AMENDED AND RESTATED CREDIT AGREEMENT
among
METRIS COMPANIES INC.,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
THE CHASE MANHATTAN BANK, as Administrative Agent,
BANK OF AMERICA, N.A., as Syndication Agent,
DEUTSCHE BANK AG, NEW YORK BRANCH, as Co-Documentation Agent,
U.S. BANK NATIONAL ASSOCIATION, as Co-Documentation Agent
and
BARCLAYS BANK PLC, as Co-Agent
Dated as of July 21, 2000
CHASE SECURITIES INC., as Lead Arranger and Book Manager
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions...........................................................1
SECTION 1.01 Defined Terms...........................................1
SECTION 1.02 Classification of Loans and Borrowings.................20
SECTION 1.03 Terms Generally........................................20
ARTICLE II.
The Credits..........................................................21
SECTION 2.01 Commitments.............................................21
SECTION 2.02 Loans and Borrowings....................................22
SECTION 2.03 Borrowing Procedure.....................................23
SECTION 2.04 Continuances and Conversions of Loans...................24
SECTION 2.05 Fees....................................................25
SECTION 2.06 Evidence of Debt; Repayment of Loans....................26
SECTION 2.07 Interest on Loans.......................................26
SECTION 2.08 Default Interest........................................27
SECTION 2.09 Alternate Rate of Interest..............................27
SECTION 2.10. Termination and Reduction of Commitments; Increase of
Commitments............................................27
SECTION 2.11. Prepayment.............................................28
SECTION 2.12. Reserve Requirements; Change in Circumstances..........29
SECTION 2.13. Change in Legality.....................................30
SECTION 2.14. Letters of Credit......................................31
SECTION 2.15. Indemnity..............................................34
SECTION 2.16. Pro Rata Treatment.....................................34
SECTION 2.17. Sharing of Setoffs.....................................34
SECTION 2.18. Payments...............................................35
SECTION 2.19. Taxes..................................................35
ARTICLE III.
Representations and Warranties.......................................38
SECTION 3.01 Organization; Powers....................................38
SECTION 3.02 Authorization...........................................38
SECTION 3.03 Enforceability..........................................38
SECTION 3.04 Governmental Approvals..................................38
SECTION 3.05 Financial Statements....................................38
SECTION 3.06 No Material Adverse Change..............................39
SECTION 3.07 Title to Properties; Possession Under Leases............39
SECTION 3.08 Subsidiaries............................................39
SECTION 3.09 Litigation; Compliance with Laws........................39
SECTION 3.10. Agreements.............................................39
SECTION 3.11. Federal Reserve Regulations............................40
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act............................................40
SECTION 3.13. Use of Proceeds........................................40
SECTION 3.14. Tax Returns............................................40
SECTION 3.15. No Material Misstatements..............................40
SECTION 3.16. Employee Benefit Plans.................................41
SECTION 3.17. Environmental Matters..................................41
SECTION 3.18. Security Interests.....................................41
ARTICLE IV.
Conditions of Lending................................................42
SECTION 4.01 Conditions to Effectiveness.............................42
SECTION 4.02 Conditions to All Loans.................................43
ARTICLE V.
Affirmative Covenants................................................43
SECTION 5.01 Existence; Businesses and Properties...................43
SECTION 5.02 Insurance..............................................44
SECTION 5.03 Obligations and Taxes..................................44
SECTION 5.04 Financial Statements, Reports, etc.....................44
SECTION 5.05 Litigation and Other Notices...........................46
SECTION 5.06 Employee Benefits......................................46
SECTION 5.07 Maintaining Records; Access to Properties and
Inspections............................................47
SECTION 5.08 Further Assurances.....................................47
SECTION 5.09 Information Regarding Collateral.......................48
SECTION 5.10. Sale of Accounts.......................................48
SECTION 5.11. Regulatory Capital.....................................48
ARTICLE VI.
Negative Covenants...................................................49
SECTION 6.01 Financial Covenants....................................49
SECTION 6.02 Limitations on Indebtedness............................49
SECTION 6.03 Liens..................................................51
SECTION 6.04 Sale and Lease-Back Transactions.......................52
SECTION 6.05 Mergers, Consolidations, and Sales of Assets...........52
SECTION 6.06 Investments, Loans, Advances and Guarantees............53
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness..55
SECTION 6.08 Disposition of Assets..................................55
SECTION 6.09 Transactions with Affiliates...........................56
SECTION 6.10. Amendment of Material Documents........................56
SECTION 6.11. Limitations on Restrictions on Dividends...............56
SECTION 6.12. Limitation on Negative Pledge Clauses..................57
SECTION 6.13. Changes in Fiscal Periods..............................57
SECTION 6.14. Limitations on Lines of Business.......................57
SECTION 6.15. Certain Matters Related to Accounts....................57
ARTICLE VII.
Events of Default....................................................58
ARTICLE VIII.
The Administrative Agent.............................................61
ARTICLE IX.
Miscellaneous........................................................64
SECTION 9.01 Notices................................................64
SECTION 9.02 Survival of Agreement..................................64
SECTION 9.03 Binding Effect.........................................64
SECTION 9.04 Successors and Assigns.................................64
SECTION 9.05 Expenses; Indemnity....................................67
SECTION 9.06 Right of Setoff........................................68
SECTION 9.07 Applicable Law.........................................68
SECTION 9.08 Waivers; Amendment.....................................68
SECTION 9.09 Interest Rate Limitation...............................69
SECTION 9.10. Entire Agreement.......................................69
SECTION 9.11. Waiver of Jury Trial...................................69
SECTION 9.12. Severability...........................................69
SECTION 9.13. Counterparts...........................................69
SECTION 9.14. Headings...............................................69
SECTION 9.15. Jurisdiction; Consent to Service of Process............70
SECTION 9.16. Confidentiality........................................70
SECTION 9.17. Releases of Guarantees and Liens.......................71
SECTION 9.18. Effect of Amendment and Restatement of the Existing
Credit Agreement.......................................71
<PAGE>
Exhibits
Exhibit A Form of Borrowing Request
Exhibit B Form of Borrower Security Agreement
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Form of Pledge Agreement
Exhibit D-2 Form of Amendment to Pledge Agreement
Exhibit D-3 Form of Pledge Agreement Reaffirmation
Exhibit E Form of Subsidiary Guaranty
Exhibit F Form of Non-Bank Certificate
Exhibit G Form of Borrowing Base Certificate
Exhibit H Form of Subsidiary Security Agreement
Exhibit I Form of Exemption Certificate
Exhibit J Form of Securities Account Control Agreement
Schedules
Schedule 2.01 Commitments
Schedule 2.14 Letters of Credit
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.18 UCC Filings
Schedule 6.02 Indebtedness
Schedule 6.03 Liens
Schedule 6.06 Investments
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement"), dated as of July 21, 2000 among METRIS COMPANIES
INC., a Delaware corporation (the "Borrower"), the banks and
other financial institutions from time to time parties hereto
(the "Lenders"), BANK OF AMERICA, N.A., as Syndication Agent
(in such capacity, the "Syndication Agent"), DEUTSCHE BANK AG,
NEW YORK BRANCH, as co-documentation agent, and U.S. BANK
NATIONAL ASSOCIATION, as co-documentation agent (collectively
in such capacity, the "Co-Documentation Agents"), BARCLAYS
BANK PLC as co-agent (in such capacity, the "Co-Agent"), and
THE CHASE MANHATTAN BANK, as administrative agent for the
Lenders.
The Borrower has requested the Lenders to continue to extend credit to the
Borrower in an aggregate principal amount of up to $270,000,000, of which (i)
$100,000,000 shall be in the form of term loans, (ii) $170,000,000 minus the LC
Exposure shall be available in the form of revolving credit loans and (iii) up
to $50,000,000 shall be available in the form of letters of credit. The proceeds
of all such borrowings and such letters of credit are to be used by the Borrower
and its subsidiaries to provide working capital and for other general corporate
purposes in the ordinary course of business, including for permitted business
acquisitions. The Lenders are willing to continue to extend such credit to the
Borrower on the terms and subject to the conditions herein set forth.
Accordingly, the Borrower, the Lenders and the Administrative Agent agree
as follows:
ARTICLE I.
Definitions
-----------
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Revolving Loans.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Accounts" shall mean all accounts (excluding credit cardholder accounts
but not excluding accounts receivable arising therefrom), accounts receivable,
other receivables, contract rights, chattel paper, and related instruments and
documents, insurance claims and proceeds, and notes, whether now owned or
hereafter acquired by the Borrower or any Subsidiary.
"Additional Lender" shall have the meaning assigned to such term in Section
2.10(d).
"Adjusted Pre-Tax Income" shall mean, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted in
calculating Consolidated Net Income for such period, the sum of (a) income tax
expense and (b) provisions for loan losses on a managed basis, and minus,
without duplication and to the extent added in calculating Consolidated Net
Income the sum of (i) charge-offs in respect of Managed Accounts Receivable and
(ii) extraordinary gains and gains on securitization transactions to the extent
such gains exceed related fees.
"Administrative Agent" shall mean The Chase Manhattan Bank, together with
its affiliates, as the arranger of the Commitments and as the agent for the
Lenders under this Agreement and the other Loan Documents.
"Administrative Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Advance Rate" shall mean, at any time, the advance rate percentage set
forth below corresponding to the Receivables Ratio at such time
Receivables Ratio Advance Rate
----------------- ------------
<0.50% 85.0%
> or = 0.50% < 1.50% 90.0%
> or = 1.50% 92.5%
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as effective. "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment
Rate. "Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
presumed conclusive absent manifest error but subject to rebuttal by the
Borrower) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate or both for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Rate" shall mean, (a) with respect to Tranche B Term Loans
comprising (i) any ABR Borrowing, 2.25% and (ii) any Eurodollar Borrowing, 3.25%
and (b) with respect to the LC Fee, the Revolving Loans and the Commitment Fee,
the applicable percentage per annum set forth below based upon the ratings by
S&P and Moody's, respectively, applicable on such date to the Index Debt:
ABR Eurodollar Commitment
Rating Borrowings Borrowings Fees
------ ---------- ---------- ----
Category 1
----------
BB+/Ba1 ............................. 1.25% 2.25% 0.325%
or above
Category 2
----------
BB/Ba2 .............................. 1.50% 2.50% 0.375%
Category 3
----------
BB-/Ba3 ............................. 1.75% 2.75% 0.500%
Category 4
----------
B+ or below/B1 or ................... 2.00% 3.00% 0.625%
below/unrated
For purposes of the foregoing, (i) if at any time either S&P or Moody's
shall not have in effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this definition), then
Category 4 shall apply; (ii) if the ratings established or deemed to have been
established by S&P or Moody's for the Index Debt shall fall within different
Categories, the numerically higher Category (with Category 4 being the
numerically highest Category) shall apply; and (iii) if any rating established
or deemed to have been established by S&P or Moody's shall be changed (other
than as a result of a change in the rating system of S&P or Moody's), such
change shall be effective as of the date on which such change is first announced
by the applicable rating agency. Each change in the Applicable Rate shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of S&P or Moody's shall change, or if any such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the nonavailability of ratings from
such rating agency (and pending the effectiveness of such amendment, the
Applicable Rate will be determined by reference to the rating most recently in
effect from such rating agency).
"Approved Fund" shall mean with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Assessment Rate" shall mean for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit C.
"Available Cash Investment Basket" shall mean, as of any date of
determination, $100,000,000 minus the aggregate amount expended in cash on or
prior to such date in connection with any Investment made pursuant to Section
6.06(l), (m) or (n).
"Available Commitment" shall mean, with respect to any Lender at any time,
the difference between such Lender's Revolving Commitment and its Revolving
Exposure at such time.
"Available Total Investment Basket" shall mean, as of any date of
determination, $150,000,000 minus the aggregate amount expended (whether in the
form of cash or Capital Stock of the Borrower) on or prior to such date in
connection with any Investment made pursuant to Section 6.06(k), (l), (m) or
(n).
"Bank Regulatory Authority" shall mean the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and all other relevant bank
regulatory authorities (including, without limitation, relevant state bank
regulatory authorities).
"Big Five Accounting Firm" shall mean any of PricewaterhouseCoopers LLP,
Arthur Andersen LLP, Ernst & Young LLP, KPMG Peat Marwick LLP and Deloitte &
Touche LLP or their respective successors.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower Security Agreement" shall mean the Borrower Security Agreement,
substantially in the form of Exhibit B hereto, made by the Borrower in favor of
the Administrative Agent, as such agreement may be amended, supplemented,
modified or restated from time to time as permitted thereby or replaced by a
comparable agreement.
"Borrowing" shall mean Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Base" shall mean, at any time, an amount equal to the sum of (i)
the product of (x) Managed Accounts Receivable (other than Managed Accounts
Receivable of DMCCB or any other Depositary Institution, which Managed Accounts
Receivable have not been sold to the Borrower or any other Subsidiary of the
Borrower) times (y) the Advance Rate and (ii) 95% of the fair market value of
Permitted Investments then held by the Borrower or any of its Subsidiaries
(other than a Depositary Institution or an insurance company or other regulated
financial institution or in a Receivables Transfer Subsidiary) in which
Permitted Investments the Administrative Agent has a perfected first priority
security interest pursuant to the Securities Account Control Agreement or other
documentation satisfactory to it, excluding cash, Permitted Investments of the
type described in clause (e) of the definition thereof and Permitted Investments
in any Affiliate of the Borrower or any of its Subsidiaries. The Borrowing Base
at any time shall be determined by reference to the most recent Borrowing Base
Certificate delivered to the Administrative Agent, absent any error in such
Borrowing Base Certificate.
"Borrowing Base Certificate" shall mean a certificate in the form of
Exhibit G or any other form approved by the Administrative Agent, together with
all attachments contemplated thereby.
"Borrowing Request" shall mean a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" shall mean any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of New York) on which banks are permitted
to open for business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capital Lease" shall have the meaning given such term in the definition of
Capital Lease Obligation.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease (a "Capital Lease") of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
consistently applied and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied.
"Capital Stock" shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing;
provided that Capital Stock shall not include any certificates or other
interests in or issued by a trust or other conduit in connection with a
Receivables Transfer Program but shall include the T.H. Lee Preferred Stock.
A "Change in Control" shall be deemed to have occurred if (a) any person
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act)
shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Borrower, (b) at
any time, individuals who on the Effective Date were directors of the Borrower
(together with any replacement or additional directors nominated or appointed by
the majority of directors then in office) cease to constitute a majority of the
Board of Directors of the Borrower or (c) a "Change of Control" shall occur as
defined in the Senior Note Indenture.
"Class", when used in reference to any Loan or Borrowing, shall refer to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche B Term Loans or Incremental Loans, and, when used in reference to any
Commitment, refers to whether such Commitment is a Revolving Commitment or a
Tranche B Term Loan Commitment.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" shall mean any and all "Collateral", as defined in any
applicable Collateral Document.
"Collateral Documents" shall mean the Borrower Security Agreement, the
Subsidiary Security Agreement, the Securities Account Control Agreement, the
Pledge Agreement and the executed stock powers referred to therein and any other
agreement or instrument pursuant to which any Loan Party grants a security
interest in any of its property or assets to the Administrative Agent.
"Commitment" shall mean a Revolving Commitment or a Tranche B Term Loan
Commitment, or any combination thereof (as the context requires), and, any
commitments in respect of Incremental Loans to the extent and from the date
extended pursuant to Section 2.10(d).
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Commitment Increase Agreement" shall have the meaning assigned to such
term in Section 2.01(d).
"Consolidated Net Income" shall mean, for any period, the net income of the
Borrower and its consolidated Subsidiaries, as determined on a consolidated
basis in conformity with GAAP consistently applied.
"Consolidated Net Worth" shall mean, as at any date of determination, the
sum of (a) the consolidated stockholders' equity of the Borrower and its
Subsidiaries and (b) the amount of the T.H. Lee Preferred Stock, in the case of
clauses (a) and (b) as determined on a consolidated basis in conformity with
GAAP consistently applied.
"Consolidated Tangible Net Worth" shall mean, as at any date of
determination, Consolidated Net Worth, (a) plus, to the extent deducted in
determining Consolidated Net Worth, noncash restructuring charges taken in
connection with any Investment (other than with respect to Accounts) provided
that (i) the amount described in this clause (a) shall not at any time exceed
$50,000,000 and (ii) in the event that cash expenditures are made in connection
with any such charges, the amount described in this clause (a) shall be reduced
by a like amount, and (b) minus, to the extent reflected in determining
Consolidated Net Worth, the sum of (without duplication) (i) all write-ups
subsequent to March 31, 2000 in the book value of any asset by the Borrower or
any of its Subsidiaries, (ii) all investments in Persons that are not
consolidated Subsidiaries and (iii) all unamortized debt discount and expense
(other than unamortized fees), unamortized deferred charges (except to the
extent offset by deferred income), goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses and other intangible assets (all items of
the type referred to in clause (b) above being referred to herein as
"Intangibles").
"Consolidated Total Assets" shall mean, at any date of determination, the
consolidated total assets of the Borrower and its Subsidiaries, as determined on
a consolidated basis in accordance with GAAP consistently applied.
"Consolidated Total Revenues" shall mean, for any period, the consolidated
total revenues of the Borrower and its Subsidiaries, as determined on a
consolidated basis in conformity with GAAP consistently applied.
"Control" shall have the meaning given such term in Rule 12b-2 under the
Exchange Act and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Card Bank" shall mean DMCCB and any other Person that issues credit
cards to be formed or acquired by the Borrower or one of the Subsidiaries.
"Credit Event" shall mean each Borrowing, each issuance of a Letter of
Credit and each amendment of a Letter of Credit that increases the principal
amount thereof.
"Credit Loss Reserves" shall mean, at any date of determination, the amount
of reserves for credit losses in respect of Managed Accounts Receivable.
"Cumulative Consolidated Net Income" shall mean, as at any date of
determination, the aggregate net income of the Borrower and its consolidated
Subsidiaries, as determined on a consolidated basis in conformity with GAAP
consistently applied ("Net Operating Income"), for each fiscal quarter of the
Borrower commencing with the fiscal quarter ended March 31, 2000 and ending with
the fiscal quarter most recently ended on or prior to such date of
determination, provided that "Cumulative Consolidated Net Income" shall be
determined exclusive of any fiscal quarter of the Borrower for which Net
Operating Income is less than zero.
"Cumulative Securitization Gains" shall mean cumulative gains on
securitization transactions to the extent such gains exceed cumulative related
fees, to the extent the foregoing are first reflected on a consolidated balance
sheet of the Borrower and its Subsidiaries on or after March 31, 2000, as
determined on a consolidated basis in conformity with GAAP consistently applied
to the extent applicable.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Depositary Institution" shall mean any Person that is a bank, savings and
loan or similar financial institution.
"Designated Debt" shall mean, as at any date, all obligations of the
Borrower and its consolidated Subsidiaries which are (or, as of such date,
should be) accounted for as indebtedness on a consolidated balance sheet of the
Borrower in conformity with GAAP consistently applied whether such obligations
are classified as long-term or short-term under GAAP consistently applied.
"DI Consolidated Net Worth" shall mean, as at any date of determination,
with respect to any Depositary Institution, the consolidated stockholders'
equity of such Depositary Institution and its Subsidiaries, as determined on a
consolidated basis in conformity with GAAP consistently applied.
"DI Consolidated Tangible Net Worth" shall mean, as at any date of
determination, with respect to any Depositary Institution, DI Consolidated Net
Worth of such Depositary Institution less (to the extent reflected in
determining such DI Consolidated Net Worth) Intangibles.
"DI Cumulative Securitization Gains" shall mean, with respect to any
Depositary Institution, cumulative gains on securitization transactions to the
extent such gains exceed cumulative related fees, to the extent the foregoing
are first reflected on a consolidated balance sheet of such Depositary
Institution and its Subsidiaries on or after March 31, 1998, as determined on a
consolidated basis in conformity with GAAP consistently applied to the extent
applicable.
"DMCCB" shall mean Direct Merchants Credit Card Bank, National Association,
or its successor.
"dollars" or "$" shall mean lawful money of the United States of America.
"Effective Date" shall have the meaning assigned to such term in Section
4.01.
"Equity plus Credit Reserves to Delinquent Assets Ratio" shall mean, at any
time, the ratio of (a) Consolidated Tangible Net Worth (excluding Cumulative
Securitization Gains) plus Credit Loss Reserves at such time to (b) the amount
of Managed Accounts Receivable that are more than 90 days contractually past due
at such time or otherwise non-performing.
"Equity plus Credit Reserves to Managed Accounts Receivable Ratio" shall
mean, at any time, the ratio (expressed as a percentage) of (a) Consolidated
Tangible Net Worth (excluding Cumulative Securitization Gains) at such time plus
Credit Loss Reserves at such time to (b) Managed Accounts Receivable at such
time.
"Equity to Managed Accounts Receivable Ratio" shall mean, at any time, the
ratio (expressed as a percentage) of (a) Consolidated Tangible Net Worth
(excluding Cumulative Securitization Gains) at such time to (b) Managed Accounts
Receivable less Credit Loss Reserves at such time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
that is treated as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 412 of the Code, that is treated as a single
employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing composed of Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate determined
by reference to the LIBO Rate in accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"Excess Spread" shall mean, for any three consecutive Monthly Periods (a
"Test Period"), the average of the Series Excess Spreads determined in respect
of such Test Period for each outstanding series (a "Series") of certificates,
securities or notes ("Securities") relating to the Metris Master Trust (which
average shall be determined on a weighted basis by reference to the average
aggregate invested amount with respect to each such Series). As used in this
definition, "Series Excess Spread" means, with respect to any Series, (a) the
average of the Portfolio Yields for each of the three Monthly Periods in the
relevant Test Period minus (b) the weighted average Base Rates for such three
Monthly Periods.
In addition, as used in this definition, (i) with respect to the Securities
captioned 1998-1 and issued pursuant to the Master Trust Agreement, "Base Rate"
and "Portfolio Yield" shall have the respective meanings assigned to such terms
in the relevant supplement to the Master Trust Agreement as in effect on the
Effective Date, and (ii) with respect to any other series of Securities relating
to the Metris Master Trust, (x) "Base Rate" shall mean, as of any Business Day,
the average of the per annum Security rates applicable to such Securities on
such Business Day weighted by the unpaid principal amount of each respective
class of Securities as of such Business Day plus the product of the per annum
servicing fee rate applicable to such series times a fraction the numerator of
which is the amount by reference to which such servicing fee is payable and the
denominator of which is the aggregate invested amount in respect of such series
and (y) "Portfolio Yield" shall mean, for any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is an amount equal
to the sum of the aggregate amount of available finance charge collections
allocated to such series for such Monthly Period (excluding amounts on deposit
in any reserve account established for such series), calculated on a cash basis,
minus the aggregate amount allocated to such series for such Monthly Period in
respect of defaulted Accounts and amounts required to be deposited, but not
deposited, in any excess funding account in connection with the adjustment of an
Account, and the denominator of which is the average daily aggregate invested
amount of the Securities with respect to such series for such Monthly Period;
provided that, for the purposes of this clause (ii), the Base Rate and Portfolio
Yield will instead be calculated in the manner set forth in the documentation
governing the relevant series of Securities so long as such terms (or their
equivalent) are defined in such documentation in a manner no less favorable to
the Lenders (i.e., that would be expected to materially increase the reported
Series Excess Spread) than the relevant definitions set forth in the Master
Trust Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Excluded Subsidiaries" shall mean (i) any Credit Card Bank, (ii) any
Receivables Transfer Subsidiary and (iii) any Subsidiary that is an insurance
company or other regulated financial institution that is not permitted by
applicable law or regulation to guarantee the Obligations.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended from time
to time.
"Fee Letter" shall have the meaning assigned to such term in Section
2.05(d).
"Fees" shall mean the Commitment Fee, the LC Fee, the fees referred to in
Section 2.05(d) and the Administrative Agent Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, senior vice president--finance, principal accounting officer,
treasurer, assistant treasurer or controller of such corporation.
"Funded Senior Debt" shall mean, at any time, without duplication, the sum
of (a) the aggregate principal amount of the Term Loans and the Revolving
Exposures, (b) the amount of utilization under any receivables financing entered
into by or on behalf of the Borrower or any of its Subsidiaries (including any
liquidity facility associated therewith, Indebtedness of the type referred to in
Section 6.03(h) and the amount of utilization under any other Indebtedness
secured by Accounts), and (c) the aggregate principal amount of all outstanding
unsecured Indebtedness of the Borrower and its Subsidiaries (excluding (i) the
aggregate principal amount of unsecured Indebtedness having no scheduled
principal payments prior to the final stated maturity of each of the credit
facilities provided for herein (provided that the exclusion pursuant to this
clause (i) shall not exceed 125% of the amount of Consolidated Net Worth at such
time) and (ii) Indebtedness of the Borrower or a Subsidiary Guarantor
subordinated to any Indebtedness outstanding hereunder on terms and conditions
that either (A) qualifies as Subordinated Debt or (B) are satisfactory to the
Required Lenders (as evidenced by their prior written approval).
"GAAP" shall mean generally accepted accounting principles in the United
States.
"Governmental Authority" shall mean any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body with
jurisdiction over the Borrower, any Subsidiary or any Lender, as the case may
be.
"Guarantee" of or by any Person shall mean, without duplication, any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person (the
"primary obligor") (or any other obligation of a primary obligor if the
anticipated liability of such guarantor shall have been reserved against in the
financial statements of such guarantor or quantified in the notes thereto),
including third party mortgages or third party security interests, in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness or other obligation, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment of such Indebtedness or other
obligation or (c) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor for purposes of enabling
the primary obligor to pay such Indebtedness or other obligation; provided that
the term Guarantee shall not include endorsements for collection or deposit, in
either case, in the ordinary course of business. For purposes of determining
compliance with any covenant contained herein, the "amount" of any Guarantee
shall be deemed to equal (i) the lesser of the amount of the Indebtedness
guaranteed or otherwise benefitted by such Guarantee or the maximum amount of
the Borrower's or the applicable Subsidiary's liability with respect to such
Guarantee or (ii) if such Guarantee shall not be a guarantee of Indebtedness,
the amount of the anticipated liability reserved against in connection with such
Guarantee in the most recent balance sheet of the guarantor or any anticipated
liability of the guarantor thereunder quantified in the notes accompanying such
balance sheet.
"Immaterial Subsidiary" shall mean, at any date, any Subsidiary (other than
an Excluded Subsidiary) that represents less than 10% of each of the following
(I) Consolidated Total Assets as of the most recently ended fiscal quarter of
the Borrower, (II) Consolidated Net Worth as of the most recently ended fiscal
quarter of the Borrower and (III) Consolidated Total Revenues for the four
fiscal quarters of the Borrower most recently ended.
"Incremental Loans" shall have the meaning assigned to such term in Section
2.10(d).
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or services (other
than trade payables and payroll expenses, so long as such trade payables and
payroll expenses are incurred in the ordinary course of business), (f)
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed to the extent of the amount of such
Indebtedness or, if such Indebtedness is nonrecourse, to the extent of the
lesser of the amount of such Indebtedness and the value of the property securing
such Indebtedness, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, and (i) all obligations of
such Person, actual or contingent, as an account party in respect of letters of
credit other than trade letters of credit. Notwithstanding the foregoing,
Indebtedness shall exclude sales of Accounts accounted for as sales under GAAP
and obligations in respect of Rate Protection Agreements. The Indebtedness of
any Person shall include the Indebtedness of any partnership (other than the
Metris Master Trust) in which such Person is a general partner.
"Index Debt" shall mean the senior secured debt of the Borrower outstanding
pursuant to the Revolving Commitments.
"Information Memorandum" shall mean the Confidential Information Memorandum
dated June 2000 relating to the Borrower and the Transactions.
"Insured Subsidiary" shall mean any insured depository institution (as
defined in 12 U.S.C. ss.1813(c) (or any successor provision), as amended,
re-enacted or redesignated from time to time), that is controlled (within the
meaning of 12 U.S.C. ss.1841 (or any successor provision), as amended,
re-enacted or redesignated from time to time) by the Borrower.
"Intangibles" shall have the meaning assigned to such term in the
definition of "Consolidated Tangible Net Worth".
"Interest Election Request" shall mean a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.04.
"Interest Payment Date" shall mean, with respect to any ABR Loan, the last
day of each March, June, September and December, (b) with respect to any other
Loan, the last day of the Interest Period applicable thereto and, in the case of
a Eurodollar Loan with an Interest Period of more than three months' duration,
each day that would have been an Interest Payment Date for such Loan had
successive Interest Periods of three months' duration, been applicable to such
Loan and, in addition, the date of any refinancing or conversion of such Loan
with or to a Loan of a different Type.
"Interest Period" shall mean as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect, provided that, if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of
Eurodollar Loans only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Investment Grade" shall mean, with respect to any Person, the circumstance
that such Person has a senior unsecured non-credit enhanced long-term debt
rating of at least BBB- from S&P or at least Baa3 by Moody's.
"Investments" shall have the meaning assigned to such term in Section 6.06.
"Investments in Depositary Institutions to Adjusted Consolidated Net Worth
Ratio" shall mean, at any time, the ratio (expressed as a percentage) of (a) the
aggregate equity of the Borrower or any of its Subsidiaries in any Depositary
Institution to (b) the excess of (i) Consolidated Net Worth over (ii)
Intangibles other than Intangibles at Depositary Institutions (in each case to
the extent reflected in determining such Consolidated Net Worth).
"IPO Subsidiary" shall have the meaning given such term in Section 6.08(g).
"Issuing Banks" shall mean The Chase Manhattan Bank, Bank of America, N.A.
and U.S. Bank National Association and one or more other Lenders which shall be
designated in writing from time to time by the Borrower with the consent of such
Lender and the Administrative Agent, which consent, in the case of the
Administrative Agent, shall not be unreasonably withheld.
"LC Commitment" shall mean, with respect to each Revolving Lender, the
commitment of such Lender to acquire participation in Letters of Credit
hereunder as set forth in Section 2.14, in an amount not in excess of an amount
equal to the product of (a) $50,000,000 times (b) a percentage equal to the
portion which such Lender's Revolving Commitment represents of the Total
Revolving Commitments.
"LC Disbursement" shall mean any payment or disbursement made by the
Issuing Bank under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, at any time, the sum of (a) the aggregate undrawn
amount of all Letters of Credit outstanding at such time and (b) the aggregate
amount of all LC Disbursements for which the Lenders have not been reimbursed
pursuant to Section 2.14 (and, when used with respect to a particular Lender,
shall mean such Lender's pro rata share, based upon its LC Commitment, of such
aggregate LC Exposure).
"LC Fee" shall have the meaning set forth in Section 2.05(c).
"Letter of Credit" shall mean any letter of credit issued pursuant to the
terms of Section 2.14(a).
"Leverage Ratio" shall mean, at any time, the ratio of (a) Designated Debt
(excluding deposits held by Depositary Institutions) at such time to (b)
Consolidated Tangible Net Worth (excluding Cumulative Securitization Gains) at
such time.
"LIBO Rate" shall mean, with respect to each day during each Interest
Period pertaining to a Eurodollar Borrowing, the rate per annum determined on
the basis of the rate for deposits in dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Dow Jones Markets service as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Dow Jones Markets service (or
otherwise on such service), the "Eurodollar Base Rate" for purposes of this
definition shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which the Administrative Agent is offered dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Liquidity Facility" shall have the meaning assigned to such term in
Section 4.02.
"Loan" shall mean a Tranche B Term Loan, a Revolving Loan or an Incremental
Loan, whether made as a Eurodollar Loan or as an ABR Loan, as permitted hereby.
"Loan Documents" shall mean this Agreement, the Subsidiary Guaranty and the
Collateral Documents.
"Loan Parties" shall mean the Borrower and each Subsidiary Guarantor.
"Majority-Owned Subsidiary" shall mean any Subsidiary as to which more than
50% of the outstanding common stock thereof is owned directly by the Borrower or
a Subsidiary Guarantor.
"Majority-Owned Subsidiary Guarantor" shall mean any Majority-Owned
Subsidiary that is a Subsidiary Guarantor.
"Managed Accounts Receivable" shall mean, at any time, the sum for the
Borrower and its Subsidiaries (without duplication) of (a) all on-balance sheet
accounts receivable (determined on a consolidated basis without duplication in
accordance with GAAP) and (b) all owned or securitized accounts receivable.
"Margin Stock" shall have the meaning given such term under Regulation U.
"Master Trust Agreement" shall mean the Metris Master Trust Amended and
Restated Pooling and Servicing Agreement dated as of July 30, 1998 among MRI,
DMCCB and The Bank of New York (Delaware), as trustee, as amended, supplemented
or otherwise modified from time to time.
"Material Adverse Effect" shall mean (a) a materially adverse effect on the
business, assets, operations or financial condition of the Borrower and the
Subsidiaries taken as a whole, (b) material impairment of the ability of the
Borrower or any Subsidiary to perform any material obligation under any Loan
Document to which it now is or hereafter becomes a party or (c) material
impairment of any of the material rights of or benefits available to the Lenders
under the Loan Documents.
"MDI" shall mean Metris Direct, Inc., a Minnesota corporation. --- "Metris
Master Trust" shall mean (i) the Metris Master Trust formed pursuant to the
Master Trust Agreement, as amended or supplemented from time to time, and (ii)
any other independent trust formed for the purpose of acquiring interests in the
accounts receivable of the Borrower or any of its Subsidiaries and issuing
certificates of beneficial interest in such receivables or commercial paper
pursuant to a Receivables Transfer Program.
"Monthly Period" shall mean the period from and including the first day of
each fiscal month of the Borrower to and including the last day of such fiscal
month.
"Moody's" shall mean Moody's Investors Service, Inc., and its successors.
"MRI" shall mean Metris Receivables, Inc., a Delaware special purpose
corporation, or its successors.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code) is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.
"New Lender" shall have the meaning assigned to such term in Section
2.01(c).
"New Lender Agreement" shall have the meaning assigned to such term in
Section 2.01(c).
"Obligations" shall mean (a) the Borrower's obligations in respect of the
due and punctual payment of principal of and interest on the Loans when and as
due, whether at maturity or upon any Interest Payment Date, by acceleration,
upon one or more dates set for prepayment or otherwise, (b) all amounts required
to be paid by the Borrower under Section 2.14 or otherwise in respect of any LC
Disbursement, (c) all Fees, expenses, indemnities, reimbursements and other
obligations, monetary or otherwise, of the Borrower under this Agreement or any
other Loan Document and (d) all obligations, monetary or otherwise, of each
Subsidiary under each Loan Document to which it is a party.
"Participant" shall have the meaning assigned to such term in Section
9.04(f).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, a rating from
S&P or from Moody's of at least A1/P1 (or equivalent rating), respectively;
(c) investments in certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and
(e) investments by Depositary Institutions made in the ordinary course of
business to satisfy applicable regulatory requirements, including investments
made to comply with the Community Reinvestment Act.
"Person" shall mean any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code which
is maintained for employees of the Borrower or any ERISA Affiliate.
"Pledge Agreement" shall mean the Amended and Restated Pledge Agreement,
dated as of June 30, 1998, made by the parties thereto in favor of the
Administrative Agent (substantially in the form of Exhibit D-1 hereto), as such
agreement may be amended, supplemented, modified or restated from time to time
as permitted thereby (including pursuant to (i) the Amendment, dated as of May
7, 1999, substantially in the form of Exhibit D-2 hereto and (ii) by the Pledge
Agreement Reaffirmation, dated as of July 21, 2000, substantially in the form of
Exhibit D-3 hereto) or replaced by a comparable agreement.
"Pledge Permitted Investments" shall have the meaning assigned to such term
in the Borrower Security Agreement.
"Qualified Investment" shall mean any Investment if immediately after
giving effect thereto: (a) no Default or Event of Default shall have occurred
and be continuing or would result therefrom and (b) the Borrower and the
Subsidiaries shall be in compliance, on a pro forma basis after giving effect to
such Investment, with the covenants contained in Section 6.01 recomputed as at
the last day of the most recently ended fiscal quarter of the Borrower and the
Subsidiaries as if such Investment and related financings or other transactions
had occurred on the first day of the period for testing such compliance, and, if
the amount of such Investment or series of related Investments exceeds
$5,000,000, then the Borrower shall have delivered to the Administrative Agent
an officers' certificate to such effect, together with all relevant financial
information for the Subsidiary or assets subject to such Investment.
"Rate Protection Agreements" shall mean interest rate
protection or swap agreements, exchange rate hedging agreements, foreign
currency exchange agreements or other interest, currency or exchange rate
hedging, cap or collar agreements or arrangements.
"Re-Allocation Date" shall have the meaning assigned to such term in
Section 2.01(f).
"Receivables Ratio" shall mean, at any time, the ratio of (a) the product
of (i) Adjusted Pre-Tax Income for the two fiscal quarters of the Borrower and
its Subsidiaries most recently ended times (ii) two to (b) the average of
Managed Accounts Receivable for the two fiscal quarters of the Borrower and its
Subsidiaries most recently ended.
"Receivables Transfer Program" shall mean (i) the structured receivables
program conducted pursuant to that certain Bank Receivables Purchase Agreement
dated as of May 26, 1995, between DMCCB's predecessor and Fingerhut Companies,
Inc. ("Fingerhut") (whose rights and obligations were assigned to and assumed by
the Borrower pursuant to an Assignment and Assumption Agreement dated as of
September 16, 1996 (the "Assignment Agreement") between Fingerhut and the
Borrower), as amended and restated pursuant to the Bank Receivables Purchase
Agreement dated as of July 30, 1998, between DMCCB and the Borrower, that
certain Purchase Agreement dated as of May 26, 1995, between Fingerhut (whose
rights and obligations thereunder were assigned to and assumed by the Borrower
under the Assignment Agreement) and MRI, as amended and restated pursuant to the
Receivables Purchase Agreement dated as of July 30, 1998, between DMCCB and the
Borrower, and the Master Trust Agreement, each as amended and supplemented from
time to time or replaced by a similar agreement and related agreements; and (ii)
any other program under which the Borrower and/or any of its Subsidiaries sell
or transfer or may sell or transfer interests in its Accounts (x) to one or more
purchasers on a limited recourse basis as determined in accordance with GAAP or
(y) to a Receivables Transfer Subsidiary that incurs Indebtedness secured by
such Accounts, but excluding any sales of Accounts made in conjunction with any
sale of other assets of the Borrower or any of the Subsidiaries. Interests in
any Account sold or transferred by the Borrower and/or any of its Subsidiaries
under clause (i) above will for all purposes be deemed sold or transferred
pursuant to a Receivables Transfer Program as of the date the Account arising
under the applicable credit card account is initially transferred to the
relevant Receivables Transfer Subsidiary.
"Receivables Transfer Subsidiary" shall mean any Subsidiary of the Borrower
(or another Person in which the Borrower or any Subsidiary makes an Investment
and to which the Borrower or any Subsidiary transfers accounts receivable and
related assets) which engages in no activities other than in connection with the
acquisition, financing, sale or transfer of Accounts, provided, that (a) no
portion of the Indebtedness or any other obligations (contingent or otherwise)
of such Person shall (i) be guaranteed by the Borrower or any Subsidiary
(excluding guarantees of obligations (other than principal and interest in
respect of Indebtedness) pursuant to Standard Securitization Undertakings), (ii)
be recourse to the Borrower or any Subsidiary in any way other than pursuant to
Standard Securitization Undertakings or (iii) subject any property of the
Borrower or any Subsidiary, directly or indirectly, contingently or otherwise,
to the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings; (b) neither the Borrower nor any other Subsidiary shall have any
material contract, agreement, arrangement or understanding (except in connection
with a Receivables Transfer Program) with such Person other than on terms no
less favorable to the Borrower or such Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of the Borrower; and
(c) neither the Borrower nor any Subsidiary shall have any obligation to
maintain or preserve such Person's financial condition or cause such Person to
achieve certain levels of operating results.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation D" shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Released Subsidiary" shall have the meaning given such term in Section
9.17.
"Replacement Letter of Credit" shall mean a letter of credit issued by a
bank the long term debt of which has a rating of at least A by both Moody's and
S&P, for the benefit of the Administrative Agent to secure the repayment of any
future drawings under any outstanding Letters of Credit issued hereunder.
"Reportable Event" shall mean any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
"Required Lenders" shall mean, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, Term Loans and unused Commitments at such
time.
"Responsible Officer" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Restricted Payment" shall mean any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of Capital Stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of Capital Stock of the Borrower
or any Subsidiary or any option, warrant or other right to acquire any such
shares of Capital Stock of the Borrower or any Subsidiary.
"Revolving Borrowing" shall mean a borrowing consisting of simultaneous
Revolving Loans from each of the Lenders.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire a
participation in Letters of Credit, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.10 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Revolving
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Revolving Commitment, as
applicable. The initial aggregate amount of the Lenders' Revolving Commitments
is $170,000,000; provided that in accordance with Section 2.01 the Borrower may
increase the aggregate amount of the Revolving Commitments to $200,000,000.
"Revolving Exposure" shall mean, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loans" shall mean the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Revolving Loan shall be an Eurodollar
Revolving Loan or an ABR Revolving Loan.
"Revolving Maturity Date" shall mean the date that is the third anniversary
of the Effective Date.
"Sale-Leaseback Transaction" shall have the meaning given such term in
Section 6.04.
"Securities Account Control Agreement" shall mean the Securities Account
Control Agreement, substantially in the form of Exhibit J hereto or in a form
reasonably satisfactory to the Administrative Agent, made by the Borrower and
certain of its Subsidiaries in favor of the Administrative Agent, as such
agreement may be amended, supplemented, modified or restated from time to time
as permitted thereby or replaced by a comparable agreement.
"Senior Note Indebtedness" shall mean the indebtedness of the Borrower
issued pursuant to the Senior Note Indenture.
"Senior Note Indenture" shall mean, collectively, (a) the $100,000,000
Indenture governing the Borrower's Senior Notes due 2004 among the Borrower, the
guarantors parties thereto and the trustee named therein and (b) the
$250,000,000 Indenture governing the Borrower's Senior Notes due 2006 among the
Borrower, the guarantors parties thereto and the trustee named therein, as the
same may be amended, supplemented, modified or restated from time to time as
permitted thereby and hereby.
"Series" shall have the meaning assigned to such term in the definition of
"Excess Spread."
"S&P" shall mean Standard & Poor's Ratings Services and its successors.
"Standard Securitization Undertakings" shall mean representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary which are reasonably customary in securitization of accounts
receivable transactions; it being acknowledged that such terms as are contained
in the various securitization documents of the Borrower and its Subsidiaries as
of the Effective Date shall be deemed to be reasonably customary.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the
Administrative Agent is subject for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Subordinated Debt" shall mean any unsecured Indebtedness: (a) no part of
the principal of which is required to be paid (whether by way of mandatory
sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to
February 8, 2005; (b) the payment of the principal of and interest on which and
other obligations in respect thereof are subordinated to the prior payment in
full of the Obligations on material terms and conditions no less favorable to
the Lenders than the subordination provisions of comparable subordinated
indebtedness entered into by similar borrowers at the time of incurrence; (c)
the rate of interest for which is comparable to the interest rate on comparable
subordinated indebtedness entered into by similar borrowers at the time of
incurrence and (d) for which the covenants and events of default contained in
the related documentation are no more restrictive in any material respect on the
Borrower than the covenants and events of default contained herein.
"Subordinated Securities Intermediary Lien" shall have the meaning assigned
to such term in the Borrower Security Agreement.
"subsidiary" shall mean, with respect to any Person (herein referred to as
the "parent"), any corporation, limited liability company, partnership,
association or other business entity of which securities or other ownership
interests representing more than 50% of the ordinary voting power or more than
50% of the general partnership or membership interests are, at the time any
determination is being made, owned, controlled or held by the parent and/or one
or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower including any
subsidiary of the Borrower created or acquired by the Borrower after the date
hereof other than Metris Master Trust.
"Subsidiary Guarantors" shall mean each Subsidiary of the Borrower party to
the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean the Guaranty to be executed and delivered
by each Subsidiary of the Borrower other than the Excluded Subsidiaries,
substantially in the form of Exhibit E hereto, as the same may be amended,
supplemented, modified or restated from time to time as permitted thereby or
replaced by a comparable guaranty.
"Subsidiary Security Agreement" shall mean the Security Agreement to be
executed and delivered by each Subsidiary Guarantor, substantially in the form
of Exhibit H hereto, as the same may be amended, supplemented, modified or
restated from time to time as permitted thereby or replaced by a comparable
guaranty.
"Supermajority-Owned Subsidiary" shall mean any Subsidiary as to which
least 80% of the outstanding common stock thereof is owned directly by the
Borrower or a Subsidiary Guarantor.
"Term Loans" shall mean Tranche B Term Loans and Incremental Loans.
"T.H. Lee Preferred Stock" shall mean, at any date of determination, the
amount of the obligation of the Borrower in respect of the Series C Perpetual
Convertible Preferred Stock of the Borrower in substantially the form in effect
on the Effective Date and any Series D Preferred Stock of the Borrower issued to
The Thomas H. Lee Company after the Effective Date pursuant to the Certificate
of Designation of Series C Preferred Convertible Stock of the Borrower on a
consolidated balance sheet of the Borrower in conformity with GAAP consistently
applied.
"Total LC Commitment" shall mean, at any time, the aggregate amount of the
Lenders' LC Commitments, as in effect at such time.
"Total Revolving Commitment" shall mean, at any time, the aggregate amount
of Revolving Commitments of all the Revolving Lenders, as in effect at such
time.
"Tranche B Term Loan" shall mean the Loans continued pursuant to clause (a)
of Section 2.01.
"Tranche B Term Loan Commitment" shall mean, with respect to each Lender,
the commitment, if any, of such Lender to have made a Tranche B Term Loan
hereunder on the closing date of the Borrower's existing credit agreement
(herein amended and restated) (which commitments have been fully satisfied)
expressed as an amount representing the maximum principal amount of the Tranche
B Term Loan to have been made by such Lender hereunder, as such Tranche B Term
Loan may be (a) reduced from time to time pursuant to Section 2.10 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The amount of each Lender's Tranche B Term
Loans is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche B Term Loans, as
applicable. The aggregate amount of the Lenders' Tranche B Term Loans is
$100,000,000.
"Tranche B Term Loan Lender" shall mean a Lender with a Tranche B Term Loan
Commitment or an outstanding Tranche B Term Loan.
"Tranche B Term Maturity Date" shall mean June 30, 2003.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type" when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO Rate
and the Alternate Base Rate.
"Wholly Owned Subsidiary" shall mean any Subsidiary all of the Capital
Stock of which (other than directors' qualifying shares required by law) is
owned (directly or indirectly) by the Borrower.
"Wholly Owned Subsidiary Guarantor" shall mean any Subsidiary Guarantor
that is a Wholly Owned Subsidiary.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03 Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. All terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the Administrative
Agent notifies the Borrower that the Required Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
ARTICLE II.
The Credits
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SECTION 2.01 Commitments. (a) Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (i) to continue its Tranche B Term Loan to
the Borrower on the Effective Date and (ii) to make or continue Revolving Loans
to the Borrower, at any time and from time to time on and after the Effective
Date and until the earlier of the Revolving Maturity Date and the termination of
the Revolving Commitment of such Lender, in an aggregate principal amount that
will not result in (A) such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment or (B) the aggregate principal amount of Funded Senior Debt
at such time exceeding the Borrowing Base then in effect. The continued Tranche
B Term Loans and the Revolving Commitments of the Lenders are set forth in
Schedule 2.01. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.
For the avoidance of doubt (and notwithstanding anything else to the contrary
contained in this Agreement), the Tranche B Term Loans are fully funded and no
Tranche B Term Loan Lender has any obligation to extend further credit or make
additional loans to the Borrower or any other Person hereunder.
(b) At any time after the date hereof, provided that no Event of Default
shall have occurred and be continuing, the Borrower may, with the consent of the
Administrative Agent (which consents shall not be unreasonably withheld or
delayed), request an increase of the aggregate Revolving Commitments by notice
to the Administrative Agent in writing of the amount of such proposed increase.
The Borrower may, in its sole discretion, but with the consent of the
Administrative Agent as to any Person that is not at such time a Lender (which
consent shall not be unreasonably withheld or delayed), offer to any existing
Lender or to one or more other Persons (an "assignee") the opportunity to
participate in all or a portion of the increased Revolving Commitments pursuant
to paragraph (c) or (d) below, as applicable.
(c) Any assignee that the Borrower selects to offer participation in the
increased Revolving Commitments, and that elects to become a party to this
Agreement and obtain a Revolving Commitment, shall execute a written agreement
(the "New Lender Agreement") with the Borrower and the Administrative Agent in
form and substance satisfactory to the Administrative Agent, whereupon such
assignee (a "New Lender") shall become a Lender for all purposes and to the same
extent as if originally a party hereto and shall be bound by and entitled to the
benefits of this Agreement, and the signature pages hereof shall be deemed to be
amended to add the name of such new Lender and the amount of Revolving
Commitments hereunder shall be deemed amended to add the amount of the Revolving
Commitment of such New Lender.
(d) Any Lender that accepts an offer to it by the Borrower to increase its
Revolving Commitment pursuant to this Section shall, in each case, execute a
written agreement (the "Commitment Increase Agreement") with the Borrower and
the Administrative Agent in form and substance satisfactory to the
Administrative Agent, whereupon such Lender shall be bound by and entitled to
the benefits of this Agreement with respect to the full amount of its Revolving
Commitment as so increased, and the amount of Revolving Commitments hereunder
shall be deemed to be amended to so increase the Revolving Commitment of such
Lender.
(e) The effectiveness of any New Lender Agreement or Commitment Increase
Agreement shall be contingent upon receipt by the Administrative Agent of such
corporate resolutions of the Borrower and legal opinions of counsel to the
Borrower as the Administrative Agent shall reasonably request with respect
thereto, in each case in form and substance reasonably satisfactory to the
Administrative Agent.
(f) If any assignee becomes a New Lender pursuant to Section 2.01(c) or any
Lender's Commitment is increased pursuant to Section 2.01(d), additional
Revolving Loans made on or after the effectiveness thereof (the "Re-Allocation
Date") shall be made pro rata based on the respective Revolving Commitments in
effect on and after such Re-Allocation Date (except to the extent that any such
pro rata borrowings would result in any Lender making an aggregate principal
amount of Loans in excess of its Revolving Commitment, in which case such excess
amount will be allocated to, and made by, such New Lender and/or Lenders with
such increased Revolving Commitments to the extent of, and pro rata based on,
their respective Revolving Commitments), and continuations of Eurodollar
Borrowing outstanding on such Re-Allocation Date shall be effected by repayment
of such Eurodollar Borrowing on the last day of the Interest Period applicable
thereto and the making of new Eurodollar Borrowings pro rata based on the
respective Revolving Commitments in effect on and after such Re-Allocation Date.
In the event that on any such Re-Allocation Date there is an unpaid principal
amount of ABR Borrowings, the Borrower shall make prepayments thereof and
borrowings of ABR Borrowings so that, after giving effect thereto, the ABR
Borrowings outstanding are held pro rata based on their respective Revolving
Commitments in effect on and after such Re-Allocation Date. In the event that on
any such Re-Allocation Date there is an unpaid principal amount of Eurodollar
Borrowings, such Eurodollar Borrowings shall remain outstanding with the
respective holders thereof until the expiration of their respective Interest
Periods (unless the Borrower elects to prepay any thereof in accordance with the
applicable provisions of this Agreement), and interest on and repayments of such
Eurodollar Borrowing will be paid thereon to the respective Lenders holding such
Eurodollar Borrowings pro rata based on the respective principal amounts thereof
outstanding.
(g) Notwithstanding anything to the contrary in this Section, (i) no Lender
shall have any obligation to increase its Revolving Commitment unless it agrees
to do so in its sole discretion and (ii) after giving effect to any increase in
the Revolving Commitments pursuant to this Section, the aggregate amount of the
Revolving Commitments shall not exceed $200,000,000.
SECTION 2.02 Loans and Borrowings. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their Commitments of the applicable Class; provided,
however, that the failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). The
Loans comprising any Borrowing shall be in an aggregate principal amount which
is an integral multiple of $1,000,000 and not less than $5,000,000 (or, if made
as an ABR Loan, an aggregate principal amount equal to the remaining balance of
the Available Commitments).
(b) Subject to Section 2.13, each Revolving Borrowing shall be comprised
entirely of Eurodollar Loans or ABR Loans as the Borrower may request pursuant
to Section 2.03. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type and Class may be outstanding at the
same time; provided, however, that the Borrower shall not be entitled to request
any Borrowing which, if made, would result in an aggregate of more than 15
separate Eurodollar Borrowings of any Lender being outstanding at any one time.
For purposes of the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Loans.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 2:00 p.m., New York
City time, and the Administrative Agent shall by 3:00 p.m., New York City time,
credit the amounts so received to the general deposit account of the Borrower
with the Administrative Agent or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met, return
the amounts so received to the respective Lenders. Revolving Loans and
Incremental Loans shall be made by the Lenders pro rata in accordance with their
respective Commitments, subject to Section 2.16. Unless the Administrative Agent
shall have received notice from a Lender prior to the date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the date of such
Borrowing in accordance with this paragraph (c) and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Eurodollar Borrowing if the Interest Period
requested with respect thereto would end after the Revolving Maturity Date or
the Tranche B Term Maturity Date, as applicable.
SECTION 2.03 Borrowing Procedure. (a) To request a Borrowing, the Borrower
shall hand deliver or telecopy to the Administrative Agent a borrowing request
in the form of Exhibit A hereto (a) in the case of a Eurodollar Borrowing, not
later than 1:00 p.m., New York City time, three Business Days before any such
proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 12:00
noon, New York City time (except that the Borrower shall use its best efforts to
make such request by 11:00 a.m., New York City time), on the day of such
proposed Borrowing. Such notice shall be irrevocable and shall in each case
specify (i) whether such Borrowing is to be of Revolving Loans or Incremental
Loans, a Eurodollar Borrowing or an ABR Borrowing, (ii) the date of such
Borrowing (which shall be a Business Day) and the amount thereof and (iii) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto. If no election as to the Type of Borrowing is specified in any such
notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Borrowing is specified in any such notice,
then the Borrower shall be deemed to have selected an Interest Period of one
month's duration. If the Borrower shall not have given notice in accordance with
this Section 2.03 of its election to continue or convert a Borrowing prior to
the end of the Interest Period in effect for such Borrowing, then the Borrower
shall (unless such Borrowing is repaid at the end of such Interest Period) be
deemed to have given notice of an election to convert or continue such Borrowing
with an ABR Borrowing. The Administrative Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.03 and of each Lender's
portion of the requested Borrowing.
SECTION 2.04 Continuances and Conversions of Loans. Each Revolving
Borrowing and Term Loan Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. The Borrower shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (i) not later than 12:00 (noon), New York City time (except that the
Borrower shall use its best efforts to make such request by 11:00 a.m., New York
City time), on the day of conversion, to convert any Eurodollar Borrowing into
an ABR Borrowing, (ii) not later than 1:00 p.m., New York City time, three
Business Days prior to conversion or continuation, to convert any ABR Borrowing
into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a
Eurodollar Borrowing for an additional Interest Period, and (iii) not later than
12:00 (noon), New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing, as the case may be;
(ii) if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, the aggregate principal amount of such
Borrowing converted or continued shall be an integral multiple of $1,000,000 and
not less than $5,000,000;
(iii) if any Eurodollar Borrowing is converted at a time other than the end
of the Interest Period applicable thereto, the Borrower shall pay, upon demand,
any amounts due to the Banks pursuant to Section 2.15;
(iv) any portion of a Borrowing maturing or required to be repaid in less
than one month may not be converted into or continued as a Eurodollar Borrowing;
(v) any portion of a Eurodollar Borrowing which cannot be converted into or
continued as a Eurodollar Borrowing by reason of clause (iv) above shall be
automatically converted at the end of the Interest Period in effect for such
Borrowing into an ABR Borrowing; and
(vi) no Interest Period may be selected for any Eurodollar Borrowing that
would end after the Revolving Maturity Date or the Tranche B Term Maturity Date,
as applicable.
Each notice pursuant to this Section 2.04 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall promptly advise the other Lenders of
any notice given pursuant to this Section 2.04 and of each Lender's portion of
any converted or continued Borrowing. If the Borrower shall not have given
notice in accordance with this Section 2.04 to continue any Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.04 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing. Notwithstanding any contrary provision hereof, if an
Event of Default has occurred and is continuing and the Administrative Agent, at
the request of the Required Lenders, so notifies the Borrower, then, so long as
an Event of Default is continuing (i) no outstanding Borrowing may be converted
to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.05 Fees. (a) The Borrower agrees to pay to each Revolving Lender,
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31, and on the date on which the Commitment of such Lender shall be
terminated as provided herein, a commitment fee (the "Commitment Fee")
calculated at a rate per annum equal to the Applicable Rate in effect from time
to time on the amount of the Available Commitment of such Lender, during the
quarter then ended (or shorter period commencing with the Effective Date (or
applicable Re-Allocation Date as appropriate) or ending with the Revolving
Maturity Date or any date on which the Revolving Commitment of such Lender shall
be terminated), commencing on the first such date to occur after the date
hereof. The Commitment Fee shall be computed on the basis of the actual number
of days elapsed in a year of 365 or 366 days, as the case may be. The Commitment
Fee due to each Revolving Lender shall commence to accrue on the Effective Date
(or applicable Re-Allocation Date as appropriate) and shall cease to accrue on
the earlier of (I) the Revolving Maturity Date and (II) the termination of the
Revolving Commitment of such Lender as provided herein.
(b) The Borrower agrees to pay to the Administrative Agent the fees (the
"Administrative Agent Fees") relating to this Agreement at the times and in the
amounts agreed upon in the letter agreement dated April 14, 2000, between the
Borrower and The Chase Manhattan Bank (the "Fee Letter").
(c) The Borrower agrees to pay each Revolving Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31,
and on the date on which the Letters of Credit are no longer outstanding, a fee
(the "LC Fee") calculated at a rate per annum equal to the Applicable Rate for
Eurodollar Revolving Borrowings in effect on such date on such Lender's pro rata
share, based upon its Revolving Commitment, of the average daily amount of all
Letters of Credit outstanding during the preceding period. The LC Fee shall be
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be. The LC Fee due to each Revolving Lender shall
commence to accrue on the Effective Date (or applicable Re-Allocation Date as
appropriate) and shall cease to accrue on the date on which Letters of Credits
are no longer outstanding.
(d) The Borrower shall pay to the applicable Issuing Lender for its own
account a fronting fee of 1/8 of 1% per annum (or any lower rate agreed to by
any Issuing Bank) of the average daily face amount of any Letter of Credit
issued by such Issuing Bank, payable quarterly in arrears on each March 31, June
30, September 30 and December 31 and on the date on which the Revolving
Commitment of such Lender shall be terminated as provided herein after the date
a Letter of Credit is issued. In addition to the foregoing fees, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
(e) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06 Evidence of Debt; Repayment of Loans. (a) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness to such Lender resulting from each Loan made by it from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement. The Administrative Agent shall
maintain the Register pursuant to Section 9.04(d) in which it will record (i)
the amount of each Loan made hereunder, the Type of each Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender's share thereof. The entries made in the
Register and the accounts of each Lender maintained pursuant to this paragraph
(a) shall, to the extent permitted by applicable law, be prima facie evidence of
the existence and amounts of the obligations therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to maintain
the Register or any accounts or any error therein shall not in any manner affect
the obligations of the Borrower to repay the Loans in accordance with their
terms.
(b) The outstanding principal balance of each Revolving Loan shall be
payable on the Revolving Maturity Date. The Borrower hereby unconditionally
promises to pay (i) to the Administrative Agent for the account of each
Revolving Lender the then unpaid principal amount of each Revolving Loan of such
Revolving Lender on the Revolving Maturity Date, (ii) to the Administrative
Agent for the account of each Tranche B Term Loan Lender the then unpaid
principal amount of each Tranche B Term Loan of such Tranche B Term Loan Lender
on the Tranche B Term Maturity Date.
(c) Each repayment of a Borrowing shall be applied ratably to the Loans
included in the repaid Borrowing. Repayments of Loans shall be accompanied by
accrued interest on the amount repaid.
SECTION 2.07 Interest on Loans. (a) Subject to the provisions of Sections
2.08 and 2.09, the Loans comprising each Eurodollar Borrowing shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Rate. Interest on each
Eurodollar Borrowing shall be payable on each applicable Interest Payment Date.
The LIBO Rate for each Interest Period shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error. The
Administrative Agent shall promptly advise the Borrower and each Lender of such
determination.
(b) Subject to the provisions of Section 2.08, the Loans comprising each
ABR Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of (i) 365 or 366 days, as the case may be, during any
period in which the Alternate Base Rate is based on the Prime Rate, and (ii) 360
days, during any period in which the Alternate Base Rate is based on the Base CD
Rate or the Federal Funds Effective Rate) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Rate. Interest on each ABR Borrowing
shall be payable on each applicable Interest Payment Date. The Alternate Base
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error. The Administrative Agent shall
promptly advise the Borrower and each Lender of such determination.
SECTION 2.08 Default Interest. (i) If all or a portion of the principal
amount of any Loan or reimbursement obligation shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), all outstanding
Loans and reimbursement obligations (whether or not overdue) shall bear interest
at a rate per annum which is equal to (x) in the case of the Loans, the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions
of Section 2.07 plus 2% or (y) in the case of reimbursement obligations, the
rate applicable to ABR Revolving Loans plus 2%, and (ii) if all or a portion of
any interest payable on any Loan or reimbursement obligation or any commitment
fee or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate applicable to ABR Loans under the
relevant credit facility plus 2% (or, in the case of any such other amounts that
do not relate to a particular facility, the ABR plus 4.25%), in each case, with
respect to clauses (i) and (ii) above, from the date of such non-payment until
such amount is paid in full (as well after as before judgment).
SECTION 2.09 Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Eurodollar Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to the Lenders of making or
maintaining Eurodollar Loans during such Interest Period, or that reasonable
means do not exist for ascertaining the LIBO Rate, the Administrative Agent
shall, as soon as practicable thereafter, give written notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing shall be deemed to
be a request for an ABR Borrowing. The Administrative Agent agrees to give
written notice to the Borrower promptly after it determines that the conditions
giving rise to any notice under the first sentence of this paragraph shall no
longer be in effect. Each determination by the Administrative Agent hereunder
shall be presumed conclusive absent manifest error but subject to rebuttal by
the Borrower.
<PAGE>
SECTION 2.10. Termination and Reduction of Commitments; Increase of
Commitments. (a) The Revolving Commitments and the LC Commitments shall be
automatically terminated on the Revolving Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written notice to
the Administrative Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total Revolving
Commitment or the Total LC Commitment; provided that (i) each partial reduction
of the Total Revolving Commitment or the Total LC Commitment, as the case may
be, shall be in an integral multiple of $1,000,000 and in a minimum principal
amount of $5,000,000; (ii) no such termination or reduction shall be made which
would reduce the Total Revolving Commitment to an amount less than the Revolving
Exposure, (iii) no such termination or reduction shall be made which would
reduce the Total Revolving Commitment below the Total LC Commitment and (iv) no
such termination or reduction shall be made which would reduce the Total LC
Commitment below the LC Exposure.
(c) Each reduction in the Total Revolving Commitment or the Total LC
Commitment hereunder shall be made ratably among the Revolving Lenders in
accordance with their respective Revolving Commitments or LC Commitments, as
applicable. The Borrower shall pay to the Administrative Agent for the account
of the Lenders, on the date of each termination or reduction hereunder, the
Commitment Fee on the amount of the Revolving Commitments so terminated or
reduced accrued through the date of such termination or reduction.
(d) At any time and on up to no more than four occasions, the Borrower may,
by notice to (but without the consent of) the Administrative Agent (which shall
promptly deliver a copy to each of the Lenders), request the addition of a new
tranche of term loans (the loans made pursuant to all such tranches,
collectively, the "Incremental Loans"). Each tranche of Incremental Loans (i)
shall be in an aggregate principal amount of not less than $25,000,000 and (ii)
shall have such pricing, amortization and maturity date as may be agreed to by
the Borrower and the Lenders providing such Incremental Loans. All of the
Incremental Loans (i) shall be in an aggregate principal amount not in excess of
$100,000,000 in total, (ii) shall be Term Loans for all purposes hereunder
(including for purposes of sharing of Collateral, Guarantees and prepayments),
(iii) shall not amortize or mature prior to the Tranche B Term Loans, and (iv)
shall otherwise have the same terms as the Tranche B Term Loans (and references
to Tranche B Term Loans shall be deemed as the context requires to include
references to Incremental Loans having the terms of Tranche B Term Loans). The
Borrower or its agent shall have the right to arrange for the Lenders or for one
or more additional Persons (any such additional Persons being called an
"Additional Lender") to extend commitments to provide Incremental Loans in an
aggregate amount equal to the amount thereof requested by the Borrower, provided
that each Additional Lender shall be subject to the approval of the Borrower and
the Administrative Agent (which approval shall not be unreasonably withheld or
delayed). Commitments in respect of Incremental Loans shall become Commitments
under this Agreement pursuant to an amendment to this Agreement executed by each
of the Borrower, each Lender agreeing to provide such Commitment, each
Additional Lender, if any, and the Administrative Agent, and such amendments to
the other Loan Documents as the Administrative Agent shall reasonably deem
appropriate to effect such purpose. The effectiveness of such amendment shall be
subject to the satisfaction on the date thereof and, if different, on the date
on which the Incremental Loans are made, of each of the conditions set forth in
Section 4.02 and such amendment. The Borrower will use the proceeds of the
Incremental Loans only for the purposes permitted by Section 3.13. For the
avoidance of doubt, no Lender shall be required to make an Incremental Loan to
the Borrower or any other Person.
SECTION 2.11. Prepayment. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing, in whole or in part, upon giving
written notice (or telephone notice promptly confirmed by written notice) to the
Administrative Agent: (i) before 1:00 p.m., New York City time, three Business
Days prior to prepayment, in the case of Eurodollar Loans and before 12:00 noon,
New York City time, and (ii) on the day of the proposed prepayment (except that
the Borrower shall use its best efforts to make such request by 11:00 a.m., New
York City time), in the case of ABR Loans; provided that each partial prepayment
shall be in an amount which is an integral multiple of $1,000,000 and not less
than $5,000,000.
(b) On the date of any termination or reduction of the Revolving
Commitments pursuant to Section 2.10(b), the Borrower shall pay or prepay so
much of the Revolving Borrowings as shall be necessary in order that the
Revolving Exposure will not exceed the Total Revolving Commitment after giving
effect to such termination or reduction.
(c) If at any time the amount of Funded Senior Debt shall exceed the
Borrowing Base, the Borrower shall, within 30 days, pay or prepay so much of the
Loans then outstanding, together with accrued interest thereon, or forthwith
deposit cash with the Administrative Agent in such amount, which cash deposit
shall serve as collateral security for the repayment of any further drawings
under the Letters of Credit, so that the sum of the aggregate amount of the
Funded Senior Debt will not exceed the Borrowing Base after giving effect to
such prepayment or collateralization.
(d) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing (or portion
thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section 2.11 shall be subject to Section 2.15 but
otherwise without premium or penalty. All prepayments under this Section 2.11
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.12. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the Effective Date, any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or such
Issuing Bank of the principal of or interest on any Eurodollar Loan made by such
Lender or any Fees or other amounts payable hereunder, including reimbursement
of drawings under the Letters of Credit (other than "Taxes" covered by Section
2.19 and changes in the rate of tax imposed on the overall net income of such
Lender by any Governmental Authority as a result of a present or former
connection between the jurisdiction of the Governmental Authority imposing such
tax on such Lender (except a connection arising solely from such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement)), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender, or shall impose on such
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise) in respect thereof by an amount deemed by such Lender to be material,
then the Borrower will pay to such Lender upon demand such additional amount or
amounts as will compensate such Lender on an after tax basis for such additional
costs incurred or reduction suffered.
(b) If any Lender shall have determined that the adoption after the
Effective Date of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender's holding company 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 such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such Lender's holding company on an after tax basis for any such reduction
suffered after the date hereof.
(c) A certificate of a Lender setting forth such amount or amounts, along
with the Lender's method of computation of such amounts, as shall be necessary
to compensate such Lender (or participating banks or other entities pursuant to
Section 9.04) as specified in paragraph (a) or (b) above, as the case may be,
shall be delivered to the Borrower and shall be presumed conclusive absent
manifest error but subject to rebuttal by the Borrower. The Borrower shall pay
each Lender the amount shown as due on any such certificate delivered by it
within 10 days of its receipt of the same. In the event any Lender delivers such
a certificate, the Borrower may, at its own expense, require such Lender to
transfer and assign in whole or in part, without recourse (in accordance with
Section 9.04) all or part of its interests, rights and obligations under this
Agreement to an assignee which shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority, (ii) the Borrower shall have
received a written consent of the Administrative Agent in the case of an entity
that is not a Lender, which consent shall not unreasonably be withheld, and
(iii) the Borrower or such assignee shall have paid to the assigning Lender in
immediately available funds the principal of and interest accrued to the date of
such payment on the Loans made by it hereunder and all other amounts owed to it
hereunder as of such date. Any Lender claiming any additional amounts payable
pursuant to this Section 2.12 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any additional amount which may thereafter accrue and would not, in
the sole determination of such Lender, be otherwise disadvantageous to such
Lender.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period; provided, however, that no Lender shall be entitled to
compensation for any such increased costs or reductions unless it shall have
submitted a certificate under paragraph (c) above with respect thereto not more
than 90 days after the date that such Lender knows that such increased costs
have been incurred or such reduction suffered. Notwithstanding any other
provision of this Section 2.12, no Lender shall demand compensation for any
increased cost or reduction referred to above if it shall not at the time be the
general policy of such Lender to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, and each
Lender shall in good faith endeavor to allocate increased costs or reductions
fairly among all of its affected commitments and credit extensions (whether or
not it seeks compensation from all affected borrowers). The protection of this
Section 2.12 shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
SECTION 2.13. Change in Legality. (a) Notwithstanding any other provision
herein contained, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan
unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be converted
to ABR Loans, in which event all such Eurodollar Loans shall be automatically
converted to ABR Loans as of the effective date of such notice as provided in
paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.13, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower. The Administrative Agent agrees to give written notice to the Borrower
promptly after it determines that the conditions giving rise to any notice under
paragraph (a) above shall no longer be in effect.
(c) Each Lender agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its applicable lending office if the
making of such filing or change would enable such Lender to legally make or
maintain any Eurodollar Loan referred to in paragraph (a) of this Section 2.13;
provided, however, that (i) such Lender shall not be required to make such
filing or change if, in the sole determination of such Lender, such action would
be otherwise disadvantageous to such Lender and (ii) until such time as such
Lender shall have determined that it can make or maintain such Eurodollar Loan,
the Lender may take the actions referred to in Section 2.13(a).
SECTION 2.14. Letters of Credit. (a) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Issuing Bank shall issue and deliver to the Borrower or continue at any time and
from time to time on or after the Effective Date and prior to the fifth Business
Day before the Revolving Maturity Date, Letters of Credit for the account of the
Borrower or any Subsidiary in an aggregate undrawn amount at any one time
outstanding not to exceed $50,000,000; provided that such Issuing Bank shall not
issue any Letter of Credit if, immediately after giving effect to such issuance,
the LC Exposure at such time would exceed the Total LC Commitment or if the
Revolving Exposure would exceed the Total Revolving Commitment or if the
aggregate principal amount of Funded Senior Debt at such time would exceed the
Borrowing Base then in effect. Each Letter of Credit (x) shall be in form as
shall have been agreed upon in writing by the Borrower, the Administrative Agent
and such Issuing Bank, (y) shall be in a minimum face amount of $2,000 and (z)
shall permit drawings upon the presentation of one or more sight drafts and such
other documents as shall be specified by the Borrower in the applicable notice
delivered pursuant to paragraph (b) below and shall expire on a date not later
than the earlier of (i) the date one year after the date of the issuance of such
Letter of Credit (or, in the case of any renewal or extension thereof, one year
after such renewal or extension) and (ii) the fifth Business Day prior to the
Revolving Maturity Date. The letters of credit set forth on Schedule 2.14 shall
be deemed to be "Letters of Credit" hereunder at all times such letters of
credit are outstanding after the Effective Date; and each of the issuing banks
listed therein shall be deemed to be the "Issuing Bank" with respect to such
Letters of Credit.
(b) The Borrower shall give such Issuing Bank written or telecopy notice or
notice via computer modem not later than 10:00 a.m., New York City time, one
Business Day (or such shorter period as shall be acceptable to such Issuing Bank
and the Administrative Agent) prior to any proposed issuance of a Letter of
Credit. Each such notice shall refer to this Agreement and shall specify (i) the
date on which such Letter of Credit is to be issued (which shall be a Business
Day), the account party on the Letter of Credit and the face amount thereof
(which shall be an amount in dollars), (ii) the name and address of the
beneficiary, (iii) whether such Letter of Credit shall permit a single drawing
or multiple drawings, (iv) the form of the sight draft and any other documents
required to be presented at the time of any drawing (together with the exact
wording of such documents or copies thereof) and (v) the expiry date of such
Letter of Credit. Such Issuing Bank shall give the Administrative Agent, which
shall in turn give to each Lender, prompt written or telecopy advice of any
notice received from the Borrower pursuant to this Section 2.14.
(c) By the issuance (or continuance on the Effective Date) of a Letter of
Credit and without any further action on the part of such Issuing Bank or the
Lenders in respect thereof, such Issuing Bank hereby grants to each Lender, and
each Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender's pro rata percentage, based upon its LC
Commitment, of the face amount of such Letter of Credit, effective upon the
issuance of such Letter of Credit; provided that (i) no Lender shall be required
to acquire participations in Letters of Credit that would result in its pro rata
percentage, based upon its LC Commitment, of the LC Exposure exceeding its LC
Commitment, as the same may be reduced from time to time in accordance with
Section 2.10 and (ii) any Lender or New Lender that increases its Revolving
Commitment or extends a Revolving Commitment after the Effective Date in
connection with an increase in Revolving Commitments requested by the Borrower
pursuant to Section 2.01(b) shall acquire from such Issuing Bank a participation
in such Letter of Credit equal to such Lender's pro rata percentage, based on
its LC Commitment, of the face amount of such Letter of Credit on the effective
date of such increased or new Revolving Commitment. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees severally and not jointly to pay to the Administrative Agent, on behalf
of such Issuing Bank, in accordance with paragraph (e) below, such Lender's pro
rata percentage, based upon its LC Commitment, of each unreimbursed LC
Disbursement made by such Issuing Bank; provided that the Lenders shall not be
obligated to make any such payment with respect to any payment or disbursement
made under any Letter of Credit as a result of the gross negligence or wilful
misconduct of such Issuing Bank. Notwithstanding the foregoing, if, as permitted
by Section 2.14(f), an Issuing Bank has separately agreed with the Borrower that
the Issuing Bank will be held to a higher standard of care, such standard shall
govern as between the Issuing Bank and the Lenders.
(d) Each Lender acknowledges and agrees that its acquisition of
participations pursuant to paragraph (c) above in respect of Letters of Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of any Default or Event of
Default hereunder, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(e) Promptly after it shall have ascertained that any draft and any
accompanying documents presented under a Letter of Credit appear to be in
conformity with the terms and conditions of such Letter of Credit, such Issuing
Bank shall give written or telecopy notice to the Borrower and the
Administrative Agent of the receipt and amount of such draft and the date on
which payment thereon will be made. If the Administrative Agent shall not have
received from the Borrower the payment required pursuant to paragraph (f) by the
date and time required by such paragraph, the Administrative Agent shall
promptly notify such Issuing Bank and each Lender of the LC Disbursement and, in
the case of each Lender, its pro rata percentage, based upon its LC Commitment
of such LC Disbursement. Each Lender shall pay to the Administrative Agent, not
later than 2:00 p.m., New York City time, on such date, such Lender's percentage
of such LC Disbursement, which the Administrative Agent shall promptly pay to
such Issuing Bank. The Administrative Agent will promptly remit to each Lender
such Lender's percentage of any amounts subsequently received by the
Administrative Agent from the Borrower in respect of such LC Disbursement;
provided that amounts so received for the account of any Lender prior to payment
by such Lender of amounts required to be paid by it hereunder in respect of any
LC Disbursement shall be remitted to such Issuing Bank.
(f) If the Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to
the Administrative Agent an amount equal to such LC Disbursement not later than
2:00 p.m., New York City time, on the date that such LC Disbursement is made, if
the Borrower shall have received notice of such LC Disbursement prior to 10:00
a.m., New York City time, on such date, or, if such notice has not been received
by the Borrower prior to such time on such date, then not later than 2:00 p.m.,
New York City time, on (i) the Business Day that the Borrower receives such
notice, if such notice is received prior to 10:00 a.m., New York City time, on
the day of receipt, or (ii) the Business Day immediately following the day that
the Borrower receives such notice, if such notice is not received prior to such
time on the day of receipt. The Administrative Agent shall inform the applicable
Issuing Bank of any such payment by the Borrower. The obligations of the
Borrower under this paragraph (f) shall be absolute, unconditional and
irrevocable and shall be satisfied strictly in accordance with their terms
irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower or any other Person may at any time have against the beneficiary
under any Letter of Credit, the Administrative Agent, such Issuing Bank or any
other Lender (other than the defense of payment in accordance with the terms of
this Agreement or a defense based on the gross negligence or wilful misconduct
of the Administrative Agent or such Issuing Bank) or any other Person in
connection with this Agreement or any other transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; provided that
payment by such Issuing Bank under such Letter of Credit against presentation of
such draft or document shall not have constituted gross negligence, wilful
misconduct or breached any other standard agreed to in writing by the applicable
Issuing Bank;
(iv) payment by such Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply in any
immaterial respect with the terms of such Letter of Credit; provided that such
payment shall not have constituted gross negligence or wilful misconduct; or
(v) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing; provided that such other circumstance or event shall
not have been the result of gross negligence or wilful misconduct of such
Issuing Bank or the result of a violation by such Issuing Bank of the standards
of care specified in the Uniform Commercial Code of the State of New York.
It is understood that in making any payment under a Letter of Credit (x)
such Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including
reliance on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary equals the amount of such draft
and whether or not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document on its face appears
to be in order, and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or invalid or
any statement therein proves to be inaccurate or untrue in any respect
whatsoever, and (y) any noncompliance in any immaterial respect of the documents
presented under a Letter of Credit with the terms thereof shall, in either case,
not be deemed wilful misconduct or gross negligence of such Issuing Bank.
Notwithstanding the foregoing, to the extent such Issuing Bank has separately
agreed with the Borrower to a standard of care which varies from that set forth
above, such standard shall govern as between the Borrower and such Issuing Bank.
(g) Each Issuing Bank hereby agrees to share, pro rata in accordance with
its LC Exposure, with all of the Lenders, its security interest in all documents
and goods in which it will have a security interest in connection with the
issuance of any Letter of Credit and to share on the same basis all amounts
recovered by such Issuing Bank in connection with any such security interest.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender against
any loss or reasonable expense which such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
Borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by the Borrower to borrow or to convert or continue any Loan hereunder
after irrevocable notice of such Borrowing, conversion or continuation has been
given pursuant to Section 2.03 or 2.04, (c) any payment, prepayment or
conversion of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day of
the Interest Period applicable thereto or (d) the occurrence of any Event of
Default, including, in each such case, any loss or reasonable expense sustained
or incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan. Such loss or reasonable expense shall include an amount
equal to the excess, if any, as reasonably determined by such Lender, of (i) its
cost of obtaining the funds for the Loan being paid, prepaid, converted,
continued or not borrowed (based on the LIBO Rate) for the period from the date
of such payment, prepayment or failure to borrow to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan which would have commenced on the date of such failure)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would be realized by such Lender in reemploying the funds so paid, prepaid or
not borrowed for such period or Interest Period, as the case may be. A
certificate of any Lender setting forth any amount or amounts which such Lender
is entitled to receive pursuant to this Section 2.15 and the method of
calculation employed by such Lender shall be delivered to the Borrower and shall
be presumed conclusive absent manifest error but subject to rebuttal by the
Borrower.
SECTION 2.16. Pro Rata Treatment. Except as provided in Section 2.01(f) or
as required under Section 2.13, each Borrowing, each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans, each payment
of the Commitment Fee, each payment of the LC Fees and each reduction of the
Revolving Commitments shall be allocated pro rata among the Lenders in
accordance with their respective Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their outstanding Loans). Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Revolving Loan, Term Loans
and participations in LC Disbursements as a result of which the unpaid principal
portion of the aggregate amount of its Revolving Loans, Term Loans and
participations in LC Disbursements shall be proportionately less than the unpaid
principal portion of the Revolving Loans, Term Loans and participations in LC
Disbursements of any other Lender, it shall be deemed simultaneously to have
purchased from such other Lender at face value, and shall promptly pay to such
other Lender the purchase price for, a participation in the Revolving Loans,
Term Loans and participations in LC Disbursements of such other Lender, so that
the aggregate unpaid principal amount of the Revolving Loans, Term Loans and
participations in LC Disbursements and participations in Revolving Loans, Term
Loans and participations in LC Disbursements held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Revolving Loans,
Term Loans and participations in LC Disbursements then outstanding as the
principal amount of its Revolving Loans, Term Loans and participations in LC
Disbursements, prior to such exercise of banker's lien, setoff or counterclaim
or other event was to the principal amount of all Revolving Loans, Term Loans
and participations in LC Disbursements, outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.17
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Revolving Loan, Term Loan or participation
in LC Disbursements, deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower to such Lender by reason thereof as fully as if
such Lender had made a Revolving Loan, Term Loan or participation in LC
Disbursements directly to the Borrower in the amount of such participation.
SECTION 2.18. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Fees (other than the fees
referred to in paragraph (d) of Section 2.05) or other amounts) hereunder and
under any other Loan Document not later than 12:00 noon, New York City time, on
the date when due in dollars and without set off or deduction to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York, in
immediately available funds, except payments to be made directly to the Issuing
Bank as expressly provided herein and except that payments pursuant to Sections
2.12, 2.15, 2.19 and 9.05 shall be made directly to the Persons entitled thereto
and payments pursuant to other Loan Documents shall be made to the Persons
specified therein. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.18, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities (including penalties, interest and
expenses) with respect thereto, excluding (i) any such taxes, levies, imposts,
deductions, charges, withholdings or liabilities imposed on or measured by the
net income of the Administrative Agent or any Lender and (ii) franchise taxes
imposed on (or measured by) its net income by any Governmental Authority on the
Administrative Agent or any Lender as a result of a present or former connection
between the jurisdiction of the Governmental Authority imposing such tax on the
Administrative Agent or such Lender (except a connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement) and (iii)
any branch profits taxes imposed by the United States or any similar tax, levy,
impost, deduction, charge, withholding or liability imposed in any other
jurisdiction in which the Administrative Agent or any Lender is located (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders or the Administrative Agent, (i) the sum payable shall
be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.19) such Lender or the Administrative Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law; provided that
the Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Taxes (i) that are attributable to such Lender's
failure to comply with the requirements of paragraph (f) of this Section or (ii)
that are United States withholding taxes imposed on amounts payable to such
Lender at the time the Lender becomes a party to this Agreement, except to the
extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Taxes pursuant to Section 2.19(a).
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative Agent
for the full amount of Taxes and Other Taxes paid by such Lender or the
Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Lender or the
Administrative Agent, as the case may be, makes written demand therefor. Upon
the written request of the Borrower and at the Borrower's sole expense, a Lender
or Administrative Agent shall take reasonable steps to obtain a refund in
respect of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.19. If any Lender or the Administrative
Agent receives a refund (whether pursuant to a request described in the
preceding sentence or otherwise) in respect of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower pursuant to this Section 2.19, it
shall promptly notify the Borrower of such refund and shall, within 30 days
after receipt of a request by the Borrower (or promptly upon receipt, if the
Borrower has requested application for such refund pursuant hereto), repay such
refund to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section 2.19 with respect to such refund), net of all
out-of-pocket expenses of such Lender and without interest (except to the extent
such refund includes any interest); provided that the Borrower, upon the request
of such Lender or the Administrative Agent, agrees to return such refund (plus
penalties, interest or other charges) to such Lender or the Administrative Agent
in the event such Lender or the Administrative Agent is required to repay such
refund.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrower in respect of any payment to any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent, at
its address referred to in Section 9.01, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each Lender or Participant that is not a United States person as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall, on or
before the date it becomes a party to this Agreement or a Participant, as the
case may be, deliver to the Borrower and the Administrative Agent, Internal
Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Lender or
Participant claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a
statement substantially in the form of Exhibit I, and any other certificate or
statement of exemption or any subsequent version thereof or successors thereto,
properly completed and duly executed by such Lender or Participant, in each case
claiming complete exemption from or a reduced rate of United States federal
withholding tax. In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of and prior to the expiration of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower in writing at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
the Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph (other than the notification described in the preceding
sentence) that such Non-U.S. Lender is not legally able to deliver, but such
Non-U.S. Lender shall provide notice thereof to the Borrower.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.19 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested by the Borrower or
to change the jurisdiction of its applicable lending office if the making of
such a filing or change would avoid the need for or reduce the amount of any
such additional amounts which may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such Lender.
(h) In the event the Borrower is required pursuant to this Section 2.19 to
pay any additional amount to any Lender, such Lender shall, if no Default or
Event of Default has occurred and is continuing, upon the request of the
Borrower to such Lender and the Administrative Agent, assign, pursuant to and in
accordance with the provisions of Section 9.04, all of its rights and
obligations under this Agreement and under the other Loan Documents to another
Lender or an assignee selected by the Borrower and reasonably satisfactory to
the Administrative Agent, in consideration for (i) the payment by such assignee
to the assigning Lender of the principal of, and interest accrued and unpaid to
the date of such assignment on, the Loans of such Lender, (ii) the payment by
the Borrower to the assigning Lender of any and all other amounts owing to such
Lender under any provision of this Agreement accrued and unpaid to the date of
such assignment and (iii) the Borrower's release of the assigning Lender from
any further obligation or liability under this Agreement.
<PAGE>
ARTICLE III.
Representations and Warranties
The Borrower represents and warrants to each of the Lenders that:
SECTION 3.01 Organization; Powers. Each of the Borrower and the
Subsidiaries (a) is an organization duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in every jurisdiction where such qualification is required, except
where the failure so to qualify is not materially likely to result in a Material
Adverse Effect, and (d) has the corporate power and authority to execute,
deliver and perform its obligations under each of the Loan Documents and each
other agreement or instrument contemplated thereby to which it is or will be a
party and to borrow hereunder.
SECTION 3.02 Authorization. The execution, delivery and performance by the
Borrower and each Subsidiary Guarantor of each of the Loan Documents to which it
is a party, the Borrowings and the issuances of Letters of Credit (collectively,
the "Transactions") (a) have been duly authorized by all requisite corporate
and, if required, stockholder action and (b) will not (i) violate (A) any
provision of law, statute, rule or regulation, or of the certificate or articles
of incorporation or other constitutive documents or by-laws of the Borrower or
any Subsidiary, (B) any order of any Governmental Authority or (C) any provision
of any material indenture, agreement or other instrument to which the Borrower
or any Subsidiary is a party or by which any of them or any of their property is
or may be bound, (ii) result in a breach of or constitute (alone or with notice
or lapse of time or both) a default under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary other than pursuant to the Collateral Documents.
SECTION 3.03 Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
the Borrower or any Subsidiary Guarantor is a party, when executed and delivered
by the Borrower or such Subsidiary Guarantor, as the case may be, will
constitute, a legal, valid and binding obligation of the Borrower or such
Subsidiary Guarantor, as the case may be, enforceable against the Borrower or
such Subsidiary Guarantor, as the case may be, in accordance with its terms
(subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights generally and to general principles of equity).
SECTION 3.04 Governmental Approvals; No Conflicts. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required by the Borrower or any of the Subsidiaries in
connection with the Transactions, except such as have been made or obtained and
are in full force and effect.
SECTION 3.05 Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders its balance sheets and statements of earnings and
statements of cash flows (a) as of and for the fiscal year ended December 31,
1999, audited by and accompanied by the opinion of KPMG Peat Marwick LLP,
independent public accountants, and (b) as of and for the fiscal quarter ended
March 31, 2000, certified by its chief financial officer. Such financial
statements present fairly the financial condition and results of operations of
the Borrower and its Subsidiaries as of such dates and for such periods. Such
financial statements and the notes thereto were prepared in accordance with GAAP
applied on a consistent basis, except as disclosed in such statements and notes.
(b) Except as disclosed in the financial statements referred to above or
the notes thereto or in the Information Memorandum, after giving effect to the
Transactions, none of the Borrower or its Subsidiaries has, as of the Effective
Date, any material contingent liabilities, unusual long-term commitments or
unrealized losses.
SECTION 3.06 No Material Adverse Change. There has been no material adverse
change in the business, assets, operations or financial condition of the
Borrower and the Subsidiaries, taken as a whole, since December 31, 1999.
SECTION 3.07 Title to Properties; Possession Under Leases. (a) Each of the
Borrower and the Subsidiaries has good and marketable title to, or valid,
subsisting and enforceable leasehold interests in, all its material properties
and assets, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties and assets for their intended purposes. All such material properties
and assets are free and clear of Liens, other than Liens expressly permitted by
Section 6.03.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Each of the Borrower and the Subsidiaries has complied with all
material obligations under all material leases to which it is a party and all
such leases are in full force and effect. Each of the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 3.08 Subsidiaries. Schedule 3.08 sets forth as of the Effective
Date a list of all direct or indirect Subsidiaries of the Borrower and the
percentage of the shares of each class of Capital Stock (other than ownership of
or participations in a Receivables Transfer Subsidiary) owned beneficially or of
record by the Borrower therein.
SECTION 3.09 Litigation; Compliance with Laws. Except as set forth on
Schedule 3.09, (a) there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority pending or, to the knowledge
of the Borrower, threatened against or affecting the Borrower or any Subsidiary
or any business, property or rights of any such Person (i) which involve any
Loan Document or the Transactions or (ii) which would be materially likely to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in violation of any
law, rule or regulation, or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or
default would be materially likely to result in a Material Adverse Effect.
<PAGE>
SECTION 3.10. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that would be materially likely to result in a Material
Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default would be materially likely to result in a Material
Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Borrower nor any
of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the regulations of the Board,
including Regulation U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of the
Loans and the Letters of Credit only for working capital and other general
corporate purposes of the Borrower and its Subsidiaries in the ordinary course
of business including the financing of Permitted Business Acquisitions pursuant
to Section 6.06.
SECTION 3.14. Tax Returns. Except as described in Schedule 3.14, each of
the Borrower and the Subsidiaries has filed or caused to be filed all federal,
and material state and local tax returns required to have been filed. Each of
the Borrower and its Subsidiaries have paid or caused to be paid all taxes
required to have been paid, except (a) taxes or assessments that are being
contested in good faith by appropriate proceedings and for which the Borrower
shall have set aside on its books whatever reserves are required in accordance
with GAAP consistently applied or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.15. No Material Misstatements. No statement or information
contained in this Agreement, any other Loan Document, the Information Memorandum
or any other document, certificate or statement furnished to the Administrative
Agent or the Lenders or any of them, by or on behalf of any Loan Party for use
in connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained as of the date such statement, information, document
or certificate was so furnished (or, in the case of the Information Memorandum,
as of the date of this Agreement), any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained herein or therein not misleading. The projections and pro forma
financial information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of the Borrower to
be reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. There is no fact known to any Loan Party that could reasonably
be expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, in the Information Memorandum or
in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
SECTION 3.16. Employee Benefit Plans. The Borrower and each of its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder with respect to the employee benefit plans (as
defined in Section 3(3) of ERISA) of the Borrower and its ERISA Affiliates. No
Reportable Event has occurred in respect of any Plan of the Borrower or any
ERISA Affiliate. The present value of all benefit liabilities under each Plan
(based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed by more than $5,000,000 the
value of the assets of such Plan, and the present value of all benefit
liabilities of all underfunded Plans (based on those assumptions used to fund
each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed $5,000,000. Neither the Borrower nor any ERISA Affiliate has
incurred any Withdrawal Liability that would be materially likely to have a
Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, where such reorganization or termination would be materially likely
to result, through increases in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Effect.
SECTION 3.17. Environmental Matters. Each of the Borrower and the
Subsidiaries has complied in all material respects with all material federal,
state, local and other statutes, ordinances, orders, judgments, rulings and
regulations relating to environmental pollution or to environmental regulation
or control. Neither the Borrower nor any Subsidiary has received notice of any
failure so to comply which alone or together with any other such failure is
materially likely to result in a Material Adverse Effect. The Borrower's and the
Subsidiaries' plants do not manage any hazardous wastes, hazardous substances,
hazardous materials, toxic substances or toxic pollutants, as those terms are
used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or any other applicable law, in violation of any such law or any
regulations promulgated pursuant thereto or in any other applicable law where
such violation is materially likely to result, individually or together with
other violations, in a Material Adverse Effect.
SECTION 3.18 Security Interests. (a) At all times after execution and
delivery of the Pledge Agreement by the parties thereto, the Administrative
Agent for the ratable benefit of the Lenders will have a valid, first priority,
perfected security interest in the Pledged Stock (as defined in the Pledge
Agreement), subject to no other Liens.
(b) At all times after execution and delivery of the Borrower Security
Agreement by the Borrower, the Subsidiary Security Agreement by the Subsidiary
Guarantors and the Securities Account Control Agreement by the parties thereto
and completion of the filings listed on Schedule 3.18, the security interests
created in favor of the Administrative Agent, for the ratable benefit of the
Lenders, pursuant to such Security Agreements will constitute valid, perfected
security interests in the collateral subject thereto, subject to no other Liens
(it being understood that the foregoing representation shall not apply to any
such collateral sold in accordance with this Agreement).
<PAGE>
ARTICLE IV.
Conditions of Lending
---------------------
SECTION 4.01 Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which each of the following
conditions is satisfied:
(a) The Administrative Agent shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of the Borrower, (ii) a
reaffirmation of the Pledge Agreement, executed and delivered by a duly
authorized officer of the relevant Loan Parties, (iii) the Subsidiary Security
Agreement and the Subsidiary Guaranty, each executed and delivered by a duly
authorized officer of the relevant Loan Parties, and (iv) the Borrower Security
Agreement, executed and delivered by a duly authorized officer of the Borrower.
(b) The Administrative Agent shall have received a copy of the resolutions
of the Board of Directors of each Loan Party authorizing the execution, delivery
and performance of the Loan Documents to which such Loan Party is a party
certified by the Secretary or an Assistant Secretary of such Loan Party as of
the Effective Date, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(c) The Administrative Agent shall have received true and complete copies
of the certificate of incorporation and by-laws of each Loan Party, certified as
of the Effective Date as complete and correct copies thereof by the Secretary or
an Assistant Secretary of such Loan Party.
(d) The Administrative Agent shall have received an executed legal opinion
of counsel to the Loan Parties (which may be in-house), in form and substance
reasonably satisfactory to the Administrative Agent.
(e) The Lenders, Administrative Agent and the arranger of the credit
facilities provided for herein shall have received all fees (due and payable
pursuant to the Fee Letter) and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by any Loan Party
hereunder or under any other Loan Document.
(f) All consents and approvals necessary to be obtained from any
Governmental Authority or other Person in connection with the financing
contemplated hereby and the continuing operation of the Borrower and its
Subsidiaries shall have been obtained and be in full force and effect, and all
applicable waiting periods and appeal periods shall have expired, in each case
without the imposition of any burdensome conditions.
(g) Commitments shall have been received in respect of an amended and
restated $600 million liquidity facility (the "Liquidity Facility") on behalf of
the Metris Master Trust.
(h) The Administrative Agent shall have received the results of a recent
search of the Uniform Commercial Code, judgment and tax lien filings which may
have been filed with respect to the Borrower or any other Loan Party, and the
results of such search shall be satisfactory to the Lenders.
(i) S&P and Moody's shall have confirmed that the credit facilities
provided for herein are rated at least BB- and Ba3, respectively.
(j) The Administrative Agent shall have received a completed Borrowing Base
Certificate dated the Effective Date and signed by a Financial Officer of the
Borrower.
SECTION 4.02 Conditions to All Loans. The obligations of the Lenders to
make any Loans hereunder and of the Issuing Banks to issue any Letters of Credit
hereunder, and the effectiveness of any amendment to a Letter of Credit that
increases the principal amount thereof, are subject to the satisfaction of the
conditions that, on the date of each Credit Event, but excluding each Borrowing
in which Loans are continued or converted as contemplated in Section 2.04:
(a) In the case of a Borrowing, the Administrative Agent shall have
received a notice of such Borrowing as required by Section 2.03, or, in the case
of an issuance of a Letter of Credit, the Issuing Bank shall have received a
notice in accordance with Section 2.14(b).
(b) The representations and warranties set forth in Article III hereof,
Section 3 of the Pledge Agreement, Section 3 of the Borrower Security Agreement,
Section 3 of the Subsidiary Security Agreement (to the extent applicable to
Persons that are parties to the Subsidiary Security Agreement on the date of
such Credit Event) and Section 3 of the Subsidiary Guaranty (to the extent
applicable to Persons that are parties to the Subsidiary Guaranty on the date of
such Credit Event) shall be true and correct in all material respects on and as
of the date of such Credit Event with the same effect as though made on and as
of such date, except to the extent such representations and warranties expressly
relate to an earlier date.
(c) The Borrower shall be in compliance with all the terms and provisions
set forth herein and in each other Loan Document on its part to be observed or
performed, and at the time of and immediately after such Credit Event no Event
of Default or Default shall have occurred and be continuing.
(d) In the case of any Credit Event that would result in the aggregate
principal amount of the Loans outstanding exceeding $300,000,000 (less the
aggregate face amount of any Letters of Credit to be outstanding after such
Credit Event), a certificate of a Financial Officer of the Borrower (i) as to
the matters contained in clauses (b) and (c) of this Section 4.02 and (ii)
demonstrating compliance (with supporting calculations) by the Borrower, after
giving effect to such Credit Event, with Section 4.04 of the Senior Note
Indenture referred to in clause (a) of the definition thereof and Section 4.05
of the Senior Note Indenture referred to in clause (b) of the definition thereof
and any other provision of any other indenture or agreement applicable to the
Borrower or any Subsidiary that may be implicated by the amount of credit
extensions hereunder.
Each Credit Event, excluding each Borrowing in which Loans are continued or
converted as contemplated in Section 2.04(b), shall be deemed to constitute a
representation and warranty by the Borrower (or any other relevant Loan Party,
as the case may be), on the date of such Borrowing as to the matters specified
in paragraphs (b) and (c) of this Article IV.
ARTICLE V.
Affirmative Covenants
---------------------
The Borrower covenants and agrees with each Lender and the Administrative
Agent that, so long as this Agreement shall remain in effect, the principal of
or interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid or any Letter of Credit shall remain
outstanding, unless the Required Lenders shall otherwise consent in writing, the
Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01 Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05
and with regard to any Subsidiary which has no significant assets and no
significant liabilities.
(b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated (except
as permitted pursuant to Section 6.05); comply in all material respects with all
applicable laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted, the failure to comply with which
would be materially likely to result in a Material Adverse Effect; and at all
times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 5.02 Insurance. Keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, (i) including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses; including public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it; and maintain such other insurance as may be required by law.
SECTION 5.03 Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as (a) the validity or amount
thereof shall be contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary shall have set aside on its books whatever reserves
are required in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.04 Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender (by delivery of a
regular or periodic report filed under the Exchange Act containing such items or
otherwise):
(a) within 100 days after the end of each fiscal year, its consolidated
balance sheets and related statements of earnings and cash flows showing the
financial condition of the Borrower and its consolidated Subsidiaries as of the
close of such fiscal year and the results of its operations and the operations
of such Subsidiaries during such year, audited by KPMG Peat Marwick LLP or any
other Big Five Accounting Firm and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied (except for
changes concurred with by the Borrower's independent public accountants and
disclosed in such statements or the notes thereto);
(b) within 50 days after the end of each of the first three fiscal quarters
of each fiscal year, its consolidated balance sheets and related statements of
earnings and cash flow showing the financial condition of the Borrower and its
consolidated subsidiaries as of the close of such fiscal quarter and the results
of its operations and the operations of such Subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year, all certified by one of
its Financial Officers, as fairly presenting the financial condition and results
of operations of the Borrower on a consolidated basis in accordance with GAAP
consistently applied (except for changes concurred with by the Borrower's
independent public accountants and disclosed in such statements or the notes
thereto), subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under clause (a)
or (b) above, (x) a certificate of the accounting firm, in the case of (a), or
Financial Officer, in the case of (b), referred to in the applicable paragraph
certifying that no Event of Default or Default has occurred or, if such an Event
of Default or Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto and (y)
a certificate of a Financial Officer setting forth computations in reasonable
detail satisfactory to the Administrative Agent demonstrating compliance with
the covenants contained in Section 6.01 (as of the last day of each calendar
month included in the relevant fiscal period) and stating whether any change in
GAAP or in the application thereof (not previously communicated to the
Administrative Agent in a certificate pursuant to this subsection) has occurred
since the date of the Borrower's audited financial statements referred to in
Section 3.05 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) within 15 days after the end of each calendar month, a completed
Borrowing Base Certificate calculating and certifying the Borrowing Base as of
the last day of such calendar month, signed on behalf of the Borrower by a
Financial Officer;
(e) within 30 days after the commencement of each fiscal year of the
Borrower, a detailed consolidated budget for such fiscal year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for such fiscal year and, in a
manner consistent with the Information Memorandum, the assumptions used therein)
and, promptly when available, any significant revisions of such budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of or all the functions of said Commission, or with any
national securities exchange, or distributed to its shareholders, as the case
may be; and
(g) as soon as reasonably practicable, from time to time, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.05 Litigation and Other Notices. Furnish to the Administrative
Agent prompt written notice of the following promptly after a Responsible
Officer of the Borrower or any Subsidiary becomes aware of the same:
(a) any Event of Default or Default (provided that in the case of a Default
such notice may be oral, unless requested to be in writing by the Administrative
Agent), specifying the nature and extent thereof and the corrective action (if
any) proposed to be taken with respect thereto;
(b) the filing or commencement of, or receipt of notice of intention of any
Person to file or commence, any action, suit or proceeding, whether at law or in
equity or by or before any Governmental Authority, against the Borrower or any
Affiliate thereof which would be materially likely to result in a Material
Adverse Effect;
(c) the occurrence of any Reportable Event that, alone or together with any
other Reportable Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $5,000,000;
(d) any development affecting or relating to the Borrower or any Subsidiary
that in the reasonable judgment of the Borrower has resulted in, or is
materially likely to result in, a Material Adverse Effect referred to in clause
(a) of the definition of such term; and
(e) the occurrence of any event which constitutes a Change in Control.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.06 Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code with respect to the employee
benefit plans (as defined in Section 3(3) of ERISA) of the Borrower and the
ERISA Affiliates and (b) furnish to the Administrative Agent (i) as soon as
possible after, and in any event within 30 days after any Responsible Officer of
the Borrower or any ERISA Affiliate knows or has reason to know that any
Reportable Event has occurred that alone or together with any other Reportable
Event could reasonably be expected to result in liability of the Borrower or any
ERISA Affiliate to the PBGC in an aggregate amount exceeding $5,000,000, a
statement of a Financial Officer setting forth details as to such Reportable
Event and the action that the Borrower or such ERISA Affiliate proposes to take
with respect thereto, together with a copy of the notice, if any, of such
Reportable Event to the PBGC, (ii) promptly after receipt thereof, a copy of any
notice that the Borrower or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any such Plan, (iii) within 10 days after the due date
for filing with the PBGC pursuant to Section 412(n) of the Code a notice of
failure to make a required installment or other payment with respect to a Plan,
a statement of a Financial Officer setting forth details as to such failure and
the action that the Borrower proposes to take with respect thereto, together
with a copy of any such notice given to the PBGC and (iv) promptly and in any
event within 30 days after receipt thereof by the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the Borrower or any ERISA Affiliate concerning (A) the imposition of
Withdrawal Liability or (B) a determination that a Multiemployer Plan is, or is
expected to be, terminated or in reorganization, both within the meaning of
Title IV of ERISA.
SECTION 5.07 Maintaining Records; Access to Properties and Inspections.
Maintain or cause to be maintained at all times true and complete books and
records of its financial operations and permit the Administrative Agent or any
Lender and their designated representatives reasonable access after reasonable
notice to all such books and records and to any of the properties or assets of
the Borrower and the Subsidiaries during regular business hours in order that
the Administrative Agent and the Lenders may make such examinations and make
abstracts from such books and records and may discuss the affairs, finances and
accounts with, and be advised as to the same by, Financial Officers and, after
consultation with the Borrower, the independent accountants of the Borrower or
any Subsidiary, all as the Administrative Agent or any Lender may reasonably
deem appropriate for the purpose of verifying the accuracy of the various
reports delivered by the Borrower or any Subsidiary thereof to the
Administrative Agent and/or the Lenders pursuant to this Agreement or for
otherwise ascertaining compliance with this Agreement. Except during the
continuance of any Event of Default, all requests by Lenders under this Section
shall be made through and coordinated by the Administrative Agent with a view to
minimizing inconvenience to the Borrower and its Subsidiaries.
SECTION 5.08 Further Assurances. (a) Promptly perform or cause to be
performed any and all such acts and execute or cause to be executed, at the cost
and expense of the Borrower, any and all documents under the provisions of any
applicable law, rule or regulation of any Governmental Authority, and take all
such further actions, which may be required under any applicable law, or which
the Administrative Agent or the Required Lenders may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or which are
necessary from time to time, in order to grant, maintain, preserve and protect
in favor of the Administrative Agent, for the benefit of the Lenders, the
security interest in and pledge of the collateral under the Collateral
Documents, including the perfection and priority thereof, all as provided in the
Collateral Documents. The Borrower also agrees to provide to the Administrative
Agent, from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents.
(b) With respect to any Subsidiary organized in the United States (other
than as prohibited by law or regulation) that has not previously done so,
promptly (i) execute and deliver to the Administrative Agent, for the benefit of
the Lenders, a new pledge agreement or such amendments or supplements to the
Pledge Agreement as the Administrative Agent shall deem necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on
all of the Capital Stock of such Subsidiary owned directly or indirectly by the
Borrower or any Subsidiary, and (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the parent
company of such Subsidiary.
(c) With respect to any Subsidiary (other than an Excluded Subsidiary or an
Immaterial Subsidiary) that has not previously done so, provide the
Administrative Agent with written notice of the existence of such a Subsidiary,
and cause such Subsidiary to execute and deliver to the Administrative Agent one
or more instruments (as the Administrative Agent shall request and satisfactory
to the Administrative Agent in form and substance) pursuant to which such
Subsidiary shall (i) undertake the obligations of a Subsidiary Guarantor under
the Subsidiary Guaranty and (ii) become a party to the Subsidiary Security
Agreement.
(d) Cause MDI to be the direct or indirect parent of any Subsidiary whose
Capital Stock is not pledged by the Borrower pursuant to the Pledge Agreement.
(e) Cause any residual interest issued to or held by the Borrower or any of
its Subsidiaries (other than an Excluded Subsidiary) in connection with the sale
of Accounts into a Receivables Transfer Program to be pledged as collateral
pursuant to the Collateral Documents to secure the repayment of the Obligations
(f) Prior to the first time the Borrower includes any Permitted Investments
in the Borrowing Base, deliver to the Administrative Agent (i) an executed legal
opinion of counsel to the Loan Parties (which may be in-house) and (ii) executed
Uniform Commercial Code filings in respect of the securities account established
pursuant to the Securities Account Control Agreement and the financial assets
and security entitlements credited thereto, in each case in form and substance
reasonably satisfactory to the Administrative Agent.
SECTION 5.09 Information Regarding Collateral. (a) The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral. The Borrower also agrees promptly to notify the
Administrative Agent if any material portion of the Collateral is damaged or
destroyed. (b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.04, the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer of the Borrower certifying that all Uniform Commercial Code
financing statements or other appropriate filings, recordings or registrations
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
necessary to perfect, and an opinion of counsel (which may be rendered by the
chief legal officer of the Borrower) that such filings or recordings are
sufficient to perfect, the security interests under the Collateral Documents
(other than in respect of Collateral as to which the sole method of perfection
is possession) for a period of not less than 18 months after the date of such
certificate and opinion (except as noted therein with respect to any
continuation statements to be filed within such period).
<PAGE>
SECTION 5.10. Sale of Accounts. Sell all Accounts comprising receivables
owing by any obligor pursuant to any credit card Account under a credit card
agreement held by a Credit Card Bank (to the extent not funded by deposits or
capital of such Credit Card Bank) to the Borrower, any Subsidiary Guarantor or
to another Depositary Institution (for the purpose of investing its deposits) or
directly or indirectly through a Receivables Transfer Subsidiary, into any
Receivables Transfer Program. Notwithstanding the foregoing, Accounts may be
sold in any manner as permitted by Section 6.08.
SECTION 5.11. Regulatory Capital. Cause each of its Insured Subsidiaries to
be at all times at least "adequately capitalized" for purposes of 12 U.S.C.
ss.1831o, as amended, re-enacted or redesignated from time to time, and at all
times to maintain such amount of capital as may be prescribed from time to time,
whether by regulation, agreement or order, by each Bank Regulatory Authority
having jurisdiction over such Insured Subsidiary.
<PAGE>
ARTICLE VI.
Negative Covenants
------------------
The Borrower covenants and agrees with each Lender and the Administrative
Agent that, so long as this Agreement shall remain in effect, the principal of
or interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid or any Letter of Credit shall remain
outstanding, unless the Required Lenders shall otherwise consent in writing, the
Borrower will not, and will not cause or permit any of the Subsidiaries to:
SECTION 6.01 Financial Covenants
(a) Leverage Ratio. In the case of the Borrower, permit the Leverage Ratio
at any time to exceed 3.0 to 1.0.
(b) Minimum Consolidated Net Worth. In the case of the Borrower, permit
Consolidated Net Worth at any time to be less than the sum of (i) $467,851,000
plus (ii) 40% of Cumulative Consolidated Net Income as of the last day of the
fiscal quarter of the Borrower most recently ended plus (iii) 40% of the net
cash proceeds of any issuance by the Borrower of Capital Stock after December
31, 1999.
(c) Minimum Excess Spread. In the case of the Borrower, permit Excess
Spread on any Series to be less than 1%.
(d) Minimum Equity to Managed Accounts Receivable Ratio. In the case of the
Borrower, permit the Equity to Managed Accounts Receivable Ratio at any time to
be less than 5%.
(e) Minimum Equity to Delinquent Assets Ratio. In the case of the Borrower,
permit the Equity plus Credit Reserves to Delinquent Assets Ratio at any time to
be less than 2.25 to 1.00.
(f) Minimum Equity plus Credit Reserves to Managed Accounts Receivable
Ratio. In the case of the Borrower, permit the Equity plus Credit Reserves to
Managed Accounts Receivable Ratio at any time to be less than 10%.
(g) Maximum Investments in Depositary Institutions to Adjusted Consolidated
Net Worth Ratio. In the case of the Borrower, permit the Investments in
Depositary Institutions to Adjusted Consolidated Net Worth Ratio to exceed 50%.
(h) Borrowing Base. Permit the aggregate principal amount of Funded Senior
Debt (other than Funded Senior Debt incurred by DMCCB or any other Depositary
Institution) at any time to exceed the Borrowing Base then in effect.
SECTION 6.02 Limitations on Indebtedness. Create, incur, assume or suffer
to exist any Indebtedness, except:
(a) Indebtedness of the Borrower or any Subsidiary Guarantor under this
Agreement or the Subsidiary Guaranty;
(b) other Indebtedness of the Borrower or any of its Subsidiaries so long
as, on the date of incurrence thereof, after giving effect thereto, no Default
or Event of Default shall have occurred or would result therefrom, provided that
the aggregate principal amount of all Indebtedness of all Subsidiaries that are
not Subsidiary Guarantors (other than Depositary Institutions) shall not exceed
$25,000,000 at any time;
(c) Indebtedness of the Borrower and its Subsidiaries outstanding on the
Effective Date which is of the type described in clause (i) below and which is
described in Schedule 6.02;
(d) (i) Indebtedness of the Borrower and any Subsidiary Guarantor pursuant
to the Senior Note Indenture in an aggregate principal amount not to exceed
$250,000,000 at any one time outstanding and (ii) Indebtedness of the Borrower
or any Subsidiary Guarantor issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease, redeem or refund the
Indebtedness referred to in clause (i) of this subsection (d) (A) the terms of
which have been provided to the Lenders at least seven Business Days before the
date of such renewal, refinancing, extension or modification, (B) which do not
shorten the date for payment of interest thereon or shorten the maturity (or
weighted average life) or increase the principal amount thereof and which, after
giving effect thereto, contain terms and conditions (including, without
limitation, covenants and events of default) that are no less favorable taken as
a whole to the Lenders in any material respect than the terms and conditions
thereof applicable before giving effect thereto, and (C) at any time that a
Default or Event of Default shall not have occurred and be continuing or would
result therefrom;
(e) Indebtedness arising out of any Receivables Transfer Program;
(f) Indebtedness in connection with loans and advances permitted by Section
6.06(d);
(g) Indebtedness in respect of deposits held by any Depositary Institution;
(h) Indebtedness of any Depositary Institution (other than in respect of
deposits held by such Depositary Institution) so long as the aggregate
outstanding principal amount thereof does not, at any time when such Depositary
Institution is not Investment Grade, exceed 75% of the DI Consolidated Tangible
Net Worth (excluding DI Cumulative Securitization Gains) of such Depositary
Institution at such time, provided, that (i) Indebtedness incurred by a
Depositary Institution pursuant to this clause (h) when it is Investment Grade
shall count as usage of such amount if such Depositary Institution ceases to be
Investment Grade and (ii) if the aggregate outstanding principal amount of such
Indebtedness at the time such Depositary Institution ceases to be Investment
Grade exceeds the amount that would otherwise be permitted by this clause (h),
such excess shall not result in a Default or Event of Default under this clause
(h) so long as no additional Indebtedness is incurred by such Depositary
Institution while it is not Investment Grade; and
(i) Indebtedness of the Borrower or any Subsidiary (which in each case may
be secured pursuant to Section 6.03(b)) that is either (x) incurred to finance
the acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average life
thereof (provided that such Indebtedness is incurred prior to or within 180 days
after such acquisition or the completion of such construction or improvement) or
(y) assumed in connection with the merger, consolidation or acquisition of a
Person or substantially all of its assets existing at the time such Person is
merged into or consolidated with the Borrower or any Subsidiary or at the time
of acquisition thereof, as the case may be, by the Borrower or a Subsidiary
(provided that such Indebtedness was in existence prior to the contemplation of
such merger, consolidation or acquisition); provided that the aggregate
principal amount of all Indebtedness incurred pursuant to this clause (i) shall
not exceed $50,000,000.
Notwithstanding anything to the contrary herein, no Released Subsidiary shall be
permitted to Guarantee any Indebtedness of the Borrower or any Subsidiary (other
than another Released Subsidiary).
SECTION 6.03 Liens. Create, incur, assume or permit to exist any Lien on
any property or assets, including stock or other securities of any Person now
owned or hereafter acquired or assign or convey any rights to or security
interests in any future revenue (in each case, other than property or assets
sold or transferred pursuant to the Receivables Transfer Program); provided
that, notwithstanding the foregoing, the following Liens shall be permitted so
long as, in each case, such Liens do not apply to the Capital Stock of any
Credit Card Bank or any other Subsidiary whose Capital Stock is not pledged to
the Lenders pursuant to a Loan Document:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the Effective Date which (with the exception of existing Liens
consisting of the interests of lessors under Capital Leases) are set forth in
Schedule 6.03; provided that such Liens shall secure only those obligations
which they secure on the Effective Date;
(b) Liens on fixed or capital assets that are either (i) acquired,
constructed or improved by the Borrower or any Subsidiary, provided that (A)
such security interests secure Indebtedness permitted by Section 6.02(i)(x), (B)
such security interests and the Indebtedness secured thereby are incurred prior
to or within 180 days after such acquisition or the completion of such
construction or improvement, (C) the Indebtedness secured thereby does not
exceed 90% of the cost of acquiring, constructing or improving such fixed or
capital assets and (D) such security interests shall not apply to any other
property or assets of the Borrower or any Subsidiary or (ii) existing prior to
the acquisition of such fixed or capital assets (or prior to the date on which
any Person owning such fixed or capital assets becomes a Subsidiary), provided
that (A) such security interests secure Indebtedness permitted by Section
6.02(i)(y), (B) such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as the case may be,
(C) such Lien shall not apply to any other property or assets of the Borrower or
any Subsidiary, (D) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(c) Liens for taxes not yet due or which are being contested in compliance
with Section 5.03 and judgment liens securing judgments which have not given
rise to Events of Default;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business and securing
obligations that are not due or that are being contested in compliance with
Section 5.03;
(e) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other social
security laws or regulations;
(f) deposits to secure the performance of bids, trade contracts (other than
for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(h) Liens on Accounts and on credit cardholder accounts owned by the
Borrower or any of its Subsidiaries, in each case securing Indebtedness incurred
to finance the acquisition thereof so long as (i) such Liens do not at any time
encumber any asset other than the Accounts and credit cardholder accounts
financed by such Indebtedness and (ii) recourse for repayment of such
Indebtedness is limited to the Accounts and credit cardholder accounts so
financed (subject to customary limited recourse to the Borrower and its
Subsidiaries relating to representations and warranties made with respect to
such Accounts and credit cardholder accounts in connection with the incurrence
of such Indebtedness);
(i) other Liens to secure Indebtedness or obligations in respect of Rate
Protection Agreements of the Borrower and/or any Subsidiary, so long as after
giving effect thereto the aggregate outstanding principal amount of Indebtedness
or obligations in respect of Rate Protection Agreements secured by Liens under
this Section 6.03(i) does not exceed $10,000,000 at such time;
(j) Liens created by the Collateral Documents; and
(k) any Subordinated Securities Intermediary Lien in respect of Pledged
Permitted Investments.
SECTION 6.04 Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (a "Sale-Leaseback Transaction"), except that
the Borrower and the Subsidiaries at any time may enter into any Sale-Leaseback
Transaction so long as prior to and after giving effect thereto the Borrower and
its Subsidiaries are in compliance with Sections 6.02(c) and 6.08(c).
SECTION 6.05 Mergers, Consolidations, and Sales of Assets. Merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or, sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or any substantial part of its
assets (whether now owned or hereafter acquired) or sell, transfer, lease or
otherwise dispose of any Capital Stock of any Subsidiary, except that:
(a) if immediately after giving effect thereto no Event of Default or
Default shall have occurred and be continuing (i) any wholly owned Subsidiary
may (A) merge or consolidate into the Borrower in a transaction in which the
Borrower is the surviving corporation or (B) transfer assets to the Borrower,
and (ii) any wholly owned Subsidiary may merge into or consolidate with or
transfer assets to any Person that upon the consummation of such merger,
consolidation or transfer is a Wholly Owned Subsidiary Guarantor in a
transaction in which no Person other than the Borrower or a Wholly Owned
Subsidiary Guarantor receives any consideration;
(b) any Receivables Transfer Subsidiary may merge or consolidate into or
transfer assets to another Receivables Transfer Subsidiary in a transaction in
which no other Person receives any consideration, and
(c) sales of Accounts expressly permitted by Section 6.08.
SECTION 6.06 Investments, Loans, Advances and Guarantees. Purchase, hold or
acquire (including pursuant to any merger with any Person that was not a wholly
owned Subsidiary prior to such merger) any Capital Stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist (other
than any increase in value of any prior investment) any investment or any other
interest in, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit (or
material portion thereof) (collectively, "Investments"), except:
(a) Permitted Investments; provided that if a Permitted Investment ceases
to be a Permitted Investment due to a downgrading or withdrawal of a rating
assigned by a rating agency, then such investment shall cease to be a Permitted
Investment 30 days following such downgrading or withdrawal;
(b) Investments existing on the date hereof and set forth on Schedule 6.06,
to the extent such investments would not be permitted under any other clause of
this Section;
(c) Investments existing on the date hereof by the Borrower and its
Subsidiaries in the Capital Stock of their Subsidiaries;
(d) Investments made by the Borrower or any Subsidiary after the Effective
Date (i) to or in the Borrower or any Subsidiary Guarantor, (ii) to or into any
Immaterial Subsidiary that is not a Subsidiary Guarantor in an aggregate amount
not to exceed $10,000,000 at such time, (iii) to or into a Receivables Transfer
Subsidiary to establish or maintain a Receivables Transfer Program, (iv) to or
into any Depositary Institution; provided that the aggregate amount of
Investments made by the Borrower or any Subsidiary after the Effective Date
pursuant to this clause (iv) shall not exceed the greater of (I) $15,000,000 and
(II) an amount not to exceed the amount necessary to provide that such
Depositary Institution qualifies as "well capitalized" for purposes of 12 U.S.C.
ss.1831o, as amended, re-enacted or redesignated from time to time, or such
higher amount as may be required from time to time by the applicable regulatory
body or agency; and (v) to or into any other Subsidiary that is an insurance
company or other regulated financial institution that is not a Depository
Institution to the extent necessary to comply with laws, regulations or orders
with respect to such Subsidiary; provided that the aggregate amount of
Investments made by the Borrower or any Subsidiary after the Effective Date
pursuant to this clause (v) shall not exceed $25,000,000;
(e) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(f) Investments made in connection with a sale of assets permitted by
Section 6.08 to the extent of the non-cash consideration received by the
Borrower or a Subsidiary;
(g) Investments consisting of purchases of Accounts so long as the
aggregate consideration paid by the Borrower and its Subsidiaries in respect of
all such Investments consummated during any period of four fiscal quarter
periods (an "Acquisition Test Period") of the Borrower (excluding any such
consideration paid with Capital Stock of the Borrower) shall not exceed 30% of
the average Managed Accounts Receivable as of the last day of each of the four
fiscal quarter periods of the Borrower and its Subsidiaries most recently ended,
provided, that (i) for the purposes of this clause (g), the aggregate
consideration paid for Accounts on the date of any determination after the end
of the fiscal quarter during which such Accounts were acquired shall be deemed
to be the lesser of (x) the actual aggregate consideration paid by the Borrower
and its Subsidiaries and (y) the outstanding amount of such Accounts determined
in accordance with GAAP as of the most recent fiscal quarter ending prior to
such date of determination and (ii) any acquisition of Accounts that is
permitted under this clause (g) on the date of determination shall remain
permitted once such transaction is consummated, notwithstanding the average
Managed Accounts Receivable subsequent to such date of determination;
(h) Investments in respect of Rate Protection Agreements entered into in
the ordinary course of business;
(i) guaranties or indemnifications by the Borrower with respect to
performance bonds or other sureties (other than in respect of Indebtedness)
required by any regulatory authority to be obtained by a Subsidiary in the
ordinary course of business;
(j) Qualified Investments financed solely with Capital Stock of the
Borrower in any Person that, after giving effect to such Investment, is (i) a
Supermajority-Owned Subsidiary and (ii) to the extent required by Section
5.08(c), a Subsidiary Guarantor;
(k) Qualified Investments not otherwise permitted by clause (j) above
financed solely with Capital Stock of the Borrower in any Person that, after
giving effect to such Investment, is a Majority-Owned Subsidiary Guarantor,
provided, that, after giving effect to such Investment, the Available Total
Investment Basket shall not be less than zero;
(l) Qualified Investments financed with Capital Stock of the Borrower or
cash, in an aggregate amount for all investments made pursuant to this clause
(l) not to exceed $75,000,000, in any Person that, after giving effect to such
Investment, is a Majority-Owned Subsidiary but is not a Subsidiary Guarantor,
provided that (i) no more than $50,000,000 of such Investments may be made with
cash in any Person that is not a Wholly Owned Subsidiary and (ii) after giving
effect to such Investment, neither the Available Total Investment Basket nor the
Available Cash Investment Basket shall be less than zero;
(m) Qualified Investments financed with Capital Stock of the Borrower or
cash, in an aggregate amount not to exceed $25,000,000, in any Person that,
after giving effect to such Investment, is not a Majority-Owned Subsidiary,
provided, that, after giving effect to such Investment, neither the Available
Total Investment Basket nor the Available Cash Investment Basket shall be less
than zero; and
(n) Qualified Investments not otherwise permitted by this Section 6.06
financed with cash in any Person that, after giving effect to such Investment,
is a Majority-Owned Subsidiary Guarantor, provided, that after giving effect to
such Investment, neither the Available Total Investment Basket nor the Available
Cash Investment Basket shall be less than zero.
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness. (a)
Declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (i) the Borrower may make Restricted Payments with respect to
its Capital Stock payable solely in additional Capital Stock, (ii) Restricted
Payments made to the Borrower or any Subsidiary Guarantor, (iii) the Borrower
may make Restricted Payments, not exceeding $1,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and its Subsidiaries; (iv) any
distribution of rights to all shareholders of the Borrower and any purchase,
redemption or other acquisition or retirement of equity interests issued
pursuant to any shareholder rights plan of the Borrower, as the same may be
adopted or amended from time to time, as to which the aggregate amount of the
Restricted Payments made after the Effective Date does not exceed $1,000,000;
(v) the Borrower may make Restricted Payments in an aggregate amount in any
fiscal year of the Borrower not to exceed 40% of Consolidated Net Income for the
prior fiscal year of the Borrower; and (vi) the issuance by the Borrower of
options or other equity securities of the Borrower to outside directors, members
of management or employees of the Borrower or any of its Subsidiaries.
(b) Make or agree to pay or make, directly or indirectly, any payment or
other distribution (whether in cash securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments as and
when due in respect of any Indebtedness (subject to any subordination provisions
thereof);
(iii) refinancings of Indebtedness to the extent permitted by Section
6.02(d); and
(iv) payment of secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness.
SECTION 6.08 Disposition of Assets. Sell, transfer, lease or otherwise
dispose of any asset, including any Capital Stock, nor will the Borrower permit
any of its Subsidiaries to issue any additional shares of its Capital Stock or
other ownership interest in such Subsidiary (other than to the Borrower or any
Subsidiary Guarantor), except:
(a) sales of used or surplus equipment and Permitted Investments in the
ordinary course of business;
(b) sales, transfers and dispositions permitted by clause (a) or (b) of
Section 6.05;
(c) sales, transfers and dispositions of assets (other than Capital Stock
of a Subsidiary) that are not permitted by any other clause of this Section
6.08; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (c) (excluding
any such disposition pursuant to any Sale-Leaseback Transaction involving the
approximately 140,000 square foot office building located at 17600 North
Perimeter Drive, Scottsdale, Arizona 85255, used by Direct Merchants Credit Card
Bank, National Association as its principal banking facility) shall not exceed
$25,000,000 during any fiscal year of the Borrower;
(d) sales, transfers and dispositions of Accounts in connection with the
Receivables Transfer Program;
(e) sales, transfers and dispositions of Accounts (and, to the extent
necessary in connection with such sale, related credit cardholder accounts), so
long as the fair market value of the Accounts sold during any period of four
fiscal quarter periods of the Borrower shall not exceed 15% of the average
Managed Accounts Receivable as of the last day of each of the four fiscal
quarters of the Borrower and its Subsidiaries most recently ended;
(f) sales, transfers and dispositions of Accounts that have been charged
off on the books and records of the Borrower or a Subsidiary in accordance with
its standard credit and collection policies; and
(g) sales of common stock of up to three Subsidiaries (other than MDI and
any Depositary Institution) (an "IPO Subsidiary") pursuant to an underwritten
registered public offering thereof, so long as (i) after giving effect to any
such sale, no more than 20% of the total outstanding common stock of such
Subsidiary shall be owned by Persons other than the Borrower and its
Subsidiaries and (ii) all of the net proceeds of such offering are received by
the Borrower or its Subsidiaries and reinvested in the business of the Borrower,
a Subsidiary Guarantor or such IPO Subsidiary;
provided that all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and for cash consideration equal to at least
85% of such fair value.
SECTION 6.09 Transactions with Affiliates. Sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions in the ordinary course of business
(provided that this requirement shall be deemed satisfied in respect of the
Receivables Transfer Program) that are at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and one or more Subsidiary Guarantors not involving any other
Affiliate and (c) any Restricted Payment permitted by Section 6.07.
<PAGE>
SECTION 6.10. Amendment of Material Documents. Amend, modify or waive (a)
any of its rights under its certificate of incorporation, by-laws or other
organizational documents or (b) the Senior Note Indenture, in each case in any
respect materially adverse to the Lenders.
SECTION 6.11. Limitations on Restrictions on Dividends by Subsidiaries.
Permit or place, or permit any Subsidiary to permit or place, any restriction,
directly or indirectly on (i) the payment of dividends or other distributions by
any Subsidiary to the Borrower or (ii) the making of advances or other cash
payments by any Subsidiary to the Borrower, except, in either case, (x) as
specifically set forth in this Agreement, (y) as may be required under a
Receivables Transfer Program with respect to the frequency of dividends from any
Receivables Transfer Subsidiary or (z) as may be required by non-consensual
restrictions imposed by applicable requirements of law.
SECTION 6.12. Limitation on Negative Pledge Clauses. Enter into or suffer
to exist or become effective any agreement which prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, to secure the Obligations or, in the case of any guarantor,
its obligations under the Guarantee and Collateral Agreement, other than (a)
this Agreement and the other Loan Documents, (b) the Senior Note Indenture (or
the documentation in respect of any exchange, refinancing, extension or renewal
of the Senior Note Indebtedness permitted by Section 6.02(d)(ii)), (c) any
agreements entered into by a Receivables Transfer Subsidiary in respect of its
assets or property, (d) any agreements governing any purchase money Liens or
Capital Lease Obligations otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby), (e) any restrictions regarding encumbrances on property leased by the
Borrower or a Subsidiary contained in the documents relating to the relevant
lease and (f) in an agreement for the purchase or acquisition of Accounts or
credit card accounts otherwise permitted hereunder, that (i) prior to the
agreed-to purchase or acquisition of Accounts or credit card accounts, restricts
the right of the Borrower or Subsidiary party thereto to assign or otherwise
transfer its rights under such agreement or (ii) after the agreed-to purchase or
acquisition of Accounts or credit card accounts, restricts the right of the
Borrower or Subsidiary party thereto to assign or transfer any surviving
indemnification rights under such agreement.
SECTION 6.13. Changes in Fiscal Periods. Permit the fiscal year of the
Borrower to end on a day other than December 31 or change the Borrower's method
of determining fiscal quarters; provided that the Borrower may make one election
after the Effective Date to change its fiscal year end if the Borrower shall
provide the Administrative Agent and the Lenders with such financial information
as is reasonably useful to allow the Administrative Agent and the Lenders to
compare the financial position and results of operations of the Borrower and its
Subsidiaries prior and subsequent to such change for all relevant fiscal periods
of the Borrower and its Subsidiaries.
SECTION 6.14. Limitations on Lines of Business, etc. Enter into any
business or business activity other than (i) in the case of any Receivables
Transfer Subsidiary, the purchasing, holding, owning and selling of the Accounts
of the Borrower and its Subsidiaries and any activities incidental to and
necessary or convenient for the accomplishment of such purposes and (ii) in the
case of the Borrower or any other Subsidiary, (a) businesses in which the
Borrower or any of such Subsidiaries are engaged on the date hereof or
businesses reasonably related thereto, including direct marketing and providing
consumer-oriented or consumer-related financial products and services
(including, but not limited to, consumer credit products, extended service plans
and fee-based products) and (b) business financial services for business and
corporate customers (including sole proprietorships), including, but not limited
to, issuing credit cards, merchant card transaction processing, installment
lending, extending lines of credit and equipment leasing; provided that the
Borrower and its Subsidiaries shall be engaged primarily in the businesses
referred to in clause (ii)(a).
SECTION 6.15. Certain Matters Related to Accounts. In the case of the
Borrower, sell, transfer or otherwise dispose of any Accounts owned by it to any
Person except (i) to a Receivables Transfer Subsidiary whose Capital Stock has
been pledged pursuant to the Pledge Agreement, (ii) directly into a Receivables
Transfer Program, (iii) to a Subsidiary Guarantor or (iv) as permitted by
Section 6.08.
ARTICLE VII.
Events of Default
-----------------
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in connection
with any Loan Document or the borrowings hereunder, or any representation,
warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished in connection with or pursuant
to any Loan Document, shall prove to have been false or misleading in any
respect material to the interests of the Lenders when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any Loan when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof or otherwise,
or default shall be made in the payment of any reimbursement obligation in
respect of any Letter of Credit when and as the same shall become due and
payable;
(c) default shall be made in the payment of any interest on any Loan or any
Fee (other than an amount referred to in (b) above) due under any Loan Document,
when and as the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance of any
covenant, condition or agreement contained in Section 5.01(a), Section 5.05(a)
or Article VI (other than Section 6.01(g)) of this Agreement;
(e) default shall be made in the due observance or performance of any
covenant, condition or agreement contained in Section 5.05(b), (c) or (d) of
this Agreement and such default shall continue unremedied for a period of 10
Business Days;
(f) default shall be made in the due observance or performance of any
covenant, condition or agreement contained in any Loan Document (other than
those specified in clause (b), (c), (d) or (e) above) and such default shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent or the Required Lenders to the Borrower;
(g) the Borrower or any of its Subsidiaries shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
in a principal amount in excess of $10,000,000 or fail to pay any amount in
excess of $10,000,000 due in respect of any Rate Protection Agreement, in each
case when and as the same shall become due and payable (after giving effect to
any applicable period of grace specified in the instrument evidencing or
governing such Indebtedness or Rate Protection Agreement), (ii) fail to observe
or perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Indebtedness in a
principal amount in excess of $15,000,000 after giving effect to any applicable
period of grace specified in the instrument evidencing or governing such
Indebtedness, if the effect of any failure referred to in this clause (ii) is to
cause, or to permit the holder or holders of such Indebtedness (or any Person
acting on their behalf) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity, or (iii) in the case of
the Borrower, fail to observe or perform any term, covenant, condition or
agreement contained in the Senior Note Indenture or any other agreement or
instrument evidencing or governing any of the Senior Note Indebtedness if the
effect of any failure referred to in this clause (iii) is to cause, or to permit
the holder or holders of such Senior Note Indebtedness (or any Person acting on
their behalf) to cause, with the giving of notice if required, all or any
portion of such Senior Note Indebtedness to become due prior to its stated
maturity;
(h) (i) an event of default, termination event or similar event shall occur
which results in the suspension or termination of the ability of the Borrower or
any of its Subsidiaries to sell or transfer receivables for cash pursuant to the
Receivables Transfer Program; provided this clause (i) will not be applicable,
in the case of any such event with respect to a Receivables Transfer Program, so
long as the Borrower obtains a commitment for an alternative Receivables
Transfer Program (for a comparable or greater amount) within 30 days after the
occurrence of such event and such commitment is maintained throughout the
remaining scheduled term of the affected Receivables Transfer Program, or (ii)
the Borrower or any of its Subsidiaries shall fail to maintain the existence of
the Receivables Transfer Program for a period of 30 consecutive days other than
as a result of an event or condition described in clause (i) of this paragraph
(h); (b) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of the Borrower or any of its Subsidiaries, or of a substantial part of
the property or assets of the Borrower or any of its Subsidiaries, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other federal or state bankruptcy, insolvency, receivership or similar law, (ii)
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of the property or assets of the Borrower or any of its
Subsidiaries or (iii) the winding-up or liquidation of the Borrower or any of
its Subsidiaries; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
(j) the Borrower or any of its Subsidiaries shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other federal or
state bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (i) above, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of the property or assets of the Borrower
or any of its Subsidiaries, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the foregoing;
(k) one or more judgments for the payment of money in an aggregate amount
in excess of $10,000,000 shall be rendered against the Borrower, any of its
Subsidiaries or any combination thereof (unless such judgment is covered by
insurance and the insurer has offered to defend such judgment or acknowledged,
in writing, its liability with respect thereto) and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any of its
Subsidiaries to enforce any such judgment (unless the Borrower or the relevant
Subsidiary, as applicable, has previously established reserves under GAAP
consistently applied for the full amount of such judgment);
(l) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section 412(n)(1)
of the Code) shall have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the Borrower to the PBGC
or to a Plan in an aggregate amount exceeding $5,000,000 and, within 30 days
after the reporting of any such Reportable Event to the Administrative Agent or
after the receipt by the Administrative Agent of the statement required pursuant
to Section 5.06(b)(iii) hereof, the Administrative Agent shall have notified the
Borrower in writing that (i) the Required Lenders have made a determination
that, on the basis of such Reportable Event or Reportable Events or the failure
to make a required payment, there are reasonable grounds (A) for the termination
of such Plan or Plans by the PBGC, (B) for the appointment by the appropriate
United States district court of a trustee to administer such Plan or Plans or
(C) for the imposition of a lien in favor of a Plan and (ii) as a result thereof
an Event of Default exists hereunder; or a trustee shall be appointed by a
United States district court to administer any such Plan or Plans; or the PBGC
shall institute proceedings (including giving notice of intent thereof) to
terminate any such Plan or Plans;
(m)(i) the Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or is not contesting
such Withdrawal Liability in a timely and appropriate manner and (iii) the
amount of such Withdrawal Liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in connection
with Withdrawal Liabilities (determined as of the date or dates of such
notification) either (A) exceeds $5,000,000 or requires payments exceeding
$5,000,000 in any year or (B) is less than $5,000,000 but any Withdrawal
Liability payment remains unpaid 30 days after such payment is due;
(n) the Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if solely as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an amount
exceeding $5,000,000;
(o) any Collateral Document or Subsidiary Guaranty shall not be in full
force and effect, enforceable in accordance with its terms, or the security
interest purported to be created by any Collateral Document shall not be a valid
and enforceable perfected first priority security interest in any collateral
subject thereto (except, in the case of the Borrower Security Agreement and the
Subsidiary Security Agreement, in connection with releases of collateral
thereunder in accordance with the terms thereof);
(p) a Change in Control shall occur; or
(q) (i) any of the Borrower's Subsidiaries that is an Insured Subsidiary
shall be required to cease accepting deposits or making loans as a result of a
cease and desist order or other formal supervisory action (other than an
instruction generally applicable to banks organized under the jurisdiction of
organization of such Insured Subsidiary) by any Bank Regulatory Authority; (ii)
the federal deposit insurance of any of the Borrower's Subsidiaries that is an
Insured Subsidiary shall be terminated pursuant to 12 U.S.C. ss.1818(a) or any
successor provision); or (iii) any of the Borrower's Subsidiaries that is an
Insured Subsidiary shall be required (whether or not the time allowed by the
appropriate Bank Regulatory Authority for the submission of such plan has been
established or elapsed) to submit a capital restoration plan of the type
referred to in 12 U.S.C. ss.1831o(b)(2)(C), as amended, re-enacted or
redesignated from time to time;
then, and in every such event (other than an event with respect to the
Borrower described in paragraph (i) or (j) above), and at any time thereafter
during the continuance of such event, the Administrative Agent, at the request
of the Required Lenders, shall, by notice to the Borrower, take any of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments; (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding and (iii) require that the
Borrower deposit cash with the Administrative Agent, in an amount equal to the
aggregate LC Exposure, as collateral security for the repayment of any future
drawings under the Letters of Credit; and in any event with respect to the
Borrower described in paragraph (i) or (j) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding, and the Borrower shall forthwith be required to
deposit cash with the Administrative Agent in an amount equal to the aggregate
LC Exposure or shall deliver to the Administrative Agent a Replacement Letter of
Credit drawable without condition and in a face amount equal to the aggregate LC
Exposure and otherwise satisfactory in all respects to the Administrative Agent,
which Letter of Credit or cash deposit shall serve as collateral security for
the repayment of any further drawings under the Letters of Credit.
ARTICLE VIII.
The Administrative Agent
------------------------
In order to expedite the transactions contemplated by this Agreement, the
Administrative Agent is hereby appointed to act as agent on behalf of the
Lenders. Each of the Lenders, and each subsequent holder of any Loan by its
acceptance thereof, hereby irrevocably authorizes the Administrative Agent to
take such actions on behalf of such Lender or holder and to exercise such powers
as are specifically delegated to the Administrative Agent by the terms and
provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders all payments of principal of and interest on the Loans and
all other amounts due to the Lenders hereunder, and promptly to distribute to
each Lender its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrower of any Event of Default specified
in this Agreement of which the Administrative Agent has actual knowledge
acquired in connection with its agency hereunder; (c) to act as Administrative
Agent on behalf of the Lenders under the other Loan Documents and to exercise
all rights granted to the Administrative Agent under the other Loan Documents;
(d) to distribute to each Lender copies of all notices, financial statements and
other materials delivered by the Borrower pursuant to this Agreement as received
by the Administrative Agent; and (e) take the actions it is authorized to take
pursuant to the Collateral Documents in order to release collateral thereunder.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by any
Loan Party of any of the terms, conditions, covenants or agreements contained in
any Loan Document. The Administrative Agent shall not be responsible to the
Lenders or the holders of the Loans for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement, or any other Loan
Documents or other notes, instruments or agreements. The Administrative Agent
shall in all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders and, except
as otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders and each
subsequent holder of any Loan. The Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper Person or Persons. Neither the Administrative Agent nor
any of its directors, officers, employees or agents shall have any
responsibility to the Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or the Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The
Administrative Agent may execute any and all duties hereunder by or through
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected by it with respect to all matters arising hereunder and shall
not be liable for any action taken or suffered in good faith by it in accordance
with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall be under
no duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, (i) the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and the Borrower and (ii) the
Administrative Agent, at the request of the Borrower and with the consent of the
Required Lenders (which consent shall not be unreasonably withheld) shall
resign. Upon any such resignation, the Borrower shall have the right to appoint
a successor, subject to the approval of the Required Lenders (which approval
shall not be unreasonably withheld). If no successor shall have been so
appointed by the Borrower and approved by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation or the Required Lenders consent to the
resignation of the Administrative Agent, then (i) the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
if the Administrative Agent shall have resigned by notifying the Lenders or (ii)
otherwise, the Required Lenders may appoint a successor Administrative Agent to
replace the terminated Administrative Agent, in each case which successor shall
be a bank with an office in New York, New York, having a combined capital and
surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
bank, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.05 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 Administrative Agent.
With respect to the Loans made by it and the Letter of Credit
participations acquired by it hereunder, the Administrative Agent in its
individual capacity and not as Administrative Agent shall have the same rights
and powers as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or other Affiliate thereof as if it were not
the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent, on demand, in
the amount of its pro rata share of any expenses incurred for the benefit of the
Lenders by the Administrative Agent, including counsel fees and compensation of
agents paid for services rendered on behalf of the Lenders, which shall not have
been reimbursed by the Borrower and (ii) to indemnify and hold harmless the
Administrative Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as the
Administrative Agent or any of them in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted by it
or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower; provided that no Lender
shall be liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
The Syndication Agent, the Documentation Agents and the Co-Agent shall have
no duties, rights, obligations or liabilities hereunder (other than under
Section 9.16) or under the other Loan Documents in their roles as such.
<PAGE>
ARTICLE IX.
Miscellaneous
-------------
SECTION 9.01 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telecopier, as follows:
(a) if to the Borrower, to it at Metris Companies Inc., 600 South Highway
169, Suite 1800, St. Louis Park, Minnesota 55426, Attention of Treasurer
(Telephone No. (952) 417-5711) (Telecopy No. (952) 417-5660), with a copy to the
attention of General Counsel of Metris Companies Inc., 600 South Highway 169,
Suite 1800, St. Louis Park, Minnesota 55426 (Telephone No. (952) 593-4794)
(Telecopy No. (952) 593-5098);
(b) if to the Administrative Agent, to it at Chase Loan and Agency
Services, One Chase Manhattan Plaza, New York, New York 10005, Attention: Janet
Belden (Telecopy No. 212-552-5658), with a copy to The Chase Manhattan Bank, 270
Park Avenue, New York, New York 10017, Attention: Roger Parker (Telecopy No.
212-270-1789); and
(c) if to a Lender, to it at its address (or telecopy number) set forth in
an administrative questionnaire furnished to the Administrative Agent.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or other telegraphic communications equipment of the sender, or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
The Administrative Agent shall upon request provide to the Borrower a list of
notice addresses of the Lenders.
SECTION 9.02 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any Fee or any other amount payable under
this Agreement or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated.
SECTION 9.03 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower, the Administrative Agent and each
Lender and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior consent of
all the Lenders.
SECTION 9.04 Successors and Assigns. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower, the Administrative Agent or the Lenders that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of any Commitment and/or Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender, an Affiliate of such Lender
or an Approved Fund or after the occurrence and during the continuance of an
Event of Default, the Borrower, the Issuing Banks (in the case of any Revolving
Commitment or Revolving Loan) and the Administrative Agent must give their prior
written consent to such assignment (which consent, in each case, shall not be
unreasonably withheld or delayed); (ii) except (A) in the case of an assignment
to an Approved Fund or (B) as otherwise agreed by the Borrower and the
Administrative Agent, the amount of the Commitment or Term Loan of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (in the case of
Commitments) or $1,000,000 (in the case of Term Loans) (or, if less, the
then-remaining Commitment or Term Loan of the assigning Lender) and the amount
of the Commitment or Term Loan of such Lender remaining after such assignment
shall not be less than $5,000,000 (in the case of Commitments) or $1,000,000 (in
the case of Term Loans) or shall be zero; and (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500 (to be
paid by the assignee or the assignor). Upon acceptance and recording pursuant to
paragraph (e) of this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement
and (B) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto (but shall
continue to be entitled to the benefits of Sections 2.12, 2.15, 2.19 and 9.05,
as well as to any Fees accrued for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Revolving Loans without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto or the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under this Agreement, any
other Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 5.04 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (v)
such assignee will independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain, as agent of the Borrower, at
one of its offices in the City of New York a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement. Any assignment
of any Loan shall be effective only upon appropriate entries with respect
thereto being made in the Register. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an administrative questionnaire in form
satisfactory to the Administrative Agent completed in respect of the assignee
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above and, if required, the written
consent of the Borrower and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lender and the Issuing Banks.
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
(each, a "Participant") in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Participant shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.12, 2.15 and 2.19 limited, as to each
Participant, to the amount the selling Lender could claim and (iv) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, or extending any scheduled principal payment date or date fixed for the
payment of principal of or interest or fees on the Loans).
(g) Any Lender or Participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or Participant or proposed assignee or
Participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
Participant or proposed assignee or Participant shall execute an agreement
whereby such assignee or Participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
substantially similar terms to those set forth in Section 9.16.
(h) Notwithstanding the limitations set forth in paragraph (b) above, (i)
any Lender may at any time assign or pledge all or any portion of its rights
under this Agreement to a Federal Reserve Bank and (ii) any Lender which is a
"fund" may at any time assign or pledge all or any portion of its rights under
this Agreement to secure such Lender's indebtedness, in each case without the
prior written consent of the Borrower, the Administrative Agent or any Issuing
Bank; provided that each such assignment shall be made in accordance with
applicable law and no such assignment shall release a Lender from any of its
obligations hereunder. In order to facilitate any such assignment, the Borrower
shall, at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a registered promissory note or notes evidencing the Loans made
to the Borrower by the assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its respective rights
and duties hereunder.
SECTION 9.05 Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent, Issuing Banks or any
Lender in connection with the enforcement or protection of their rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made hereunder, including (i) the reasonable fees and
disbursements of Simpson Thacher & Bartlett, counsel for the Administrative
Agent, (ii) in connection with any such amendment, modification or waiver, the
fees and disbursements of any common counsel, and (iii) in connection with any
such enforcement or protection, the fees and disbursements of any counsel for
the Administrative Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the Issuing
Banks, the Syndication Agent, the Documentation Agent, the Co-Agents, each
Lender and their directors, officers, employees and agents (each such Person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees and expenses, incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee; provided, however, that the Borrower will only be
liable for the fees of a single firm which shall act as common counsel for the
Lenders, except in the case where (i) a Lender reasonably determines based upon
the written advice of legal counsel, a copy of which shall be provided to the
Borrower, in its judgment that having common counsel would present such counsel
with a conflict of interest, (ii) a Lender reasonably concludes that there may
be legal defenses available to it that are different from or in addition to
those available to other Lenders or (iii) defense of any action or proceeding is
not assumed by the Lenders.
(c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent or any Lender. All amounts due under this Section
9.05 shall be payable on written demand therefor accompanied by evidence in
reasonable detail sufficient to identify the nature and amount of the expense so
incurred.
SECTION 9.06 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter existing under this Agreement or any other Loan
Document held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have. Each Lender agrees promptly to notify the
Borrower of any such setoff and the application thereof made by such Lender.
SECTION 9.07 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
SECTION 9.08 Waivers; Amendment.(a) No failure or delay of the
Administrative Agent, the Issuing Bank or any Lender in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement, any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower, each other
affected Loan Party and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the scheduled
date of amortization or the maturity of or date for the payment of any
principal, interest or Fee on any Loan or Commitment, or waive or excuse any
such payment or any part thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender affected thereby, (ii) increase
the Commitment of or decrease any Fee to be paid to any Lender without the prior
written consent of such Lender, (iii) amend or modify the provisions of this
Section or reduce the percentage specified in the definition of the "Required
Lenders", without the prior written consent of each Lender or (iv) release or
otherwise limit or modify the obligations of any material Subsidiary Guarantor
(except as provided in the Subsidiary Guaranty) or release all or any
substantial part of the collateral securing the Obligations (except as provided
in the Borrower Security Agreement, the Subsidiary Security Agreement or the
Securities Account Control Agreement) in each case without the prior written
consent of each Lender; provided, further, that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent. Each
Lender and each holder of a Loan shall be bound by any waiver, amendment or
modification authorized by this Section, and any consent by any Lender or holder
of a Loan pursuant to this Section shall bind any Person subsequently acquiring
a Loan from it.
SECTION 9.09 Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the applicable interest rate, together with all
fees and charges which are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable in respect of the Loans held by such Lender, together with all Charges
payable to such Lender, shall be limited to the Maximum Rate.
<PAGE>
SECTION 9.10. Entire Agreement. This Agreement and the other Loan Documents
and the letter agreement referred to in Section 2.05 constitute the entire
contract between the parties relative to the subject matter hereof. Any previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Nothing in this
Agreement or in the other Loan Documents, expressed or implied, is intended to
confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 9.11. Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any of the other Loan Documents. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications in this Section 9.11.
SECTION 9.12 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.03.
SECTION 9.14. Headings. The cover page, the Article and Section headings
and the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of the
parties hereto agrees that a final judgment in any New York State court or any
federal court of the United States of America sitting in New York City shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party hereto may have to bring any action or proceeding relating
to this Agreement or the other Loan Documents in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 9.16. Confidentiality. Unless otherwise agreed to in writing by the
Borrower, the Administrative Agent, the Syndication Agent, the Documentation
Agents, the Co-Agents and each Lender hereby agree to keep all Proprietary
Information (as defined below) confidential and not to disclose or reveal any
Proprietary Information to any Person other than the Administrative Agent's or
such Lender's directors, officers, employees, Affiliates and agents and to
actual or potential assignees (including an Approved Fund of such Lender) and
Participants, and then only on a confidential basis; provided, however, that the
Administrative Agent or any Lender may disclose Proprietary Information (a) as
required by law, rule, regulation or judicial process, (b) to its attorneys and
accountants, (c) as requested or required by any state or federal or foreign
authority or examiner regulating banks or banking, (d) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 9.16), and (e) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender. For purposes of
this Agreement, the term "Proprietary Information" shall include all information
about the Borrower or any of its Affiliates which has been furnished by the
Borrower or any of its Affiliates, whether furnished before or after the date
hereof, and regardless of the manner in which it is furnished; provided,
however, that Proprietary Information does not include information which (x) is
or becomes generally available to the public other than as a result of a
disclosure by the Administrative Agent or any Lender not permitted by this
Agreement, (y) was available to the Administrative Agent or any Lender on a
nonconfidential basis prior to its disclosure to the Administrative Agent or
such Lender by the Borrower or any of its Affiliates from a Person who is not
otherwise bound by a confidentiality agreement with the Borrower or any of its
Affiliates or is not otherwise prohibited from transmitting the information to
the Administrative Agent or such Lender or (z) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a Person
other than the Borrower or its Affiliates who is not otherwise bound by a
confidentiality agreement with the Borrower or any of its Affiliates, or is not
otherwise prohibited from transmitting the information to the Administrative
Agent or such Lender. In addition, the terms of any confidentiality agreement
between any Lender and the Borrower will remain in full force and effect
pursuant to the terms thereof.
SECTION 9.17 Releases of Guarantees and Liens. (a) Notwithstanding anything
to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 9.08) to take any action requested by the Borrower having the effect
of releasing any Collateral or guarantee obligations (i) to the extent necessary
to permit consummation of any disposition expressly permitted by Section 6.08 or
that has been consented to in accordance with Section 9.08 or (ii) under the
circumstances described in paragraph (b) below. It is understood that any IPO
Subsidiary (and any Subsidiary thereof) shall, at the request of the Borrower,
be released from its obligations under the Subsidiary Guaranty, the Subsidiary
Security Agreement or the Securities Account Control Agreement (any Subsidiary
so released, a "Released Subsidiary") so long as, at the time of such release,
such Subsidiary does not Guarantee any Indebtedness of the Borrower or any
Subsidiary other than another Released Subsidiary, and only the Capital Stock of
such IPO Subsidiary not sold in such initial public offering shall remain
pledged pursuant to the Pledge Agreement by the Borrower or a Subsidiary
Guarantor. It is further understood that upon receipt of a written request from
a Loan Party pursuant to the Borrower Security Agreement or the Subsidiary
Security Agreement, as the case may be, the Administrative Agent shall release
the security interest provided therein in the Permitted Investment specified in
such request so long as subsequent to such release the aggregate principal
amount of the Funded Senior Debt would not exceed the Borrowing Base at such
time.
(b) At such time as the Loans and the other Obligations shall have been
paid in full in cash, the Commitments have been terminated and no Letters of
Credit shall be outstanding, the Collateral shall be released from the Liens
created by the Collateral Documents, and the Collateral Documents and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Loan Party under the Collateral Documents
shall terminate, all without delivery of any instrument or performance of any
act by any Person.
SECTION 9.18. Effect of Amendment and Restatement of the Existing Credit
Agreement. On the Effective Date, the Borrower's existing credit agreement shall
be amended, restated and superseded in its entirety. The parties hereto
acknowledge and agree that (a) this Agreement and the other Loan Documents
executed and delivered in connection herewith do not constitute a novation,
payment and reborrowing, or termination of the "Obligations" (as defined in the
existing credit agreement) under the existing credit agreement as in effect
prior to the Effective Date; (b) such "Obligations" are in all respects
continuing (as amended and restated hereby) with only the terms thereof being
modified as provided in this Agreement; and (c) the Liens and security interests
as granted under the Security Documents securing payment of such "Obligations"
are in all respects continuing and in full force and effect and secure the
payment of the Obligations (as defined in this Agreement).
<PAGE>
IN WITNESS WHEREOF, the Borrower the Administrative Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
<PAGE>
METRIS COMPANIES INC., as Borrower
By:
-----------------------------------------
Name: Ralph Than
Title: Senior Vice President, Treasurer
By:
------------------------------------------
Name: Benson Woo
Title: Senior Vice President, Finance
THE CHASE MANHATTAN BANK, as
Administrative Agent, Lender and Issuing Bank
By:
------------------------------------------
Name: Marian N. Schulman
Title: Vice President
AMARA I FINANCE LTD.
By: INVESCO Senior Secured Management,
Inc., as Sub-Advisor
By:
-----------------------------------------
Name: Thomas H. B. Ewald
Title: Authorized Signatory
AMARA II FINANCE LTD.
By: INVESCO Senior Secured Management,
Inc., as Sub-Advisor
By:
-----------------------------------------
Name: Thomas H. B. Ewald
Title: Authorized Signatory
BANK OF AMERICA, N.A.
By:
------------------------------------------
Name: Mary Pat Riggins
Title: Principal
BARCLAYS BANK PLC
By:
-----------------------------------------
Name: Richard Herder
Title: Director
BEAR STEARNS CORPORATE LENDING INC.
By:
-----------------------------------------
Name:
Title:
CERES II FINANCE, LTD.
By:
-----------------------------------------
Name: Thomas H. B. Ewald
Title: Authorized Signatory
DEUTSCHE BANK A.G., NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By:
-----------------------------------------
Name: Gayma Z. Shivnarain
Title: Director
By:
-----------------------------------------
Name:
Title:
FIRST DOMINION FUNDING II
By:
-----------------------------------------
Name: Andrew H. Marshak
Title: Authorized Signatory
FIRST DOMINION FUNDING III
By:
-----------------------------------------
Name: Andrew H. Marshak
Title: Authorized Signatory
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------------------
Name:
Title:
KZH SHOSHONE LLC
By:
-----------------------------------------
Name: Peter Chin
Title: Authorized Agent
ML CLO XII PILGRIM AMERICA (CAYMAN) LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By:
-----------------------------------------
Name: Jason Groom
Title: Vice President
ML CLO XV PILGRIM AMERICA (CAYMAN) LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By:
-----------------------------------------
Name: Jason Groom
Title: Vice President
OASIS COLLATERALIZED HIGH INCOME PORTFOLIO
By:
-----------------------------------------
Name: Thomas H. B. Ewald
Title: Authorized Signatory
PILGRIM CLO 1999-1 LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By:
-----------------------------------------
Name: Jason Groom
Title: Vice President
STANFIELD CLO, LTD.
By: Stanfield Capital Partners LLC as its
Collateral Manager
By:
-----------------------------------------
Name: Christopher A. Bondy
Title: Partner
STRATA FUNDING LIMITED
By:
-----------------------------------------
Name: Thomas H. B. Ewald
Title: Authorized Signatory
U.S. BANK NATIONAL ASSOCIATION
By:
-----------------------------------------
Name: Elliot Jaffee
Title: Senior Vice President
VAN KAMPEN PRIME RATE INCOME TRUST
By: Van Kampen Investments Advisory Corp.
By:
-----------------------------------------
Name: Brian T. Buscher
Title: Manager Operations & Compliance
<PAGE>
EXHIBIT B
FORM OF SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT, dated as of July
21, 2000, ("the Borrower Security Agreement") made by METRIS COMPANIES INC., a
Delaware corporation (the "Borrower"), in favor of THE CHASE MANHATTAN BANK, as
Administrative Agent (in such capacity, the "Administrative Agent") for the
Lenders (as such terms are defined in the Credit Agreement referred to below).
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Revolving Credit and Letter of Credit Facility
Agreement, dated as of September 16, 1996 (the "Original Credit Agreement"),
among the Borrower, the Administrative Agent and the lenders parties thereto,
the lenders made extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the provisions of the Original Credit Agreement, the
Borrower entered into the Security Agreement, dated as of September 16, 1996
(the "Original Security Agreement");
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
June 30, 1998 (the "Existing Credit Agreement"), among the Borrower, the lenders
parties thereto, the Syndication Agent, the Documentation Agents, the Co-Agents
(as such terms are defined in the Existing Credit Agreement) and the
Administrative Agent, the parties thereto agreed to amend and restate in its
entirety the Original Credit Agreement;
WHEREAS, pursuant to the Amended and Restated Borrower Security Agreement
dated as of June 30, 1998 (the "Existing Security Agreement") the parties
thereto agreed to amend and restate in its entirety the Original Security
Agreement;
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
July 21, 2000 (herein, as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders, the
Syndication Agent, the Co-Documentation Agents, the Co-Agent (as such terms are
defined in the Credit Agreement) and the Administrative Agent, the parties
thereto have agreed to amend and restate in its entirety the Existing Credit
Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make or continue their respective extensions of credit to the Borrower under the
Credit Agreement that the Existing Security Agreement shall be amended and
restated as provided herein.
<PAGE>
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make or continue their respective extensions of credit to
the Borrower, the Borrower hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, General Intangibles
and Instruments.
(b) The following terms shall have the following meanings:
"Agreement": this Borrower Security Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 5.3 or Section 6.2.
"Excluded Assets": any property, including but not limited to
Accounts, Chattel Paper, Documents, General Intangibles, Instruments, books
and records pertaining to such property and all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to the foregoing, sold, assigned,
transferred, set-over and otherwise conveyed directly or indirectly from
time to time in connection with any Receivables Transfer Program in
accordance with the Credit Agreement.
"Issuers": the collective reference to each issuer of any Permitted
Investment.
"Pledged Permitted Investments": Permitted Investments credited to the
Securities Account by the Securities Intermediary pursuant to the
Securities Account Control Agreement.
<PAGE>
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Code and, in any event, shall include, without limitation, all
income from Pledged Permitted Investments, collections thereon or
distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account), but excluding any of the
foregoing (including, without limitation, assets sold pursuant to the
Receivables Transfer Program) transferred by the Borrower as permitted by
the Credit Agreement.
"Securities Account": as defined in the Securities Account Control
Agreement.
"Securities Intermediary": as defined in the Securities Account
Control Agreement.
"Subordinated Securities Intermediary Lien": any lien in favor of the
Securities Intermediary in the Securities Account or any securities
entitlement credited thereto, provided that any such lien is subordinate to
the lien of the Administrative Agent as set forth in Section 4 of the
Securities Account Control Agreement.
1.2 Other Definitional Provisions. (a) The words "hereof", "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Borrower hereby grants to the
Administrative Agent for the ratable benefit of the Lenders a security interest
in all of the following property now owned or at any time hereafter acquired by
the Borrower or in which the Borrower now has or at any time in the future may
acquire any right, title or interest excluding any Excluded Assets
(collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all General Intangibles;
(e) all Instruments;
<PAGE>
(f) Pledged Permitted Investments;
(g) all books and records pertaining to the Collateral; and
(h) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
3. Representations and Warranties. The Borrower hereby represents and
warrants that (it being understood that the following representations and
warranties shall not apply to Collateral (including, without limitation, assets
sold pursuant to any Receivables Transfer Program) that has been transferred by
the Borrower as permitted by the Credit Agreement):
3.1 Title; No Other Liens. Except for (i) the security interest granted to
the Administrative Agent for the ratable benefit of the Lenders pursuant to this
Agreement and (ii) any Subordinated Securities Intermediary Lien in respect of
Pledged Permitted Investments, the Borrower owns each item of the Collateral
free and clear of any and all Liens or claims of others. No financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed (i) in
favor of the Administrative Agent, for the ratable benefit of the Lenders,
pursuant to the Original Security Agreement, the Existing Security Agreement or
this Agreement, (ii) in favor of the Securities Intermediary in respect of any
Subordinated Securities Intermediary Lien that may exist on Pledged Permitted
Investments, or (iii) in connection with a sale, transfer or disposition of
Accounts permitted by Section 6.08 (e) or (f) of the Credit Agreement.
3.2 Perfected First Priority Liens. The security interests granted pursuant
to this Agreement (a) upon completion of the filings and other actions specified
on Schedule 1 will constitute perfected security interests in the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for the Obligations, and (b) are prior to all other Liens on
the Collateral in existence on the date hereof.
3.3 Chief Executive Office. The Borrower's jurisdiction of organization on
the date hereof is Delaware and its chief executive office is located at 600
South Highway 169, Suite 1800, St. Louis Park, Minnesota, 55426.
3.4 Pledged Permitted Investments. The Borrower is the record and
beneficial owner of, and has good and marketable title to, the Pledged Permitted
Investments pledged hereunder, free of any and all Liens or options in favor of,
or claims of, any other Person, except (i) the security interest created by this
Agreement and (ii) any Subordinated Securities Intermediary Lien.
4. Covenants. The Borrower covenants and agrees with the Administrative
Agent and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letters of Credit are outstanding
and the Commitments shall have expired or otherwise been terminated:
<PAGE>
4.1 Delivery of Instruments and Chattel Paper. If any amounts payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instruments or Chattel Paper (not previously delivered to the Administrative
Agent pursuant to this Section 4.1) having an aggregate principal amount in
excess of $100,000, such Instruments or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
Notwithstanding the foregoing, prior to the occurrence and continuance of an
Event of Default, payments by check promptly deposited shall be collected by the
Borrower without delivery to the Administrative Agent.
4.2 Maintenance of Perfected Security Interest; Further Documentation;
Release of Security Interest. (a) The Borrower shall maintain the security
interest created by this Agreement as a perfected security interest having at
least the priority described in Section 3.2 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Administrative Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, (i) the
filing of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Pledged Permitted Investments, taking any
actions necessary to enable the Administrative Agent to obtain "control" (within
the meaning of the applicable Uniform Commercial Code) with respect thereto.
(c) Concurrently with the transfer by the Borrower of any Collateral as
permitted by the Credit Agreement, the security interest created by this
Agreement in such Collateral shall automatically terminate without any further
action by the Administrative Agent; provided that the Administrative Agent
shall, at the reasonable request and sole expense of the Borrower, execute such
releases as may be necessary to effect any such transfer. Upon receipt by the
Administrative Agent of a written request from the Borrower, the Administrative
Agent shall release the security interest provided herein in the Pledged
Permitted Investments specified by the Borrower in such request so long as
subsequent to such release the aggregate principal amount of Funded Senior Debt
would not exceed the Borrowing Base at such time.
4.3 Changes in Locations, Name, etc. The Borrower will not (unless, in each
case, it shall have given the Administrative Agent at least 30 days' prior
written notice of such change):
(a) change its jurisdiction of organization or the location of its chief
executive office from that specified in Section 3.3; or
<PAGE>
(b) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Administrative Agent in connection with
this Agreement would become seriously misleading.
4.4 Pledged Permitted Investments. (a) Subject to the Borrower's rights
under Section 6.5(a), any sums paid upon or in respect of the Pledged Permitted
Investments upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Permitted Investments or any property shall
be distributed upon or with respect to the Pledged Permitted Investments
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of Pledged Permitted
Investments shall be received by the Borrower, the Borrower shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Administrative Agent and the Lenders,
segregated from other funds of the Borrower, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Administrative Agent, the
Borrower will not (i) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Pledged
Permitted Investments or Proceeds thereof, or any interest therein, except for
the security interests created by this Agreement or (ii) enter into any
agreement or undertaking restricting the right or ability of the Borrower or the
Administrative Agent to sell, assign or transfer any of the Pledged Permitted
Investments or Proceeds thereof.
5. Provisions Relating to Receivables.
5.1 Borrower Remains Liable under Receivables. Anything herein to the
contrary notwithstanding, the Borrower shall remain liable under each of the
Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Receivable. Neither the Administrative Agent
nor any Lender shall have any obligation or liability under any Receivable (or
any agreement giving rise thereto) by reason of or arising out of this Agreement
or the receipt by the Administrative Agent or any Lender of any payment relating
to such Receivable pursuant hereto, nor shall the Administrative Agent or any
Lender be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
<PAGE>
5.2 Communication with Obligors. To the extent permitted by law, the
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with the obligors on the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
5.3 Collections on Receivables. The Administrative Agent hereby authorizes
the Borrower to collect the Receivables, subject to the Administrative Agent's
direction and control, and the Administrative Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by the Borrower, (a) shall be forthwith (and, in any
event, within two Business Days) deposited by the Borrower in the exact form
received, duly indorsed by the Borrower to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.3, and (b) until so turned
over, shall be held by the Borrower in trust for the Administrative Agent and
the Lenders, segregated from other funds of the Borrower.
6. Remedies.
6.1 Notice to Obligors. Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default, the
Borrower shall notify obligors on the Receivables that the Receivables have been
assigned to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the Administrative
Agent.
6.2 Proceeds to be Turned Over To Administrative Agent. In addition to the
rights of the Administrative Agent and the Lenders specified in Section 5.3 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing all Proceeds received by the Borrower consisting of cash, checks and
other near-cash items shall be held by the Borrower in trust for the
Administrative Agent and the Lenders, segregated from other funds of the
Borrower, and shall, if required by the Administrative Agent, forthwith upon
receipt by the Borrower, be turned over to the Administrative Agent in the exact
form received by the Borrower (duly indorsed by the Borrower to the
Administrative Agent, if required) and held by the Administrative Agent in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent. All Proceeds while held by the Administrative Agent in a
Collateral Account (or by the Borrower in trust for the Administrative Agent and
the Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.3.
<PAGE>
6.3 Application of Proceeds. If an Event of Default shall have occurred and
be continuing, at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the
Administrative Agent to the Borrower or to whomsoever may be lawfully entitled
to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit are outstanding
and the Commitments shall have expired or otherwise been terminated shall be
paid over to the Borrower or to whomsoever may be lawfully entitled to receive
the same.
6.4 Code Remedies. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders may exercise, in addition to
all other rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Borrower, which right or equity is
hereby waived or released. The Borrower further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at the Borrower's premises or elsewhere. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations, in such order as the Administrative Agent may elect, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
<PAGE>
6.5 Pledged Permitted Investments. (a) Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the Borrower of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.5(b), the Borrower shall be permitted
to receive all payments made in respect of the Pledged Permitted Investments, in
each case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit Agreement.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the Borrower, (i) the Administrative Agent shall have the right to receive any
and all payments or other Proceeds paid in respect of the Pledged Permitted
Investments and make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (ii) any or all of the Pledged Permitted
Investments shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such Pledged Permitted
Investments at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged Permitted
Investments as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Permitted Investments upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by the Borrower or
the Administrative Agent of any right, privilege or option pertaining to such
Pledged Permitted Investments, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Permitted Investments with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to the Borrower to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.
(c) The Borrower hereby authorizes and instructs each Issuer of any Pledged
Permitted Investments pledged by the Borrower hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from the Borrower, and the Borrower agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any payments with respect to the Pledged Permitted
Investments directly to the Administrative Agent.
7. Administrative Agent's Appointment as Attorney-in-Fact; Administrative
Agent's Performance of Borrower's Obligations.
<PAGE>
7.1 Powers. The Borrower hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, the Borrower hereby gives the Administrative Agent the power and
right, on behalf of the Borrower, without notice to or assent by the Borrower,
to do any or all of the following:
(a) in the name of the Borrower or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or with respect
to any other Collateral whenever payable;
(b) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by
the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;
(c) execute, in connection with any sale provided for in Section 6.4,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(d) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral; (6) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, to give
such discharges or releases as the Administrative Agent may deem
appropriate; and (7) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative Agent's
option and the Borrower's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as the Borrower might do.
<PAGE>
Anything in this Section 7.1 to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1 unless an Event of Default shall
have occurred and be continuing.
7.2 Performance by Administrative Agent of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained herein,
the Administrative Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement (with, if no Default or Event of Default shall have occurred and be
continuing, notice to the Borrower).
7.3 Borrower's Reimbursement Obligation. The expenses of the Administrative
Agent incurred in connection with actions undertaken as provided in this Section
7, together with interest thereon at a rate per annum equal to the rate per
annum at which interest would then be payable on past due ABR Revolving Loans
under the Credit Agreement, from the date of payment by the Administrative Agent
to the date reimbursed by the Borrower, shall be payable by the Borrower to the
Administrative Agent on demand.
7.4 Ratification; Power Coupled With An Interest. The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
8. Duty of Administrative Agent. The Administrative Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Administrative Agent deals with similar
property for its own account. Except as expressly required by the Code, neither
the Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
<PAGE>
9. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Borrower authorizes the Administrative Agent to file financing
statements with respect to the Collateral without the signature of the Borrower
in such form and in such filing offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
Agent under this Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction which accepts such reproduction for filing as a financing
statement.
10. Authority of Administrative Agent. The Borrower acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Borrower, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and the Borrower shall be under no
obligation, or entitlement, to make any inquiry respecting such authority.
11. Notices. All notices, requests and demands to or upon the
Administrative Agent or the Borrower hereunder shall be effected in the manner
provided for in Section 9.01 of the Credit Agreement.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Amendments in Writing; No Waiver; Cumulative Remedies.
13.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except as
provided in Section 9.08 of the Credit Agreement.
13.2 No Waiver by Course of Conduct. Neither the Administrative Agent nor
any Lender shall by any act (except by a written instrument pursuant to Section
13.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future occasion.
13.3 Remedies Cumulative. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
<PAGE>
14. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
15. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
17. Effective Date. This Agreement shall be effective on the Effective
Date.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Borrower Security
Agreement to be duly executed and delivered as of the date first above written.
METRIS COMPANIES INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT D-1
FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of June 30, 1998, among
Metris Companies Inc. (the "Borrower"), a Delaware corporation, Metris Direct,
Inc., a Delaware corporation ("Direct"; together with the Borrower, the
"Pledgors") and The Chase Manhattan Bank, as administrative agent (in such
capacity, the "Administrative Agent") for the lenders (the "Lenders") party to
the Amended and Restated Credit Agreement, dated as of June 30, 1998 (as
amended, modified, extended or restated from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, the Administrative Agent, the
Syndication Agent, the Documentation Agents and the Co-Agents (as such terms are
defined therein).
The Lenders have agreed to make Loans to the Borrower and to issue or
participate in Letters of Credit for the account of the Borrower pursuant to,
and subject to the terms and conditions specified in the Credit Agreement.
Direct is a wholly owned Subsidiary of the Borrower and will derive substantial
direct and indirect benefit from the extensions of credit made to the Borrower
under the Credit Agreement. The Pledge Agreement as in effect immediately prior
to the Closing Date (the "Existing Pledge Agreement") is hereby amended and
restated in its entirety as set forth herein. The obligations of the Lenders to
make Loans and to issue or participate in Letters of Credit, in each case, under
the Credit Agreement, are and will be conditioned on, among other things, the
execution and delivery by the Pledgors of a pledge agreement in the form hereof
to secure the due and punctual payment by (a) the Borrower of (i) the principal
of and interest on the Loans under the Credit Agreement when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under Section
2.14 of the Credit Agreement in respect of any LC Disbursement, when and as due,
including interest thereon, if any, and (iii) all Fees, expenses, indemnities,
reimbursements and other obligations, monetary or otherwise, of the Borrower to
the Administrative Agent and the Lenders, in each case, as applicable, under the
Credit Agreement and the other Loan Documents (all of the foregoing obligations
being collectively called the "Borrower Obligations") and (b) Direct of (i) all
of its obligations under the Subsidiary Guaranty, including, without limitation,
the Borrower Obligations guaranteed by it thereunder and (ii) all expenses,
indemnities, reimbursements and other obligations, monetary or otherwise, of
Direct to the Administrative Agent and the Lenders, in each case, as applicable,
under the Subsidiary Guaranty and the other Loan Documents (all of the foregoing
obligations being collectively called the "Direct Obligations"; together with
the Borrower Obligations, the "Obligations"). Capitalized terms used but not
otherwise defined herein shall have the meanings specified in the Credit
Agreement.
Accordingly, the Pledgors and the Administrative Agent hereby agree as
follows:
SECTION 1. Definitions. (a) The definitions in this Section 1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation".
<PAGE>
(b) As used herein, the following terms shall have the following meanings:
"Collateral" shall have the meaning assigned to such term in Section 2.
"Credit Agreement Termination Date" shall mean the date upon which all
amounts outstanding (including all principal, interest, fees and expenses) under
the Credit Agreement shall be paid in full, no Letters of Credit are outstanding
and all Commitments thereunder shall be terminated.
"Federal Securities Laws" shall have the meaning assigned to such term in
Section 12.
"Pledged Securities" shall have the meaning assigned to such term in
Section 2.
"Pledged Stock" shall have the meaning assigned to such term in Section 2.
"Proceeds" shall have the meaning assigned to such term under the New York
Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to either Pledgor from
time to time with respect to any of the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to either Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under the color of Governmental Authority) and (iii) any
and all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"Secured Parties" shall mean the Lenders and the Administrative Agent.
"Security Interest" shall have the meaning assigned to such term in Section
2.
"Subsidiary" shall mean any subsidiary of either Pledgor.
<PAGE>
SECTION 2. Pledge. As security for the payment and performance in full of
the Borrower Obligations (in the case of the Borrower) and the Direct
Obligations (in the case of Direct), each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Administrative Agent, and grants to the Administrative Agent, for the benefit of
the Secured Parties, a first security interest (the "Security Interest") in all
its right, title and interest in, to and under the following, whether now owned
or hereafter acquired: (a) the shares of capital stock listed in Schedule I
hereto as being owned by it and any shares of capital stock of any Subsidiary
(except to the extent such a pledge is prohibited by law) obtained by it in the
future, and the certificates representing or evidencing such shares (the
"Pledged Stock"), (b) all other property which may be delivered to and held by
the Administrative Agent pursuant to the terms hereof, (c) subject to Section 5
below, all payments of principal or interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of, in exchange for or upon the conversion of the securities referred
to in clauses (a) and (b) above, (d) subject to Sections 4 and 5 below, all
rights and privileges of such Pledgor with respect to the securities and other
property referred to in clauses (a), (b) and (c) above, and (e) all Proceeds of
any of the foregoing (the items referred to in clauses (a) through (e) being
collectively called the "Collateral"). Upon delivery to the Administrative
Agent, (a) any stock certificates, notes, or other securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be accompanied by
stock powers duly executed in blank or other instruments of transfer
satisfactory to the Administrative Agent and by such other instruments and
documents as the Administrative Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the relevant Pledgor and such other
instruments or documents as the Administrative Agent may request. Each
subsequent delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule I and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Administrative Agent, its successors and assigns, forever; subject,
however, to the terms, covenants and conditions hereinafter set forth.
SECTION 3. Representations and Warranties. Each Pledgor hereby represents,
warrants and covenants to and with the Administrative Agent that, from and after
the Closing Date:
(a) the Pledged Stock set forth in Schedule I attached hereto pledged
by such Pledgor represents all the outstanding capital stock of each of its
Subsidiaries (other than as to any Subsidiary the pledge of whose Capital
Stock is prohibited by law);
(b) except for the security interest granted to the Administrative
Agent, on behalf of the Secured Parties, such Pledgor (i) is and will at
all times continue to be the direct owner, beneficially and of record, of
the Pledged Securities pledged by it, (ii) holds the same free and clear of
all liens, charges, encumbrances and security interests of every kind and
nature, (iii) will make no assignment, pledge, hypothecation or transfer
of, or create any security interest in, the Collateral and (iv) subject to
Section 5 below, will cause any and all Collateral, whether for value paid
by such Pledgor or otherwise, to be forthwith deposited with (or, if book
entry only, registered in the name of) the Administrative Agent and pledged
or assigned hereunder;
(c) such Pledgor (i) has good right and legal authority to pledge the
Collateral pledged by it in the manner hereby done or contemplated and (ii)
will defend its title or interest thereto or therein against any and all
attachments, liens claims, encumbrances, security interests or other
impediments of any nature, however arising, of all Persons;
(d) no consent or approval of any governmental body or regulatory
authority or any securities exchange was or is necessary to the validity of
the pledge effected hereby;
<PAGE>
(e) by virtue of the execution and delivery by such Pledgor of this
Pledge Agreement, when the certificates, instruments or other documents
representing or evidencing the Collateral pledged by it are delivered to
the Administrative Agent in accordance with this Pledge Agreement, the
Administrative Agent will obtain a valid and perfected first lien, upon and
security interest in such Collateral (except for Liens permitted by the
Credit Agreement) as security for the payment and performance of the
relevant Obligations, prior to all other liens and encumbrances thereon and
security interests therein; and
(f) the pledge effected hereby is effective to vest in the
Administrative Agent, on behalf of the Secured Parties, the rights of the
Administrative Agent in the Collateral as set forth herein.
SECTION 4. Registration in Nominee Name; Denominations. The Administrative
Agent, on behalf of the Secured Parties, shall have the right, in its sole and
absolute discretion, to hold the Pledged Securities in the name of the relevant
Pledgor, endorsed or assigned in blank or in favor of the Administrative Agent,
or in its own name or the name of its nominee. The relevant Pledgor will
promptly give to the Administrative Agent copies of any notices or other
communications received by it with respect to Pledged Securities registered in
its name. Upon the occurrence and during the continuance of a Default or an
Event of Default, the Administrative Agent shall at all times have the right to
exchange the certificates representing Pledged Securities for certificates (a)
of smaller or larger denominations for any purpose consistent with this Pledge
Agreement or (b) registered in its name or the name of its nominee.
SECTION 5. Voting Rights; Dividends and Interest; etc.
(a) Unless and until an Event of Default shall have occurred and be
continuing:
(i) The relevant Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers accruing to an owner of
Pledged Securities or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement, the Credit Agreement and the other
Loan Documents.
(ii) The Administrative Agent shall execute and deliver to the
relevant Pledgor, or cause to be executed and delivered to such Pledgor,
all such proxies, powers of attorney, and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to exercise
the voting and/or consensual rights and powers which it is entitled to
exercise pursuant to subparagraph (i) above.
(iii) The relevant Pledgor shall be entitled to receive and retain any
and all cash dividends and cash interest paid on the Pledged Securities.
<PAGE>
(b) Upon the occurrence and during the continuance of an Event of Default
and upon notice by the Administrative Agent to the Pledgors, all rights of
either Pledgor to exercise the voting and consensual rights and powers which
they are entitled to exercise pursuant to paragraph (a)(i) of this Section 5 and
the right to receive and retain cash dividends and cash interest shall cease,
and all such rights shall thereupon become vested in the Administrative Agent,
which shall have the sole and exclusive right and authority to exercise such
voting and consensual rights and powers and to receive and retain such dividends
and interest during the continuance of such Event of Default, which shall be
applied against the Obligations in accordance with Section 7.
SECTION 6. Remedies upon Default. If an Event of Default shall have
occurred and be continuing, the Administrative Agent may sell the Collateral, or
any part thereof, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Administrative Agent shall deem appropriate. The Administrative Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Administrative Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of either Pledgor, and each Pledgor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Pledgor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
<PAGE>
The Administrative Agent shall give the relevant Pledgor 10 days' written
notice (which each Pledgor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York) of the Administrative Agent's intention to make any sale of Collateral
owned by such Pledgor. Such notice, in the case of a public sale, shall state
the time and place for such sale and, in the case of a sale at a broker's board
or on a securities exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Administrative Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may, in its sole and absolute discretion, determine. The
Administrative Agent shall not be obligated to make any sale of any Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
of such Collateral shall have been given. The Administrative Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Administrative Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Administrative Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public sale made pursuant to this
Section 6, the Administrative Agent or any other Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay or appraisal on the part of either Pledgor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to the Administrative Agent or any other
Secured Party from such Pledgor as a credit against the purchase price, and the
Secured Parties may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to such Pledgor
therefor. For purposes hereof, a written agreement to purchase the Collateral or
any portion thereof shall be treated as a sale thereof; the Administrative Agent
shall be free to carry out such sale pursuant to such agreement, and neither
Pledgor shall be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Administrative Agent
shall have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full; provided, however, that in the event
the Obligations shall have been paid in full, the relevant Pledgor shall be
entitled to the return of the proceeds of the sale of any such Collateral to the
extent not applied to payment of the Obligations. As an alternative to
exercising the power of sale herein conferred upon it, the Administrative Agent
may proceed by a suit or suits at law or in equity to foreclose upon the
Collateral pursuant to this Pledge Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6 hereof, as well as any Collateral consisting of
cash, shall be applied by the Administrative Agent as follows:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Administrative Agent in connection with such sale or otherwise in
connection with this Pledge Agreement or any of the Obligations, including
all court costs and the reasonable fees and expenses of its agents and
legal counsel, the repayment of all advances made by the Administrative
Agent hereunder on behalf of the Pledgors and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder;
SECOND, to the payment in full of the Obligations, pro rata as among
the Secured Parties in accordance with the monetary Obligations owed to
them until all the Obligations have been paid in full; and
THIRD, to the relevant Pledgor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
<PAGE>
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Pledge Agreement. Upon any sale of the Collateral by the Administrative Agent
(including, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Limitations on Responsibility of Administrative Agent. The
Administrative Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Collateral Documents, except for those made by it herein.
The Administrative Agent makes no representation as to the value or condition of
the Collateral or any part thereof, as to the title of either Pledgor to the
Collateral, as to the security afforded by this Pledge Agreement or the related
Collateral Documents or as to the validity, execution, enforceability, legality
or sufficiency of this Pledge Agreement or the related Collateral Documents, and
the Administrative Agent shall incur no liability or responsibility in respect
of any such matters. The Administrative Agent shall not be responsible for
insuring the Collateral, for the payment of taxes, charges or assessments or for
liens upon the Collateral or otherwise as to the maintenance of the Collateral,
except as provided in the immediately following sentence when the Administrative
Agent has possession of the Collateral. The Administrative Agent shall have no
duty to either Pledgor or to the holders of the Obligations as to any Collateral
in its possession or control or in the possession or control of any agent or
nominee of the Administrative Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Collateral as may be in its
possession substantially the same care as it accords its own assets and the duty
to account for monies received by it. The Administrative Agent shall not be
required to ascertain or inquire as to the performance by either Pledgor of any
of the covenants or agreements contained herein or in the other Loan Documents.
Neither the Administrative Agent nor any officer, agent or representative
thereof shall be personally liable for any action taken or omitted to be taken
by any such Person in connection with this Pledge Agreement or any related
Collateral Document except for (i) such Person's own gross negligence or willful
misconduct or (ii) such Person's failure to perform its duties or obligations
under this Pledge Agreement; provided, however, neither the Administrative Agent
nor any officer, agent or representative thereof shall be personally liable for
any action taken by any such Person in accordance with any notice given by the
Required Lenders hereunder solely by reason of the circumstances that, at the
time such action is taken by any such Person, the Required Lenders which gave
the notice to take such action are no longer the Required Lenders. The
Administrative Agent may execute any of the powers granted under this Pledge
Agreement or any of the related Collateral Documents and perform any duty
hereunder or thereunder either directly or by or through agents or
attorneys-in-fact, and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it without gross negligence or
willful misconduct.
<PAGE>
SECTION 9. Reliance by Administrative Agent; Indemnity Against Liabilities;
etc. (a) Whenever in the performance of its duties under this Pledge Agreement
the Administrative Agent shall deem it necessary or desirable that a matter be
proved or established with respect to either Pledgor or any other Person in
connection with the taking, suffering or omitting of any action hereunder by the
Administrative Agent, such matter may be conclusively deemed to be proved or
established by a certificate executed by an officer of such Person, and the
Administrative Agent shall have no liability with respect to any action taken,
suffered or omitted in reliance thereon.
(b) The Administrative Agent may consult with counsel and shall be fully
protected in taking any action hereunder in accordance with any advice of such
counsel. The Administrative Agent shall have the right but not the obligation at
any time to seek instructions concerning the administration of this Pledge
Agreement, the duties created hereunder or the Collateral from any court of
competent jurisdiction.
(c) The Administrative Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice, request
consent, order or other paper or document which it reasonably believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence or willful misconduct, the Administrative
Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate or opinions
furnished to the Administrative Agent in connection with this Pledge Agreement.
(d) The Administrative Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Default or Event of Default unless and until the Administrative Agent shall have
received a notice of such Default or Event of Default. The Administrative Agent
shall have no obligation whatsoever either prior to or after receiving such a
notice to inquire whether a Default or Event of Default has, in fact, occurred
and shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any notice so furnished to it so long as such notice is received
directly or indirectly from either Pledgor or the Required Lenders. The
Administrative Agent may (but shall not be obligated to) take action hereunder
on the basis of an Event of Default of the type specified in clause (i) or (j)
of Article VII of the Credit Agreement whether or not the Administrative Agent
has received any notice of such Event of Default.
(e) If the Administrative Agent has been requested to take any specific
action pursuant to any provision of this Pledge Agreement, the Administrative
Agent shall not be under any obligation to exercise any of the rights or powers
vested in it by this Pledge Agreement in the manner so requested unless it shall
have been provided indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or
direction.
<PAGE>
SECTION 10. Indemnification by Pledgors. Each Pledgor agrees to indemnify
and hold harmless the Administrative Agent and its directors, officers,
employees and agents, on demand, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in its capacity as
the Administrative Agent or any of them in any way relating to or arising out of
this Pledge Agreement or any related Collateral Document or any action taken or
omitted by them under this Pledge Agreement or any related Collateral Document;
provided that neither Pledgor shall be liable to the Administrative Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from (i)
the gross negligence or willful misconduct of the Administrative Agent or any of
its directors, officers, employees or agents or (ii) failure of the
Administrative Agent to perform its duties or obligations under this Pledge
Agreement.
SECTION 11. The Administrative Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Administrative Agent the attorney-in-fact of such
Pledgor for the purpose of carrying out the provisions of this Pledge Agreement
and taking any action and executing any instrument which the Administrative
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. In accordance with this
Pledge Agreement and without limiting the generality of the foregoing sentence,
the Administrative Agent shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to
such Pledgor representing any dividend or other distribution payable in respect
of the Collateral or any part thereof and to give full discharge for the same.
<PAGE>
SECTION 12. Securities Act, etc. In view of the position of each Pledgor in
relation to the Pledged Securities, or because of other present or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect (the "Securities Act"), or any similar statute hereafter
enacted analogous in purpose or effect (the Securities Act and any such similar
statute as from time to time in effect being called the "Federal Securities
Laws") with respect to any disposition of the Pledged Securities permitted
hereunder. Each Pledgor understands that compliance with the Federal Securities
Laws might very strictly limit the course of conduct of the Administrative Agent
if the Administrative Agent were to attempt to dispose of all or any part of the
Pledged Securities, and might also limit the extent to which or the manner in
which any subsequent transferee of any Pledged Securities could dispose of the
same. Similarly, there may be other legal restrictions or limitations affecting
the Administrative Agent in any attempt to dispose of all or part of the Pledged
Securities under applicable Blue Sky or other state securities laws or similar
laws analogous in purpose or effect. Each Pledgor agrees that the Administrative
Agent shall not incur any liability as a result of the sale of the Pledged
Securities or any portion thereof at any such private sale in a manner that the
Administrative Agent reasonably believes is commercially reasonable (within the
meaning of Section 9-504(3) of the Uniform Commercial Code). Each Pledgor hereby
waives any claims against the Administrative Agent or the Lenders arising by
reason of the fact that the price at which the Pledged Securities may have been
sold at such sale was less than the price that might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, even if
the Administrative Agent shall accept the first offer received and does not
offer any portion of the Pledged Securities to more than one possible purchaser.
Each Pledgor further agrees that the Administrative Agent has no obligation to
delay the sale of any Pledged Securities for the period of time necessary to
permit such Pledgor to qualify or register such Pledged Securities for public
sale under the Securities Act, applicable Blue Sky laws and other applicable
state and federal securities laws, even if such Pledgor would agree to do so.
Without limiting the generality of the foregoing, the provisions of this Section
12 would apply if, for example, the Administrative Agent were to place all or
any portion of the Pledged Securities for private placement by any investment
banking firm, or if such investment banking firm purchased all or any portion of
the Pledged securities for its own account, or if the Administrative Agent
placed all or any portion of the Pledged Securities privately with a purchaser
or purchasers.
SECTION 13. Administrative Agent's Expenses. Each Pledgor agrees to pay
upon demand to the Administrative Agent the amount of any and all reasonable
expenses, including the reasonable expenses of its counsel and of any experts or
agents, which the Administrative Agent may incur in connection with (i) the
administration of this Pledge Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Administrative
Agent hereunder or (iv) the failure of such Pledgor to perform or observe any of
the provisions hereof. Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby.
SECTION 14. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telex, graphic scanning or other telegraphic communications
equipment of the sending party, to the relevant address specified in Section
9.01 of the Credit Agreement.
All notices and other communications given to any party hereto in
accordance with the provisions of this Pledge Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telex, graphic scanning or other telegraphic communications
equipment of the sender, or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 14 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 14.
SECTION 15. Successors and Assigns. (a) Whenever in this Pledge Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Pledgors, the Administrative Agent or the
Lenders that are contained in this Pledge Agreement shall bind and inure to the
benefit of their respective successors and assigns.
(b) Neither Pledgor shall assign or delegate any of its rights and duties
hereunder.
(c) The covenants, promises and agreements by each Pledgor shall inure to
the benefit of each assignee of any Lender permitted under Section 9.04 of the
Credit Agreement.
SECTION 16. Applicable Law. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
SECTION 17. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude the exercise of any other right or power. The rights and
remedies of the Administrative Agent hereunder are cumulative and not exclusive
of any rights or remedies which it would otherwise have. No waiver of any
provision of this Pledge Agreement or consent to any departure by either Pledgor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on either Pledgor in any case shall entitle either Pledgor to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Pledge Agreement nor any provision hereof may be waived,
amended or modified, except as provided in Section 9.08 of the Credit Agreement.
SECTION 18. Entire Agreement. This Pledge Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Pledge Agreement and the other
Loan Documents. Nothing in this Pledge Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto or thereto any rights, remedies, obligations or liabilities under
or by reason of this Pledge Agreement or the other Loan Documents.
SECTION 19. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Pledgors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Pledge Agreement shall be considered to have been relied upon
by the Lenders and shall survive the making by the Lenders of the Loans under
the Credit Agreement and the issuance by the Issuing Banks of Letters of Credit,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as any Obligation is outstanding
and unpaid and so long as the Commitments have not been terminated.
SECTION 20. Termination. This Pledge Agreement, and the Security Interest
shall terminate when all the Obligations have been paid in full, the Lenders
have no further commitment to lend under the Credit Agreement and no Letters of
Credit are outstanding, at which time the Administrative Agent shall reassign
and deliver to the relevant Pledgor, or to such Person or Persons as the
relevant Pledgor shall designate, against receipt, such of the Collateral (if
any) as shall not have been sold or otherwise applied by the Administrative
Agent pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be without recourse to or warranty by the Administrative
Agent and at the expense of the relevant Pledgor.
<PAGE>
SECTION 21. Severability. In the event any one or more of the provisions
contained in this Pledge Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 22. Counterparts. This Pledge Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
SECTION 23. Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Pledge Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Pledge Agreement.
SECTION 24. Further Assurances. Each Pledgor agrees to do such further acts
and things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Administrative Agent may at any time request
in connection with the administration and enforcement of this Pledge Agreement
or with respect to the Collateral or any part thereof or in order better to
assure and confirm unto the Administrative Agent its rights and remedies
hereunder.
SECTION 25. Effective Date. This Agreement shall be effective on the
Effective Date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
Agreement, or caused this Pledge Agreement to be duly executed on their behalf,
as of the day and year first above written.
METRIS COMPANIES INC., as a Pledgor
By
--------------------------------------
Name:
Title:
By
--------------------------------------
Name:
Title:
METRIS DIRECT, INC., as a Pledgor
By
--------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By
--------------------------------------
Name:
Title:
<PAGE>
<TABLE>
SCHEDULE 1
PLEDGED SECURITIES
------------------
CERTIFICATE NUMBER OF
NAME OF COMPANY NAME OF PLEDGOR NUMBER SHARES
--------------- --------------- ------ ------
<S> <C> <C> <C>
Metris Direct, Inc. Metris Companies Inc. 4 1,000
Metris Receivables, Inc. Metris Direct, Inc. 5 100
DMCCB, Inc. Metris Direct, Inc. 4 1,000
Metris Travel Services Inc. Metris Direct, Inc. 1 1,000
Metris Funding Co. Metris Direct, Inc. 2 100
Metris Warranty Services of Metris Direct, Inc. 1 1,000
Florida, Inc.
Metris Information Technologies, Metris Direct, Inc. 1 1,000
Inc.
Metris Direct Services, Inc. Metris Direct, Inc. 1 1,000
</TABLE>
EXHIBIT D-2
AMENDMENT, dated as of May 7, 1999, to (a) the AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of June 30, 1998, (as amended by the Amendment, dated as of
December 7, 1998, the "Credit Agreement") among METRIS COMPANIES INC., a
Delaware corporation (the "Borrower"), the lenders listed in Schedule 2.01
thereto (the "Lenders"), NATIONSBANK, N.A., as Syndication Agent (in such
capacity, the "Syndication Agent"), DEUTSCHE BANK, as documentation agent, U.S.
BANK NATIONAL ASSOCIATION, as documentation agent (collectively in such
capacity, the "Documentation Agents"), BARCLAYS BANK PLC as co-agent, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as co-agent (collectively in
such capacity, the "Co-Agents"), and THE CHASE MANHATTAN BANK, as administrative
agent for the Lenders (the "Administrative Agent") and (b) the AMENDED AND
RESTATED PLEDGE AGREEMENT, dated as of June 30, 1998 (the "Pledge Agreement"),
among the Borrower, Metris Direct, Inc., a Delaware corporation, and the
Administrative Agent (this "Amendment").
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make,
and have made, certain loans and other extensions of credit to the Borrower; and
WHEREAS, in connection with the acquisition by the Borrower of certain
credit card portfolio assets from General Electric Consumer Card Company (the
"GECC Portfolio"), the Borrower has requested that the Lenders agree to amend
the Credit Agreement as provided herein;
WHEREAS, in connection with certain other amendments to the Credit
Agreement and the Pledge Agreement, the Borrower has requested, and the Lenders
have agreed, that certain provisions of each of the Credit Agreement and the
Pledge Agreement be amended as provided herein;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of the premises contained
herein, the parties hereto hereby agree as follows:
SECTION I. AMENDMENTS
1.1. Defined Terms. Unless otherwise defined herein, capitalized terms
which are defined in the Credit Agreement are used herein as defined therein.
1.2. Amendment to Section 1.1. The definition of "Borrowing Base" set forth
in Section 1.1 of the Credit Agreement is hereby deleted in its entirety and the
following definition is substituted in lieu thereof:
<PAGE>
"'Borrowing Base' shall mean, at any time, an amount equal to the product
of (x) Managed Accounts Receivable (other than Managed Accounts Receivable of
DMCCB or any other Depositary Institution, which Managed Accounts Receivable
have not been sold to the Borrower or any other Subsidiary of the Borrower)
times (y) the Advance Rate. The Borrowing Base at any time shall be determined
by reference to the most recent Borrowing Base Certificate delivered to the
Administrative Agent, absent any error in such Borrowing Base Certificate."
1.3. Amendment to Section 6.01. Paragraph (g) of Section 6.01 of the Credit
Agreement is deleted in its entirety and the following paragraph (g) is
substituted in lieu thereof:
"(g) Borrowing Base. In the case of the Borrower, permit the aggregate
principal amount of Funded Senior Debt (other than Funded Senior Debt incurred
by DMCCB or any other Depositary Institution, including that of the type
described in clause (c) of the definition of Funded Senior Debt) at any time to
exceed the Borrowing Base then in effect."
1.4. Amendment to Section 6.06(d). Each occurrence of the phrase "loans,
advances or investments" contained in paragraph (d) of Section 6.06 of the
Credit Agreement is deleted and the phrase "loans, advances, investments or
Guarantees" is substituted in lieu thereof.
1.5. Amendment to Section 6.06(g). Paragraph (g) of Section 6.06 of the
Credit Agreement is deleted in its entirety and the following paragraph (g) is
substituted in lieu thereof:
"(g) Permitted Business Acquisitions so long as the aggregate consideration
paid by the Borrower and its Subsidiaries in respect of all Permitted Business
Acquisitions (i) of Accounts, consummated or entered into during any period of
four consecutive fiscal quarter periods of the Borrower (an "Acquisition Test
Period") (provided, that for the purposes of this clause (i), the aggregate
consideration paid for Accounts on the date of any determination pursuant to
this clause (g) made after the end of the fiscal quarter during which such
Accounts were acquired shall be deemed to be the lesser of (x) the actual
aggregate consideration paid by the Borrower and its Subsidiaries and (y) the
outstanding amount of such Accounts determined in accordance with GAAP as of the
most recent fiscal quarter ending prior to such date of determination), shall
not exceed 30% of the average Managed Accounts Receivable as of the last day of
each of the four fiscal quarter periods of the Borrower and its Subsidiaries
most recently ended; provided, that (1) the acquisition of the GECC Portfolio by
the Borrower shall in any event be deemed to be a Permitted Business Acquisition
for the Acquisition Test Period ending on June 30, 1999 so long as no other
Permitted Business Acquisition is made during the period from May 7, 1999
through June 30, 1999; (2) in the event that the GECC Portfolio is acquired by
the Borrower, such percentage shall be changed to 35% for the Acquisition Test
Period ending on September 30, 1999, and (3) any acquisition that is a Permitted
Business Acquisition on the date of determination pursuant to this Section
6.06(g) shall remain a Permitted Business Acquisition once such transaction is
consummated, notwithstanding the average Managed Accounts Receivable subsequent
to such date of determination and (ii) otherwise, the cash portion of such
consideration does not exceed $50,000,000; for purposes of the foregoing, the
aggregate consideration shall not include any payment with Capital Stock or
assumption of Indebtedness (which assumption must otherwise not cause an Event
of Default after giving effect to such assumption);".
<PAGE>
1.6. Amendment to Section 6.06(i). Paragraph (i) of Section 6.06 of the
Credit Agreement is deleted in its entirety and the following paragraph (i) is
substituted in lieu thereof:
"(i) other loans, advances, investments or Guarantees by the Borrower or
any of its Subsidiaries that do not exceed $10,000,000 in the aggregate at any
one time outstanding (measured as of the date made and without giving effect to
subsequent changes in value)."
1.7. Amendments to Pledge Agreement. (a) Section 2 of the Pledge Agreement
is hereby amended by adding the following sentence to the end thereof:
"Notwithstanding anything to the contrary contained herein, no capital
stock of any Subsidiary that is not organized in the United States shall be
required to be pledged hereunder."
(b) Section 3(a) of the Pledge Agreement is deleted in its entirety and the
following paragraph (a) is substituted in lieu thereof:
"(a) the Pledged Stock set forth in Schedule I attached hereto (and revised
from time to time with the pledge of any additional stock) pledged by such
Pledgor represents all the outstanding capital stock of each of its Subsidiaries
(other than as to any Subsidiary that is not organized in the United States or
as to the pledge of whose Capital Stock is prohibited by law);".
SECTION II. MISCELLANEOUS
2.1. Conditions to Effectiveness of Amendment. This Amendment shall become
effective (the "Amendment Effective Date") as of the date first set forth above
upon (a) the Administrative Agent having received counterparts of this Amendment
duly executed and delivered by the Borrower and the Required Lenders and (b)
payment to the Administrative Agent and the Lenders by the Borrower of such fees
in respect of this Amendment as have been previously agreed upon by the Borrower
and the Administrative Agent.
2.2. Representations and Warranties. The Borrower represents and warrants
to each Lender that as of the effective date of this Amendment: (a) the
representations and warranties made by the Loan Parties in the Loan Documents
are true and correct in all material respects on and as of the date hereof
(except to the extent that such representations and warranties are expressly
stated to relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects on and as
of such earlier date); and (b) no Default or Event of Default shall have
occurred and be continuing as of the date hereof
2.3. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Amendment signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
<PAGE>
2.4. Continuing Effect; No Other Amendments. Except to the extent expressly
stated herein, all of the terms and provisions of the Credit Agreement and the
other Loan Documents are and shall remain in full force and effect and are not
waived in any respect. This Amendment shall constitute a Loan Document.
2.5. Payment of Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and
reasonable expenses incurred to date in connection with this Amendment and the
other Loan Documents, including, without limitation, the reasonable fees and
disbursements of legal counsel to the Administrative Agent.
2.6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
METRIS COMPANIES INC., as Borrower and as a
Pledgor
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
METRIS DIRECT, INC., as a Pledgor
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent, Lender and Issuing Bank
By:
----------------------------------------
Name:
Title:
NATIONSBANK, N.A.
By:
----------------------------------------
Name:
Title:
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
By:
----------------------------------------
Name:
Title:
BARCLAYS BANK PLC,
NEW YORK BRANCH
By:
----------------------------------------
Name:
Title:
THE SUMITOMO BANK, LTD.
By:
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Name:
Title:
THE BANK OF NEW YORK
By:
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Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA
By:
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Name:
Title:
BANQUE NATIONALE DE PARIS
By:
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Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:
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Name:
Title:
THE FUJI BANK, LIMITED
By:
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Name:
Title:
KZH IV LLC
By:
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Name:
Title:
<PAGE>
VAN KAMPEN PRIME RATE INCOME TRUST
By:
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Name:
Title:
KZH SHOSHONE LLC
By:
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Name:
Title:
AMARA-1 FINANCE LTD
By:
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Name:
Title:
AMARA-2 FINANCE LTD
By:
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Name:
Title:
CERES FINANCE LTD.
By:
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Name:
Title:
<PAGE>
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:
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Name:
Title:
STRATA FUNDING LTD.
By:
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Name:
Title:
SPS TRADES
By:
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Name:
Title:
OASIS COLLATERALIZED HIGH INCOME
PORTFOLIOS-I, LTD.
By:
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Name:
Title:
FIRST DOMINION FUNDING II
By:
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Name:
Title:
EXHIBIT D-3
FORM OF PLEDGE AGREEMENT REAFFIRMATION
PLEDGE AGREEMENT REAFFIRMATION, dated as of July 21, 2000 (this
"Reaffirmation"), with respect to the Amended and Restated Pledge Agreement,
dated as of June 30, 1998 (as amended, supplemented, waived or otherwise
modified from time to time, including this Reaffirmation, the "Pledge
Agreement"), made by the Borrower and Metris Direct, Inc. ("MDI") in favor of
the Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Borrower, the lenders parties thereto, the Syndication Agent,
Documentation Agents and Co-Agents named therein and the Administrative Agent
are parties to the Credit Agreement, dated as of June 30, 1998, as amended (the
"Existing Credit Agreement");
WHEREAS, concurrently with the execution of this Reaffirmation, the
Administrative Agent and the several banks and other financial institutions or
entities parties thereto (the "Lenders") will amend and restate the Existing
Credit Agreement with the Borrower, pursuant to the Credit Agreement, dated as
of July 21, 2000 (the Existing Credit Agreement, as so amended and restated, the
"Amended and Restated Credit Agreement"), under which the Lenders and the
Administrative Agent will agree to continue Term Loans and, from time to time,
to make Revolving Loans to, and the Issuing Banks will agree to issue Letters of
Credit from time to time for the account of, the Borrower, in an aggregate
principal amount of up to $270,000,000;
WHEREAS, as collateral security for the Borrower Obligations and the Direct
Obligations (as each such term is defined in the Pledge Agreement), the Borrower
and MDI have granted to the Administrative Agent, for the ratable benefit of the
Lenders, a first priority security interest in all outstanding Capital Stock of
(i) each of the companies listed in Schedule I to the Pledge Agreement, and (ii)
each of the companies listed on Annex A hereto, with said Schedule I being
hereby deemed supplemented to include a reference to such stock described on
Annex A;
WHEREAS, all of the liabilities and obligations of the Borrower under the
Existing Credit Agreement are being continued in full force and effect, unpaid
and undischarged, pursuant to the Amended and Restated Credit Agreement;
WHEREAS, each of the signatories hereto is a party to the Pledge Agreement
and wishes to confirm that all of its liabilities and obligations, and Liens and
security interests created, under the Pledge Agreement remain in full force and
effect after giving effect to the amendment and restatement of the Existing
Credit Agreement pursuant to the Amended and Restated Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
continue or make any extensions of credit to the Borrower under the Amended and
Restated Credit Agreement that the parties hereto shall have executed and
delivered this Reaffirmation to the Administrative Agent for the ratable benefit
of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Amended and Restated
Credit Agreement and to induce the Lenders to continue or make extensions of
credit thereunder, each of the signatories hereto (a "Confirming Party") hereby
agrees with the Administrative Agent, for the ratable benefit of the Lenders, as
follows:
<PAGE>
1. Unless otherwise defined herein, capitalized terms used herein
shall have the respective meanings assigned to them in the
Amended and Restated Credit Agreement.
2. Each Confirming Party hereby consents to the execution and
delivery of, and the amendment and restatement of the Existing
Credit Agreement pursuant to, the Amended and Restated Credit
Agreement. Each Confirming Party hereby agrees that each
reference to the "Credit Agreement" in the Pledge Agreement shall
be deemed to be a reference to the Amended and Restated Credit
Agreement.
3. Each Confirming Party hereby agrees, with respect to the Pledge
Agreement, that:
a. all of its obligations and liabilities under the Pledge
Agreement remain in full force and effect on a continuous basis
after giving effect to the amendment and restatement of the
Existing Credit Agreement pursuant to the Amended and Restated
Credit Agreement;
b. all of its obligations and liabilities under the Pledge
Agreement shall be increased if the increased maximum amount of
extensions of credit available to the Borrower under the Amended
and Restated Credit Agreement is increased thereunder in
accordance with its terms;
c. all of the Liens and security interests created and arising
under the Pledge remain in full force and effect on a continuous
basis, unimpaired, uninterrupted and undischarged, and having the
same perfected status and priority as existed prior to the
effectiveness of the Amended and Restated Credit Agreement, after
giving effect to the amendment and restatement of the Existing
Credit Agreement pursuant to the Amended and Restated Credit
Agreement, as collateral security for the Obligations as
described above; and
d. all of the obligations and liabilities of the Borrower under
the Existing Credit Agreement (i) are continued in full force and
effect on a continuous basis, unpaid and undischarged, pursuant
to the Amended and Restated Credit Agreement and (ii) constitute
the same obligations and liabilities under the Amended and
Restated Credit Agreement.
4. Each Confirming Party agrees that it shall take any action
reasonably requested by the Administrative Agent in order to
confirm or effect the intent of this Reaffirmation.
5. This Reaffirmation shall be construed in accordance with and
governed by the laws of the State of New York.
6. This Reaffirmation may be executed by one or more of the parties
hereto on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Reaffirmation to be
executed and delivered by a duly authorized officer on the date first above
written.
METRIS COMPANIES INC.
By:
-------------------------------------
Name:
Title:
METRIS DIRECT, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT E
FORM OF AMENDED AND RESTATED SUBSIDIARY GUARANTY
AMENDED AND RESTATED SUBSIDIARY GUARANTY, dated as of July 1, 2000, made by
each of the signatories hereto (together with any other entity that may become a
party hereto, the "Subsidiary Guarantors"), in favor of THE CHASE MANHATTAN
BANK, as administrative agent (in such capacity, the "Administrative Agent") for
the lenders (the "Lenders") (as such terms are defined in the Credit Agreement
referred to below).
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Revolving Credit and Letter of Credit Facility
Agreement, dated as of September 16, 1996 (the "Original Credit Agreement"),
among Metris Companies Inc. (the "Borrower"), the Administrative Agent and the
lenders parties thereto, the lenders have made extensions of credit to the
Borrower upon the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
June 30, 1998 (the "Existing Credit Agreement"), among the Borrower, the
Lenders, the Syndication Agent, the Documentation Agents, the Co-Agents (as such
terms are defined therein) and the Administrative Agent, the parties thereto
agreed to amend and restate in its entirety the Original Credit Agreement:
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, each of the Subsidiary Guarantors executed a guarantee (the
"Existing Subsidiary Guaranty") guaranteeing all of the Borrowers' obligations
under the Existing Credit Agreement and the other loan documents;
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
July 21, 2000 (herein, as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders, the
Syndication Agent, the Co-Documentation Agents, the Co-Agent (as such terms are
defined in the Credit Agreement) and the Administrative Agent, the parties
thereto have agreed to amend and restate in its entirety the Existing Credit
Agreement;
WHEREAS, the Borrower is the direct or indirect parent of each Subsidiary
Guarantor, and it is to the advantage of each Subsidiary Guarantor that the
Lenders make the extensions of credit to the Borrower pursuant to the Credit
Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make or continue their respective extensions of credit to the Borrower under the
Credit Agreement that the Existing Subsidiary Guaranty shall be amended and
restated as provided herein.
<PAGE>
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make or continue their respective extensions of credit to
the Borrower under the Credit Agreement, each Subsidiary Guarantor hereby agrees
with the Administrative Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Subsidiary Guaranty shall refer to this Subsidiary
Guaranty as a whole and not to any particular provision of this Subsidiary
Guaranty.
(c) The definitions contained herein shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Sections shall be deemed references to Sections of this Subsidiary Guaranty
unless the context shall otherwise require.
2. Guaranty. (a) To induce the Lenders to make or continue the Loans, the
Issuing Banks to issue the Letters of Credit for the account of the Borrower and
the Lenders to acquire participations in the Letters of Credit, each Subsidiary
Guarantor hereby unconditionally and irrevocably guarantees, each as a primary
obligor and not merely as a surety, the due and punctual payment and performance
of all Obligations. All payments by any Subsidiary Guarantor shall be in lawful
money of the United States of America. Each and every default in payment of the
principal of and premium, if any, or interest on any Obligations shall give rise
to a separate cause of action hereunder, and separate suits may be brought
hereunder as each cause of action arises.
<PAGE>
Each Subsidiary Guarantor waives presentation to, demand of payment from
and protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of this Subsidiary Guaranty and notice of protest for nonpayment and
all other formalities. The obligations of each Subsidiary Guarantor hereunder
shall not be discharged or impaired or otherwise affected by (i) the failure or
delay of any Lender or the Administrative Agent to assert any claim or demand or
to enforce any right or remedy against the Borrower, any Subsidiary Guarantor or
any other Person under the provisions of any Loan Document or otherwise; (ii)
any extension or renewal of any of the Obligations; (iii) any rescission,
waiver, amendment or modification of any of the terms or provisions of any Loan
Document, any guarantee or any other agreement or instrument; (iv) the release
of (or the failure to perfect a security interest in) any security held by the
Administrative Agent or any Lender for the performance of any of the
Obligations; (v) the failure or delay of any Lender or the Administrative Agent
to exercise any right or remedy against any other Subsidiary Guarantor or any
other guarantor of the Obligations; (vi) the release of any other guarantor of
the Obligations; (vii) the failure of any Lender or the Administrative Agent to
assert any claim or demand or to enforce any remedy under any Loan Document, any
guarantee or any other agreement or instrument; (viii) any default, failure or
delay, wilful or otherwise, in the performance of the Obligations; or (ix) any
other act, omission or delay to do any other act which may or might in any
manner or to any extent vary the risk of any Subsidiary Guarantor or otherwise
operate as a discharge of any Subsidiary Guarantor as a matter of law or equity
or which would impair or eliminate any right of any Subsidiary Guarantor to
subrogation.
Each Subsidiary Guarantor further agrees that this Subsidiary Guaranty
constitutes a guarantee of payment when due and not of collection, and waives
any right to require that any resort be had by any Lender to any security held
for payment of the Obligations or to any balance of any deposit account or
credit on the books of such Lender in favor of the Borrower or any other Person.
The Administrative Agent and the Lenders, in their sole discretion, shall have
the right to proceed first and directly against any Subsidiary Guarantor.
The obligations of each Subsidiary Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise.
Each Subsidiary Guarantor further agrees that this Subsidiary Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment, or any part thereof, on any Obligation is rescinded or must
otherwise be restored by any Lender upon the bankruptcy or reorganization of the
Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which the Administrative Agent or any Lender may have at law or in equity
against any Subsidiary Guarantor by virtue hereof, upon the failure of the
Borrower to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will, upon receipt of written demand by the
Administrative Agent or the Required Lenders, forthwith pay, or cause to be
paid, to the Administrative Agent for distribution to the Lenders in cash an
amount equal to the sum of (i) the unpaid principal amount of such Obligations
then due, (ii) accrued and unpaid interest on such Obligations and (iii) all
other monetary Obligations then due, and thereupon the Lenders shall assign
(without recourse or warranty of any kind) such Obligations owed to it and paid
by the relevant Subsidiary Guarantors, together with their rights in respect of
all security interests in the property and assets of the Borrower, if any, then
held by them in respect of such Obligations, to such Subsidiary Guarantors, such
assignment to be pro tanto to the extent to which the Obligations in question
were discharged by such Subsidiary Guarantors, or make such other disposition
thereof as such Subsidiary Guarantors shall direct (all without recourse to the
Administrative Agent or any Lender and without any representation or warranty by
the Administrative Agent or such Lender).
<PAGE>
Upon payment by any Subsidiary Guarantor of any sums to the Administrative
Agent or the Lenders hereunder, all rights of such Subsidiary Guarantor against
the Borrower arising as a result thereof shall in all respects be subordinate
and junior in right of payment to the prior indefeasible payment in full of all
the Obligations and, if any payment shall be made to any Subsidiary Guarantor on
account of such rights prior to the indefeasible payment in full of all the
Obligations, such payment shall forthwith be paid to the Lenders to be credited
and applied against the Obligations to the extent necessary to discharge such
Obligations.
Each Subsidiary Guarantor waives notice of and hereby consents to any
agreements or arrangements whatsoever by the Administrative Agent or the Lenders
with any other Person pertaining to the Obligations, including agreements and
arrangements for payment, extension, subordination, composition, arrangement,
discharge or release of the whole or any part of the Obligations, or for the
discharge or surrender of any or all security, or for compromise, whether by way
of acceptance of part payment or otherwise, and the same shall in no way impair
any Subsidiary Guarantor's liability hereunder. Nothing shall discharge or
satisfy the liability of any Subsidiary Guarantor hereunder except the full
performance and payment of the Obligations.
Each reference herein to the Lenders or a Lender shall be deemed to include
their or its successors and assigns, in whose favor the provisions of this
Subsidiary Guaranty shall also inure.
The obligations of a Subsidiary Guarantor under this Subsidiary Guaranty
shall automatically terminate upon (i) any disposition, in compliance with the
terms of Section 6.05 of the Credit Agreement, by the Borrower, directly or
indirectly, of capital stock of such Subsidiary Guarantor following which
disposition such Subsidiary Guarantor is no longer a Subsidiary of the Borrower
or (ii) any sale, in compliance with the terms of Section 6.05 of the Credit
Agreement, of all or substantially all of the assets of such Subsidiary
Guarantor that results in such Subsidiary Guarantor no longer being a
Subsidiary.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Subsidiary Guarantor hereunder
shall in no event exceed the amount which can be guaranteed by such Subsidiary
Guarantor under applicable federal and state laws relating to the insolvency of
debtors.
<PAGE>
(c) Each Subsidiary Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, such Subsidiary Guarantor under this
Subsidiary Guaranty; provided, however, that each Subsidiary Guarantor will only
be liable for the fees of a single firm which shall act as common counsel for
the Lenders, except in the case where (i) a Lender reasonably determines based
upon the written advice of legal counsel, a copy of which shall be provided to
such Subsidiary Guarantor, in its judgment that having common counsel would
present such counsel with a conflict of interest, (ii) a Lender reasonably
concludes that there may be legal defenses available to it that are different
from or in addition to those available to other Lenders or (iii) defense of any
action or proceeding is not assumed by the Lenders. This Subsidiary Guaranty
shall remain in full force and effect until the Obligations are paid in full, no
Letters of Credit are outstanding and the Commitments are terminated,
notwithstanding that from time to time prior thereto the Borrower may be free
from any Obligations.
(d) No payment or payments made by the Borrower or any other Person or
received or collected by the Administrative Agent or any Lender from the
Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Subsidiary Guarantor hereunder
which shall, notwithstanding any such payment or payments other than payments
made by such Subsidiary Guarantor in respect of the Obligations or payments
received or collected from such Subsidiary Guarantor in respect of the
Obligations, remain liable for the Obligations up to the maximum liability of
such Subsidiary Guarantor hereunder until the Obligations are paid in full, no
Letters of Credit are outstanding and the Commitments are terminated.
(e) Each Subsidiary Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability hereunder, it will notify the Administrative
Agent and such Lender in writing that such payment is made under this Subsidiary
Guaranty for such purpose.
3. Representations and Warranties. Each Subsidiary Guarantor hereby
represents and warrants to the Administrative Agent and each Lender that the
representations and warranties set forth in Article III of the Credit Agreement
as they relate to such Subsidiary Guarantor, each of which is hereby
incorporated herein by reference, are true and correct, and the Administrative
Agent and each of the Lenders shall be entitled to rely on each of them as if
they were fully set forth herein.
Each Subsidiary Guarantor agrees that the representations and warranties
contained in this Section 3 shall be deemed to have been made by such Subsidiary
Guarantor on the date of each Credit Event under the Credit Agreement (except,
in the case of a Borrowing in which Loans are continued or converted as
contemplated in Section 2.04 of the Credit Agreement or in the case of an
issuance of a Letter of Credit that does not increase the aggregate LC Exposure)
on and as of the date of such Credit Event as though made hereunder on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date.
4. Covenants. Each Subsidiary Guarantor hereby covenants and agrees with
the Administrative Agent and the Lenders that, from and after the date of this
Subsidiary Guaranty until the Obligations are paid in full, no Letters of Credit
are outstanding and the Commitments are terminated, it will comply with each of
the covenants set forth in Articles V and VI of the Credit Agreement as they
relate to such Subsidiary Guarantor.
<PAGE>
5. Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Subsidiary Guarantor against any of and all the
obligations of such Subsidiary Guarantor now or hereafter existing under this
Subsidiary Guaranty and the other Loan Documents held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Subsidiary Guaranty or such other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of set-off) which such
Lender may have. Each Lender agrees promptly to notify the relevant Subsidiary
Guarantor of any such set-off and the application thereof made by such Lender.
6. Authority of Administrative Agent. Each Subsidiary Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Subsidiary Guaranty with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Subsidiary Guaranty shall, as between
the Administrative Agent and the Lenders, be governed by the Credit Agreement
and by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Subsidiary
Guarantors, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Lenders with full and valid authority so to act or refrain from
acting, and the Subsidiary Guarantors shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
7. Notices. All notices and other communications given to any party hereto
in accordance with the provisions of this Subsidiary Guaranty shall be deemed to
have been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy or other telegraphic communications equipment of the
sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 7 or in accordance with the
latest unrevoked direction from such party given in accordance with this Section
7. All notices, requests and demands shall be addressed as follows:
(i) if to the Administrative Agent or any Lender, at its address or
transmission number for notices provided in Section 9.01 of the Credit
Agreement; and
(ii) if to any Subsidiary Guarantor, at such Subsidiary Guarantor's address
or transmission number for notices set forth under its signature below.
The Administrative Agent, each Lender and each Subsidiary Guarantor may
change its address and transmission numbers for notices by notice in the manner
provided in this Section.
<PAGE>
8. Severability. Any provision of this Subsidiary Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9. Integration. This Subsidiary Guaranty represents the agreement of the
Subsidiary Guarantors with respect to the subject matter hereof and there are no
promises or representations by the Administrative Agent or any Lender relative
to the subject matter hereof not reflected herein.
10. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Subsidiary Guaranty may be waived, amended,
supplemented or otherwise modified except as provided in Section 9.08 of the
Credit Agreement.
(b) Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 10(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Administrative Agent or such Lender would
otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
11. Section Headings. The Section headings used in this Subsidiary Guaranty
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
12. Successors and Assigns. This Subsidiary Guaranty shall be binding upon
the successors and assigns of each Subsidiary Guarantor and shall inure to the
benefit of the Administrative Agent and the Lenders and their successors and
assigns, except that no Subsidiary Guarantor may assign or transfer any of its
rights or obligations under this Subsidiary Guaranty without the prior written
consent of the Administrative Agent.
13. GOVERNING LAW. THIS SUBSIDIARY GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
14. Waiver of Jury Trial. Each Subsidiary Guarantor hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Subsidiary Guaranty or any of the other Loan
Documents. Each Subsidiary Guarantor (a) certifies that no representative, agent
or attorney of any other party to the Loan Documents has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties to the Loan Documents have been induced to enter into this Subsidiary
Guaranty and the other Loan Documents, as applicable, by, among other things,
the mutual waivers and certifications in this Section 14.
15. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary
Guarantor agrees that a final judgment in any New York State court or any
Federal court of the United States of America sitting in New York City shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Subsidiary Guaranty shall
affect any right that the Administrative Agent or any Lender may have to bring
any action or proceeding relating to this Subsidiary Guaranty or the other Loan
Documents in the courts of any jurisdiction.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Subsidiary Guaranty or
the other Loan Documents in any New York State or Federal court. Each Subsidiary
Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each Subsidiary Guarantor irrevocably consents to service of process in
the manner provided for notices in Section 7. Nothing in this Subsidiary
Guaranty will affect the right of the Administrative Agent or any Lender to
serve process in any other manner permitted by law.
16. Effective Date. This Agreement shall be effective on the Effective
Date.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary
Guaranty to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
METRIS DIRECT, INC.
By:
----------------------------------------
Name:
Title:
Address for Notices:
600 South Highway 169
Suite 1800
St. Louis Park, Minnesota 55426
Attention: Vice President and Treasurer
Fax: (612) 525-5070
METRIS RECOVERY SERVICES, INC.
By:
----------------------------------------
Name:
Title:
Address for Notices:
EXHIBIT H
FORM OF AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT, dated as of July 21,
2000 ("the Subsidiary Security Agreement"), made by each of the signatories
hereto (together with any other entity that may become a party hereto, the
"Subsidiary Grantors"), in favor of THE CHASE MANHATTAN BANK, as Administrative
Agent (in such capacity, the "Administrative Agent") for the Lenders (as such
terms are defined in the Credit Agreement referred to below).
W I T N E S S E T H:
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WHEREAS, pursuant to the Revolving Credit and Letter of Credit Facility
Agreement, dated as of September 16, 1996 (the "Original Credit Agreement"),
among the Borrower, the Administrative Agent and the lenders parties thereto,
the lenders made extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
June 30, 1998 (the "Existing Credit Agreement"), among the Borrower, the
Lenders, the Syndication Agent, the Documentation Agents, the Co-Agents (as such
terms are defined therein) and the Administrative Agent, the parties thereto
agreed to amend and restate in its entirety the Original Credit Agreement;
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, each of the Subsidiary Grantors executed a guarantee (the
"Existing Subsidiary Guaranty") guaranteeing all of the Borrowers' obligations
under the Existing Credit Agreement and the other loan documents;
WHEREAS, pursuant to the provisions of the Existing Credit Agreement, the
Subsidiary Grantors entered into the Subsidiary Security Agreement, dated as of
June 30, 1998 (the "Existing Subsidiary Security Agreement");
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
July 21, 2000 (herein, as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders, the
Syndication Agent, the Co-Documentation Agents, the Co-Agent (as such terms are
defined in the Credit Agreement) and the Administrative Agent, the parties
thereto have agreed to amend and restate in its entirety the Existing Credit
Agreement;
WHEREAS, each of the Subsidiary Grantors are Subsidiaries of the Borrower
and will derive substantial direct and indirect benefit from the extensions of
credit made or continued to the Borrower under the Credit Agreement; and
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WHEREAS, it is a condition precedent to the obligation of the Lenders to
make or continue their respective extensions of credit to the Borrower under the
Credit Agreement that each of the Subsidiary Grantors shall have executed and
delivered this amended and restated Subsidiary Security Agreement to the
Administrative Agent for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make or continue their respective extensions of credit to
the Borrower, the Subsidiary Grantors hereby agree with the Administrative
Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, General Intangibles
and Instruments.
(b) The following terms shall have the following meanings:
"Agreement": this Subsidiary Security Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 5.3 or Section 6.2.
"Excluded Assets": any property, including but not limited to
Accounts, Chattel Paper, Documents, General Intangibles, Instruments, books
and records pertaining to such property and all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to the foregoing, sold, assigned,
transferred, set-over and otherwise conveyed directly or indirectly from
time to time in connection with any Receivables Transfer Program in
accordance with the Credit Agreement.
"Issuers": the collective reference to each issuer of any Permitted
Investment.
"Pledged Permitted Investments": Permitted Investments credited to the
Securities Account by the Securities Intermediary pursuant to the
Securities Account Control Agreement.
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"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Code and, in any event, shall include, without limitation, all
income from Pledged Permitted Investments, collections thereon or
distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account), but excluding any of the
foregoing (including, without limitation, assets sold pursuant to the
Receivables Transfer Program) transferred by the Borrower as permitted by
the Credit Agreement.
"Securities Account": as defined in the Securities Account Control
Agreement.
"Securities Intermediary": as defined in the Securities Account
Control Agreement.
"Subordinated Securities Intermediary Lien": any lien in favor of the
Securities Intermediary in the Securities Account or any securities
entitlement credited thereto, provided that any such lien is subordinate to
the lien of the Administrative Agent as set forth in Section 4 of the
Securities Account Control Agreement.
1.2 Other Definitional Provisions. (a) The words "hereof", "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, each of the Subsidiary Grantors
hereby grants to the Administrative Agent for the ratable benefit of the Lenders
a security interest in all of the following property now owned or at any time
hereafter acquired by any of the Subsidiary Grantors or in which any of the
Subsidiary Grantors now has or at any time in the future may acquire any right,
title or interest excluding any Excluded Assets (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
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(d) all General Intangibles;
(e) all Instruments;
(f) Pledged Permitted Investments;
(g) all books and records pertaining to the Collateral; and
(h) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing.
3. Representations and Warranties. Each of the Subsidiary Grantors hereby
represents and warrants that (it being understood that the following
representations and warranties shall not apply to Collateral (including, without
limitation, assets sold pursuant to any Receivables Transfer Program) that has
been transferred by any of the Subsidiary Grantors as permitted by the Credit
Agreement):
3.1 Title; No Other Liens. Except for (i) the security interest granted to
the Administrative Agent for the ratable benefit of the Lenders pursuant to this
Agreement and (ii) any Subordinated Securities Intermediary Lien in respect of
Pledged Permitted Investments, each of the Subsidiary Grantors owns each item of
the Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed (i) in favor of the Administrative Agent, for the ratable benefit of
the Lenders, pursuant to the Existing Subsidiary Security Agreement or this
Agreement, (ii) in favor of the Securities Intermediary in respect of any
Subordinated Securities Intermediary Lien that may exist on Pledged Permitted
Investments, or (iii) in connection with a sale, transfer or disposition of
Accounts permitted by Section 6.08 (e) or (f) of the Credit Agreement.
3.2 Perfected First Priority Liens. The security interests granted pursuant
to this Agreement (a) upon completion of the filings and other actions specified
on Schedule 1 will constitute perfected security interests in the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for the Obligations, and (b) are prior to all other Liens on
the Collateral in existence on the date hereof.
3.3 Chief Executive Office. Each of the Subsidiary Grantor's jurisdiction
of incorporation and chief executive office is set forth on Schedule 2.
3.4 Pledged Permitted Investments. Such Subsidiary Grantor is the record
and beneficial owner of, and has good and marketable title to, the Pledged
Permitted Investments pledged by it hereunder, free of any and all Liens or
options in favor of, or claims of, any other Person, except (i) the security
interest created by this Agreement and (ii) any Subordinated Securities
Intermediary Lien.
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4. Covenants. Each of the Subsidiary Grantors covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Agreement until the Obligations shall have been paid in full, no Letters of
Credit are outstanding and the Commitments shall have expired or otherwise been
terminated:
4.1 Delivery of Instruments and Chattel Paper. If any amounts payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instruments or Chattel Paper (not previously delivered to the Administrative
Agent pursuant to this Section 4.1) having an aggregate principal amount in
excess of $100,000, such Instruments or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
Notwithstanding the foregoing, prior to the occurrence and continuance of an
Event of Default, payments by check promptly deposited shall be collected by a
Subsidiary Grantor without delivery to the Administrative Agent.
4.2 Maintenance of Perfected Security Interest; Further Documentation;
Release of Security Interest. (a) Each of the Subsidiary Grantors shall maintain
the security interest created by this Agreement as a perfected security interest
having at least the priority described in Section 3.2 and shall defend such
security interest against the claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of each of the Subsidiary
Grantors, each of the Subsidiary Grantors will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) the filing of any financing
or continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the security interests created hereby and (ii) in
the case of Pledged Permitted Investments, taking any actions necessary to
enable the Administrative Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
. (c) Concurrently with the transfer by any of the Subsidiary Grantors of
any Collateral as permitted by the Credit Agreement, the security interest
created by this Agreement in such Collateral shall automatically terminate
without any further action by the Administrative Agent; provided, that the
Administrative Agent shall, at the reasonable request and sole expense of the
Subsidiary Grantors, execute such releases as may be necessary to effect any
such transfer. Upon receipt by the Administrative Agent of a written request
from a Subsidiary Grantor, the Administrative Agent shall release the security
interest provided herein in the Pledged Permitted Investments specified by such
Subsidiary Grantor in such request so long as subsequent to such release the
aggregate principal amount of Funded Senior Debt would not exceed the Borrowing
Base at such time.
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4.3 Changes in Locations, Name, etc. No Subsidiary Grantor will (unless, in
each case, it shall have given the Administrative Agent at least 30 days' prior
written notice of such change):
(a) change its jurisdiction of organization or the location of its chief
executive office from that specified in Section 3.3; or
(b) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Administrative Agent in connection with
this Agreement would become seriously misleading.
4.4 Pledged Permitted Investments. (a) Subject to the rights of each of the
Subsidiary Grantors under Section 6.5(a), any sums paid upon or in respect of
the Pledged Permitted Investments upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Permitted
Investments or any property shall be distributed upon or with respect to the
Pledged Permitted Investments pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Administrative Agent, be delivered
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of Pledged Permitted Investments shall be received by
such Subsidiary Grantor, such Subsidiary Grantor shall, until such money or
property is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Subsidiary Grantor, as additional collateral security for
the Obligations.
(b) Without the prior written consent of the Administrative Agent, such
Subsidiary Grantor will not (i) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Permitted Investments or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (ii) enter into
any agreement or undertaking restricting the right or ability of such Subsidiary
Grantor or the Administrative Agent to sell, assign or transfer any of the
Pledged Permitted Investments or Proceeds thereof.
5. Provisions Relating to Receivables.
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5.1 Subsidiary Grantors Remain Liable under Receivables. Anything herein to
the contrary notwithstanding, each of the Subsidiary Grantors shall remain
liable under each of its respective Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such Receivable.
Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Administrative Agent
or any Lender of any payment relating to such Receivable pursuant hereto, nor
shall the Administrative Agent or any Lender be obligated in any manner to
perform any of the obligations of any Subsidiary Grantors under or pursuant to
any Receivable (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under any Receivable
(or any agreement giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times.
5.2 Communication with Obligors. To the extent permitted by law, the
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with the obligors on the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
5.3 Collections on Receivables. The Administrative Agent hereby authorizes
each of the Subsidiary Grantors to collect the Receivables, subject to the
Administrative Agent's direction and control, and the Administrative Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any of the Subsidiary
Grantors, (a) shall be forthwith (and, in any event, within two Business Days)
deposited by such Subsidiary Grantor in the exact form received, duly indorsed
by such Subsidiary Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.3, and (b) until so turned
over, shall be held by such Subsidiary Grantor in trust for the Administrative
Agent and the Lenders, segregated from other funds of such Subsidiary Grantor.
6. Remedies.
6.1 Notice to Obligors. Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default,
each of the Subsidiary Grantors shall notify obligors on the Receivables that
the Receivables have been assigned to the Administrative Agent for the ratable
benefit of the Lenders and that payments in respect thereof shall be made
directly to the Administrative Agent.
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6.2 Proceeds to be Turned Over To Administrative Agent. In addition to the
rights of the Administrative Agent and the Lenders specified in Section 5.3 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing all Proceeds received by any of the Subsidiary Grantors consisting of
cash, checks and other near-cash items shall be held by such Subsidiary Grantor
in trust for the Administrative Agent and the Lenders, segregated from other
funds of such Subsidiary Grantor, and shall, if required by the Administrative
Agent, forthwith upon receipt by such Subsidiary Grantor, be turned over to the
Administrative Agent in the exact form received by such Subsidiary Grantor (duly
indorsed by such Subsidiary Grantor to the Administrative Agent, if required)
and held by the Administrative Agent in a Collateral Account maintained under
the sole dominion and control of the Administrative Agent. All Proceeds while
held by the Administrative Agent in a Collateral Account (or by any Subsidiary
Grantors in trust for the Administrative Agent and the Lenders) shall continue
to be held as collateral security for all the Obligations and shall not
constitute payment thereof until applied as provided in Section 6.3.
6.3 Application of Proceeds. If an Event of Default shall have occurred and
be continuing, at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the
Administrative Agent to the Subsidiary Grantors or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit are outstanding
and the Commitments shall have expired or otherwise been terminated shall be
paid over to the Subsidiary Grantors or to whomsoever may be lawfully entitled
to receive the same.
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6.4 Code Remedies. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders may exercise, in addition to
all other rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any of
the Subsidiary Grantors or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Administrative Agent or any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in any of the Subsidiary
Grantors, which right or equity is hereby waived or released. Each of the
Subsidiary Grantors further agrees, at the Administrative Agent's request, to
assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at the
Subsidiary Grantors' premises or elsewhere. The Administrative Agent shall apply
the net proceeds of any action taken by it pursuant to this Section, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Administrative Agent
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Administrative Agent account for the surplus,
if any, to the Subsidiary Grantors. To the extent permitted by applicable law,
each of the Subsidiary Grantors waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
6.5 Pledged Permitted Investments. (a) Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Subsidiary Grantor of the Administrative Agent's intent
to exercise its corresponding rights pursuant to Section 6.5(b), each Subsidiary
Grantor shall be permitted to receive all payments made in respect of the
Pledged Permitted Investments, in each case paid in the normal course of
business of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Subsidiary Grantor, (i) the Administrative Agent shall have the
right to receive any and all payments or other Proceeds paid in respect of the
Pledged Permitted Investments and make application thereof to the Obligations in
such order as the Administrative Agent may determine, and (ii) any or all of the
Pledged Permitted Investments shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Permitted Investments at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Permitted Investments as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Permitted Investments upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate or other organizational structure of any Issuer, or upon the
exercise by any Subsidiary Grantor or the Administrative Agent of any right,
privilege or option pertaining to such Pledged Permitted Investments, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Permitted Investments with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except to account for
property actually received by it, but the Administrative Agent shall have no
duty to any Subsidiary Grantor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so or delay in so doing.
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(c) Each Subsidiary Grantor hereby authorizes and instructs each Issuer of
any Pledged Permitted Investments pledged by such Subsidiary Grantor hereunder
to (i) comply with any instruction received by it from the Administrative Agent
in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from such Subsidiary Grantor, and each
Subsidiary Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any
payments with respect to the Pledged Permitted Investments directly to the
Administrative Agent.
7. Administrative Agent's Appointment as Attorney-in-Fact; Administrative
Agent's Performance of Subsidiary Grantors' Obligations.
7.1 Powers. Each of the Subsidiary Grantors hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of each of the Subsidiary
Grantors and in the name of each of the Subsidiary Grantors or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each of the Subsidiary
Grantors hereby gives the Administrative Agent the power and right, on behalf of
each of the Subsidiary Grantors, without notice to or assent by any Subsidiary
Grantors, to do any or all of the following:
(a) in the name of each of the Subsidiary Grantors or its own name, or
otherwise, take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under
any Receivable or with respect to any other Collateral and file any claim
or take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or with respect
to any other Collateral whenever payable;
(b) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by
the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;
(c) execute, in connection with any sale provided for in Section 6.4,
any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
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(d) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought against any
of the Subsidiary Grantors with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Administrative Agent
may deem appropriate; and (7) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and the Subsidiary Grantors' expense, at any time, or from
time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as any of
the Subsidiary Grantors might do.
Anything in this Section 7.1 to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1 unless an Event of Default shall
have occurred and be continuing.
7.2 Performance by Administrative Agent of Subsidiary Grantors'
Obligations. If any of the Subsidiary Grantors fail to perform or comply with
any of its agreements contained herein, the Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement (with, if no Default or Event of
Default shall have occurred and be continuing, notice to the Borrower).
7.3 Subsidiary Grantors' Reimbursement Obligation. The expenses of the
Administrative Agent incurred in connection with actions undertaken as provided
in this Section 7, together with interest thereon at a rate per annum equal to
the rate per annum at which interest would then be payable on past due ABR
Revolving Loans under the Credit Agreement, from the date of payment by the
Administrative Agent to the date reimbursed by the Subsidiary Grantors, shall be
payable by the Subsidiary Grantors to the Administrative Agent on demand.
7.4 Ratification; Power Coupled With An Interest. Each of the Subsidiary
Grantors hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released.
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8. Duty of Administrative Agent. The Administrative Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Administrative Agent deals with similar
property for its own account. Except as expressly required by the Code, neither
the Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Subsidiary Grantors or any other Person or to take any other
action whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any of the Subsidiary Grantors for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
9. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, each of the Subsidiary Grantors authorizes the Administrative Agent to
file financing statements with respect to the Collateral without the signature
of such Subsidiary Grantor in such form and in such filing offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
10. Authority of Administrative Agent. Each of the Subsidiary Grantors
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and each of the Subsidiary Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
each of the Subsidiary Grantors shall be under no obligation, or entitlement, to
make any inquiry respecting such authority.
11. Notices. All notices, requests and demands to or upon the
Administrative Agent or any of the Subsidiary Grantors hereunder shall be
effected in the manner provided for in Section 9.01 of the Credit Agreement.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Amendments in Writing; No Waiver; Cumulative Remedies.
13.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except as
provided in Section 9.08 of the Credit Agreement.
<PAGE>
13.2 No Waiver by Course of Conduct. Neither the Administrative Agent nor
any Lender shall by any act (except by a written instrument pursuant to Section
13.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future occasion.
13.3 Remedies Cumulative. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
14. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
15. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each of the Subsidiary Grantors and shall inure to the
benefit of the Administrative Agent and the Lenders and their successors and
assigns.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
17. Effective Date. This Agreement shall be effective on the Effective
Date.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Security
Agreement to be duly executed and delivered as of the date first above written.
METRIS DIRECT, INC.
By:
---------------------------------------
Title:
METRIS RECOVERY SERVICES, INC.
By:
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Title:
<PAGE>
Schedule 1
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
Metris Direct Inc. - Secretary of State of Minnesota
Metris Recovery Services, Inc. - Secretary of State of Arizona and Minnesota
Perfection by Control
In respect of Pledged Permitted Investments, execution and
delivery of the Securities Account Control Agreement by each
of the parties thereto.
<PAGE>
Schedule 2
Jurisdiction of Incorporation
Metris Direct Inc. - Minnesota
Metris Recovery Services, Inc. - Delaware
Chief Executive Office
Metris Direct Inc. - 600 South Highway 169
Suite 1800
St. Louis Park, Minnesota 55426
Metris Recovery Services, Inc. - 6909 East Greenway Parkway
Scottsdale, Arizona 85254
