom maintain the Company's ratio of earnings available for fixed charges to fixed charges at not less than 1.25:1 and further requires that Nordstrom retain ownership of all the outstanding shares of stock of the Company. This agreement does not, however, represent a guarantee by Nordstrom of the payment of any obligation of the Company. NOTE 2 - RENTAL INCOME The Company owns an office building in Englewood, Colorado, and leases space in the building to the Bank under a month-to-month agreement for $87 per month. 13 of 17 NOTE 3 - INTEREST EXPENSE The components of net interest expense are as follows:
Year ended January 31, 1995 1994 1993 ---------------------- ------- ------- ------- Notes payable to Nordstrom, Inc. $ 2,940 $ 1,696 $ 461 Notes payable to banks 1,766 771 1,694 Commercial paper 3,320 1,590 2,780 Long-term debt 23,161 25,543 28,906 ------- ------- ------- Total interest expense 31,187 29,600 33,841 Less: Interest income (113) (135) (248) ------- ------- ------- Interest, net $31,074 $29,465 $33,593 ======= ======= =======
NOTE 4 - INCOME TAXES The Company files consolidated income tax returns with Nordstrom. Income taxes have been provided on a separate return basis, and the difference between the effective tax rate and the statutory Federal income tax rate is due to the provision for state and local income taxes. At January 31, 1995 and 1994, amounts due to Nordstrom for income taxes totalled $1,500 and $1,592. The Company has no significant deferred taxes. NOTE 5 - OTHER ACCOUNTS RECEIVABLE Other accounts receivable consists of amounts due from the Bank for net activity in Accounts and VISA Accounts, less service fees due the Bank. These amounts are settled on a second business day basis. NOTE 6 - NOTES PAYABLE AND COMMERCIAL PAPER The notes payable to bank represents amounts borrowed from a commercial bank as fiduciary under a master note agreement which provides for borrowings up to $50,000. Borrowings under the Agreement bear interest at floating rates based on a published short-term interest rate composite index (6.0% and 3.0% at January 31, 1995 and 1994) and mature up to six months from the date of borrowing or on demand. The notes payable to Nordstrom, Inc. represent amounts borrowed from Nordstrom under an Agreement dated November 24, 1992 which provides for borrowings from time to time, depending on seasonal cash flow requirements. Borrowings under the Agreement bear interest at floating rates based on a published short-term interest rate composite index (6.0% and 3.0% at January 31, 1995 and 1994) and mature up to six months from the date of borrowing or on demand. A summary of notes payable and commercial paper is as follows: 14 of 17 NOTE 6 (continued)
Year ended January 31, 1995 1994 1993 ---------------------- -------- -------- -------- Average daily borrowings outstanding: Nordstrom $ 60,651 $ 54,643 $ 14,072 Other 104,722 75,300 121,536 Maximum amount outstanding: Nordstrom 204,000 182,500 138,000 Other 209,605 117,023 186,038 Weighted average interest rate: During the year: Nordstrom 4.8% 3.1% 3.3% Other 4.9% 3.1% 3.7% At year-end: Nordstrom 6.0% 3.0% 3.0% Other 6.0% 3.1% 3.1%
The Company has $225,000 in unsecured lines of credit which are available as liquidity support for notes payable to bank and commercial paper issued by the Company, and expire in June 1995 and January 1998. Under the terms of the line-of-credit agreements, the Company must, among other things, comply with the terms of the Investment Agreement between the Company and Nordstrom and the Operating Agreements between the Company and Nordstrom National Credit Bank, and maintain a ratio of total debt to tangible net worth no greater than 6 to 1. The Company pays commitment fees for the lines in lieu of compensating balance requirements. The carrying amount of the notes payable and commercial paper approximates fair value because of the short maturity of these instruments. NOTE 7 - LONG-TERM DEBT Long-term debt consists of the following:
January 31, 1995 1994 ----------- -------- -------- Medium-term notes, 7.83% - 9.6%, due 1995 - 2001 $209,000 $210,000 Sinking fund debentures, 9.375%, due 2016, payable in annual installments of $3,750 beginning in 1997 43,100 55,600 -------- -------- Total long-term debt $252,100 $265,600 ======== ========
Aggregate principal payments on long-term debt for the next five fiscal years are as follows: 1995 - $25,000, 1996 - $73,000, 1997 - $53,750, 1998 - $53,750, and 1999 - $3,750. 15 of 17 NOTE 7 (continued) The fair value of long-term debt at January 31, 1995 and 1994, estimated using quoted market prices of the same or similar issues with the same remaining maturity, was $257,143 and $292,358. During the year ended January 31, 1995, the Company filed a shelf registration statement under Form S-3 for $250 million in debt. Subsequent to year-end, the Company issued $42 million in medium-term notes under the shelf registration. NOTE 8 - SUPPLEMENTARY CASH FLOW INFORMATION For purposes of the Statements of Cash Flows, the Company considers all short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short maturity of these instruments. Supplementary cash flow information is as follows:
Year Ended January 31, 1995 1994 1993 ---------------------- ------- ------- ------- Cash paid during the year for: Interest $30,005 $30,224 $34,121 Income taxes paid to Nordstrom, Inc. 11,692 11,568 10,350
16 of 17 NORDSTROM CREDIT, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
Column A Column B Column C Column D Column E Additions Deductions ----------- ---------- -------------------- -------------------- ------- Account Balance Charged to Charged write-offs Balance beginning costs and to other net of Other end of Description of period expenses accounts recoveries deductions period ----------- ----------- --------- -------- ---------- ---------- ------- Holdback allowance - customer accounts receivable Year ended January 31, 1995 $23,145 $940 $19,279* $20,406 $ - $22,958 Year ended January 31, 1994 $23,969 $ - $25,713* $26,537 $ - $23,145 Year ended January 31, 1993 $24,192 $ - $29,469* $29,692 $ - $23,969 * The Company purchases Accounts net of this amount which represents the allowance for uncollectible amounts. Bad debt expenses are reflected on the books of Nordstrom for Accounts and VISA Accounts generated through sales at Nordstrom stores.
17 of 17
EXHIBIT INDEX EXHIBIT METHOD OF FILING ------------------------------------------ ------------------------------- 3.1 Articles of Incorporation Incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.1. 3.2 By-laws Incorporated by reference from the Registrant's Form 10-K for the year ended January 31, 1991, Exhibit 3.2. 4.1 Indenture between Registrant and Incorporated by reference from First Interstate Bank of Denver, Registration No. 33-3765, Exhibit N.A., as successor trustee, dated 4.2; Registration No. 33-19743, November 15, 1984, the First Sup- Exhibit 4.2; Registration No. plement thereto dated January 15, 33-29193, Exhibit 4.3, and 1988, the Second Supplement thereto Registrant's Annual Report on Form dated June 1, 1989, and the Third 10-K for the year ended January 31, Supplement thereto dated October 1991, Exhibit 4.2, respectively. 19, 1990 4.2 Trustee Resignation of First Inter- Filed herewith electronically. state Bank of Washington, N.A. dated March 13, 1995. 4.3 Trustee Acceptance of First Inter- Filed herewith electronically. state Bank of Denver, N.A. dated March 13, 1995 10.1 Investment Agreement dated October Incorporated by reference from 8, 1984 between Registrant and Registrant's Form 10, Exhibit 10.1. Nordstrom, Inc. 10.2 Operating Agreement dated August Incorporated by reference from 30, 1991 between Registrant and Registrant's Form 10-Q for the Nordstrom National Credit Bank quarter ended July 31, 1991, Exhibit 10.1, as amended. 10.3 Operating Agreement for VISA Incorporated by reference from Accounts and Receivables Registration No. 33-55905, Exhibit dated May 1, 1994 between 10.1. Registrant and Nordstrom National Credit Bank
10.4 Credit Agreement dated June 30, Incorporated by reference from 1992, as amended January 1, 1993, Registrant's Form 10-K for the between Registrant and Seattle- year ended January 31, 1993, First National Bank of Washington Exhibit 10.5. 10.5 Second Amendment to the Credit Incorporated by reference from Agreement dated June 30, 1992, as Registrant's Form 10-K for the amended January 1, 1993 between year ended January 31, 1994, Registrant and Seattle-First Exhibit 10.4. National Bank of Washington dated June 29, 1993 10.6 Third Amendment to the Credit Filed herewith electronically. Agreement dated June 30, 1992, as amended January 1, 1993 and June 29, 1993, between Registrant and Bank of America National Trust and Savings Association dated June 30, 1994 10.7 Fourth Amendment to the Credit Filed herewith electronically. Agreement dated June 30, 1992, as amended January 1, 1993, June 29, 1993 and June 30, 1994, between Registrant and Bank of America National Trust and Savings Association dated January 20, 1995 10.8 Loan Agreement dated November 24, Incorporated by reference from 1992 between Registrant and Registrant's Form 10-K for the Nordstrom, Inc. year ended January 31, 1993, Exhibit 10.6. 10.9 Loan Agreement dated June 25, 1994, Filed herewith electronically. as amended December 1, 1994, between Registrant and a group of commercial banks. 10.10 Loan Agreement dated June 10, 1985, Filed herewith electronically. as amended May 16, 1994, between Registrant and Morgan Guaranty Trust Company of New York 12.1 Computation of Ratio of Earnings Filed herewith electronically. Available for Fixed Charges to Fixed Charges 23.1 Independent Auditors' Consent Filed herewith electronically. 27.1 Financial Data Schedule Filed herewith electronically.
EX-4 2 Exhibit 4.2 TRUSTEE RESIGNATION TO: Nordstrom Credit, Inc. In connection with the appointment of First Interstate Bank of Denver, N.A. as successor trustee under the Indenture (defined below), First Interstate Bank of Washington, N.A. (the "Resigning Trustee"), hereby resigns as trustee under that certain indenture by and between the Company and the Resigning Trustee dated as of November 15, 1984, as supplemented by the First Supplemental Indenture dated as of January 15, 1988, the Second Supplemental Indenture dated as of June 1, 1989 and the Third Supplemental Indenture dated as of October 19, 1990 (as supplemented, the "Indenture"), providing for the issuance from time to time of unsecured debentures, notes or other evidences of indebtedness of the Company (the "Securities") to be issued in one or more series under such Indenture. This resignation is provided pursuant to Section 610(b) of the Indenture, and shall be applicable with respect to all series of Securities heretofore issued under the Indenture. DATED: March 13, 1995 FIRST INTERSTATE BANK OF WASHINGTON, N.A. By /s/Perry R. Tobe ---------------- Perry R. Tobe, Trust Officer EX-4 3 Exhibit 4.3 TRUSTEE ACCEPTANCE TO: First Interstate Bank of Washington, N.A. Nordstrom Credit, Inc. First Interstate Bank of Denver, N.A. (the "Successor Trustee"), hereby accepts its appointment by Nordstrom Credit, Inc. (the "Company") as successor trustee under that certain indenture by and between the Company and First Interstate Bank of Washington, N.A. (the "Resigning Trustee"), dated as of November 15, 1984, as supplemented by the First Supplemental Indenture dated as of January 15, 1988, the Second Supplemental Indenture dated as of June 1, 1989 and the Third Supplemental Indenture dated as of October 19, 1990 (as supplemented, the "Indenture"), providing for the issuance from time to time of unsecured debentures, notes or other evidences of indebtedness of the Company (the "Securities") to be issued in one or more series under such Indenture. This acceptance is given pursuant to Section 611 of the Indenture, and shall be applicable with respect to all series of Securities heretofore issued under the Indenture. DATED: March 13, 1995. FIRST INTERSTATE BANK OF DENVER, N.A. By /s/ Laura Rivera ---------------- Laura Rivera, Banking Officer The Company hereby confirms that First Interstate Bank of Denver, N.A. is vested with all the rights, powers, trusts and duties of the Resigning Trustee under the Indenture. DATED: March 13, 1995 NORDSTROM CREDIT, INC. By /s/ John C. Walgamott ---------------------- John C. Walgamott, President STATE OF COLORADO ) )ss. COUNTY OF DENVER ) I certify that I know or have satisfactory evidence that Laura Rivera is the person who appeared before me, and she acknowledged that she signed this instrument, on oath stated that she was authorized to execute the instrument and acknowledged it as a Banking Officer of First Interstate Bank of Denver, N.A., to be the free and voluntary act of such parties for the uses and purposes mentioned in this instrument. DATED: March 13, 1995 /s/Lynn E. Taylor --------------------- (Notary Signature) Lynn E. Taylor Notary Public for the State of Colorado My commission expires: 8/2/97 EX-10 4 Exhibit 10.6 AMENDMENT NO. 3 TO CREDIT AGREEMENT THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT dated as of June 30, 1994 (the "Amendment") is entered into by and between NORDSTROM CREDIT, INC. (the "Borrower") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"). RECITALS A. The Borrower and Seattle-First National Bank ("Seafirst") are parties to a Credit Agreement dated as of June 30, 1992, as amended by that certain Amendment No. 1 to Credit Agreement dated as of January 1, 1993 and that certain Amendment No. 2 to Credit Agreement dated as of June 29, 1993 (as amended, the "Credit Agreement"), pursuant to which Seafirst has extended certain credit facilities to the Borrower. B. Seafirst has assigned all of its rights and obligations to the Borrower under the Credit Agreement to the Bank pursuant to an Assignment and Assumption Agreement dated as of June 30, 1994. C. The Borrower has requested that the Bank agree to certain amendments of the Credit Agreement. D. The Bank is willing to amend the Credit Agreement, subject to the terms and conditions of this Amendment. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement. 2. Amendments to Credit Agreement. (a) The introductory paragraph of the Credit Agreement is hereby amended by deleting the definition of "Prime Rate" therein and by inserting the following new definition in lieu thereof: "`Reference Rate' shall mean on any day the rate of interest in effect for such day as publicly announced from time to time by the Bank in San Francisco, California, as its "reference rate." The "reference rate" is a rate set by the Bank based upon various factors including Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the reference rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change." (b) The Credit Agreement shall be amended by deleting each reference to the "Prime Rate" therein and by inserting in lieu thereof the phrase "Reference Rate". (c) Section 1.1 of the Credit Agreement is hereby amended by deleting the date "June 30, 1994" and inserting in lieu thereof "June 30, 1995". (d) The Credit Agreement shall be amended by deleting each reference to "Seattle-First National Bank" therein, and in any other loan documents executed in connection therewith, and inserting in lieu thereof "Bank of America National Trust and Savings Association". (e) The Bank's address set forth on the signature page of the Credit Agreement shall be amended by deleting the address of Seattle-First National Bank therein and by inserting in lieu thereof the following: "Bank of America National Trust and Savings Association Credit Products #3838 555 California Street, 41st Floor San Francisco, CA 94104 Attention: Stephen J. DeMarti Vice President" (f) Exhibit A to the Credit Agreement is hereby amended and restated in its entirety so that, as amended, it shall read as set forth on Exhibit A to this Amendment, which Exhibit A is incorporated herein by this reference. 3. Representations and Warranties. The Borrower hereby represents and warrants to the Bank as follows: (a) No Default, or event which with the passage of time, the giving of notice or both would constitute a Default, has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment and the Replacement Note (as defined below) have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental authority) in order to be effective and enforceable. The Credit Agreement, as amended by this Amendment, and the Replacement Note constitute the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, without defense, counterclaim or offset. (c) All representations and warranties of the Borrower contained in the Credit Agreement are true and correct. (d) The Borrower is entering into this Amendment and is executing the Replacement Note on the basis of its own investigation and for its own reasons, without reliance upon the Bank or any other person. 4. Effective Date. This Amendment will become effective as of June 30, 1994 (the "Effective Date"), provided that each of the following conditions precedent has been satisfied: (a) The Bank has received from the Borrower a duly executed original of this Amendment. (b) The Bank has received from the Borrower a duly executed Revolving Note, in the form and substance of Exhibit A attached hereto (the "Replacement Note"). (c) The Bank has received from the Borrower a copy of a resolution passed by the board of directors of the Borrower, certified by the Secretary or an Assistant Secretary of the Borrower as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment and the Replacement Note. 5. Miscellaneous. (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. (c) This Amendment shall be governed by and construed in accordance with the law of the State of California. (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. (e) This Amendment, together with the Credit Agreement and the Replacement Note, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 5.4 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. NORDSTROM CREDIT, INC. By:/s/John C. Walgamott -------------------- Title: President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:/s/Stephen J. DeMarti --------------------- Title: Vice President EXHIBIT A REVOLVING NOTE $60,000,000 As of June 30, 1994 FOR VALUE RECEIVED, the undersigned, NORDSTROM CREDIT, INC., promises to pay to BANK OF AMERICAN NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"), or order, at the Bank's office located at 1850 Gateway Boulevard, Concord, California 94520, or such other place as the holder of this Revolving Note may from time to time designate, the principal amount of SIXTY MILLION DOLLARS ($60,000,000) or so much thereof as may be borrowed hereunder, which amount shall be due and payable in lawful money of the United States of America, and the undersigned further promises to pay interest at said office in like money. If not sooner paid, the principal of this Revolving Note shall be due and payable on the Maturity Date. Principal with respect to each fixed rate Revolving Loan shall be due and payable also on the maturity date for each such loan. The undersigned further promises to pay interest on the unpaid principal balance with respect to each Revolving Loan made hereunder from the date thereof until paid, at the rate or rates per annum set forth in the Credit Agreement (defined below). Interest shall be due and payable in consecutive quarterly installments on the first day of each calendar quarter, commencing September 30, 1994, and continuing of the first day of each successive calendar quarter thereafter and on the maturity date of each fixed rate Revolving Loan. If not sooner paid, all interest remaining unpaid shall be due and payable on the Maturity Date. Any change in the interest rate resulting from a change in the Reference Rate shall be effective as of the day on which said change in the Reference Rate shall become effective, without notice or demand of any kind. All calculations of interest with respect to any Reference Rate Revolving Loan shall be on a basis of a year of 365 or 366 days as appropriate, and an actual-day month, and all calculations of interest with respect to any fixed rate Revolving Loan shall be on a basis of a year of 360 days and an actual-day month. All Revolving Loans made by the Bank to the undersigned pursuant to the Credit Agreement (defined below) and all payments and prepayments made on account of the principal balance hereof shall be recorded by the Bank on the appropriate schedule annexed hereto or in the Bank's other records. The undersigned promises to pay costs of collection and attorneys' fees (including allocated costs of in-house counsel) if default is made in the payment of this Revolving Note. This Revolving Note shall be governed by and construed in accordance with the laws of the State of California. The Bank reserves all of its rights under federal law including those relating to the charging of interest rates. This Revolving Note is the Revolving Note referred to in the Credit Agreement dated as of June 30, 1992 between the undersigned and the Bank, as amended by that certain Amendment No. 1 to Credit Agreement dated as of January 1, 1993, that certain Amendment No. 2 to Credit Agreement dated as of June 29, 1993, and that certain Amendment No. 3 to Credit Agreement dated as of June 30, 1994 (as amended, the "Credit Agreement"). All terms defined in the Credit Agreement shall have the same definitions when used herein. Upon the occurrence of a Default, the principal hereof with interest accrued thereon may become, or may be declared to be, at the option of Bank, forthwith due and payable, as provided in said Credit Agreement. This Revolving Note replaces, but does not extinguish the indebtedness under, the Master Noted dated as of June 30, 1992 executed by the undersigned in favor of Seattle-First National Bank ("Seafirst"), which Master Note was subsequently assigned to the Bank pursuant to an Assignment and Acceptance Agreement dated as of June 30, 1994 between Seafirst and the Bank. IN WITNESS WHEREOF, the undersigned has executed and delivered this Revolving Note as of the date first above written. NORDSTROM CREDIT, INC. By:___________________ Title:________________ EX-10 5 Exhibit 10.7 AMENDMENT NO. 4 TO CREDIT AGREEMENT THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT dated as of January 20, 1995 (the "Amendment") is entered into by and between NORDSTROM CREDIT, INC., a Colorado corporation (the "Borrower") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"). RECITALS A. Borrower and Bank (as successor in interest to Seattle-First National Bank ("Seafirst") pursuant to an Assignment and Assumption Agreement dated as of June 30, 1994 by and between Seafirst, as Assignor, and Bank, as Assignee) are parties to a Credit Agreement dated as of June 30, 1992, as amended by that certain Amendment No. 1 to Credit Agreement dated as of January 1, 1993, that certain Amendment No. 2 to Credit Agreement dated as of June 29, 1993 and that certain Amendment No. 3 to Credit Agreement dated as of June 30, 1994 (as amended, the "Credit Agreement"), pursuant to which Bank has extended certain credit facilities to Borrower. B. Borrower has requested that Bank agree to certain amendments of the Credit Agreement. C. Bank is willing to amend the Credit Agreement, subject to the terms and conditions of this Amendment. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement. 2. Amendments to Credit Agreement. (a) The second and third sentences of the Credit Agreement shall be deleted. (b) Article 1 of the Credit Agreement shall be amended and restated in its entirety as follows: "1.1 Revolving Loan Facility. Bank agrees, on the terms and conditions set forth herein, to make loans to Borrower from time to time on any Business Day until the Maturity Date, in an aggregate amount not to exceed at any time outstanding $90,000,000 (such amount, as the same may be reduced under Section 1.5, the "Commitment"). Within the limits of the Commitment, and subject to the other terms and conditions hereof, Borrower may borrow under this Section 1.1, prepay under Section 1.6 and reborrow under this Section 1.1. 1.2 Revolving Note. The Loans made by Bank shall be evidenced by a promissory note ("Revolving Note") made by Borrower to the order of Bank in substantially the form of Exhibit A attached hereto. Bank shall endorse on the schedules annexed to the Revolving Note or in Bank's other records the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by Borrower with respect thereto. Bank is irrevocably authorized by Borrower to endorse its Revolving Note and Bank's records shall be conclusive absent manifest error of the amount of the Loans made by Bank to Borrower and the interest and payments thereon. Any failure so to endorse or record or any error in doing so shall not, however, limit or otherwise affect the obligations of Borrower hereunder or under the Revolving Note. 1.3 Procedure for Borrowing. Each Borrowing shall be made upon Borrower's irrevocable written notice delivered to Bank in the form of a Notice of Borrowing (which notice must be received by Bank prior to 9:00 a.m. (San Francisco time) (a) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans; (b) two Business Days prior to the requested Borrowing Date, in the case of CD Rate Loans; and (c) on the requested Borrowing Date, in the case of Base Rate Loans, specifying: (i) the amount of the Borrowing, which shall be in an aggregate minimum amount of $1,000,000 or any multiple of $1,000,000 in excess thereof; (ii) the requested Borrowing Date, which shall be a Business Day; (iii) the Type of Loans comprising the Borrowing; and (iv) the duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing fails to specify the duration of the Interest Period for any Borrowing comprised of CD Rate Loans or Offshore Rate Loans, such Interest Period shall be 90 days or three months, respectively. 1.4 Conversion and Continuation Elections. (a) Borrower may, upon irrevocable written notice to Bank in accordance with subsection 1.4(b): (i) elect, as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of CD Rate Loans or Offshore Rate Loans, to convert any such Loans (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into Loans of any other Type; or (ii) elect, as of the last day of the applicable Interest Period, to continue any Loan having an Interest Period expiring on such day (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof); provided, that if at any time the aggregate amount of any CD Rate Loan or Offshore Rate Loan is reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such CD Rate Loan or Offshore Rate Loan shall automatically convert into a Base Rate Loan, and on and after such date the right of Borrower to continue such Loan as, and convert such Loan into, a CD Rate Loan or an Offshore Rate Loan, as the case may be, shall terminate. (b) Borrower shall deliver a Notice of Conversion/Continuation to be received by Bank not later than 9:00 a.m. (San Francisco time) at least (i) three Business Days in advance of the Conversion/Continuation Date, if any Loan is to be converted into or continued as an Offshore Rate Loan; (ii) two Business Days in advance of the Conversion/Continuation Date, if any Loan is to be converted into or continued as a CD Rate Loan; and (iii) on the Conversion/Continuation Date, if any Loan is to be converted into a Base Rate Loan, specifying: (A) the proposed Conversion/Continuation Date; (B) the amount of the Loan to be converted or continued; (C) the Type of Loan resulting from the proposed conversion or continuation; and (D) other than in the case of conversions into Base Rate Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to any CD Rate Loan or Offshore Rate Loan Borrower has failed to select timely a new Interest Period to be applicable to such Loan, or if any Default or event that with the giving of notice or lapse of time or both would become a Default then exists, Borrower shall be deemed to have elected to convert such Loan into a Base Rate Loan effective as of the expiration date of such Interest Period. (d) Unless Bank otherwise agrees in writing, during the existence of a Default or event that with the giving of notice or lapse of time or both would become a Default Borrower may not elect to have a Loan converted into or continued as an Offshore Rate Loan or a CD Rate Loan. 1.5 Voluntary Termination or Reduction of Commitment. Borrower may, upon not less than five Business Days' prior notice to Bank, terminate the Commitment, or permanently reduce the Commitment by an aggregate minimum amount of $1,000,000; unless, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the then-outstanding principal amount of the Loans would exceed the amount of the Commitment then in effect. Once reduced in accordance with this Section, the Commitment may not be increased. All accrued commitment fees to, but not including the effective date of any reduction or termination of Commitment, shall be paid on the effective date of such reduction or termination. 1.6 Optional Prepayments. Subject to Section 5.4, Borrower may, at any time or from time to time, upon not less than three Business Days' irrevocable notice to Bank, prepay Loans in whole or in part in an amount not less than $1,000,000. Such notice of prepayment shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. If such notice is given by Borrower, Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 5.4. 1.7 Repayment. Borrower shall repay to Bank on the Maturity Date the principal amount of Loans outstanding on such date. 1.8 Interest. (a) Each Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate, CD Rate or the Base Rate, as the case may be (and subject to Borrower's right to convert to other Types of Loans under Section 1.4), plus the Applicable Margin. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Loans under Section 1.6 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Default, interest shall be paid on demand of Bank. (c) Anything herein to the contrary notwithstanding, the obligations of Borrower to Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by Bank would be contrary to the provisions of any law applicable to Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by Bank, and in such event Borrower shall pay Bank interest at the highest rate permitted by applicable law. 1.9 Facility Fee. Borrower will pay to Bank quarterly in advance a facility fee equal to the amount of the Commitment (without regard to usage) times the Applicable Fee Percentage. 1.10 Computation of Fees and Interest. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. Each determination of an interest rate by Bank shall be conclusive and binding on Borrower in the absence of manifest error. 1.11 Payments by Borrower. All payments to be made by Borrower shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by Borrower shall be made to Bank at the address from time to time specified by Bank for such purpose, and shall be made in dollars and in immediately available funds, no later than 3:00 p.m. (San Francisco time) on the date specified herein. Any payment received by Bank later than 3:00 p.m. (San Francisco time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. Subject to the provisions set forth in the definition of "Interest Period" herein, whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. 1.12 Conditions to Lending. The obligation of Bank to make any Loan or to continue or convert any Loan under Section 2.04 is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date or Conversion/Continuation Date: (a) Notice of Borrowing or Conversion/Continuation. Bank shall have received a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable; (b) Continuation of Representations and Warranties. The representations and warranties in Article 2 shall be true and correct on and as of such Borrowing Date or Conversion/Continuation Date with the same effect as if made on and as of such Borrowing Date or Conversion/Continuation Date; and (c) No Existing Default. No Default or event that with the giving of notice or lapse of time or both would become a Default shall exist or shall result from such Borrowing or continuation or conversion. Each Notice of Borrowing and Notice of Conversion/Continuation submitted by Borrower hereunder shall constitute a representation and warranty by Borrower hereunder, as of the date of each such notice and as of each Borrowing Date or Conversion/Continuation Date, as applicable, that the conditions in Section 1.12 are satisfied." (c) Each reference in the Credit Agreement to "advance" or "advances" and "Revolving Loan" or "Revolving Loans" shall be deleted and "Loan" or "Loans, as applicable, shall be inserted in lieu thereof. (d) Article 2 shall be amended by adding the following prior to Section 2.1 thereof: "Borrower represents and warrants to Bank that:" (e) Section 2.1 shall be amended by deleting the following: "The Borrower represents and warrants to Bank that, as of the date of this Agreement and as of each request by Borrower for an advance hereunder, the" and inserting "The" in lieu thereof. (f) The following shall be added as new Sections 2.2, 2.3, 2.4 and 2.5 to the Credit Agreement, immediately following Section 2.1 thereof: "2.2 Borrower: (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado; (b) has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under this Agreement and the Revolving Note; (c) is duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license; and (d) is in compliance with all Requirements of Law; except, in each case referred to in clause (c) or clause (d), to the extent that the failure to do so could not reasonably be expected to cause (i) a material adverse change in, or a have material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of Borrower or Borrower and its subsidiaries, if any taken as a whole; (ii) a material impairment of the ability of Borrower to perform under this Agreement or the Revolving Note and to avoid any Default; or (iii) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower of this Agreement or the Revolving Note. 2.3 The execution, delivery and performance by Borrower of this Agreement and the Revolving Note and all documents given in connection herewith or therewith have been duly authorized by all necessary corporate action, and do not and will not: (a) contravene the terms of any of Borrower's certificate or articles of incorporation, bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of Borrower, any shareholder rights agreement related to Borrower, or any applicable resolutions of the board of directors (or any committee thereof) of Borrower; (b) conflict with or result in any breach or contravention of, or the creation of any lien under, any document evidencing any contractual obligation to which Borrower is a party or any order, injunction, writ or decree of any Governmental Authority to which Borrower or its property is subject; or (c) violate any Requirement of Law. 2.4 No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Borrower this Agreement or the Revolving Note. 2.5 This Agreement and the Revolving Note constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability." (g) The word "written" shall be added to the third line of Article 3 of the Credit Agreement after the word "prior" in such line. (h) The following shall be added to the Credit Agreement after subsection 3.4(d) thereof as new subsection (e): "(e) promptly after learning thereof, notice of any change in the Applicable Rating by S&P or Moody's that would change the Applicable Fee Percentage." (i) The following shall be added after the phrase "immediately due and payable" in the fifth line of Section 4.1 of the Credit Agreement: "without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; and exercise all rights and remedies available to it under the Revolving Note, this Agreement, or applicable law; provided, however, that upon the occurrence of any event specified in subsection (f) or (g) of Section 4.1 (in the case of an involuntary proceeding against Borrower as described in clause (i) of such subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of Bank to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of Bank" (j) Subsection 4.1(f) of the Agreement shall be amended and restated in its entirety as follows: "(f) Insolvency; Voluntary Proceedings. Borrower or Nordstrom, Inc. (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or" (k) The following shall be added as new Subsection 4.1(g) of the Agreement, immediately following subsection 4.1(f), and the remaining subsections of 4.1 shall be relettered accordingly: "(g)Involuntary Proceedings Proceedings"}. (i) Any involuntary Insolvency Proceeding is commenced or filed against Borrower or Nordstrom, Inc., or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of Borrower's or Nordstrom, Inc's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) Borrower or Nordstrom, Inc. admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) Borrower or Nordstrom, Inc. acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar person for itself or a substantial portion of its property or business; or" (l) Subsection 4.1(h) (after giving effect to the relettering described in subsection (k) above) of the Credit Agreement by inserting "or Nordstrom, Inc." after "Borrower" in the first line thereof, and by inserting "or Nordstrom, Inc.'s" after "Borrower's" in the sixth line thereof. (m) The following shall be added to the Credit Agreement immediately after Section 4.2 thereof as new Section 4.3: "4.3 Rights Not Exclusive. The rights provided for in this Agreement and the Revolving Note are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising." (n) The following shall be added as Article 5 of the Credit Agreement, immediately following Article 4 thereof, and Article 5 of the Credit Agreement shall be renumbered as Article 6 and the sections of such Article shall be renumbered accordingly: "ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY 5.1 Taxes. If any payments to Bank under this Agreement are made from outside the United States, Borrower will not deduct any foreign taxes from any payments it makes to Bank. If any such taxes are imposed on any payments made by Borrower (including payments under this Section), Borrower will pay the taxes and will also pay to Bank, at the time interest is paid, any additional amount which Bank specifies as necessary to preserve the after-tax yield Bank would have received if such taxes had not been imposed. Borrower will confirm that it has paid the taxes by giving Bank official tax receipts (or notarized copies) within 30 days after the due date. 5.2 Illegality. (a) If Bank determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for Bank or any applicable lending office of Bank to make Offshore Rate Loans, then, on written notice thereof by Bank to Borrower, any obligation of Bank to make Offshore Rate Loans shall be suspended until Bank notifies Borrower that the circumstances giving rise to such determination no longer exist. (b) If Bank determines that it is unlawful to maintain Offshore Rate Loans, Borrower shall, upon its receipt of notice of such fact and demand from Bank, prepay in full all Offshore Rate Loans then outstanding, together with interest accrued thereon and amounts required under Section 5.4, either on the last day of the Interest Period thereof, if Bank may lawfully continue to maintain Offshore Rate Loans to such day, or immediately, if Bank may not lawfully continue to maintain Offshore Rate Loans. If Borrower is required to so prepay any Offshore Rate Loan, then concurrently with such prepayment, Borrower shall borrow from Bank, in the amount of such repayment, a Base Rate Loan. 5.3 Increased Costs and Reduction of Return. (a) If Bank determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by Bank with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to Bank of agreeing to make or making, funding or maintaining any CD Rate Loan or Offshore Rate Loan, then Borrower shall be liable for, and shall from time to time, upon demand, pay to Bank, additional amounts as are sufficient to compensate Bank for such increased costs. (b) If Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by Bank (or any applicable lending office of Bank) or any corporation controlling Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by Bank or any corporation controlling Bank and (taking into consideration Bank's or such corporation's policies with respect to capital adequacy and Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of Bank to Borrower, Borrower shall pay to Bank, from time to time as specified by Bank, additional amounts sufficient to compensate Bank for such increase. 5.4 Funding Losses. Borrower shall reimburse Bank and hold Bank harmless from any loss or expense which Bank may sustain or incur as a consequence of: (a) the failure of Borrower to make on a timely basis any payment of principal of any CD Rate Loan or Offshore Rate Loan; (b) the failure of Borrower to borrow, continue or convert a Loan after Borrower has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of Borrower to make any prepayment in accordance with any notice delivered under Section 1.6; (d) the prepayment or other payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period; or (e) the automatic conversion under Section 1.4 of any Offshore Rate Loan or CD Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or CD Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. 5.5 Inability to Determine Rates. If Bank determines that for any reason adequate and reasonable means do not exist for determining the CD Rate or Offshore Rate for any requested Interest Period with respect to a proposed CD Rate Loan or Offshore Rate Loan, or that the CD Rate or Offshore Rate applicable pursuant to subsection 1.8(a) for any requested Interest Period with respect to a proposed CD Rate Loan or Offshore Rate Loan does not adequately and fairly reflect the cost to Bank of funding such Loan, Bank will promptly so notify Borrower. Thereafter, the obligation of Bank to make or maintain CD Rate Loans or Offshore Rate Loans, as the case may be, hereunder shall be suspended until Bank revokes such notice in writing. Upon receipt of such notice, Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If Borrower does not revoke such Notice, Bank shall make, convert or continue the Loans, as proposed by Borrower, in the amount specified in the applicable notice submitted by Borrower, but such Loans shall be made, converted or continued as Base Rate Loans instead of CD Rate Loans or Offshore Rate Loans. 5.6 Survival. The agreements and obligations of Borrower in this Article 5 shall survive the payment of all other obligations under this Agreement and the Revolving Note." (o) Section 6.1 (as renumbered after giving effect to this Amendment) of the Credit Agreement shall be amended and restated in its entirety as follows: "6.1 Notices. (a) All notices, requests and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by Borrower by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the signature page hereof with respect to such person, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, telecopied or delivered, to the address or facsimile number specified for notices on the signature page hereof with respect to such person; or, as directed to Borrower or Bank, to such other address as shall be designated by such party in a written notice to the other party. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article 1 shall not be effective until actually received by Bank. (c) Any agreement of Bank herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of Borrower. Bank shall be entitled to rely on the authority of any person purporting to be a person authorized by Borrower to give such notice and Bank shall not have any liability to Borrower or other person on account of any action taken or not taken by the Bank in reliance upon such telephonic or facsimile notice. The obligation of Borrower to repay the Loans shall not be affected in any way or to any extent by any failure by Bank to receive written confirmation of any telephonic or facsimile notice or the receipt by Bank of a confirmation which is at variance with the terms understood by the Bank to be contained in the telephonic or facsimile notice." (p) Section 6.2 (as renumbered after giving effect to this Amendment) of the Credit Agreement shall be amended by inserting after the phrase "attorneys' fees" the phrase "including allocated costs of internal counsel". (q) Section 6.5 (as renumbered after giving effect to this Amendment) of the Credit Agreement shall be amended by deleting the word "Washington" and inserting the word "California" in lieu thereof. (r) The following shall be added as new Article 7 of the Credit Agreement, immediately after Article 6 thereof: "ARTICLE 7 DEFINITIONS 7.1 Certain Defined Terms. The following terms have the following meanings: "Applicable Margin" means (i) with respect to Base Rate Loans, .0000%; (ii) with respect to CD Rate Loans, .3750%; and (iii) with respect to Offshore Rate Loans, .3750%. "Applicable Fee Percentage means, for any date, the per annum percentage amount set forth below opposite the Applicable Rating:
Applicable Rating Applicable Fee Percentage ----------------------------------------------------- S&P Moody's ------------------------------ A- or more A3 or more 0.1250% favorable favorable BBB or more Baa2 or more 0.1500% favorable favorable BBB- or less Baa3 or less favorable or favorable or not rated not rated 0.2000%
"Applicable Rating" means the most favorable ratings issued from time to time by S&P or Moody's as applicable to Borrower's senior unsecured long-term debt; provided that (a) if the most favorable ratings established by such rating agencies indicate two different pricing levels, the level corresponding to the more favorable of such ratings shall apply, (b) if only one such rating agency shall provide a rating as to Borrower's senior unsecured long-term debt, the pricing level shall be determined based upon such rating, (c) if the ratings system of either such rating agency shall change, the pricing level shall be determined based upon the rating from the agency whose ratings system is unchanged, (d) if the ratings system of both such rating agencies shall change, Borrower and Bank shall negotiate in good faith to amend the references to specific ratings in the definition of "Applicable Fee Percentage" to reflect such changed rating systems, and pending such amendment, if no pricing level is otherwise determinable based upon the foregoing, the last pricing level in effect shall apply, and (e) if neither S&P nor Moody's rates Borrower's long term senior unsecured debt, the Applicable Fee Percentage shown in the last row of the definition thereof will apply. "Base Rate" means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank in San Francisco, California, as its "reference rate." (The reference rate is a rate set by Bank based upon various factors including Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) Any change in the reference rate announced by Bank shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base Rate. "Borrowing" means a borrowing hereunder consisting of a Loan of a single Type made to Borrower on a given day by Bank under Article 1, and, other than in the case of Base Rate Loans, having a single Interest Period. "Borrowing Date" means any date on which a Borrowing occurs under Section 2.3. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the applicable offshore dollar interbank market. "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of Bank or of any corporation controlling Bank. "CD Rate" means, for any Interest Period with respect to CD Rate Loans comprising part of the same Borrowing, the rate of interest (rounded upward to the next 1/100th of 1%) determined as follows: CD Rate = Certificate of Deposit Rate + Assessment ___________________________ Rate 1.00 - Reserve Percentage Where: "Assessment Rate" means, for any day of such Interest Period, the rate determined by Bank as equal to the annual assessment rate in effect on such day payable to the FDIC by a member of Bank Insurance Fund that is classified as adequately capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification within the meaning of 12 C.F.R. S327.3) for insuring time deposits at offices of such member in the United States; or, in the event that the FDIC shall at any time hereafter cease to assess time deposits based upon such classifications or successor classifications, equal to the maximum annual assessment rate in effect on such day that is payable to the FDIC by commercial banks (whether or not applicable to Bank) for insuring time deposits at offices of such banks in the United States. "Certificate of Deposit Rate" means the rate of interest per annum determined by Bank to be the arithmetic mean (rounded upward to the next 1/100th of 1%) of the rates notified to Bank as the rates of interest bid by two or more certificate of deposit dealers of recognized standing selected by Bank for the purchase at face value of dollar certificates of deposit issued by major United States banks, for a maturity comparable to such Interest Period and in the approximate amount of the CD Rate Loan to be made, at the time selected by Bank on the first day of such Interest Period. "Reserve Percentage" means, for any day of such Interest Period, the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%), as determined by Bank, in effect on such day (including any ordinary, marginal, emergency, supplemental, special and other reserve percentages), prescribed by the FRB for determining the maximum reserves to be maintained by member banks of the Federal Reserve System with deposits exceeding $1,000,000,000 for new non-personal time deposits for a period comparable to such Interest Period and in an amount of $100,000 or more. The CD Rate shall be adjusted, as to all CD Rate Loans then outstanding, automatically as of the effective date of any change in the Assessment Rate or the Reserve Percentage. "CD Rate Loan" means a Loan that bears interest based on the CD Rate. "Commitment", as to Bank, has the meaning specified in Section 1.1. "Conversion/Continuation Date" means any date on which, under Section 1.4, Borrower (a) converts a Loan of one Type to another Type, or (b) continues as a Loan of the same Type, but with a new Interest Period, a Loan having an Interest Period expiring on such date. "Dollars", "dollars" and "$" each mean lawful money of the United States. "FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions. "Federal Funds Rate" means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by Bank of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by Bank. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession). "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. S101, et seq.), as in effect from time to time. "Interest Payment Date" means, as to any Offshore Rate Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter and each date such Loan is converted into another Type of Loan, provided, however, that if any Interest Period for a CD Rate Loan or an Offshore Rate Loan exceeds 90 days or three months, respectively, the date that falls 90 days or three months (as the case may be) after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date. "Interest Period" means, (a) as to any Offshore Rate Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Loan, and ending on the date one, two, three or six months thereafter as selected by Borrower in its Notice of Borrowing or Notice of Conversion/ Continuation; and (b) as to any CD Rate Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/Continuation Date on which the Loan is converted into or continued as a CD Rate Loan, and ending 30, 60, 90 or 180 days thereafter, as selected by Borrower in its Notice of Borrowing or Notice of Conversion/Continuation; provided that: (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Loan shall extend beyond January 20, 1998. "Loan" means an extension of credit by Bank to Borrower under Article 1, or any portion thereof remaining after or resulting from any conversion of Loans under Section 1.4, and may be a Base Rate Loan, a CD Rate Loan or an Offshore Rate Loan (each, a "Type" of Loan). "Maturity Date" means the earlier to occur of: (a) January 20, 1998; and (b) the date on which the Commitment terminates in accordance with the provisions of this Agreement. "Moody's means Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency. "Notice of Borrowing" means a notice in substantially the form of Exhibit B. "Notice of Conversion/Continuation" means a notice in substantially the form of Exhibit C. "Offshore Rate" means, for any Interest Period, with respect to any Offshore Rate Loan comprising part of the same Borrowing, the rate of interest per annum (rounded upward to the next 1/16th of 1%) determined by Bank as follows: Offshore Rate = IBOR ____________________________________ 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to Bank) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"); and "IBOR" means the rate of interest per annum determined by Bank as the rate at which dollar deposits in the approximate amount of Bank's Offshore Rate Loan for such Interest Period would be offered by Bank's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by Bank), to major banks in the offshore dollar interbank market at their request at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. The Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. "Offshore Rate Loan" means a Loan that bears interest based on the Offshore Rate. "Requirement of Law" means, as to any person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the person or any of its property or to which the person or any of its property is subject. "S&P means Standard & Poor's Ratings Group and any successor thereto that is a nationally recognized rating agency. "Type" has the meaning specified in the definition of "Loan." "United States" and "U.S." each mean the United States of America. 7.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. The term "including" is not limiting and means "including without limitation." In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." The term "person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. (c) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. This Agreement and the other Loan Documents are the result of negotiations among and has been reviewed by counsel to Bank and Borrower, and are the products of both parties. Accordingly, they shall not be construed against Bank merely because of Bank's involvement in their preparation. 7.3 Accounting Principles and Periods. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of Borrower." (s) Bank's address as set forth on the signature page of the Credit Agreement shall be amended by deleting the name and title "Stephen J. DeMarti Vice President" and inserting the name and title "Maria Vickroy-Peralta Assistant Vice President" in lieu thereof; and by adding the following immediately after such name and title: "Telephone: (415) 622-7198 Facsimile: (415) 622-4585". (t) Exhibit A to the Credit Agreement is hereby amended and restated in its entirety so that, as amended, it shall read as set forth on Exhibit A to this Amendment, which Exhibit A is incorporated herein by this reference. (u) Exhibit B to this Amendment, which is incorporated herein by this reference, is hereby added as Exhibit B to the Agreement. (v) Exhibit C to this Amendment, which is incorporated herein by this reference, is hereby added as Exhibit C to the Agreement. 3. Representations and Warranties. Borrower hereby represents and warrants to Bank as follows: (a) No Default or event which with notice or lapse of time or both would become a Default has occurred and is continuing. (b) The execution, delivery and performance by Borrower of this Amendment and the Replacement Note (as defined below) have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any Governmental Authority) in order to be effective and enforceable. The Credit Agreement, as amended by this Amendment, and the Replacement Note constitute the legal, valid and binding obligations of Borrower, enforceable against it in accordance with their respective terms, without defense, counterclaim or offset. (c) All representations and warranties of Borrower contained in the Credit Agreement are true and correct. (d) Borrower is entering into this Amendment and is executing the Replacement Note on the basis of its own investigation and for its own reasons, without reliance upon Bank or any other person. 4. Effective Date. This Amendment will become effective as of January 20, 1995 (the "Effective Date"), provided that each of the following conditions precedent has been satisfied: (a) Bank has received from Borrower a duly executed original of this Amendment. (b) Bank has received from Borrower a duly executed Revolving Note, in the form and substance of Exhibit A attached hereto (the "Replacement Note"). (c) Bank has received from Borrower a copy of a resolution passed by the board of directors of Borrower, certified by the Secretary or an Assistant Secretary of Borrower as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment and the Replacement Note. (d) an opinion of Lane Powell Spears Lubersky and Davis, Graham & Stubbs, counsel to Borrower and addressed to Bank, substantially in the form of Exhibit D. 5. Miscellaneous. (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. (c) This Amendment shall be governed by and construed in accordance with the law of the State of California. (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. (e) This Amendment, together with the Credit Agreement and the Replacement Note, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 6.4 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. NORDSTROM CREDIT, INC. By: /s/John C. Walgamott -------------------- Name: John C. Walgamott Title: President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/James C. Deichen ------------------- James C. Deichen Senior Vice President By: /s/Maria Vickroy-Peralta ------------------------ Maria Vickroy-Peralta Assistant Vice President EXHIBIT A AMENDED AND RESTATED REVOLVING NOTE $90,000,000 As of January 20, 1995 FOR VALUE RECEIVED, the undersigned, NORDSTROM CREDIT, INC., a Colorado corporation ("Borrower"), hereby promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Bank") the principal sum of Ninety Million Dollars ($90,000,000) or, if less, the aggregate unpaid principal amount of all Loans made by Bank to Borrower pursuant to the Credit Agreement, dated as of June 30, 1992 (such Credit Agreement, as amended by that certain Amendment No.1 to Credit Agreement dated as of January 1, 1993, that certain Amendment No. 2 to Credit Agreement dated as of June 29, 1993, that certain Amendment No. 3 to Credit Agreement dated as of June 30, 1994 and that certain Amendment No. 4 to Credit Agreement dated as of even date herewith, and as it may be further amended, restated, supplemented or otherwise modified from time to time, being hereinafter called the "Credit Agreement"), between Borrower and Seattle-First National Bank, which has assigned its rights and obligations thereunder to Bank, on the dates and in the amounts provided in the Credit Agreement. Borrower further promises to pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Credit Agreement. Bank is authorized to endorse the amount and the date on which each Loan is made, the maturity date therefor and each payment of principal with respect thereto on the schedules annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part hereof; provided, that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect any obligation of Borrower under the Credit Agreement and this Amended and Restated Revolving Note (this "Revolving Note"). This Revolving Note is the Revolving Note referred to in, and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The undersigned promises to pay costs of collection and attorneys' fees (including allocated costs of internal counsel) if default is made in the payment of this Revolving Note. Terms defined in the Credit Agreement are used herein with their defined meanings therein unless otherwise defined herein. THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. This Revolving Note amends and restates in its entirety, but does not extinguish the indebtedness under, the Revolving Note dated as of June 30, 1994 executed by the undersigned in favor of Bank. NORDSTROM CREDIT, INC. By: ________________________ Title: _____________________ Schedule A to Note BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
(2) (3) (4) Amount Maturity Amount of of Date of Base (5) (1) Base Base Rate Loan Notation Date Rate Loan Rate Loan Repaid Made By __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________ __________ _____________ ____________ ____________ ___________
Schedule B to Note OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
(2) (3) (4) Amount Maturity Amount of of Date of Offshore (5) (1) Offshore Offshore Rate Notation Date Rate Loan Rate Loan Loan Repaid Made By _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________ _________ _____________ ____________ ______________ __________
Schedule C to Note CD RATE LOANS AND REPAYMENT OF CD RATE LOANS
(2) (3) (4) Amount Maturity Amount of (5) (1) of CD Date of CD CD Rate Notation Date Rate Loan Rate Loan Loan Repaid Made By _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________ _________ _____________ _____________ _______________ __________
EXHIBIT B NOTICE OF BORROWING Date:________________, 199_ To: Bank of America National Trust and Savings Association, party to the Credit Agreement dated as of June 30, 1992 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Nordstrom Credit, Inc. and Bank of America National Trust and Savings Association Ladies and Gentlemen: The undersigned Nordstrom Credit, Inc. ("Borrower"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 1.3 of the Credit Agreement, of the Borrowing specified below: 1. The Business Day of the proposed Borrowing is _________________, 19 . 2. The aggregate amount of the proposed Borrowing is $_______________________. 3. The Borrowing is to be comprised of $____________ of [Base Rate] [CD Rate] [Offshore Rate] Loans. 4. The duration of the Interest Period for the [CD Rate Loans] [Offshore Rate Loans] included in the Borrowing shall be [_____ days] [_____ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of Borrower contained in Article 2 of the Credit Agreement are true and correct as though made on and as of such date; (b) no Default or event that with the giving of notice or lapse of time or both would become a Default has occurred and is continuing, or would result from such proposed Borrowing; and (c) The proposed Borrowing will not cause the aggregate principal amount of all outstanding Loans to exceed the Commitment. NORDSTROM CREDIT, INC. By:________________________ Title:_____________________ By:________________________ Title:_____________________ EXHIBIT C NOTICE OF CONVERSION/CONTINUATION Date:__________________,199_ To: Bank of America National Trust and Savings Association, party to the Credit Agreement dated as of June 30, 1992 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Nordstrom Credit, Inc. and Bank of America National Trust and Savings Association Ladies and Gentlemen: The undersigned, Nordstrom Credit, Inc. (the "Borrower"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 1.4 of the Credit Agreement, of the [conversion] [continuation] of the Loans specified herein, that: 1. The Conversion/Continuation Date is ______________, 19__. 2. The aggregate amount of the Loans to be [converted] [continued] is $ . 3. The Loans are to be [converted into] [continued as] [CD Rate] [Offshore Rate] [Base Rate] Loans. 4. [If applicable:] The duration of the Interest Period for the Loans included in the [conversion] [continuation] shall be [days] [ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Conversion/Continuation Date, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of Borrower contained in Article 2 of the Credit Agreement are true and correct as though made on and as of such date; (b) no Default or event that with the giving of notice or lapse of time or both would become a Default has occurred and is continuing, or would result from such proposed Borrowing; and (c) the proposed [conversion][continuation] will not cause the aggregate principal amount of all outstanding Loans to exceed the Commitment. NORDSTROM CREDIT, INC. By:_________________________ Title:______________________ By:_________________________ Title:______________________ EXHIBIT D FORM OF LEGAL OPINION [Date] Bank of America National Savings and Trust Association United States Division--Credit Products--San Francisco #3838 555 California Street, 41st Floor San Francisco, CA 94104 Ladies and Gentlemen: We have acted as counsel for Nordstrom Credit, Inc. ("Borrower") in connection with Amendment No. 4 to Credit Agreement dated as of January ___, 1995, between Borrower and Bank of America National Trust and Savings Association ("Bank") (the "Amendment"). The Amendment sets forth certain amendments to the Credit Agreement dated as of June 30, 1992 (as amended by that certain Amendment No. 1 to Credit Agreement dated as of January 1, 1993, that certain Amendment No. 2 to Credit Agreement dated as of June 29, 1993 and that certain Amendment No. 3 to Credit Agreement dated as of June 30, 1994, the "Credit Agreement"), between Borrower and Bank. Capitalized terms used herein have the respective meanings assigned in the Credit Agreement or the Amendment. In connection with this opinion we have examined: (i) copies of the Credit Agreement, the Amendment and the Amended and Restated Revolving Note dated as of January ___, 1995 (the "Revolving Note") executed by Borrower; (ii) resolutions adopted by the board of directors of Borrower at a meeting held on _______________________; (iii) good standing certificates with respect to Borrower issued by the Colorado Secretary of State on January ___, 1995; and (iv) originals or copies of such other documents, corporate records, certificates and other statements of government officials and corporate officers and other representatives of the persons referred to herein and of such other instruments as we have considered necessary or appropriate for purposes of this opinion. For purposes of this opinion we have assumed your due execution and delivery of the Credit Agreement and the Amendment. On the basis of the foregoing and subject to the qualifications hereinafter stated, we advise you that it is our opinion: 1. Corporate Existence and Power. Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Colorado and is qualified to do business in each other jurisdiction where the conduct of its business or the ownership of its properties requires such qualification and where failure to qualify could have a material adverse effect on the financial condition or operations of Borrower, and has full corporate power, authority and legal right to carry on its business as presently conducted, to own and operate its properties and assets, and to execute and deliver the Amendment and perform its obligations under the Credit Agreement, as amended by the Amendment, and the Revolving Note. 2. Corporate Authorization. The execution, delivery and performance by Borrower of the Amendment and Revolving Note and any borrowing hereunder have been duly authorized by all necessary corporate action of Borrower, do not require any shareholder approval or to the best of our knowledge the approval or consent of any trustee or the holders of any Indebtedness of Borrower, do not contravene any law, regulation, rule or order binding on it or its articles of incorporation or bylaws and to the best of our knowledge to not contravene the provisions of or constitute a default under an indenture, mortgage, contract or other agreement or instrument to which Borrower is a party or by which Borrower or any of its properties may be bound or affected. 3. Government Approvals, Etc. No government approval or filing or registration with any governmental authority is required for the making and performance by Borrower of the Credit Agreement, as amended by the Amendment, or the Revolving Note or in connection with Borrower's performance of its obligations under the Credit Agreement, as amended by the Amendment, or the Revolving Note. 4. Binding Obligations, Etc. The Amendment and the Revolving Note have been duly executed and delivered by Borrower and the Credit Agreement, as amended by the Amendment, and the Revolving Note constitute, the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. 5. Litigation. To the best of our knowledge there are no actions, proceedings, investigations, or claims against or affecting Borrower now pending before any court, arbitrator or governmental authority (nor to the best of our knowledge has any thereof been threatened nor does any basis exist therefor) which if determined adversely to Borrower would be likely to have a material adverse effect on the financial condition or operations of Borrower, or to result in a judgment or order against Borrower (in excess of insurance coverage) for more than $1,000,000 in any one case of $5,000,000 in the aggregate, except as set forth on the attached schedule. 6. Agreements. To the best of our knowledge Borrower is not in material breach of or material default under any material agreement to which it is a party or which is binding on it or any material part of its assets. 7. Investment Company Status. None of the Borrower or any person controlling the Borrower is (a) an "Investment Company" within the meaning of the Investment Company Act of 1940; or (b) to our knowledge, subject to regulation under any other Federal or state statute or regulation limiting its ability to incur indebtedness. 8. Regulation U, Etc.. The execution and delivery of the Credit Agreement, the Amendment and the Revolving Note, and the performance of the Credit Agreement, as amended by the Amendment, and the Revolving Note, will not conflict with or contravene any of Regulations G, T, U and X promulgated by the Federal Reserve Board. The opinions expressed above are subject to the following qualifications: (a) The enforceability of the obligations of Borrower under the Credit Agreement, as amended by the Amendment, and the Revolving Note is subject to applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally and to general principles of equity (whether asserted in an action in equity or at law). (b) We have assumed the genuineness of all signatures, the authenticity of all documents certified and submitted to us as originals and the conformity with the original documents of all documents certified and submitted to us as copies. (c) We express no opinion as to the laws of any jurisdiction other than the laws of the State of Colorado, the State of California, and the federal laws of the United States. This opinion may be relied on by you and by your participant, Seattle-First National Bank. Very truly yours, [attach schedule listing pending litigation] EX-10 6 Exhibit 10.9 LOAN AGREEMENT THIS AGREEMENT is entered into as of this 25th day of June, 1994, by and among NORDSTROM CREDIT, INC., the BANKS listed on the signature pages hereof and FIRST INTERSTATE BANK OF DENVER, N.A., as Agent. The parties hereto agree as follows: Section 1. DEFINITIONS ----------------------- 1.1 TERMS DEFINED. As used herein, the following terms have the meanings set forth below. 1.1.1 "Adjusted Fixed CD Reference Rate" has the meaning set forth in paragraph 2.5.2. 1.1.2 "Agent" means First Interstate Bank of Denver, N.A. in its capacity as agent for the Banks hereunder, or any successor Agent appointed pursuant to paragraph 9.7. 1.1.3 "Agreement" or "Loan Agreement" means this Loan Agreement as amended from time to time. 1.1.4 "Assessment Rate" has the meaning set forth in paragraph 2.5.2. 1.1.5 "Bank" means each bank listed on the signature pages hereof as having a Commitment, and its successors and assigns. 1.1.6 "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day or (ii) the Federal Funds Rate for such day plus one-half of one percent (0.5%). 1.1.7 "Borrower" means Nordstrom Credit, Inc., a Colorado corporation, and its successors. 1.1.8 "Borrowing" means a borrowing under this Agreement consisting of Loans made to the Borrower at the same time by all Banks severally. A Borrowing is a "Fixed Rate Borrowing" if such Loans are Fixed Rate Loans or a "Floating Rate Borrowing" if such Loans are Floating Rate Loans. A Borrowing may include an Initial Borrowing under which additional funds are advanced by the Banks or a Subsequent Borrowing. 1.1.9 "Business Day" means any day except a Saturday, Sunday or day on which commercial banks or the Federal Reserve Bank in New York City or in the State of Colorado are authorized by law to close. 1.1.10 "Code" means the Internal Revenue Code of 1986, as amended. 1 1.1.11 "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages hereof, as such amount may be reduced from time to time pursuant to paragraph 2.8. 1.1.12 "Consolidated Tangible Net Worth" means at any date the consolidated stockholders' equity of Borrower and its Subsidiaries less their consolidated Intangible Assets, all determined as of such date. For purposes of this definition, "Intangible Assets" means the amount (to the extent reflected in determining such consolidated stockholders' equity) of all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, organization or developmental expense and other intangible items. 1.1.13 "Consolidated Total Debt" means on a consolidated basis, the total of all items of indebtedness, obligation or liability (including, without limitation, indebtedness, obligation or liability secured by a mortgage, pledge, lien, security interest or other encumbrance on their respective properties whether or not assumed by Borrower or any of its Subsidiaries, and guaranties) of Borrower and its Subsidiaries. 1.1.14 "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code. 1.1.15 "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. 1.1.16 "Dollars" means United States Dollars unless otherwise specified. 1.1.17 "Effective Date" means the first date upon which counterparts hereof shall have been signed by all parties hereto and delivered to Agent, notice of which date shall be given by Agent to Borrower and each of the Banks. 1.1.18 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 1.1.19 "Event of Default" has the meaning set forth in Section 7. 1.1.20 "Federal Funds Rate" means the "Fed. Funds Effective Rate" as reported in the most recently available Federal Reserve\Statistical Release H-15 (or any successor publication). 1.1.21 "Fixed CD Base Reference Rate" has the meaning set forth in paragraph 2.5.2. 1.1.22 "Fixed Rate Loan" means a Loan to be made bearing interest based on the Fixed CD Base Reference Rate pursuant to the terms of this Agreement. 2 1.1.23 "Floating Rate Loan" means a Loan to be made bearing interest based on the Base Rate pursuant to the terms of this Agreement. 1.1.24 "Initial Borrowing" means a Borrowing under which additional funds are severally advanced by the Banks hereunder. 1.1.25 "Interest Period" means, (A) with respect to each Fixed Rate Borrowing, the period commencing on the date of such Borrowing and ending thirty (30), sixty (60), ninety (90) or one hundred eighty (180) days thereafter, as Borrower may elect in the applicable Notice of Borrowing; provided that the first day of any such Interest Period shall be (i) for an Initial Borrowing, the date new funds are advanced; (ii) for a Subsequent Borrowing, the last day of the next preceding Interest Period applicable to such Borrowing, which day shall also be a Business Day; and provided further that in determining the Interest Period for each Fixed Rate Borrowing: (a) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and (b) in no event shall Borrower elect any Interest Period ending later than Maturity of the Notes; and (B) with respect to each Floating Rate Borrowing, the period commencing on the date of such Borrowing and ending ninety (90) days thereafter; provided that the first day of any such Interest Period shall be (i) for an Initial Borrowing, the date new funds are advanced; (ii) for a Subsequent Borrowing, the last day of the next preceding Interest Period applicable to such Borrowing, which day shall also be a Business Day; and provided further that in determining the Interest Period for each Floating Rate Borrowing: (a) any Interest Period (other than an Interest Period determined pursuant to clause (b)(i) below) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; (b) if any Interest Period includes a date on which a payment of principal of the Loans is required but does not end on such date, then (i) the principal amount (if any) of each Floating Rate Loan required to be repaid on such date shall have an Interest Period ending on such date and (ii) the remainder (if any) of such Floating Rate Loans shall have an Interest Period determined as set forth above; and (c) in no event shall Borrower elect any Interest Period ending later than Maturity of the Notes. 1.1.26 "Line" means the revolving line of credit available to Borrower pursuant to the terms and conditions of this Agreement. 3 1.1.27 "Loan" means that portion of a Borrowing severally advanced by each Bank pursuant to the terms hereof; such term shall include a portion or portions of either Initial Borrowings or Subsequent Borrowings. 1.1.28 "Maturity of the Notes" means the date on which all principal and interest of the Notes is fully due and payable, in no event later than June 23, 1995. 1.1.29 "Nordstrom" means Nordstrom, Inc., a Washington corporation and Borrower's parent company, owning one hundred percent (100%) of Borrower's capital stock of all classes, issued and outstanding. 1.1.30 "Note" or "Notes" means one or more master promissory notes of Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of Borrower to repay the Loans as more fully described at paragraph 2.3. 1.1.31 "Notice of Borrowing" has the meaning set forth in paragraph 2.2.2. 1.1.32 "NNCB" means Nordstrom National Credit Bank, a national banking association, all of the capital stock of which is, as of the date of this Agreement, owned by Nordstrom. 1.1.33 "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. 1.1.34 "Plan" means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by Borrower or any member of a Controlled Group for employees of Borrower or any member of such Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which Borrower or any member of such Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five (5) plan years made contributions. 1.1.35 "Prime Rate" means the rate of interest publicly announced or published by First Interstate Bank of Denver, N.A. from time to time as its Prime Rate, and is not necessarily its lowest rate. 1.1.36 "Required Banks" means at any time Banks having at least sixty-six and two-thirds percent (66-2/3%) of the aggregate amount of the Commitments. 1.1.37 "Reserve Percentage" has the meaning set forth in paragraph 2.5.2. 1.1.38 "Subordinated Debt" means all indebtedness for money borrowed which, by the terms of any document or instrument representing such indebtedness, is subordinate to debts to general creditors or subordinated to debts incurred pursuant to this Agreement. 4 1.1.39 "Subsequent Borrowing" means a Borrowing which results in no net increase in the aggregate outstanding principal amount of all Loans made by the Banks hereunder and for which Borrower elects a new or different Interest Period or interest rate election. 1.1.40 "Subsidiary" means a corporation fifty percent (50%) or more of the outstanding voting stock of which is owned, directly or indirectly, by Borrower or by one or more other Subsidiaries, or by Borrower and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which originally has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. Further for purposes of this Agreement and all financial covenants contained herein, any "consolidation" of Borrower and its Subsidiaries shall include all Subsidiaries whether or not consolidated under generally accepted accounting principles. 1.1.41 "Telerate" means an automated rate quotation service provided by Telerate, Inc. or its successors. 1.1.42 "Unfunded Vested Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested nonforfeitable benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of Borrower or any member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. 1.2 OTHER ACCOUNTING TERMS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by Borrower's independent public accountants) with the most recent audited consolidated financial statements of Borrower and its Subsidiaries delivered to the Banks. Section 2. THE LINE ------------------- 2.1 AGREEMENT TO LEND. Subject to the terms and conditions of this Agreement, each Bank severally agrees to lend to Borrower and Borrower may borrow amounts not to exceed in the aggregate at any one time outstanding the amount of each Bank's Commitment. The Line shall be a revolving line of credit under which Borrower may borrow, repay and reborrow from time to time pursuant to the terms and conditions hereof. Each Borrowing shall be made from the several Banks ratably in proportion to their respective Commitments. The making of Loans to Borrower may be suspended or terminated at any time in the discretion of the Required Banks upon the occurrence of a Default. 5 2.2 METHOD OF BORROWING. 2.2.1 Amount. Each Fixed Rate Borrowing shall be in a minimum principal amount of ten million Dollars ($10,000,000) or any larger multiple of five million Dollars ($5,000,000); a Floating Rate Borrowing may be of any amount of even One Million Dollar ($1,000,000) increments; provided that in no event may any Borrowing be in excess of the unused aggregate Commitments. 2.2.2 Notice of Borrowing. (i) Borrower shall give Agent (a) a written notice signed by an authorized officer of Borrower or (b) telephonic notice from an authorized officer of Borrower or a representative designated by an authorized officer of Borrower (a "Notice of Borrowing") not later than 10:00 a.m. Denver time at least two (2) Business Days before each Borrowing, specifying: (a) the date of such Borrowing (which shall be a Business Day) and, to the extent that the Borrowing is a Subsequent Borrowing, shall be no sooner than the last day of the Interest Period applicable to such previous Borrowing(s); (b) the aggregate amount of such Borrowing; (c) whether the Loans comprising such Borrowing are to be Floating Rate Loans or Fixed Rate Loans; (d) in the case of a Fixed Rate Borrowing, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (e) that all of the conditions precedent to such Borrowing set forth in Section 3 have been met, including but not limited to all representations and warranties of Borrower hereunder being true on and as of such date and no Default having occurred and continuing. (ii) Any telephonic Notice of Borrowing shall be followed by a written Notice of Borrowing, properly executed by Borrower and received by Agent within one (1) Business Day after the telephonic Notice of Borrowing; provided, however that notwithstanding failure to receive such written Notice of Borrowing as provided hereunder, Banks may rely upon the previously given telephonic Notice of Borrowing. (iii) Upon receipt of a Notice of Borrowing (written or telephonic), Agent shall promptly notify each Bank by telephone or telecopy of the contents thereof and of such Bank's ratable share of such Borrowing; and such Notice of Borrowing shall not thereafter be revocable by Borrower. (iv) Not later than 10:00 a.m. Denver time on the day of any Borrowing, each Bank shall (except as provided in subsection (v) of this paragraph) make available its ratable share of such Borrowing, in federal or other funds immediately available in Denver, Colorado, to Agent at its 6 address specified on the signature page of this Agreement or pursuant to paragraph 10.1. Unless Agent has actual knowledge that any applicable condition precedent specified in Section 3 has not been satisfied, Agent will make the funds so received from the Banks available to Borrower by deposit to Borrower's account with Agent or otherwise at Agent's address; otherwise Agent will promptly return funds to the Banks. (v) If any Bank makes a Loan hereunder on a day on which Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its Loan to make such repayment, and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Bank to Agent as provided in subsection (iv) of this paragraph 2.2.2, or remitted by Borrower to Agent as provided hereunder, as the case may be. For purposes of this subsection (v), "a day on which Borrower is to repay all or any part of an outstanding Loan" shall include the last day of each Interest Period. 2.3 NOTES. The obligation of Borrower to repay the Loans made by each Bank pursuant to this Agreement shall be evidenced by one master promissory note payable to the order of each such Bank, in the form of Exhibit A, properly completed. Upon receipt of each Bank's Note, Agent shall mail each Bank's Note to such Bank by first class mail at the address set forth on the signature pages hereof. Each Bank shall record in its books and records, electronic or otherwise, and prior to any transfer of its Note shall endorse on the appropriate schedules forming a part thereof appropriate notations to evidence the date and amount of each Loan made by it and the date and amount of each payment of principal made by Borrower with respect thereto. Each Bank is hereby irrevocably authorized by Borrower so to endorse its Note and to attach to and make a part of such Note a continuation of any such schedule as and when required; provided, that the failure of any Bank to do so shall not affect the obligations of Borrower hereunder or under such Note. Each Bank's records and/or such endorsement on any Note shall constitute prima facie evidence of the amount of indebtedness under such Note. 2.3.1 Interest Payments. Interest accrued on the outstanding principal balance of each Loan shall be payable as follows: (i) for Floating Rate Loans, on the last day of each Interest Period; or (ii) for Fixed Rate Loans, on the last day of each Interest Period, or in the event that such Interest Period is longer than ninety (90) days, at intervals of ninety (90) days after the first day of such Interest Period and on the last day of such Interest Period; provided that in any event, all accrued interest shall be fully due and payable on Maturity of the Notes. 7 2.3.2 Optional Repayment of Principal. (i) Borrower may, upon at least two (2) Business Days' notice to Agent, repay Floating Rate Borrowings in whole at any time, or from time to time in any amount of even one hundred thousand Dollar ($100,000) increments by paying the principal amount to be repaid together with accrued interest thereon to the date of repayment. Each such optional repayment shall be applied to repay the Floating Rate Loans of the several Banks in proportion to their respective Commitments. (ii) Borrower may, upon at least four (4) Business Days' notice to Agent in the case of Fixed Rate Loans (such notice in each case to be received prior to 10:00 a.m. Denver time on the day such notice is given), repay only on the last day of any Interest Period the full principal amount of any such Fixed Rate Borrowings to which such Interest Period applies, by paying the principal amount to be repaid together with accrued interest thereon to the date of repayment. Each such optional repayment shall be applied to repay such Fixed Rate Borrowing(s) in proportion to the respective Fixed Rate Loans composing such Borrowing(s), subject to paragraph 2.10. (iii) Upon receipt of a notice of repayment pursuant to this paragraph 2.3.2, Agent shall promptly notify each Bank by telephone or telecopy of the contents of such notice and of such Bank's ratable share of such repayment, and such notice shall not thereafter be revocable by Borrower. 2.3.3 Maturity. All outstanding principal and accrued but unpaid interest of each Borrowing shall be fully due and payable on the last day of the Interest Period for such Borrowing (in addition to any payments required under 2.3.1 above), and in any event shall be fully due and payable at Maturity of the Notes. 2.4 INTEREST PERIODS. 2.4.1 Election of Interest Period. The duration of the Interest Period for each Fixed Rate Borrowing shall be as specified in the applicable Notice of Borrowing as set forth in paragraph 2.2.2. 2.4.2 Failure to Elect. If Agent does not receive a Notice of Borrowing for any Subsequent Borrowing or a notice of optional repayment pursuant to paragraphs 2.2.2 or 2.3.2 above, respectively, within the applicable time limits specified therein, Borrower shall be deemed to have given a Notice of Borrowing requesting that a Floating Rate Borrowing be made on the last day of the current Interest Period, and shall be deemed to have made the statements, representations and warranties contained in paragraph 2.2.2(e). 2.4.3 Limitations. Notwithstanding any ability of Borrower to elect Interest Periods and/or repay principal, the duration of each Interest Period shall be subject to the provisions of the definition of Interest Period. 8 2.5 INTEREST RATES. From the date of this Agreement to and including Maturity of the Notes: 2.5.1 Floating Rate Loan. Each Floating Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until due, at a rate per annum equal to the Base Rate in effect for such day; the interest rate shall change concurrently with each change in the Base Rate. 2.5.2 Fixed Rate Loan. Each Fixed Rate Loan shall bear interest on the outstanding principal amount thereof, for each Interest Period applicable thereto, at a rate per annum equal to the sum of three-eighths of one percent (3/8%) plus the applicable Adjusted Fixed CD Reference Rate. The "Adjusted Fixed CD Reference Rate" applicable to any Interest Period means a rate per annum determined pursuant to the following formula: ACDR = [ CDBR ]* + AR [ 1.00 - RP ] ACDR = Adjusted Fixed CD Reference Rate CDBR = Fixed CD Base Reference Rate RP = Reserve Percentage AR = Assessment Rate * The amount in brackets being rounded upwards, if necessary, to the next higher 1/100 of 1%. The "Fixed CD Base Reference Rate" applicable to any Interest Period is the rate of interest determined by Agent to be the secondary market bid quote for top-tier U.S. bank certificates of deposit having a maturity comparable to such Interest Period appearing on the appropriate page of Telerate one (1) Business Day before the first day of such Interest Period. The "early" certificate of deposit bid quote is used for Borrowings funded on or between the first and fifteenth day of any month and the "late" CD bid quote is used for Borrowings funded on or between the sixteenth and last day of any month. "Reserve Percentage" means for any day that percentage (including any supplemental percentage applied on a marginal basis or any other reserve requirement having a similar effect), expressed as a decimal, which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirement (including without limitation any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System in respect of new non-personal time deposits in Dollars having a maturity comparable to the related Interest Period, and in an amount of one hundred thousand Dollars ($100,000) or more. The Adjusted Fixed CD Reference Rate may be adjusted on and as of the effective date of any change in the Reserve Percentage. 9 "Assessment Rate" means for any Interest Period the gross annual assessment rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) incurred by First Interstate Bank of Denver, N.A. to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of First Interstate Bank of Denver, N.A. in the United States during the most recent period for which such rate has been determined prior to the commencement of such Interest Period. 2.5.3 Default Rates. (i) Notwithstanding the foregoing, if any interest payment is not made when due, the Loan on which such interest payment is delinquent and, to the extent permitted by law, any overdue interest, shall bear interest, payable on demand, for each day until paid at a per annum rate equal to the sum of one percent (1%) plus the interest rate then applicable to such Loan until the earlier of the end of (a) the applicable Interest Period or (b) acceleration of the Loan pursuant to Section 7, at which time the principal amount of such Loan shall be due and owing. (ii) If any principal payment is not made when due, the principal amount, and to the extent permitted by law, any overdue interest, shall bear interest payable on demand for each day until paid at a per annum rate equal to the sum of one percent (1%) plus the rate applicable to Floating Rate Loans for such day; all such interest shall be payable on demand. 2.5.4 Determination of Interest Rates. (i) Agent shall determine each interest rate applicable to the Loans hereunder. Agent shall give prompt notice to Borrower and the Banks by telephone or telecopy of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (ii) In the event that the use of the procedure described in paragraph 2.5.2 for computation of Fixed CD Base Reference Rate is precluded for any reason, including but not limited to Agent's determination that the information required to compute the effective interest rate is not available through Telerate or similar service for more than one (1) Business Day, Agent will use as the Fixed CD Base Reference Rate the rate determined by Agent to be the arithmetic average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rate quoted by two (2) or more New York certificate of deposit dealers of recognized standing determined to most closely approximate the Telerate quote specified for determination of such rate in paragraph 2.5.2 for certificates of deposit having a maturity comparable to the applicable Interest Period and in an amount approximately equal to the Fixed Rate Borrowing to be made by the several Banks. 10 Such procedure change will be communicated to Borrower and each of the Banks. If no such quotation is available on a timely basis, the provisions of paragraph 2.6.1 shall apply. 2.5.5 Computation. Interest on Fixed Rate Loans shall be computed on the basis of a year of three hundred sixty (360) days and paid for the actual number of days elapsed, calculated as to each Interest Period from and including the first day thereof to but excluding the last day thereof. Interest on Floating Rate Loans shall be computed on the basis of a year of three hundred sixty-five (365) days (366 in a leap year) and paid for the actual number of days elapsed, calculated as to each Loan from and including the first day of such Loan to but excluding the date of repayment. 2.6 ADJUSTMENTS TO INTEREST RATES. 2.6.1 Basis for Determining Interest Rate Inadequate or Unfair. (i) If with respect to any Interest Period for a Fixed Rate Loan: (a) Agent determines that the information required to compute the effective interest rate is not available through Telerate or some similar service because deposits in Dollars (in the applicable amounts) are not being offered to or by (as the case may be) a sufficient number of banks in the relevant market for such Interest Period, or (b) the Required Banks advise Agent that the Adjusted Fixed CD Reference Rate as determined by Agent will not adequately and fairly reflect the cost to such Banks of maintaining or funding their Fixed Rate Loans for such Interest Period, Agent shall forthwith give notice thereof to Borrower and the Banks, whereupon until Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, (A) the obligations of the Banks to make Fixed Rate Loans shall be suspended and (B) Borrower shall repay in full the then- outstanding principal amount of each affected Fixed Rate Loan together with accrued interest thereon, on the last day of the then-current Interest Period applicable to such Loan. Concurrently with repaying each such Fixed Rate Loan of each Bank pursuant to this paragraph, Borrower may borrow a Floating Rate Loan in an equal principal amount from such Bank, and such Bank shall make such a Floating Rate Loan. (ii) If with respect to any Interest Period for a Fixed Rate Loan, any Bank provides reasonable proof to Agent and Borrower that the Telerate quote for the Fixed CD Base Reference Rate does not adequately and fairly reflect the cost to such Bank of maintaining or funding its Fixed Rate Loans for such Interest Period in an amount deemed by such Bank to be material, then within fifteen (15) days after demand by such Bank made to Agent and made promptly by Agent to Borrower, Borrower shall pay to Agent for the account of such Bank such additional amount or amounts as will compensate such Bank for such increased cost. Each Bank will promptly notify Borrower and Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank 11 to compensation pursuant to this paragraph by providing to Borrower and Agent a certificate of such Bank claiming compensation under this paragraph and setting forth the additional amounts to be paid to it hereunder. Such certificate shall be conclusive in the absence of manifest error. 2.6.2 Illegality. If, after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank to make, maintain or fund its Fixed Rate Loans and such Bank shall so notify Agent, Agent shall forthwith give notice thereof to the other Banks and Borrower. Upon receipt of such notice, Borrower shall repay in full the then outstanding principal amount of each Fixed Rate Loan of such Bank, together with accrued interest thereon, on either (i) the last day of the then-current Interest Period applicable to such Fixed Rate Loan if such Bank may lawfully continue to maintain and fund such Fixed Rate Loan to such day or (ii) immediately if such Bank may not lawfully continue to fund and maintain such Fixed Rate Loan to such day. Concurrently with repaying each affected Fixed Rate Loan of such Bank, Borrower shall borrow a Floating Rate Loan in an equal principal amount from such Bank, and such Bank shall make such a Floating Rate Loan. 2.6.3 Increased Cost and Reduced Returns. (i) If after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (a) shall subject any Bank to any tax, duty, or other charge with respect to its Loans, its Note or its obligation to make Loans, or shall change the basis of taxation of payments to any Bank of the principal of or interest on its Loans or any other amount due under this Agreement in respect of its Loans or its obligation to make Loans (except for changes in the rate of tax on the overall net income of such Bank imposed by the jurisdiction in which such Bank's principal executive office is located); or (b) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding, with respect to any Fixed Rate Loan, any such requirement already included in an applicable Reserve Percentage), or shall impose on any Bank or on the United States market for 12 certificates of deposit any other condition affecting its Loans, its Note or its obligation to make Loans; and the result of any of the foregoing is to increase the cost to such Bank of making or maintaining any Loan, or to reduce the amount of any sum received or receivable by such Bank under this Agreement or under its Note by an amount deemed by such Bank to be material, then within fifteen (15) days after demand by such Bank made to Agent and made promptly by Agent to Borrower, Borrower shall pay to Agent for the account of such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. If any Bank demands compensation under this paragraph 2.6.3(i), Agent shall so notify all Banks hereunder, and Borrower may at any time, upon at least five (5) Business Days' prior notice to Agent on behalf of such Bank, and Agent having promptly notified such Bank of receipt of such notice, repay to Agent for such Bank's account the full amount of the then-outstanding Fixed Rate Loans of such Bank, together with a) accrued interest thereon to the date of prepayment and b) the compensation requested. Concurrently with repaying such Fixed Rate Loans of such Bank, Borrower shall borrow from such Bank a Floating Rate Loan in an amount equal to the aggregate principal amount of such Fixed Rate Loans, and such Bank shall make such a Floating Rate Loan. (ii) If after the date hereof, any Bank shall have determined that the adoption of or compliance with any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Bank's capital as a consequence of its obligations hereunder to a level below that which Bank could have achieved but for such adoption, change or compliance (taking into consideration Bank's policies with respect to capital adequacy) by an amount deemed by Bank to be material, then from time to time, within fifteen (15) days after demand by Bank, Borrower shall pay to such Bank such additional amount or amounts as will compensate Bank for such reduction. (iii) Each Bank will promptly notify Borrower and Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this paragraph. A certificate of any Bank claiming compensation under this paragraph and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. 2.6.4 Floating Rate Loans Substituted for Affected Fixed Rate Loans. If notice has been given by a Bank pursuant to paragraph 2.6.2 or by Borrower pursuant to paragraph 2.6.3 requiring Fixed Rate Loans of any Bank to be repaid, then, unless and until such Bank notifies Agent and Borrower that the circumstances giving rise to such repayment no longer apply: (i) all Loans which would otherwise be made by such Bank as Fixed Rate Loans shall be made instead as Floating Rate Loans, and 13 (ii) after each of its Fixed Rate Loans has been so repaid, all payments and prepayments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Floating Rate Loans instead. If such Bank notifies Borrower and Agent that the circumstances giving rise to such repayment no longer apply, Borrower may borrow a Fixed Rate Loan from such Bank on the first day of the next succeeding Interest Period applicable to each related Borrowing in the amount of the Fixed Rate Loan which would have been outstanding from such Bank as part of such Borrowing if the provisions of paragraphs 2.6.2 or 2.6.3 had never applied, and concurrently with each such Borrowing shall repay an equal principal amount of such Bank's outstanding Floating Rate Loans. 2.7 COMMITMENT FEE. Borrower shall pay to Agent for the account of each Bank a commitment fee at the rate of three-sixteenths of one percent (3/16%) per annum on the total of each Bank's Commitment. Such commitment fee shall accrue from and including the date of this Agreement through the Maturity of the Notes, and shall be payable in arrears on the last Business Day of each calendar quarter beginning September 30, 1994. Such fee shall be based on the actual number of days elapsed divided by three hundred sixty-five (365) (or three hundred sixty-six (366) in a leap year). 2.8 TERMINATION OR REDUCTION OF COMMITMENT. Borrower may, upon at least five (5) Business Days' notice to Agent, terminate entirely at any time, or proportionately and permanently reduce from time to time by an aggregate amount of ten million Dollars ($10,000,000) or any larger multiple of five million Dollars ($5,000,000), the aggregate unused portions of the Commitments. If the Commitments are terminated in part or in their entirety, all accrued commitment fees on the terminated portion shall be payable on the effective date of such termination. 2.9 GENERAL PROVISIONS AS TO PAYMENTS. 2.9.1 Payment and Distribution. Borrower shall make each payment of principal of, and interest on, the Loans and of commitment fees and any other amounts due hereunder, not later than 10:00 a.m. Denver, Colorado, time on the date when due, in federal or other Dollar funds immediately available in Denver, Colorado, to Agent for the accounts of the several Banks at Agent's address specified on the signature page hereof or such other address pursuant to paragraph 10.1. Agent will promptly distribute to each Bank its ratable share of each such payment received by Agent for the account of the Banks. 2.9.2 Adjusted Payment Date. Whenever any payment of principal of, or interest on, the Loans or of commitment fees shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. 2.10 Funding Losses. (i) If Borrower makes any payment of principal with respect to any Fixed Rate Loan (pursuant to Section 7 or paragraphs 2.6.1(i), 2.6.2, 2.6.3 or 2.6.4 or otherwise) on any day other than the last 14 day of an Interest Period applicable thereto (whether voluntarily or otherwise) or (ii) if Borrower fails to repay any Fixed Rate Loan after notice has been given to any Bank in accordance with paragraph 2.3.2(iii), or (iii) if Borrower fails to borrow after notice has been given by Agent to any Bank in accordance with paragraph 2.2.2(iii), Borrower shall reimburse each Bank on demand made through Agent for any resulting loss or expense incurred by such Bank, including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, including loss of margin for the period before, but excluding loss of margin for the period after, any such payment; provided that such Bank shall have delivered to Agent and Agent shall have delivered to Borrower a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Section 3. CONDITIONS PRECEDENT -------------------------------- 3.1 CONDITIONS PRECEDENT TO BORROWING. The several obligations of the Banks to make any Loan are subject to satisfaction of the following conditions before the first Borrowing: 3.1.1 Agreement and Notes. Borrower shall have executed and delivered to Agent for the account of each Bank this Loan Agreement and the Notes, one payable to the order of each of the Banks, each such Note dated on or before the date of the first Borrowing. 3.1.2 Opinion of Counsel. Borrower shall have delivered to Agent, on or before the date of the first Borrowing, an opinion of Borrower's counsel stating that: (i) Borrower is a corporation duly organized, validly existing and in good standing under the laws of Colorado, and Borrower and each of its Subsidiaries has all corporate power required to carry on its business as now conducted, and is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it, or in which the transaction of its business, makes such qualification necessary. (ii) The execution, delivery and performance by Borrower of this Agreement and the Notes are within Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official, and do not contravene or constitute a default under any provision of applicable law or regulation or of the certificate of incorporation or by-laws of Borrower or to the best of such counsel's knowledge of any agreement, bond, debenture, note, contract, indenture, judgment, injunction, order, decree or other instrument binding upon Borrower, or result in the creation or imposition of any lien on any asset of Borrower. 15 (iii) This Agreement and the Notes each constitutes a valid and binding agreement of Borrower, each enforceable in accordance with its terms subject to bankruptcy and insolvency laws and enforceability of creditor's rights generally. (iv) There is no action, suit or proceeding pending against, or to the best of counsel's knowledge threatened against or affecting, Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, financial position or results of operations of Borrower or which in any manner questions the validity of the Loan Agreement or the Notes. (v) To the best of counsel's knowledge, Borrower and all members of the Controlled Group have fulfilled their obligations under the minimum funding standards of ERISA with respect to each Plan to which it is a party, and have not incurred any liability to the PBGC in connection with any Plan established or maintained by Borrower or any member of the Controlled Group. (vi) Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 3.1.3 Certificate of Incumbency; Resolution. Agent shall have received: (i) a certificate signed by the Secretary of Borrower and dated the Effective Date as to the incumbency of the person or persons authorized to execute and deliver this Agreement, the Notes, Notices of Borrowing, and all other documents or instruments required hereunder, and to give telephonic Notices of Borrowing; and (ii) certified copies of resolutions adopted by the Board of Directors of Borrower authorizing execution, delivery and performance of this Agreement, the Notes and all other instruments or agreements required hereunder, each of which shall affirmatively permit Agent and Banks to rely thereon until Agent has received a certified copy of a resolution or incumbency certificate revoking or modifying the previous certificate or resolution. 3.1.4 Agent's Fee. Agent shall have received from Borrower the sum of ten thousand Dollars ($10,000) as its agent's fee at or prior to the Effective Date. 3.1.5 Other Evidence. Agent shall have received all documents and other evidence it may reasonably request relating to the existence of Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to Agent. 16 3.2 CONDITIONS PRECEDENT TO EACH BORROWING. The several obligations of the Banks to make each Loan or to make any such Loan is subject to satisfaction of the conditions stated in 3.1 above and the following additional conditions: 3.2.1 Notice of Borrowing. Agent shall have received a Notice of Borrowing as required by paragraph 2.2.2 or shall be deemed to have received such Notice of Borrowing under paragraph 2.4.2. 3.2.2 Representations and Warranties. All representations and warranties set forth in Section 4 below shall be true as of the date of any Borrowing with the same effect as if those such representations and warranties were made on and as of that date. 3.2.3 No Default. No Default hereunder shall be caused by such Borrowing or shall have occurred and be continuing. Each Notice of Borrowing pursuant to paragraph 2.2.2 and each Borrowing hereunder shall be deemed to be a representation and warranty by Borrower on the date of such notice or Borrowing, as the case may be, as to the facts specified in paragraphs 3.2.2 and 3.2.3 above. Section 4. REPRESENTATIONS AND WARRANTIES ----------------------------------------- Borrower hereby represents and warrants that: 4.1 ORGANIZATION AND GOOD STANDING. It is a corporation duly organized and validly existing in good standing under the laws of the State of Colorado with corporate and other power and authority to own its properties and conduct its business as presently conducted; it and each of its Subsidiaries is duly licensed and qualified as a foreign corporation in good standing in all jurisdictions in which the character of the property owned or leased or the nature of the business conducted by it requires such licensing or qualification. 4.2 VALIDITY OF AGREEMENT. This Agreement has been duly authorized, executed and delivered by it and constitutes its valid and binding agreement, enforceable in accordance with its terms. 4.3 VALIDITY OF NOTES. The Notes have been duly and validly authorized by all necessary corporate action, and having been executed and delivered pursuant to the provisions of this Agreement, each constitutes Borrower's valid and binding obligation enforceable in accordance with the terms of such Note and the terms of this Agreement. 4.4 EXISTING DEFAULTS. It is not in violation of its articles of incorporation or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any bond, debenture, note, contract, indenture, mortgage, loan agreement, lease or any other evidence of indebtedness, agreement or instrument to which it is a party or by which it or any of its properties may be bound. 17 4.5 NO DEFAULT IN OTHER AGREEMENT. The execution, delivery and performance of this Agreement, the incurrence of the obligations herein set forth and the consummation of the transactions herein contemplated will not result in the creation of a lien on any of its property and will not conflict with, result in a breach of any of the terms, conditions or provisions of, or constitute a default under its articles of incorporation or by-laws or any bond, debenture, note, contract, indenture, mortgage, loan agreement, lease or any other evidence of indebtedness, agreement or instrument to which it is a party or by which it or any of its properties may be bound, or result in violation by it of any law, order, rule or regulation of any court or governmental agency or body having jurisdiction over it or any of its properties. 4.6 NO CONSENTS OR APPROVALS. No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by it of the transactions contemplated by this Agreement. 4.7 LITIGATION. There is no material litigation at law or in equity and no proceedings before any commission or other administrative authority pending or to its knowledge threatened against or affecting it or its Subsidiaries other than as disclosed pursuant to paragraph 6.11, and there is no such matter which constitutes a Default hereunder. 4.8 COMPLIANCE WITH ERISA. Borrower and all members of the Controlled Group have fulfilled their obligations under the minimum funding standards of ERISA with respect to each Plan to which it is a party and have not incurred any liability to the PBGC in connection with any Plan established or maintained by Borrower or any member of the Controlled Group. 4.9 TAXES. It has filed (or has obtained extensions of the time by which it is required to file) all United States federal income tax returns and all other material tax returns required to be filed by it and has paid all taxes shown due on the returns so filed as well as all other material taxes, assessments and governmental charges which have become due, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. 4.10 NOT AN INVESTMENT COMPANY. It is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 4.11 FULL DISCLOSURE; NO MATERIAL CHANGE. All information heretofore furnished by it to Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by it to Agent or any Bank will be, true and accurate in every material respect or based on reasonable estimates on the date as of which such information is stated or certified, including but not limited to its financial statements dated as of January 31, 1994. It has disclosed to the Banks in writing any and all facts which materially and adversely affect or may affect (to the extent Borrower can reasonably foresee), its business, operations, prospects or condition, financial or otherwise, and its Subsidiaries or its ability to perform its obligations under this Agreement. There has been no material adverse change 18 in Borrower's financial condition since its financial statements dated January 31, 1994. 4.12 INVESTMENT AND OPERATING AGREEMENTS. That certain INVESTMENT AGREEMENT Between NORDSTROM, INC. And NORDSTROM CREDIT, INC. Dated as of October 8, 1984, wherein Nordstrom agrees, among other terms, to provide certain financial support for Borrower and to subordinate all debt of Borrower to Nordstrom or its subsidiaries to Borrower's other debt (including indebtedness incurred hereunder), and that certain OPERATING AGREEMENT Between NORDSTROM NATIONAL CREDIT BANK And NORDSTROM CREDIT, INC. Dated as of August 30, 1991, are in full force and effect, have not been amended, and are intended to benefit lenders to Borrower, and there has been no default or breach of either of such agreements by any party thereto. Section 5. NEGATIVE COVENANTS ----------------------------- Borrower hereby covenants and agrees that so long as any Commitment hereby granted shall remain available and until full and final payment of all indebtedness incurred hereunder, it will not without the prior written consent of the Required Banks: 5.1 OTHER ACTIVITIES. Change the general character of its business as conducted at the date hereof or engage, directly or through a Subsidiary, in any type of business not reasonably related to its business as normally conducted. 5.2 SALE OF ASSETS. Sell, lease or otherwise dispose of (or allow any Subsidiary to do any of the foregoing) such property as in the opinion of the Required Banks constitutes a material portion of its assets except in the ordinary course of business and for full, fair and reasonable consideration. For purposes of this paragraph, assets constituting five percent (5%) or more of Borrower's or any Subsidiary's respective assets in any fiscal year, non- cumulative from year to year, shall be presumptively deemed "material" although a lesser amount may constitute "a material portion" in the proper circumstances. 5.3 STOCK ACQUISITION. Purchase (nor will it permit any Subsidiary to purchase) any stock of any class of Borrower or any debentures, notes or other debt instruments of Borrower. 5.4 STOCK ISSUANCE; Disposition. Issue or sell any shares of its stock, other than to Nordstrom. Nordstrom shall at all times directly or indirectly own and hold the entire legal and beneficial interest in and to all the outstanding shares of stock of Borrower and shall not have, directly or indirectly, sold, exchanged, transferred, pledged or any way encumbered or otherwise disposed of any such shares of stock. 5.5 LIQUIDATION, MERGER, DISSOLUTION. (i) Liquidate or dissolve or enter into any consolidation, merger, pool, joint venture, syndicate or other combination unless Borrower is the surviving corporation and no Default would be caused thereby, or (ii) sell, lease or dispose of its business or assets as a whole. 19 5.6 EXTENSION OF CREDIT; DEALINGS WITH NORDSTROM. Purchase or otherwise acquire, hold or invest in the securities of or make any loans or advances to any other person or entity except (i) in the ordinary course of business or (ii) to Nordstrom, NNCB or any of their respective subsidiaries or to any Subsidiary of Borrower, if such loans (a) do not exceed fifty million Dollars ($50,000,000) in the aggregate at any one time outstanding, (b) do not remain outstanding in excess of sixty (60) days; (c) are for general operating purposes only; and (d) are on terms and conditions similar to those Borrower could negotiate with a non affiliated party, including interest rates and collateral and do not involve more than normal risk of repayment or present other unfavorable features; provided however, in no event shall Borrower lend to Nordstrom or NNCB directly or indirectly any part of the Line or proceeds thereof.The performance by NNCB and Borrower of the activities contemplated by the Operating Agreement shall not be construed as a violation of this Section 5.6 5.7 LIENS AND ENCUMBRANCES. Create or suffer to exist any security interest, lien or other encumbrance on any of its or its Subsidiaries' property or assets of any kind or nature except those that exist at the date of, or are contemplated by, this Agreement or exist on such property at the date of its purchase by Borrower or its Subsidiary; provided that liens are allowed on fixed assets securing debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such fixed assets; provided further that such lien attaches to such fixed assets concurrently with or within 90 days after the acquisition thereof; and provided further that liens are allowed for taxes, assessments, governmental charges, materialmen's liens or mechanic's liens not yet due or which are being contested in good faith by appropriate proceedings. 5.8 REGULATION U. Use any proceeds of the Loans, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any "margin stock," within the meaning of Regulation U of the Board of Governors of the Federal Reserve System. Neither Borrower nor any Subsidiary will engage principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any such margin stock within the meaning of such Regulation U. 5.9 INVESTMENT AND OPERATING AGREEMENTS. Amend the INVESTMENT AGREEMENT Between NORDSTROM, INC. And NORDSTROM CREDIT, INC. Dated as of October 8, 1984, or the OPERATING AGREEMENT Between NORDSTROM NATIONAL CREDIT BANK And NORDSTROM CREDIT, INC. Dated as of August 30, 1991, either formally or through course of dealing in any manner that will have a material impact on Borrower, or terminate or fail to enforce or ensure compliance with such agreements or either of them if such termination or failure will have a material impact on Borrower; without limiting the generality of the foregoing, Borrower and Banks specifcally agree that "material impact" shall presumptively include but not be limited to (i) ownership of all or any part of the voting stock of Borrower by any person or entity other than Nordstrom, (ii) abrogation of Nordstrom's obligation to ensure that Borrower maintains a positive net worth, (iii) abrogation of Nordstrom's obligation to ensure that Borrower's Fixed Charges Ratio (as defined in the INVESTMENT AGREEMENT Between NORDSTROM, INC. And NORDSTROM CREDIT, INC. Dated as of October 8, 1984) is no less than 1.25 to 1; or (iv) failure by Nordstrom to subordinate 20 all debt of Borrower to Nordstrom and its subsidiaries to Borrower's other debt. Banks acknowledge that the modification of the Operating Agreement or the entering into a new Operating Agreement between the Borrower and NNCB, and/or between Nordstrom and the Borrower which deals with the assignment of VISA card accounts, the settlement of such accounts, and the servicing of such accounts and which will not have any of the "material impacts" described above in this Section 5.9, will not be considered to be amendments of any of the Operating Agreements or failures to enforce or ensure compliance with the Operating Agreements which would have a material impact upon the Borrower. Section 6. AFFIRMATIVE COVENANTS --------------------------------- In addition to other terms and conditions under this Agreement and the Notes, Borrower agrees with Banks that so long as any unpaid balance of any Loan or any Commitment under this Agreement shall be outstanding, Borrower will: 6.1 CONSOLIDATED COVERAGE. Maintain as at the end of each fiscal quarter a Consolidated Coverage Ratio of not less than 1.25 to 1. The "Consolidated Coverage Ratio" means a ratio at the date at which the determination is made determined pursuant to the following formula based on figures for the immediately preceding fiscal quarter: IAFC ----- CCR = FC CCR = Consolidated Coverage Ratio IAFC = Income Available for Fixed Charges FC = Fixed Charges "Income Available for Fixed Charges" means the net income of Borrower determined in accordance with generally accepted accounting principles, except that such determination shall be made before any deduction for Fixed Charges or provision for taxes in respect of income. "Fixed Charges" means the quarterly interest charges on the aggregate principal amount of Debt of Borrower outstanding during the period. "Debt" means all obligations of Borrower which in accordance with generally accepted accounting principles would be included in determining total liabilities as shown on the liability side of a balance sheet as of the date that Debt is to be determined. 6.2 CONSOLIDATED TOTAL DEBT TO CONSOLIDATED TANGIBLE NET WORTH. Maintain as at the end of each fiscal quarter a ratio of Consolidated Total Debt (adjusted by deducting consolidated Subordinated Debt) to Consolidated Tangible Net Worth (adjusted by adding consolidated Subordinated Debt) of five to one (5.0:1.0) or less. 21 6.3 CONSOLIDATED TANGIBLE NET WORTH. Maintain at all times a positive Consolidated Tangible Net Worth. 6.4 FINANCIAL INFORMATION. Deliver to Agent for the benefit of each Bank: (i) as soon as practicable but in no event later than forty- five (45) days after the close of each of the first three (3) quarters of each fiscal year a consolidated financial statement (including at least a consolidated balance sheet as of the close of such quarter, and consolidated statement of income, shareholders' equity and cash flow statement for each such quarter and for that part of the fiscal year ending with the last day of each such quarter) for each of Borrower, Nordstrom and NNCB++ , each prepared for such entity and any subsidiaries by such entity's chief accounting or chief financial officer in accordance with generally accepted accounting principles consistently applied; (ii) as soon as practicable but in no event later than ninety (90) days after the close of each fiscal year, consolidated financial statement for each of Borrower, Nordstrom and NNCB and any subsidiaries of each such entity (including at least a consolidated balance sheet as of the close of each such fiscal year and a consolidated statement of income, shareholders' equity and cash flow statement for each such fiscal year as at the end thereof, each setting forth the same data for the immediately preceding fiscal year) prepared and audited by an independent certified public accountant acceptable to the Banks in accordance with generally accepted accounting principles consistently applied; (iii) simultaneously with the delivery of each set of financial statements referred to in clauses (i) and (ii) above, a certificate of the president, chief financial officer or the chief accounting officer of Borrower (a) setting forth in reasonable detail the calculations required to establish whether Borrower was in compliance with the requirements of paragraphs 6.1 through 6.3 inclusive, on the date of such financial statements and (b) stating whether there exists on the date of such certificate any Default and, if any Default then exists, setting forth the details thereof and the action which Borrower is taking or proposes to take with respect thereto; (iv) simultaneously with the delivery of each set of financial statements referred to in clause (ii) above, a statement of the firm of independent public accountants which reported on such statements stating ___________________________ ++ To the extent that NNCB is a national banking association and therefore prepares and/or refers to its reports of financial information in accordance with certain regulatory requirements not applicable to other entities, provision of NNCB'S "call reports" in lieu of the financial information required for NNCB under the provisions of subparagraphs(i), (ii), and (vii) of this paragraph 6.4 shall be deemed compliance with those subparagraphs. 22 whether anything has come to their attention to cause them to believe that there existed on the date of such statements any Default; (v) forthwith upon the occurrence of any Default, a certificate of the chief financial officer or the chief accounting officer of Borrower setting forth the details thereof and the action which Borrower is taking or proposes to take with respect thereto; (vi) promptly upon the mailing thereof to the shareholders of each of Borrower, Nordstrom and/or NNCB copies of all financial statements, reports and proxy statements so mailed; (vii) promptly upon the filing thereof, copies of all registration statements and annual, quarterly or monthly reports which Borrower, Nordstrom and/or NNCB shall have filed with the Securities and Exchange Commission; (viii) if and when Borrower or any member of the Controlled Group gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; and (ix) from time to time such additional information regarding the operation, financial position or business of Borrower, Nordstrom, NNCB and/or any of their respective subsidiaries as Agent, at the request of any Bank, may reasonably request. 6.5 ACCOUNTING. Keep, and cause each Subsidiary to keep, its books of account in accordance with generally accepted accounting principles consistently applied. 6.6 INSURANCE. Maintain, and cause each Subsidiary to maintain, insurance with financially sound and reputable insurance companies or associations (or provide adequate self-insurance) of the kinds covering the risks and in such amounts usually carried by companies engaged in businesses similar to that of Borrower, and further agrees to provide to Agent evidence of said insurance as any Bank through Agent may, from time to time, request. 6.7 MAINTENANCE OF PROPERTY. Maintain, preserve and keep its buildings, machinery, equipment and other property in good condition, repair and working order for the proper and efficient operation of its business, take all such actions as are necessary and reasonable to prevent offsets or defenses to assets which represent a right to payment, and cause each Subsidiary to similarly maintain and preserve its assets. 6.8 TAXES; LEGAL COMPLIANCE. Pay all taxes, assessments or governmental charges levied, assessed or imposed against it or its income or its properties, real, personal or mixed, or arising out of its operations promptly as they become due and payable; comply promptly with all laws and 23 regulations of the federal government and of any state of the United States and of any foreign jurisdiction in which it transacts business or owns property, and any of their subdivisions, departments or agencies applicable to the business; and cause each Subsidiary to similarly pay and comply. Borrower will (and will cause each Subsidiary to) promptly pay and discharge all claims of any kind (including claims for labor, material and supplies) which, if unpaid, might by law become a lien or charge upon its property; provided, however, that neither Borrower nor any Subsidiary shall be required to pay any such tax, assessment, charge, levy or claim as long as the amount, applicability or validity thereof shall be contested in good faith by appropriate proceeding and provided adequate reserves are set aside. 6.9 LEGAL EXISTENCE. Maintain, and cause each Subsidiary to maintain, its legal existence and its right to carry on business in any jurisdiction where it is doing business and remain in and continuously operate the same lines of business presently engaged in except for periodic shut-down in the ordinary course of business and interruptions caused by strike, labor dispute, catastrophe or any other events over which it has no control. 6.10 INSPECTION. Permit any Bank at any reasonable time, and from time to time, to visit and inspect its and its Subsidiaries' properties and offices and to examine such books of account and to conduct such investigation as such Bank may deem appropriate. 6.11 LAWSUITS. Promptly notify Agent of any lawsuit, claim, proceeding or action of any kind against Borrower or its Subsidiaries in which the amount sought is or may be one million Dollars ($1,000,000) or more, or of any lawsuits, claims, proceedings and/or actions of any kind for which the aggregate amount sought, threatened or pending at any one time is or may be five million Dollars ($5,000,000) or more. 6.12 PRINCIPAL EXECUTIVE OFFICE. Promptly notify Agent of any move or contemplated move of its principal executive office from the State of Colorado. 6.13 COSTS AND ATTORNEYS' FEES. Promptly upon demand by Agent pay to and reimburse Agent for the account of each Bank for all costs and expenses, which any Bank may expend or incur in the enforcement of any of the terms or provisions of this Agreement, the Notes, any security agreements or any other documents pertaining to or arising from the Loans or any of them. In the event any obligation of Borrower is referred to an attorney for protecting or defending a Bank's or Agent's interest hereunder or for collection or realization procedures, Borrower agrees to pay to the Bank or Banks or Agent as the case may be on demand all attorney's fees, including allocated costs or fees of in-house counsel, fees incurred in both trial and appellate courts, fees incurred without suit, and expenses of title search and all court costs and costs of public officials. The sums agreed to be paid in this paragraph shall be deducted from any remittance or collection prior to application to principal or interest of the Loans as applicable. 6.14 OTHER DOCUMENTS. Execute and deliver to Agent all documents and instruments deemed necessary by Banks to carry out this Agreement. 24 Section 7. EVENTS OF DEFAULT; REMEDIES -------------------------------------- If one or more of the following events ("Events of Default") shall have occurred and be continuing: 7.1 NONPAYMENT. Borrower shall fail to pay when due any principal of or within five (5) days of when due any interest on any Notes, any fees or any other amount payable hereunder; 7.2 COVENANTS; AGREEMENTS. Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement; provided, however that failure to comply with paragraphs 6.4 through 6.9 inclusive and 6.11 through 6.12 inclusive shall constitute an Event of Default hereunder only in the event Agent, at the request of the Required Banks, has given written notice of such breach to Borrower and Borrower shall have failed to cure such breach within thirty (30) days from the date of such notice; provided, further that notwithstanding the foregoing, the notice referenced herein shall not be required nor shall any cure period be allowed if Borrower has failed to disclose such breach or Default pursuant to paragraph 6.4; 7.3 REPRESENTATIONS AND WAARRANTIES. Any representation, warranty, certification or statement made by Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made), or the representation contained in paragraph 4.12 shall proveto be untrue or inaccurate at any time while any indebtedness or Commitment is outstanding hereunder; 7.4 OTHER DEFAULT. The occurrence of an event of default or an event which with the lapse of time or notice or both would (i) become an event of default under or in respect of any agreement by which Borrower or any Subsidiary is bound relating to an obligation exceeding one million Dollars ($1,000,000);or (ii) which causes or permits acceleration of any obligation of Borrower or any Subsidiary under or in respect of any such agreement; or (iii) which is a breach of any indenture of any kind to which Borrower or any Subsidiary is a party; 7.5 BANKRUPTCY; INSOLVENCY. 7.5.1 Voluntary Action. Borrower or any Subsidiary of Borrower shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; 25 7.5.2 Involuntary Action. An involuntary case or other proceeding shall be commenced against Borrower or any Subsidiary of Borrower seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) days; or an order for relief shall be entered against Borrower or any Subsidiary of Borrower under the federal bankruptcy laws as now or hereafter in effect; 7.6 ERISA. Borrower or any member of the Controlled Group shall fail to pay when due an amount or amounts which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having Unfunded Vested Liabilities shall be filed under Title IV of ERISA by Borrower, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such plan or Plans or a proceeding shall be instituted by a fiduciary of any such plan or Plans against Borrower or any member of the Controlled Group to enforce Section 515 of ERISA; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; 7.7 JUDGEMENTS. A judgment or order for the payment of money individually or in the aggregate in excess of one million Dollars ($1,000,000) shall be rendered against Borrower or any Subsidiary, and such judgment(s) or order(s) shall continue unsatisfied or unstayed for a period of twenty (20) days; 7.8 SUBSIDIARIES. Borrower shall create or suffer to exist any Subsidiary (other than those existing at the date of this Agreement) which does not become a party signatory to this Agreement and each of the Notes (with any appropriate modifications to accommodate such addition) within thirty (30) days of its creation or acquisition by Borrower; or 7.9 NORDSTROM OR NORDSTROM NATIONAL CREDIT BANK BANKRUPTCY; INSOLVENCY. 7.9.1 Voluntary Action. Nordstrom, NNCB, or any of their respective subsidiaries, shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; 7.9.2 Involuntary Action. An involuntary case or other proceeding shall be commenced against Nordstrom, NNCB or any of their respective subsidiaries, seeking liquidation, reorganization or other relief 26 with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) days; or an order for relief shall be entered against Nordstrom, or any of its subsidiaries under the federal bankruptcy laws as now or hereafter in effect; then, and in every such event, Agent shall (i) if requested by the Required Banks, by notice to Borrower terminate the Commitments and they shall thereupon terminate, and (ii) if requested by the Required Banks, by notice to Borrower declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower; provided that in the case of any of the Events of Default specified in paragraphs 7.5.1, 7.5.2, 7.9.1 or 7.9.2 above, without any notice to Borrower or any other act by Agent or the Banks, the Commitments shall thereupon terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower. Section 8. TERMINATION OF ADVANCES ---------------------------------- In addition and not in substitution of any other right of the Banks to cease making Loans hereunder, in the event Nordstrom, NNCB or either of them fails to comply with or fulfill the following terms, conditions or covenants, the making of Loans to Borrower may be suspended or terminated at any time in the discretion of the Required Banks: 8.1 DEFAULT. The occurrence of an event of default or an event which with the lapse of time or notice or both (i) would become an event of default under or in respect of any agreement by which Nordstrom, NNCB or any of their respective subsidiaries is bound relating to an obligation exceeding one million Dollars ($1,000,000) which is not cured within any applicable cure period; or (ii) which causes or permits acceleration of any obligation of Nordstrom, NNCB or any subsidiary of either of them under or in respect of any such agreement; or (iii) which is a breach of any indenture of any kind to which Nordstrom, NNCB or any subsidiary of either of them is a party; 8.2 NORDSTROM BANKRUPTCY; INSOLVENCY. 8.2.1 Voluntary Action. Nordstrom, NNCB or any of their respective subsidiaries, shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become 27 due, or shall take any corporate action to authorize any of the foregoing; 8.2.2 Involuntary Action. An involuntary case or other proceeding shall be commenced against Nordstrom, NNCB or any subsidiary of either of them, seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law nor or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) days; or an order for relief shall be entered against Nordstrom, or any of its subsidiaries under the federal bankruptcy laws as now or hereafter in effect; 8.3 ERISA. Nordstrom, NNCB or any member of the Controlled Group shall fail to pay when due an amount or amounts which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having Unfunded Vested Liabilities shall be filed under Title IV of ERISA by Nordstrom, NNCB, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans against Nordstrom or any member of the Controlled Group to enforce Section 515 of ERISA; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; 8.4 JUDGEMENTS. A judgment or order for the payment of money individually or in the aggregate in excess of one million Dollars ($1,000,000) shall be rendered against Nordstrom, NNCB or any of their respective subsidiaries and such judgment(s) or order(s) shall continue unsatisfied or unstayed for a period of twenty (20) days. 8.5 WIND-UP OR LIQUIDATION. Nordstrom or NNCB shall (i) liquidate, dissolve or enter into any consolidation, merger, pool, joint venture, syndicate or other combination unless it is the surviving corporation or (ii) sell, lease or dispose of its business or assets as a whole. Section 9. THE AGENT -------------------- 9.1 APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably appoints and authorizes Agent to (i) take such action on that Bank's behalf and (ii) exercise such powers as are delegated to Agent by the terms of this Agreement and the Notes, together with all such powers as are reasonably incidental thereto. 9.2 AGENT AND AFFILIATES. First Interstate Bank of Denver, N.A. shall have the same rights and powers under this Agreement as any other Bank, and may exercise or refrain from exercising the same as though it were not Agent; First Interstate Bank of Denver, N.A. and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with Borrower as if it were not Agent hereunder. 28 9.3 ACTION BY AGENT. The obligations of Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, (i) Agent shall not be required to take any action with respect to any Default, except as expressly provided in Section 7, and (ii) each Bank severally acknowledges that it has made its own analysis of Borrower, the Line, this Agreement and the Notes, independently and without reliance on Agent, and has made its own decision to enter into this Agreement and the transactions contemplated hereby. 9.4 CONSULTATION WITH EXPERTS. Agent may consult with legal counsel (who may be counsel for Borrower or Agent's counsel, in-house or otherwise), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 9.5 LIABILITY OF AGENT. Neither Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks (or of a greater or lesser number of Banks, if specifically provided for herein) or (ii) in the absence of its own gross negligence or willful misconduct. Neither Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (a) any statement, warranty or representation made in connection with this Agreement or any Borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of Borrower; (c) the satisfaction of any condition specified in Section 3, except receipt of items required to be delivered to Agent; or (d) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith other than by Agent. Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) or any telephonic notice reasonably believed by it to be genuine or to be signed or given by the proper party or parties. 9.6 INDEMNIFICATION. Each Bank shall, ratably in accordance with its Commitment, indemnify Agent (to the extent not reimbursed by Borrower) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from Agent's gross negligence or willful misconduct) that Agent may suffer or incur in connection with this Agreement or any action taken or omitted by Agent hereunder. 9.7 SUCCESSOR AGENT. Agent may resign at any time by giving written notice thereof to the Banks and Borrower, and may be removed at any time by vote of one hundred percent (100%) the Banks other than Agent holding the outstanding principal balance of Loans hereunder (or representing one hundred percent (100%) of the outstanding Commitments, other than Agent's, if no Loans be then outstanding). Upon any such resignation or removal, the Required Banks shall have the right to appoint, on behalf of Borrower and the Banks, a successor Agent. If no successor Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving notice of resignation, then the retiring Agent may appoint, on behalf of Borrower and the Banks, a successor Agent. Such successor Agent shall be one of the other Banks. Upon the 29 acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent hereunder. Section 10. MISCELLANEOUS ------------------------- 10.1 NOTICES. Except as expressly set forth herein, all notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, telecopy or similar writing) and shall be given to such party at its applicable address or telecopy number set forth on the signature pages hereof or such other address or telecopy number as such party may hereafter specify for the purpose by notice to Agent and Borrower. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this paragraph and verification of receipt received, (ii) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first-class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to Agent under paragraphs 2.2.2, 2.3.2, 2.6 or 2.8 through 2.10 inclusive shall not be effective until received. 10.2 NO WAIVERS. No failure or delay by Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 10.3 EXPENSES; DOCUMENTARY TAXES. Borrower shall pay on demand (i) all out-of-pocket expenses and other reasonable charges of Agent and any Bank or Banks, including fees and disbursements or allocated costs of counsel for the Banks and Agent, whether in-house or otherwise, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default by Borrower hereunder; and (ii) if an Event of Default occurs, all out-of pocket expenses incurred by Agent or any Bank or Banks, including fees and disbursements or allocated costs of counsel, whether in-house or otherwise, in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom. Borrower shall indemnify each Bank against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement or the Notes. 10.4 SHARING OF SET-OFFS. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim, or otherwise, receive payment of a proportional amount of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportional amount received by any other Bank in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Bank, 30 the Bank receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of Borrower other than to its indebtedness under the Notes and this Agreement. Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of Borrower in the amount of such participation. Each Bank agrees that if it exercises any right of set-off or counterclaim, it will promptly notify Agent, who will promptly notify the other Banks. 10.5 AMENDMENTS AND WAIVERS. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by Borrower and the Required Banks (and, if the rights or duties of Agent are affected thereby, by Agent); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase the Commitment of any Bank or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder; including but not limited to extension of the Maturity of the Notes and/or any extension of the period of availability of the Commitments or (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks which hall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement. 10.6 SUCCESSORS AND ASSIGNS. 10.6.1 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Borrower may not assign or otherwise transfer any of its rights or obligations under this Agreement. 10.6.2 Participations and Loan Sales. Any Bank may grant a participation in any of its rights to payment under this Agreement and its Notes (as used herein, "participation" is the sharing of an undivided interest in such Bank's Loan or Loans hereunder), and may provide to participants or prospective participants any and all information provided to Banks hereunder or may sell or assign its full right to payment in individual Loans; provided, however in no event shall any such participant or purchaser of any Loan have any rights against Borrower with respect to any enforcement of, or modification to, any provision of this Agreement or any Note or any right to vote as a "Required Bank" hereunder, all such rights to remain with the Bank named herein, to be exercised on behalf of such participant(s) or purchaser(s) name. Further, Borrower agrees that (i) each participant shall be entitled to the benefits of paragraphs 2.6 and 2.10 hereof to the extent of its respective 31 participation as if it were a Bank hereunder; and (ii) no assignee or other transferee of any Bank's Loan(s) (other than a participant) shall be entitled to receive any greater payment under paragraphs 2.6.1(ii) or 2.6.3 than such Bank would have been entitled to receive with respect to the rights assigned or otherwise transferred, unless such assignment or transfer is made with Borrower's prior written consent. 10.7 COLORADO LAW; JURISDICTION. This Agreement and each Note shall be construed in accordance with and governed by the law of the State of Colorado; and each party hereto irrevocably agrees that the proper jurisdiction and venue for any cause of action hereunder or relating hereto shall be the City and County of Denver, Colorado. 10.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when Agent shall have received counterparts hereof signed by all of the parties hereto. 10.9 ORAL AGREEMENTS. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER COLORADO LAW. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. NORDSTROM CREDIT, INC. By /s/ John Walgamott -------------------- Its President -------------------- Nordstrom Credit, Inc. Attention: John Walgamott 13531 E. Caley Englewood, Colorado 80111 Telecopy No: (303) 397-4775 32 Commitments FIRST INTERSTATE BANK OF $30,000,000 DENVER, N.A. By /s/ Carol A. Ward ---------------------- Its Vice President ---------------------- First Interstate Bank of Denver, N.A. Attention: Carol A. Ward, 4N/010 633 Seventeenth Street Denver, Colorado 80270 Telecopy No:(303)293-5467 $18,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Carl J. Mehldau JR. ----------------------- Its Associate ----------------------- Morgan Guaranty Trust Company of New York Attention: David Ellis 60 Wall Street, 22nd Floor New York, New York 10260 Telecopy No.: (212) 648-5014 $12,000,000 ABN AMRO BANK N.V. By /s/ Lee-Lee Miao ----------------------- Its Vice President ----------------------- By /s/ Jeff H. Olson ----------------------- Its Vice President ----------------------- ABN AMRO Bank N.V. Attention: Lee-Lee Miao 1 Union Square, Suite 2323 Seattle, WA 98101 Telecopy No.: (206) 682-5641 33 $18,000,000 NATIONSBANK OF TEXAS, N.A. By /s/ William B. Guffey ----------------------- Its Vice President ----------------------- NationsBank of Texas, N.A. Attention: William B. Guffey 444 S. Flower St., Suite 1500 Los Angeles, CA 90071 Telecopy No.: (213) 624-5815 $12,000,000 SWISS BANK CORPORATION By /s/ Colin Taylor ----------------------- Its Director Merchant Banking --------------------- By /s/ David L. Parrot ----------------------- Its Associate Director Merchant Banking ----------------------- Swiss Bank Corporation San Francisco Branch Attention: Colin Taylor 101 California Street San Francisco, CA 94111 Telecopy No.: (415) 989-7570 34 AMENDMENT NO. 1 TO LOAN AGREEMENT THIS AMENDMENT NO. 1, dated as of December 1, 1994, ("Amendment No. 1") to that certain Loan Agreement, dated as of June 25, 1994, (the "Agreement") by and between NORDSTROM CREDIT, INC., a Colorado corporation, with principal offices at 13531 E. Caley, Englewood, Colorado 80111 (the "Borrower"), the Banks listed on the signature pages hereof, and FIRST INTERSTATE BANK OF DENVER, N.A., a national banking association, whose address is 633 Seventeenth Street, Denver, Colorado 80270, as Agent. RECITALS: WHEREAS, the Banks and the Borrower desire to increase the aggregate amount of the Commitment from a total of $90,000,000.00 to a total of $135,000,000.00 and to amend the Agreement; WHEREAS, the parties desire to enter into this Amendment No. 1 to the Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements herein set forth, the parties hereto agree as follows: 1. Section 2.7, Commitment Fee, Page 15 of the Agreement is hereby amended by deleting the first sentence of the section and inserting the following sentence in its place: "Borrower shall pay to Agent for the account of each Bank a commitment fee at the rate of one eighth of one percent (1/8 %) per annum on the total of each Bank's Commitment." 2. Section 6.2, Consolidated Total Debt to Consolidated Tangible Net Worth, Page 23 of the Agreement is hereby amended by deleting the first sentence of the section and inserting the following sentence in its place: "Maintain as of the end of each fiscal quarter a ratio of Consolidated Total Debt (adjusted by deducting consolidated Subordinated Debt) to Consolidated Tangible Net Worth (adjusted by adding consolidated Subordinated Debt) of six to one (6.0 : 1.0) or less." 3. The Commitment amounts with respect to each Bank as set forth opposite the name of each Bank on the signature pages of the Agreement, are hereby deleted and are replaced with the amounts set forth opposite the name of each Bank on the signature pages to this Amendment No. 1. 4. Miscellaneous Provisions. (a) This Amendment No. 1 shall be considered as an amendment to the Agreement and, except as herein expressly amended and supplemented, the Agreement is hereby ratified, approved and confirmed in each and every respect. To the extent of any inconsistency therewith, this Amendment No. 1 shall supersede the provisions of any prior document. All references to the Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Agreement as amended hereby. (b) This Amendment No. 1 may be executed in any number of counterparts, each of which shall be deemed an original and all of which are identical, and all such counterparts shall together constitute but one and the same Amendment No. 1. (c) The Borrower hereby represents and warrants to the Banks as follows: (i) The representations and warranties to the Banks contained in Section 4 Representations and Warranties of the Agreement are true and correct and are again made as of the date hereof. (ii) The execution and delivery of this Amendment No. 1, and the performance by the Borrower of its obligations hereunder, are within the Borrower's powers, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required) and do not and will not contravene or conflict with any provision of law or of the charter or bylaws of the Borrower or of any agreement binding upon the Borrower. (d) Terms used herein if not specifically defined shall have the same meaning as used in the Agreement. (e) This Amendment No. 1 is accepted and entered into in the State of Colorado and shall be governed and construed in accordance with the substantive laws of the State of Colorado. IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed this Amendment No. 1 as of the date, month and year first above written. BORROWER: NORDSTROM CREDIT, INC. By: /s/John C. Walgamott -------------------- Title: President -------------------- Commitments $45,000,000.00 FIRST INTERSTATE BANK OF DENVER, N.A. By: /s/ Carol A. Ward --------------------- Title: Vice President --------------------- $27,000,000.00 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: /s/ Robert Bottamedi -------------------- Title: Vice President -------------------- $18,000,000.00 ABN AMRO BANK N.V. By: /s/Carol A. Marquess -------------------- Title: Asst. Vice President -------------------- $27,000,000.00 NATIONSBANK OF TEXAS, N.A. By: /s/William B. Guffey -------------------- Title: Vice President -------------------- $18,000,000.00 SWISS BANK CORPORATION By: /s/ David L. Parrot -------------------- Title: Associate Director Merchant Banking -------------------- By: /s/ Hans-Ueli Surber -------------------- Title: Executive Director Merchant Banking -------------------- EX-10 7 Exhibit 10.10 June 10, 1985 Morgan Guaranty Trust Company of New York 9 West 57th Street New York, New York 10019 Attention: John F. Goydas Vice President Gentlemen: We hereby confirm borrowing arrangements made with you as follows, to be effective as of the opening of business on July 10, 1985. You agree to lend to us for our general business purposes certain sums not to exceed $25,000,000 at any one time outstanding, as hereinafter specified, which you represent will be available for this purpose from time to time in the Private Banking Division of your Bank in various accounts of which you are custodian, fiduciary or advisor, against our prior issuance and delivery to you from time to time as hereinafter specified of our promissory note, payable upon demand (which if given verbally shall be promptly confirmed in writing), in the form of Exhibit "A" to this letter and duly executed by an authorized offier of this Company. The principal amount of each such note shall be specified from time to time in the manner hereinafter provided. Each such note shall be dated as of the date of its issue and shall bear interest from said date, payable on the first day of each month on the daily principal amount from time to time outstanding during the accrual period, at a rate or rates equivalent to the highest annual simple interest yield currently quoted on General Motors Acceptance Corporation ordinary commercial paper borrowings of 30 to 59 days inclusive. Each change in such rate shall be effective with respect to all loans outstanding hereunder on the same date as the change is effective with respect to said rate for commercial paper of General Motors Acceptance Corporation. For purposes of computing interest, principal amounts loaned hereunder shall be deemed to be outstanding on the date loaned but not on the date repaid. Upon request, we shall issue and deliver to you, without cost to you, in exchange for the promissory note then held by you, a new promissory note in a principal amount of said note being surrendered in exchange, and dated and bearing interest from the date to which interest has been paid on said note being surrendered in exchange. A duly authorized officer or duly authorized employee of your Private Banking Division, designated by you in writing for such purpose, will from time to time notify our Treasurer (or such person as may be designated by the Treasurer in writing) of the total amount to be lent us hereunder and, on the authority of our Treasurer (or such person as may be designated by the Treasurer in writing), shall enter said amount under the column headed 1 "Principal Amount Outstanding" on our promissory note which you are then holding and such and such amount shall be deemed to be the amount then due on said note. Any entries so made on said promissory note shall constitute conclusive evidence of the principal amount of said note then outstanding when you shall have received written confirmation thereof from our Treasurer (or such person as may be designated by the Treasurer in writing) in the manner hereinafter described. In the event such notification to us results in an increase in the total amount to be lent to us hereunder, you shall forthwith transfer the amount to be lent to us hereunder, you shall forthwith transfer the amount of said increase to our Account at your Bank numbered 046-30-619. In the event such notification to us results in a decrease in the total amount to be lent us hereunder, you shall forthwith charge the amount of said decrease to our said Account at your Bank. After the close of each week during which you have made any loan to us hereunder or we have made any repayment on the principal balance of any loan made hereunder or during which the interest rate on any loan shall have changed, we shall send you a written confirmation of the transaction which took place during such week dated the last business day of such week in substantially the form attached hereto as Exhibit "B" with appropriate insertions in the blank spaces therein. It is understood and agreed that you shall have the right at any time to demand payment of all or any part of the principal amount then outstanding on the promissory note then held by you, together with interest to the date of payment. We shall have the right at any time, upon advice to you by letter or telephone, to pay all or any part of the principal amount then outstanding on the promissory note then held by you, together with interest to the date of payment, notwithstanding that you have not theretofore demanded such payment in accordance with the foregoing and with the note. It is further understood and agreed that you shall not sell, pledge, or assign nor otherwise transfer any promissory note held by you pursuant to this agreement without first having notified us at least ten days prior to the intended sale of such sale, pledge, assignment or transfer of your intention so to do, and in no event shall any such sale, pledge, assignment or transfer be effected except upon compliance with all applicable Federal and state securities laws and regulations. This agreement may be terminated by you or by us upon not less than ten day's written notice to the other party. If the foregoing satisfactorily sets forth the terms and conditions of the borrowing arrangements made with you, we request that you indicate your acceptance thereof by the signature of your duly authorized officer in the space provided below on the duplicate original of this letter which is enclosed. 2 Very truly yours, Nordstrom Credit, Inc. By /s/John A. Goesling ------------------- John A. Goesling Treasurer ACCEPTED: Morgan Guaranty Trust Company of New York By /s/John F. Goydas ------------------ John F. Goydas Vice President 3 Exhibit "A" July 10, 1985 Note No. 1 New York, New York NORDSTROM CREDIT, INC. For value received, Nordstrom Credit, Inc. a corporation organized under the laws of the State of Washington, promises to pay to the order of Morgan Guaranty Trust Company of New York, on its demand (which if given verbally shall be promptly confirmed in writing), or on or before (six months from above date), the principal sum set forth below as "Principal Amount Outstanding", on the date of such demand, at the office of Morgan Guaranty Trust Company of New York, New York and will likewise pay to the order of said payee interest at the rate or rates per annum provided for in the agreement mentioned below. Said interest will be due and payable on the first day of each month after the date of this note or upon payment in full of the principal amount from time to time outstanding as indicated below. Interest will be calculated on the daily principal amount outstanding as indicated below. This note is issued pursuant to and is subject to the terms and conditions of a certain letter agreement dated June 10, 1985, by and between Nordstrom Credit, Inc. and Morgan Guaranty Trust Company of New York. By /s/John A. Goesling ------------------- John A. Goesling
Principal Effective Amount Amount Amount Interest Authorized Date Loaned Paid Outstanding Rate Initials ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________ ____ _______ _____ __________ _________ ________
Exhibit B Nordstrom Credit, Inc. 1321 Second Avenue Seattle, Washington 98101 June 10, 1985 Attention: Re: Master Note of Nordstrom Credit, Inc. Gentlemen: We confirm to you the following changes occured in the loans outstanding under the terms of the Agreement with you dated June 10, 1985, for the week ended this date. Prior Current Principal Principal Current Amount Loan Amount Interest Date Outstanding (Repayment) Outstanding Rate ____ ___________ ___________ ___________ _________ Please arrange with your Private Banking Division to make the appropriate entries to our account on the dates indicated. Nordstrom Credit, Inc. By________________ John A. Goesling Treasurer EXHIBIT A May 16, 1994 Amendment to Master Note Agreement dated June 10, 1985 (the "Agreement"), by and between Nordstrom Credit, Inc. ("Nordstrom") and Morgan Guaranty Trust Company of New York, as custodian, fiduciary and advisor ("Morgan"). WHEREAS, the parties hereto wish to amend the Agreement so as to change the rate at which interest under the Agreement is computed and to increase the maximum amount to be loaned under the Agreement; Now, Therefore, the parties hereto agree as follows: 1. The second paragraph of the Agreement is hereby amended by deleting "25,000,000" from the second line of such paragraph and inserting "50,000,000" in lieu thereof: 2. The third paragraph of the Agreement is deleted in its entirety and the following is inserted in lieu thereof: "The principal amount of each such note shall be specified from time to time in the manner hereinafter provided. Each such note shall be dated as of the date of its issue and shall bear interest from said date, payable on the first date of each month on the daily principal amount from time to time outstanding during the accrual period, at a rate or rates equivalent to the money market yield (computed on the basis of a 360-day year) of the Commercial Paper Rate (as hereinafter defined), as such rate changes from time to time, minus thirteen (13) basis points. Each change in the Commercial Paper Rate shall be effective with respect to loans outstanding hereunder on the same date as the change is effective. For purposes of computing interest, principal amounts loaned hereunder shall be deemed to be outstanding on the date loaned but not on the date repaid. For purposes of this Agreement the "Commercial Paper 1-Month" and the "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System." 3. Except as hereby expressly amended, the Agreement and all the terms, conditions and provisions thereof shall continue in full force and effect. IN WITNESS WHEREOF, the parties have hereto set their names as at the date first above written. MORGAN GUARANTY TRUST COMPANY NORDSTROM CREDIT, INC. OF NEW YORK By:/s/Robert R. Johnson By:/s/John Walgamott -------------------- ----------------- Title:Vice President Title:President NORDSTROM CREDIT, INC. SECRETARY'S CERTIFICATE 1. I, Karen E. Purpur, the undersigned Secretary of Nordstrom Credit, Inc., a corporation organized and existing under the laws of the State of Colorado, hereby certify that I am the Secretary of said corporation and that attached to this Certificate as Exhibit B is a true and correct copy of resolutions adopted by unanimous written consent by the Board of Directors on May 16, 1994 and said resolutions have not been revoked, rescinded, or set aside, and are now in full force and effect. 2. I FURTHER CERTIFY, that there is no provision in the Charter or By- Laws of the Company limiting the power of the Board of Directors to pass the aforesaid resolutions and that the same are in conformity with the provisions of said Charter and By-Laws. 3. I FURTHER CERTIFY, that the following persons are duly elected and acting officers of the Company, holding the offices set forth next to their names below, and the signature appearing opposite the name of each such officer is his genuine signature: John C. Walgamott President /s/John C. Walgomott -------------------- John A. Goesling Executive Vice-President and Treasurer /s/John A. Goesling ------------------- In WITNESS WHEREOF, I have hereunto set my hand as Secretary of the Company and affixed the corporate seal this 16th day of May, 1994. (CORPORATE SEAL) /s/Karen E. Purpur ------------------ Secretary The undersigned, John A. Goesling, being the duly elected and acting Executive Vice President and Treasurer of the Company, hereby certifies that the signature appearing above is her genuine signature. /s/John A. Goesling ------------------- Executive Vice President and Treasurer EXHIBIT B UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF NORDSTROM CREDIT, INC. The undersigned, being all of the directors of Nordstrom Credit, Inc., a Colorado corporation, consent to and adopt the following resolutions in lieu of holding a meeting of the Board of Directors of the corporation: RESOLVED, that the proposed Amendment to the Master Note Agreement dated June 10, 1985 between the Company's predecessor, Nordstrom Credit, Inc., a Washington corporation and Morgan Guaranty Trust Company of New York is hereby adopted and approved substantially in the form Exhibit A attached hereto, and the President or any Vice President are, and each of them hereby is, authorized and directed to execute and deliver such amendment on behalf of the Company, with such changes as may be approved as necessary or desirable by the officer or officers executing the same, such execution to be conclusive evidence of such approval. RESOLVED, that the proper officers of the Company are hereby authorized and directed to take any and all such actions as may be necessary to carry out the intent and purpose of the foregoing resolution. This Consent may be executed in more than one counter- part, which together shall constitute an original. DATED this 16th day of May, 1994. /s/Bruce A. Nordstrom ----------------------------- Bruce A. Nordstrom, Director /s/James F. Nordstrom ----------------------------- James F. Nordstrom, Director /s/John N. Nordstrom ----------------------------- John N. Nordstrom, Director /s/John A. McMillan ---------------------------- John A. McMillan, Director Exhibit "C" (formerly Exhibit "A") July 15, 1994 Note No. 18 New York, New York NORDSTROM CREDIT, INC. For value received, Nordstrom Credit, Inc. a corporation organized under the laws of the State of Colorado, promises to pay to the order of Morgan Guaranty Trust Company of New York, on its demand (which if given verbally shall be promptly confirmed in writing), or on or before (six months from above date), the principal sum set forth below as "Principal Amount Outstanding," on the date of such demand, at the office of Morgan Guaranty Trust Company of New York, New York and will likewise pay to the order of said payee interest at the rate or rates per annum provided for in the agreement mentioned below. Said interest will be due an payable on the first day of each month after the date of this note or upon payment in full of the principal amount from time to time outstanding as indicated below. Interest will be calculated on the daily principal amount outstanding as indicated below. This note is issued pursuant to and is subject to the terms and conditions of a certain letter agreement dated June 10, 1985 and November 19, 1992, amended May 16, 1994, by and between Nordstrom Credit, Inc. and Morgan Guaranty Trust company of New York. By /s/John Walgamott -----------------
Principal Effective Amount Amount Amount Interest Authorized Date Loaned Paid Outstanding Rate Initials ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________ ____ _________ _______ ___________ __________ __________
EX-12 8 Exhibit 12.1 NORDSTROM CREDIT, INC. Computation of Ratio of Earnings Available for Fixed Charges to Fixed Charges (Dollars in thousands)
Year ended January 31, 1995 1994 1993 1992 1991 ---------------------- ------- ------- ------- ------- ------- Earnings before income taxes $32,045 $32,372 $29,321 $24,023 $16,389 Fixed charges (gross interest expense) 31,187 29,600 33,841 35,037 36,816 ------- ------- ------- ------- ------- Earnings available for fixed charges $63,232 $61,972 $63,162 $59,060 $53,205 ======= ======= ======= ======= ======= Ratio of earnings available for fixed charges to fixed charges 2.03 2.09 1.87 1.69 1.45 ======= ======= ======= ======= =======
EX-23 9 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Amendment No. 1 to Registration Statement No. 33-55905 of Nordstrom Credit, Inc. on Form S-3 of our report dated March 10, 1995, appearing in this Annual Report on Form 10-K of Nordstrom Credit, Inc. for the year ended January 31, 1995. DELOITTE & TOUCHE LLP Seattle, Washington March 31, 1995 EX-27 10
5 1,000 12-MOS JAN-31-1995 JAN-31-1995 440 0 679,221 22,958 0 0 5,685 0 668,624 0 252,100 0 0 0 170,173 668,624 0 93,636 0 61,591 0 940 31,074 32,045 11,600 0 0 0 0 20,445 0 0